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Special Leave Petition (Civil) Nos. 16041 42/88. From the Judgment and Order dated 27.7.1988 of the Karnataka High Court in W.P. No 9173/86 and W.A. No 2707/85. WITH SLP (C) Nos. 12258, 12254, 12260/90 & 8608/91 R.N. Narasimhamurthy, S.S. Javali, S.N. Bhat and Ravi P. Wadhwani for the Petitioners. M.S. Nesargi, R. Jagannath Goulay, M.K. Dua, M. Veerappa, K.H. Nobin Singh, S.K. Kulkarni and Surya Kant for the Respondents. The following Order of the Court was delivered by K. JAYACHANDRA REDDY, J. In all these special leave petitions the common question that arises for consideration is whether the provisions of the Karnataka Land Reforms Act, 1961 as amended in 1974 (`Act ' for short) cease to be applicable in all respects to the lands which came within the purview of the Urban Land (Ceiling and Regulation) Act, 1976 ( 'Ceiling Act ' for short). The lands involved in these matters are covered by the development plan by the Belgaum City Town Planning authority as per the Master Plan for the said City and they are included and declared as urban agglomeration in the City of Hubli under the provisions of the Ceiling Act. In the year 1972 the Karnataka Legislature passed a resolution under Article 252 of the Constitution to the effect that imposing a ceiling on urban immovable property and the acquisition of such property in excess of the ceiling limit for public purposes and all the matters connected therewith shall be regulated in the State by Parliament Qby law. The State Legislature thus divested itself of the legislative competence to enact law in respect of subject matter of the resolution. On 1.4.74 the amended Karnataka Land Reforms Act was enacted and under the said Act the tenant of the land covered by the Act is entitled to the grant of occupancy rights after making an application under the Act. This Act came into force with effect from 2.1.85. But for the purpose of grant of occupancy rights 1.4.74 was the relevant date. While so in the year 1975 the Governor of Karnataka passed the Urban Aggolmeration Ordinance whereunder all lands between the periphery of 8 K.Ms. of the municipal limits of Hubli Dharwad were declared as urban agglomeration land. In the year 1976 the Parliament passed the Ceiling Act for imposition of ceiling on urban properties and the Act was made applicable to Karnataka also in view of the resolution passed by the State Government referred to above. The order of the Land Tribunal under the Act conferring occupancy rights on the tenants was challenged before the High Court contending that the lands involved in these cases were within the purview of the Ceiling Act and therefore the provisions of the Land Reforms Act had no application to such lands on the ground that the provisions of the State Act were repugnant to the provisions of the Central Act namely the Ceiling Act. The writ petition was dismissed by the High Court. The owners preferred writ appeals and they were also dismissed by a common judgment in Writ Appeal Nos. 2707 and 2361/85 etc. The Division Bench held that there is no conflict between the two enactment in certain respect i.e. atleast so far as the implementation of the provisions of Chapter III of the Act are concerned and that provisions of this Chapter of the Act do not cease to apply to the agricultural lands coming within the meaning of urban agglomeration in the Ceiling Act. The judgment of the Division Bench is challenged in S.L.P.(Civil) No. 16041 42/88. Many of the similar writ petitions that were pending before the High Court were transferred to the Land Reforms Appellate Tribunal. The Appellate Tribunal dismissed the petitions by a common order following the judgment of the Division Bench of the High Court in Writ Appeal No.2707/85 and connected matters. Several civil revisions petitions filed by the land owners against the order of the Appellate Tribunal were dismissed by the High Court. Some of the special leave petitions are filed against the order of the High Court in the said civil revision petitions. Therefore all these special leave petitions can be disposed of by a common order. It was urged before us that the resolution of the State Legislature passed under Article 252 of the Constitution shifted the topic covered by the resolution from List II of Schedule VII to the Constitution and vested the competence to make the law in respect of the said topic in the Parliament and that thereafter the State enactment ceased to have efficacy in respect of said topic. Alternatively it was urged that, when in pursuance of the resolution the Parliament legislates in respect of the topic covered by the resolution, the Parliamentary law, repeals or supersedes any existing State legislation on the topic and therefore such law cannot be enforced thereafter. We shall first extract some of the relevant provisions of the Constitution of India and the respective enactments. Article 246 of the Constitution reads thus: "246. Subject matter of laws made by Parliament and by the Legislatures of States (l) Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the "Union List"). (2) xx xx xx (3) Subject to clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the "State List"). (4)xx xx xx " 2 Entry 18 in List II namely the State List of the VII Schedule to the Constitution is in the following terms: "18. Land, that is to say, rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents, transfer and alienation of agricultural land; land improvement and agricultural loans; colonization. " Article 252 of the Constitution reads thus: "252. Power of Parliament to legislate for two or more States by consent and adoption of such legislation by any other State (1) If it appears to the Legislatures of two or more States to be desirable that any of the matters with respect to which Parliament has no power to make laws for the States except as provided in Articles 249 and 250 should be regulated in such States by Parliament by law, and if resolutions to that effect are passed by all the Houses of the Legislatures of those States, it shall be lawful for Parliament to pass an Act for regulating that matter accordingly, and any Act so passed shall apply to such States and to any other State by which it is adopted afterwards by resolution passed in that behalf by the House or, where there are two Houses, by each of the Houses of the Legislature of that State. (2) Any Act so passed by Parliament may be amended or repealed by an Act of Parliament passed or adopted in like manner but shall not, as respects any State to which it applics, be amended or repcaled by an Act of the Legislature of that State. " Article 252 empowers the Parliament to legislate for two or more States on any of the matters with respect of which the Parliament has no power to make law except as provided under Articles 249 and 250. This power to legislate is vested in the Parliament only if two or more State Legislatures think it desirable to have a law enacted by Parliament on such matters in List II i.e. with respect to which the Parliament has no power to make law for the State. The passing of the resolutions by the State Legislatures is a condition precedent for vesting the Parliament with such power. The relevant portion of the resolution passed by the State Legislature under Article 252 reads thus: "Now, therefore, in pursuance of clause (1) of Article 252 of the Constitution, this Assembly hereby resolves that the imposition of a ceiling on urban immovable property and F acquisition of such property in excess of the ceiling and all matters connected therewith or ancillary and incidental thereto should be regulated in the State of Karnataka by Parliament by law. " The resolution states that the imposition of ceiling on urban immovable property and the acquisition of such property in excess of the ceiling limit with a view to utilising such excess property for public purposes and all other matters connected therein or incidental thereto shall be regulated in this State by Parliament by law. The basic question that arises is what is the actual content of the subject matter that was resolved to be entrusted to Parliament by the State Legislature under Article 252 of the Constitution. From the resolution it is clear that the subject matter that was resolved to be entrusted to the Parliament was the one imposing a ceiling on urban immovable property and acquisition of such property in excess of the ceiling. It is true that this subject matter is the topic that falls within Entry 18 of List 11 of Schedule VII to the Constitution and the said subject matter of Entry 18 has been originally kept apart for the State Legislature to make law and Parliament had no competence in respect of those matters falling under the wide scope of Entry 18. Now by virtue of this resolution a part of the area falling under Entry 18 is transferred to the domain of Parliament to make law relating to the matters within the transferred area. The scope of Entry 18 is very wide and the land mentioned therein may be agricultural or non agricultural and may be rural or urban. The subject matter carved out of Entry 18 under the resolutions passed by the various State Legislatures related to only "urban immovable property" and by virtue of the resolution the law that can be enacted by the Parliament should be a law "imposing a ceiling on such urban immovable property. The learned counsel for the petitioners, however, urged that vesting of tenanted land in the State and conferment of occupancy rights under the provisions of the State Act directly fall under the subject of imposing ceiling on and holding and other matters incidental or ancillary to the main topic of imposing ceiling and therefore they are fully covered by the Ceiling Act passed by the Parliament and the same supersedes the State enactment in respect of this land. The learned counsel appearing for the respondents on the contrary submitted that "imposition of ceiling" is a distinct and separately identifiable subject and is the power carved out of Entry 18 and vested in the Parliament to legislate and that the power of the State to legislate in respect of the remaining part of the subject matter is unaffected and that when two distinct powers have come into existence, vesting law making competence in the State and Parliament, the pith and substance of the laws made by each of them has to be examined to see whether any one of them encroaches the field set apart as falling within the competence of the other body. The learned counsel for the respondents, however, submitted that in any event the provisions of Chapter III of the Act have nothing to do with the imposition of ceiling on the urban land and that conferring of occupancy rights etc. to the tenants under Chapter 111 of the Act do not come under the category of "the matters connected therewith or ancillary or incidental to the imposition of ceiling" on urban immovable property. Now we shall refer to the provisions of the Urban Ceiling Act. The Statement of Objects and Reasons under Preamble to the said Act would show that the primary object and the purpose is to provide for the imposition of ceiling on vacant land in urban agglomeration and for acquisition of such lands in excess of the ceiling limit and to regulate the Marwaha and others. ; ; Miss Neelima Shangla vs State of Haryana and others; , , or Jitendra Kumar and others vs State of Punjab and others: If we have regard to the above enunciation that a candidate who finds a place in the select list as a candidate selected for appointment to a civil post, does not acquire an indefeasible right to be appointed in such posting the absence of any specific Rule entitling him for such appointment and he could be aggrieved by his non appointment only when the Administration does so either arbitrarily or for no bona fide reasons, it follows as a necessary concomitant that such candidate even if has a legitimate expectation of being appointed in such posts due to his name finding a place in the select list of candidates, cannot claim to have a right to be heard before such select list is cancelled for bona fide and valid reasons and not arbitrarily: In the instant case, when the Chandigarh Administration which received the complaints about the unfair and injudicious manner in which select list of candidates for appointment as conductors in CTU was prepared by the Selection Board constituted for the purpose, found those complaints to be well founded on an enquiry got made in that regard, we are unable to find that the Chandigarh Administration had acted either arbitrarily or without bona fide and valid reasons in cancelling such 0dubious select list. Hence, the contentions of the learned counsel for the Respondents as to the sustainability of the Judgment of CAT under appeal on the ground of non affording of an opportunity of hearing to the Respondents (candidates in the select list) is a misconceived one and is consequently rejected. In the result, we allow this appeal, set aside the Judgment under appeal, and reject the applications made by Respondents before CAT, Chandigarh. However, in the facts and circumstances of this appeal, we make no order as to costs. G.N. Appeal allowed. FOOD CORPORATION OF INDIA V. KAMDHENU CATTLE FEED INDUSTRIES NOVEMBER 3, 1992 [J.S. VERMA, YOGESHWAR DAYAL AND N. VENKATACHALA, JJ.] Constitution of India, 1950: Article 14 Contractual transactions of State or its instrumentality Essential requisites Non arbitrariness, fairness in action and due consideration of legitimate expectation Ignoring the highest bid Negotiations for higher offer and acceptance thereof Validity of. Administrative Law: Doctrine of legitimate expectation Forms part of non arbitrariness and Rule of Law To be determined in the larger public interest Open to judicial review. The appellant Corporation invited tenders for sale of stocks of damaged food grains. The respondent 's bid was the highest. Since the appellant was not satisfied about the adequacy of the amount offered even in the highest tender, it invited all the tenders to participate in the negotiations, instead of accepting the highest tender. During the course of negotiations, the respondent refused to revise the rates in its offer. On the basis of the highest bid made during the negotiations, the appellant disposed of the stocks of damaged foodgrains, rejecting the highest tenders. The respondent, whose tender was the highest, challenged the decision of the appellants by filing a Writ Petition before the High Court. It was contended that the action of the appellant was arbitrary and hence violative of article 14 of the Constitution. The High Court accepted the contention and allowed the Writ Petition. Being aggrieved by the High Court 's decision the appellant Corporation preferred the present appeal. It was contended on behalf of the appellant that there being no right in the person submitting the highest tender to claim acceptance thereof, and since all tenderers were given equal opportunity to participate in the negotiations and to revise the bid before acceptance, the action of the appellant was not arbitrary. The Respondent contended that since no cogent reasons were indicated for rejecting all the tenders and for deciding to dispose of the stock by negotiating with the tenderers for procuring a higher price, such a decision was arbitrary. Allowing the appeal, this Court, HELD: 1.1. In contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to Article 14 of the Constitution of which non arbitrariness is a significant facet. There is no unfettered discretion in public law. A public authority possesses powers only to use them for public good. This imposes the duty to act fairly and to adopt a procedure which is `fairplay in action '. Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities, with this element forming a necessary component of the decision making process in all State actions. To satisfy this requirement of non arbitrariness in a State action, it is necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely to be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given case. The decision so made would be exposed to challenge on the ground of arbitrariness. Rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but provides for control of its exercise by judicial review. [328 A D] 12. The mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirement of due consideration of a legitimate expectation forms part of the principle of non arbitrariness, a necessary concomitant of the rule of law. Every legitimate expectation is a relevant factor requiring due consideration in a fair decision making process. Whether the expectation of the claimant is reasonable or legitimate in the context is a question of fact in each case. Whenever the question arises, it is to be determined not according to the claimant 's perception but in larger public interest wherein other more important considerations may outweigh what would otherwise have been the legitimate expectation of the claimant. A bona fide decision of the public authority reached in this manner would satisfy the requirement of non arbitrariness and withstand judicial scrutiny. [328 E G] 2.1. Even though the highest tenderer can claim no right to have his tender accepted, there being a power while inviting tenders to reject all the tenders, yet that power cannot be exercised arbitrarily and must depend for its validity on the existence of cogent reasons for such action. The object of inviting tenders for disposal of a commodity is to procure the highest price while giving equal opportunity to all the intending bidders to compete. Procuring the highest price for the commodity is undoubtedly in public interest since the amount so collected goes to the public fund. Accordingly, inadequacy of the price offered in the highest tender would be a cogent ground for negotiating with the tenderers giving them equal opportunity to revise their bids with a view to obtain the highest available price. Retaining the option to accept the highest tender, in case the negotiations do not yield a significantly higher offer would be fair to the tenderers besides protecting the public interest. A procedure wherein resort is had to negotiations with the tenderers for obtaining a significantly higher bid during the period when the offers in the tenders remain open for acceptance and rejection of the tenders only in the event of a significant higher bid being obtained during negotiations would ordinarily satisfy this requirement. This procedure involves giving due weight to the legitimate expectation of the highest bidder to have his tender accepted unless outbid by a higher offer, in which case acceptance of the highest offer within the time the offers remain open would be a reasonable exercise of power for public good. [329 E H; 330 A] Shanti Vijay & Co. etc. vs Princess Fatima Fouzia & Ors. , [1980] I S.C.R. 459, relied on. Council of Civil Service Unions and Others vs Minister for the Civil Service, , and In re Preston; , , referred to. In the instant case, the respondent 's highest tender was super seded only by a significantly higher bid made during the negotiations with all tenderers giving them equal opportunity to compete by revising their bids. The fact that it was a significantly higher bid obtained by adopting the right course is sufficient to demonstrate that the action of the appellant satisfied the requirement of non arbitrariness, and it was taken for the cogent reason of inadequacy of the price offered in the highest tender, which reason was evident to all tenderers invited to participate in the negotiations and to revise their bids. The High Court was in error in taking the contrary view. [330 D E] CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4731 of 1992. From the Judgment and Order dated 21.7.92 of the C.W.N. 7419 of 1992. Y.P. Rao for the Appellant. Ashok Sen, H.L. Aggarwal, and K.K. Gupta (NP) for the Respondent. The Judgment of the Court was delivered by VERMA, J. Leave granted. The appeal by special leave under Article 136 of the Constitution is against the judgment and order dated 21.7.92 by which the Civil Writ Petition No. 7419 of 1992 has been allowed by the Punjab & Haryana High Court directing the appellant Food Corporation of India to allot to the respondent the necessary stocks of damaged rich for which the tenders had been invited by the appellant, since the respondent was the highest bidder. The appellant invited tenders for sale of stocks of damaged foodgrains in accordance with the terms and conditions contained in the tender notice (Annexure `A '). The tenders were required to be submitted upto 2.45 p.m. on 18.5.92; the tenders were to be opened on 18.5.92 at 3.00 p.m.; and offers were to remain open for acceptance upto and inclusive of 17.7.92. The respondent submitted its tender for a stock of damaged rice within the time specified, but the respondent 's tender was conditional and the full amount of earnest money required by the terms was also not deposited. It is, however, not necessary to mention the particulars of these two deficiencies in respondent 's tender since they appear to have been waived by the appellant and are not relied on before us to support the appellant 's action. The respondent 's bid in the tender was admittedly the highest as found on opening, the tenders. lt appears that the appellant was not satisfied about the adequacy of the amount offered in the highest tenders for purchase of the stocks of damaged foodgrains and, therefore. instead of accepting any of the tenders submitted, the appellant invited all the tenderers to participate in the negotiation on 9.6.92. The respondent refused to revise the rates offered in its tender. It was Rs. 245 per quintal for certain lots of this stock;, while the highest offer made during the negotiations was Rs. 275.72 per quintal. Similarly, as against the respondent 's offer of Rs. 201 per quintal in respect of some other lots, the highest offer made during the negotiation was Rs. 271.55 per quintal. On this basis, the appellant was to receive an additional amount of Rs. 8 lakhs by accepting the highest offer made during the negotiations over the total amount offered by the respondent for the stock of damaged rice. Overall, the appellant was offered an excess amount of Rs. 20 lakhs for the entire stock of damaged foodgrains in the highest offer made during the negotiations, inasmuch as against the total amount Rs.90 lakhs which the appellant would have received by acceptance of the highest tenders, the appellant was to receive the amount of Rs. 1 crore 10 lakhs by accepting the highest offers made during the negotiations in which all the tenderers, including the respondent, were given equal opportunity to participate. The respondent filed the above Writ Petition in the High Court challenging the appellant 's refusal to accept the highest tender submitted by it for the stock of damaged rice claiming that the appellant having chosen to invite tenders, it could not thereafter dispose of the stocks of damaged foodgrains by subsequent negotiations rejecting the highest tenders on the ground that a higher bid was obtained by negotiations. This action of the appellant, was alleged to be arbitrary and, therefore, in substance, violative of Article 14 of the Constitution. The High Court by its impugned order accepted this contention of the respondent and allowed the Writ Petition. Hence, this appeal. It is not disputed that according to the terms and conditions on which the appellant had invited tenders, the appellant had reserved the right to reject all the tenders and, therefore, the highest tender was not bound to be accepted. Learned counsel for the appellant submitted that there being no right in the person submitting the highest tender to claim acceptance of the tender, in a case like the present. where all the tenderers including the respondent, were invited for negotiation and given equal opportunity to participate and to revise the bid before acceptance of the highest bid offered during negotiation which resulted in obtaining an additional amount of Rs. 8 lakhs for the stock relating to respondent 's tender and an overall gain of Rs. 20 lakhs in disposal of the entire stock of damaged foodgrains, the action of the appellant could not be termed arbitrary. In reply, Shri A.K. Sen, learned counsel for the respondent contended that even though the appellant had the right to reject any tender, including the highest tender, and thereafter negotiate with all the tenderers to procure the highest price for the commodity, yet this right has to be exercised reasonably and not arbitrarily, otherwise, the credibility of the procedure of sale by inviting tenders would be lost. Shri Sen submitted that the decision not to accept any tender and to negotiate thereafter for obtaining a higher price than that quoted in the highest bid, cannot be taken on the whim and caprice of the concerned authority and can be only for cogent reasons indicated while taking the decision, or else, the decision would be arbitrary. On this basis, Shri Sen further submitted that in the present case, no cogent reasons were indicated for rejecting all the tenders and deciding to dispose of the commodity by negotiation with the tenderers for procuring a higher price. He also added that the mere fact that a higher price was obtained by negotiation would not justify the decision if it was not taken in the manner permissible. This was the only submission of Shri Sen to support the decision of the High Court. In our view, Shri A.K. Sen is right in the first part of his submission. However, in the present case, the respondent does not get any benefit therefrom. The High Court 's decision is based on the only ground that once tenders have been invited and the highest bidder has come forward to comply with the conditions stipulated in the tender notice, it is not permissible to switch over to negotiation with all the tenderers and thereby reject the highest tender. According to the High Court, such a procedure is not countenanced by the rule of law. This is not the same, as the submission of Shri Sen which is limited to permissibility of such a course only on cogent grounds indicated while deciding to switch over to the procedure of negotiation after receiving the tenders to satisfy the requirement of non arbitrariness, a necessary concomitant of the rule of law. The proposition enunciated by the High Court which forms the sole basis of its decision is too wide to be acceptable and has to be limited in the manner indicated hereafter. In contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to Article 14 of the Constitution of which non arbitrariness is a significant facet. There is no unfettered discretion in public law: A public authority possesses powers only to use them for public good. This impose the duty to act fairly and to adopt a procedure which is `fairplay in action '. Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities, with this element forming a necessary component of the decision making process in all State actions. To satisfy this requirement of non arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely lo be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given case. The decision so made would be exposed to challenge on the ground of arbitrariness. Rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but providers for control of its exercise by judicial review. The mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirement of due consideration of a Legitimate expectation forms part of the principle of non arbitrariness, a necessary concomitant of the rule of law. Every legitimate expectation is a relevant factor requiring due consideration a fair decision making process. Whether the expectation of the claimant is reasonable or legitimate in the context is a question of fact in each case. Whenever the question arises, it is to be determined not according to the claimant 's perception but in larger public interest wherein other more important considerations may outweigh what would otherwise have been the legitimate expectation of the claimant. A bona fide decision of the public authority reached in this manner would satisfy the requirement of non arbitrariness and withstand judicial scrutiny. The doctrine of legitimate expectation gets assimilated in the rule of law and operates in our legal system in this manner and to this extent. In Council of Civil Service Unions and Others vs Minister for the Civil Service, the House of Lords indicated the extent to which the legitimate expectation interfaces with exercise of discretionary power. The impugned action was upheld as reasonable, made on due consideration of all relevant factors including the legitimate expectation of the applicant, wherein the considerations of national security were found to outweigh that which otherwise would have been the reasonable expectation of the applicant. Lord Scarman pointed out that `the controlling factor in determining whether the exercise of prerogative power is subject to judicial review is not its source but its subject matter '. Again in In re preston ; it was stated by Lord Scarman that `the principle of fairness has an important place in the law of judicial review ' ant `unfairness in the purported exercise of a power can be such that it is an abuse of excess of power '. These decisions of the House of Lords give a similar indication of the significance of the doctrine of legitimate expectation. Shri A.K. Sen referred to Shanti Vijay & Co. etc. vs Princess Fatima Fouzia & Ors. etc., [1980] 1 S.C.R. 459, which holds that court should interfere where discretionary power is not exercised reasonably and in good faith. From the above, it is clear that even though the highest tenderer can claim no right to have his tender accepted, there being a power while inviting tenders to reject all the tenders, yet the power to reject all the tenders cannot be exercised arbitrarily and must depend for its validity on the existence of cogent reasons for such action. The object of inviting tenders for disposal of a commodity is to procure the highest price while giving equal opportunity to all the intending bidders to compete. Procuring the highest price for the commodity is undoubtedly in public interest since the amount so collected goes to the public fund. Accordingly, inadequacy of the price offered in the highest tender would be a cogent ground for negotiating with the tenderers giving them equal opportunity to revise their bids with a view to obtain the highest available price. The inadequacy may be for several reasons known in the commercial field. Inadequacy of the prince quoted in the highest tender would be a question of fact in each case. Retaining the option to accept the highest tender, in case the negotiations do not yield a significantly higher offer would be fair to the tenderers besides protecting the public interest. A procedure wherein resort is had to negotiations with the tenderers for obtaining a significantly higher bid during the period when the offers in the tenders remain open for acceptance and rejection of the tenders only in the event of a significant higher bid being obtained during negotiations would ordinarily satisfy this requirement. This procedure involves giving due weight to the legitimate expectation of the highest bidder to have his tender accepted unless outbid by a higher offer, in which case acceptance of the highest offer within the time the offers remain open would be a reasonable exercise power for public good. In the present case, the last date upto which the offer made in the tender was to remain open for acceptance was 17.7.92. After opening the tenders on 18.5.92, the appellant decided to negotiate with all the tenderers on 9.6.92 when significantly higher amount, as indicated earlier, was offered above the amount quoted in the highest tender. In such a situation, if the negotiations did not yield the desirable result of obtaining a significantly higher price, the appellant had the option to accept the highest tender before the last date, viz., 17.7.92 upto which the offer made therein was to remain open for acceptance. In this manner, the respondent 's higher tender was superseded only by a significantly higher bid made during the negotiations with all tenderers giving them equal opportunity to compete by revising their bids. The fact that it was a significantly higher bid obtained by adopting this course is sufficient in the facts of the present case to demonstrate that the action of the appellant satisfied the requirement of non arbitrariness, and it was taken for the cogent reason of inadequacy of the price offered in the highest tender, which reason was evident to all tenderers invited to participate in the negotiations and to revise their bids. The High Court was in error in taking the contrary view. Consequently, this appeal is allowed. The impugned judgment of the High Court is set aside, resulting in dismissal of the respondent 's writ petition, No costs, G.N. Appeal allowed. KRISHNA BHIMRAO DESHPANDE vs LAND TRIBUNAL, DHARWAD AND ORS. NOVEMBER 3, 1992 [LALIT MOHAN SHARMA AND K. JAYACHANDRA REDDY, JJ.] Constitution of India, 1950: Article 252 read with Schedule VII, List n Entry 18 Legislation by Parliament Requirement Central Law on ceiling on urban immovable property in pursuance of Resolution of State Legislature State Laws on other matters relating to the subject matter of resolution Legality of. Constitution of India, 1950: Article 252, Schedule VII, list II, Entry 18 Urban Land (Ceiling and Regulation) Act, 1976 and Karnataka Land Reforms Act as amended in 1974 Object and application of Whether any conflict between the Acts. In the year 1972 the Karnataka Legislature passed a resolution under Article 252 of the Constitution imposing a ceiling on urban immovable property and the acquisition of such property in excess of the ceiling is limit for public purposes and all the matters connected therewith shall be regulated in the State by Parliament by law. On 1.4.74 the Karnataka Land Reforms (Amendment) Act was enacted and under the Act the tenant of the land covered by the Act was entitled to the grant of occupancy rights after making an application under the Act. The Act came Into force with effect from 2.1.85. But for the purpose of grant of occupancy rights, 1.4.74 was the relevant date. In the year 1975 the Karnataka Urban Agglomeration Ordinance was passed, whereunder all lands between the periphery of 8 K.Ms. of the municipal limits of Hubli Dharwad were declared as urban agglomeration land. The Parliament passed the Urban Land (Ceiling and Regulation) Act, 1976 for imposition of ceiling on urban properties and the Ceiling Act was made applicable to Karnataka also in view of the resolution passed by the State Government. The lands involved in the present cases were covered by the development plan by the Belgaum City Town Planning authority as per the Master Plan and they were included and declared as urban agglomeration in the City of Hubli under the provisions of the Ceiling Act. The owners of the agglomeration lands challenged the order of the Land Tribunal under the Land Reforms Act conferring occupancy rights on the tenants before the High Court. They contended that the lands involved in the cases were within the purview of the Ceiling Act and therefore the provisions of the Land Reforms Act had no application to such lands on the ground that the provisions of the Ceiling Act. The writ petitions were dismissed by the High Court. The owner 's writ appeals were also dismissed by a common judgment by the Division Bench of the High Court. The Division Bench held that there was no conflict between the two enactments. The judgment of the Division Bench was challenged in S.L.P. (Civil) No. 16041 42/88. Many of the similar writ petitions that were pending before the High Court were transferred to the Land Reforms Appellate Tribunal. The Appellate Tribunal dismissed the petitions by a common order following the judgment of the Division Bench of the High Court. Several Civil revision petitions filed by the land owners against the order of the Appellate Tribunal were dismissed by the High Court. Some of the special leave petitions were filed against the order of the High Court in the said civil revision petitions. The petitioners land owners contended that when in pursuance of the resolution of the State Legislature passed under Article 252 of the Constitution the Parliament legislated in respect of the topic covered by the resolution. The Parliamentary law repealed or superseded the existing State legislation on the topic and therefore such law could not be enforced thereafter; and that vesting of tenanted land in the State and conferment of occupancy rights under the provisions of the State Act directly fall under the subject of imposing ceiling on land holding and other matters incidental or ancillary to the main topic of imposing ceiling and therefore they were fully covered by the Ceiling Act passed by the Parliament and the same superseded the State enactment in respect of such lands. The respondents submitted that "imposition of ceiling" was a distinct and separately identifiable subject and the Parliament was empowered to legislate; that the power of the State to legislate in respect of the remaining part of the subject matter was unaffected; that when two distinct powers came into existence, vesting law making competence in the State and Parliament, the pith and substance of the laws made by each of them had to be examined to see whether any one of them encroached the field set apart as falling within the competence of the other body; that in any event the provisions of Chapter III of the Karnataka Land Reforms Act had nothing to do with the imposition of ceiling on the urban land and that conferring of occupancy rights etc. to the tenants under Chapter III of the Karnataka Land Reforms Act did not come under the category of "the matters connected therewith or ancillary or incidental to the imposition of ceiling" on urban immovable property. Dismissing the special leave petitions, this Court, HELD: 1.01. Article 252 empowers the Parliament to legislate for two or more States on any of the matters with respect of which the Parliament has no power to make law except as provided under Articles 249 and 250. This power to legislate is vested in the Parliament only if two or more State Legislatures think it desirable to have a law enacted by Parliament on such matters in List II, i.e. with respect to which the Parliament has no power to make law for the State. The passing of the resolutions by the State Legislatures is a condition precedent for vesting the Parliament with such power. [339 C D] 1.02. The scope of Entry 18 is very wide and the land mentioned therein may be agricultural or non agricultural and may be rural or urban. The subject matter carved out of Entry 18 under the resolutions passed by The various State Legislatures related to only "urban immovable property" and by virtue of the resolution the law that can be enacted by the Parliament should be a law "imposing a ceiling on such urban immovable property." [340 B, C] 1.03. From the resolution it is clear that the subject matter that was resolved to be entrusted to the Parliament was the one imposing a ceiling on urban immovable property and acquisition of such property in excess of the ceiling. This subject matter is the topic that falls within Entry 18 of List II of Schedule VII to the Constitution and the subject matter of Entry 18 has been originally kept apart for the State Legislature to make law and Parliament had no competence in respect of those matters falling under the wide scope of Entry 18. By virtue of this resolution a part of the area falling under Entry 18 is transferred to the domain of Parliament to make law relating to the matters within the transferred area. [339 G, H; 341 A] 2.01. The primary object and the purpose of the Urban Land (Ceiling and Regulation) Act, 1976 is to provide for the imposition of ceiling on vacant land in urban agglomeration and for acquisition of such lands in excess of the ceiling limit and to regulate the construction of buildings on such lands and for matters connected therewith. [340 H; 341 A] 2.02. The Karnataka Land Reforms Act as amended in 1974 is a welfare legislation. The object of the Act was to have a uniform law in the State of Karnataka relating to agrarian reforms, conferment of ownership on tenants, ceiling on land holdings and for certain other matters contained therein. [342 D] 2.03. In respect of imposing ceiling on the land under urban agglomeration the provisions of the Ceiling Act alone are applicable and to that extent the provisions of Chapter IV of the Karnataka Land Reforms Act which also deal with the imposition of ceiling would not be applicable. [344 C] 2.04. The land in the instant case comes under the urban agglomeration the imposition of the ceiling should naturally be under the provisions of the Urban Ceiling Act and not under the Karnataka Land Reforms Act. [344 B, C] 2.05. Imposition of ceiling on urban land is a distinct and independent subject as compared to imposition of ceiling on owning or to hold agricultural land or any other kind of property which do not attract the Urban Ceiling Act. These are two distinct powers and therefore the law making competence can be in two different legislative bodies. Consequently it is difficult to hold that the provisions of Chapter III of the Karnataka Land Reforms Act are outside the legislative competence of the State Legislature. [350 C, D] 2.06. The one topic that is transferred in the resolution passed under Article 252 as distinct and separately identifiable and does not include the remaining topics under Entry 18 in respect of which the State alone has the power to legislate. [351 D] 2.07. The legislative power of the State has to be reconciled with that of the Parliament and that in their respective fields each is supreme. Even assuming that the State enactment has same effect on the subject matter falling within the Parliament 's legislative competence that by itself will not render such law invalid or inoperative. [350 G H] 2.08. There is no conflict between the Ceiling Act and the State Act. The imposition of ceiling on urban immovable property is an independent topic and cannot be construed as to nullify the other subject left in the domain of the State Legislature under Entry 18 inasmuch as imposition of ceiling is a distinct and separately identifiable subject and does not cover the other measures such as regulation of relationship of landlord and tenant in respect of which the State Legislature has competence to legislate. [351 C D] 2.09. There is a ceiling provision under Section 45(2) of the Karnataka Land Reforms Act providing for computation of the area in respect of which the tenant may be granted occupancy rights. But it is clear that ceiling on the area in this context is only for the purpose of Section 45. [351 F] 2.10. Provisions in the Chapters II, III, V, VI to XI of the Karnataka Land Reforms Act deal with the conferment of occupancy rights on the respective tenants and they do not in any way conflict with the subject matter transferred to the Parliament by the resolution passed under Section 252. [351 E,F] Thumati Venkaiah and others vs State of Andhra Pradesh and of others; , ; Union of India and others vs Valluri Basavaiah Chowdhary and others; , ; Calcutta Gas Company (Proprietory) Ltd. vs State of West Bengal and others, and Kannan Devan Hills Produce Company Ltd. vs The State of Kerala etc.; , referred to. CIVIL APPELLATE JURISDICTION: Special Leave Petition (Civil) Nos. 16041 42/88. From the Judgment and Order dated 27.7.1988 of the Karnataka High Court in W.P. No 9173/86 and W.A. No 2707/85. WITH SLP (C) Nos. 12258, 12254, 12260/90 & 8608/91 R.N. Narasimhamurthy, S.S. Javali, S.N. Bhat and Ravi P. Wadhwani for the Petitioners. M.S. Nesargi, R. Jagannath Goulay, M.K. Dua, M. Veerappa, K.H. Nobin Singh, S.K. Kulkarni and Surya Kant for the Respondents. The following Order of the Court was delivered by K. JAYACHANDRA REDDY, J. In all these special leave petitions the common question that arises for consideration is whether the provisions of the Karnataka Land Reforms Act, 1961 as amended in 1974 (`Act ' for short) cease to be applicable in all respects to the lands which came within the purview of the Urban Land (Ceiling and Regulation) Act, 1976 ( 'Ceiling Act ' for short). The lands involved in these matters are covered by the development plan by the Belgaum City Town Planning authority as per the Master Plan for the said City and they are included and declared as urban agglomeration in the City of Hubli under the provisions of the Ceiling Act. In the year 1972 the Karnataka Legislature passed a resolution under Article 252 of the Constitution to the effect that imposing a ceiling on urban immovable property and the acquisition of such property in excess of the ceiling limit for public purposes and all the matters connected therewith shall be regulated in the State by Parliament Qby law. The State Legislature thus divested itself of the legislative competence to enact law in respect of subject matter of the resolution. On 1.4.74 the amended Karnataka Land Reforms Act was enacted and under the said Act the tenant of the land covered by the Act is entitled to the grant of occupancy rights after making an application under the Act. This Act came into force with effect from 2.1.85. But for the purpose of grant of occupancy rights 1.4.74 was the relevant date. While so in the year 1975 the Governor of Karnataka passed the Urban Aggolmeration Ordinance whereunder all lands between the periphery of 8 K.Ms. of the municipal limits of Hubli Dharwad were declared as urban agglomeration land. In the year 1976 the Parliament passed the Ceiling Act for imposition of ceiling on urban properties and the Act was made applicable to Karnataka also in view of the resolution passed by the State Government referred to above. The order of the Land Tribunal under the Act conferring occupancy rights on the tenants was challenged before the High Court contending that the lands involved in these cases were within the purview of the Ceiling Act and therefore the provisions of the Land Reforms Act had no application to such lands on the ground that the provisions of the State Act were repugnant to the provisions of the Central Act namely the Ceiling Act. The writ petition was dismissed by the High Court. The owners preferred writ appeals and they were also dismissed by a common judgment in Writ Appeal Nos. 2707 and 2361/85 etc. The Division Bench held that there is no conflict between the two enactment in certain respect i.e. atleast so far as the implementation of the provisions of Chapter III of the Act are concerned and that provisions of this Chapter of the Act do not cease to apply to the agricultural lands coming within the meaning of urban agglomeration in the Ceiling Act. The judgment of the Division Bench is challenged in S.L.P.(Civil) No. 16041 42/88. Many of the similar writ petitions that were pending before the High Court were transferred to the Land Reforms Appellate Tribunal. The Appellate Tribunal dismissed the petitions by a common order following the judgment of the Division Bench of the High Court in Writ Appeal No.2707/85 and connected matters. Several civil revisions petitions filed by the land owners against the order of the Appellate Tribunal were dismissed by the High Court. Some of the special leave petitions are filed against the order of the High Court in the said civil revision petitions. Therefore all these special leave petitions can be disposed of by a common order. It was urged before us that the resolution of the State Legislature passed under Article 252 of the Constitution shifted the topic covered by the resolution from List II of Schedule VII to the Constitution and vested the competence to make the law in respect of the said topic in the Parliament and that thereafter the State enactment ceased to have efficacy in respect of said topic. Alternatively it was urged that, when in pursuance of the resolution the Parliament legislates in respect of the topic covered by the resolution, the Parliamentary law, repeals or supersedes any existing State legislation on the topic and therefore such law cannot be enforced thereafter. We shall first extract some of the relevant provisions of the Constitution of India and the respective enactments. Article 246 of the Constitution reads thus: "246. Subject matter of laws made by Parliament and by the Legislatures of States (l) Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the "Union List"). (2) xx xx xx (3) Subject to clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the "State List"). (4)xx xx xx " 2 Entry 18 in List II namely the State List of the VII Schedule to the Constitution is in the following terms: "18. Land, that is to say, rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents, transfer and alienation of agricultural land; land improvement and agricultural loans; colonization. " Article 252 of the Constitution reads thus: "252. Power of Parliament to legislate for two or more States by consent and adoption of such legislation by any other State (1) If it appears to the Legislatures of two or more States to be desirable that any of the matters with respect to which Parliament has no power to make laws for the States except as provided in Articles 249 and 250 should be regulated in such States by Parliament by law, and if resolutions to that effect are passed by all the Houses of the Legislatures of those States, it shall be lawful for Parliament to pass an Act for regulating that matter accordingly, and any Act so passed shall apply to such States and to any other State by which it is adopted afterwards by resolution passed in that behalf by the House or, where there are two Houses, by each of the Houses of the Legislature of that State. (2) Any Act so passed by Parliament may be amended or repealed by an Act of Parliament passed or adopted in like manner but shall not, as respects any State to which it applics, be amended or repcaled by an Act of the Legislature of that State. " Article 252 empowers the Parliament to legislate for two or more States on any of the matters with respect of which the Parliament has no power to make law except as provided under Articles 249 and 250. This power to legislate is vested in the Parliament only if two or more State Legislatures think it desirable to have a law enacted by Parliament on such matters in List II i.e. with respect to which the Parliament has no power to make law for the State. The passing of the resolutions by the State Legislatures is a condition precedent for vesting the Parliament with such power. The relevant portion of the resolution passed by the State Legislature under Article 252 reads thus: "Now, therefore, in pursuance of clause (1) of Article 252 of the Constitution, this Assembly hereby resolves that the imposition of a ceiling on urban immovable property and F acquisition of such property in excess of the ceiling and all matters connected therewith or ancillary and incidental thereto should be regulated in the State of Karnataka by Parliament by law. " The resolution states that the imposition of ceiling on urban immovable property and the acquisition of such property in excess of the ceiling limit with a view to utilising such excess property for public purposes and all other matters connected therein or incidental thereto shall be regulated in this State by Parliament by law. The basic question that arises is what is the actual content of the subject matter that was resolved to be entrusted to Parliament by the State Legislature under Article 252 of the Constitution. From the resolution it is clear that the subject matter that was resolved to be entrusted to the Parliament was the one imposing a ceiling on urban immovable property and acquisition of such property in excess of the ceiling. It is true that this subject matter is the topic that falls within Entry 18 of List 11 of Schedule VII to the Constitution and the said subject matter of Entry 18 has been originally kept apart for the State Legislature to make law and Parliament had no competence in respect of those matters falling under the wide scope of Entry 18. Now by virtue of this resolution a part of the area falling under Entry 18 is transferred to the domain of Parliament to make law relating to the matters within the transferred area. The scope of Entry 18 is very wide and the land mentioned therein may be agricultural or non agricultural and may be rural or urban. The subject matter carved out of Entry 18 under the resolutions passed by the various State Legislatures related to only "urban immovable property" and by virtue of the resolution the law that can be enacted by the Parliament should be a law "imposing a ceiling on such urban immovable property. The learned counsel for the petitioners, however, urged that vesting of tenanted land in the State and conferment of occupancy rights under the provisions of the State Act directly fall under the subject of imposing ceiling on and holding and other matters incidental or ancillary to the main topic of imposing ceiling and therefore they are fully covered by the Ceiling Act passed by the Parliament and the same supersedes the State enactment in respect of this land. The learned counsel appearing for the respondents on the contrary submitted that "imposition of ceiling" is a distinct and separately identifiable subject and is the power carved out of Entry 18 and vested in the Parliament to legislate and that the power of the State to legislate in respect of the remaining part of the subject matter is unaffected and that when two distinct powers have come into existence, vesting law making competence in the State and Parliament, the pith and substance of the laws made by each of them has to be examined to see whether any one of them encroaches the field set apart as falling within the competence of the other body. The learned counsel for the respondents, however, submitted that in any event the provisions of Chapter III of the Act have nothing to do with the imposition of ceiling on the urban land and that conferring of occupancy rights etc. to the tenants under Chapter 111 of the Act do not come under the category of "the matters connected therewith or ancillary or incidental to the imposition of ceiling" on urban immovable property. Now we shall refer to the provisions of the Urban Ceiling Act. The Statement of Objects and Reasons under Preamble to the said Act would show that the primary object and the purpose is to provide for the imposition of ceiling on vacant land in urban agglomeration and for acquisition of such lands in excess of the ceiling limit and to regulate the construction of buildings on such lands and for matters connected therewith. Section 21(n) of the Urban Ceiling Act defines "urban agglomeration" and the material part of it reads thus: "(n) "urban agglomeration" (A) in relation to any State or Union territory specified in column (1) of Schedule 1, means (i) the urban agglomeration specified in the corresponding entry in column (2) thereof and includes the peripheral area specified in the corresponding entry in column (3) thereof; and xx xx xx" Section 2(o) defines "urban land" which reads thus: "(o) "urban land" means, (i) any land situated within the limits of an urban agglomeration and referred to as such in the master plan; or (ii) in a case where there is no master plan, or where the master plan does not refer to any land as urban land, any land within the limits of an urban agglomeration and situated in any area included within the local limits of a municipality (by whatever name called), a notified area committee, a town area committee, a city and town committee, a small town committee, a cantonment board or a panchayat, but does not include any such land which is mainly used for the purpose of agriculture. Explanation For the purpose of this clause and clause (q) (A) xx xx xx (B) land shall not be deemed to be used mainly for the purpose of agriculture, if such land is not entered in the revenue or land records before the appointed day as for the purpose of agriculture; xx xx xx (C) notwithstanding anything contained in clause (B) of this Explanation, land shall not be deemed to be mainly used for the purpose of agriculture if the land has been specified in the master plan for a purpose other than agriculture;" For the purpose of the instant case it is enough to note that Hubli Dharwad is shown in the Schedule and there is also a master plan prepared for the area and the land in question also is undoubtedly within the urban agglomeration and therefore there is no doubt that in respect of imposition of ceiling on this area comes within the purview of the Urban Ceiling Act. But the question is whether granting occupancy rights under Chapter III of the Act are in any manner affected. The Karnataka Land Reforms Act as amended in 1974 is a welfare legislation. The object of the Act was to have a uniform law in the State of Karnataka relating to agrarian reforms, conferment of ownership on tenants, ceiling on land holding and for certain other matters contained therein. Section 34 of the Act defines "tenant" thus: "(34) "tenant" means an agriculturist who cultivates personally the land he holds on lease from a landlord and includes, (i) a person who is deemed to be a tenant under Section 4; (ii) a person who was protected from eviction from any land by the Karnataka Tenants (Temporary Protection from Eviction) Act, 1961; (iia) a person who cultivates personally any land on lease under a lease created contrary to the provisions of section 5 and before the date of commencement of the Amendment Act; (iii) a person who is a permanent tenant; and (iv) a person who is a protected tenant. Explanation A person who takes up a contract to cut grass, or to gather the fruits or other produce of any land, shall not on that account only be deemed to be a tenant. " The provisions of Chapter III of the Karnataka Land Reforms Act deal with conferment of ownership on tenants. Section 45 occurring in this Chapter in particular deals with conferring of occupancy rights on the tenants subject to certain conditions. The relevant portion of Section 45 reads as under: "45. Tenants to be registered as occupants of land on certain conditions (1) Subject to the provisions of the succeeding sections of this Chapter, every person who was a permanent tenant, protected tenant or other tenant or where a tenant has lawfully sublet, such sub tenant shall with effect on and from the date of vesting be entitled to be registered as an occupant in respect of the lands of which he was a permanent tenant, protected tenant or other tenant or sub tenant before the date of vesting and which he has been cultivating personally. (2) If a tenant or other person referred to in sub section (1) (i) holds land partly as owner and partly as tenant but the area of the land held by him as owner is equal to or exceeds a ceiling area he shall not be entitled to be registered as an occupant of the land held by him as a tenant before the date of vesting; (ii) does not hold and cultivate personally any land as an owner, but holds land as tenant, which he cultivates personally in excess of a ceiling area, he shall be entitled to be registered as an occupant to the extent of a ceiling area; (iii) holds and cultivates personally as an owner of any land the area of which is less than a ceiling area, he shall be entitled to be registered as an occupant to the extent of such area as will be sufficient to make up his holding to the extent of a ceiling area. xx xx xx The provisions under Chapter III which exclusively deal with conferment of occupancy rights on tenants have nothing to do with the imposition of ceiling on holdings of agricultural land under the Act. It is only Chapter IV of the said Act which deals with ceiling on land holdings. Now that the land in the instant case comes under the urban agglomeration the imposition of the ceiling should naturally be under the provisions of the Urban Ceiling Act and not under the Karnataka Land Reforms Act. The High Court, however, did not deal with this aspect. Perhaps it is necessary for us to make it clear that in respect of imposing ceiling on the land under urban agglomeration the provisions of the Ceiling Act alone are applicable and to that extent the provisions of Chapter IV of the Act which also deal with the imposition of ceiling would not be applicable. As a matter of fact in Thumati Venkaiah and Others vs State of Andhra Pradesh and Others, ; to which we will refer to at a later stage in detail on the main point, this Court observed thus: "It is no doubt true that if the Andhra Pradesh Act seeks to impose ceiling on land falling within an urban agglomeration, it would be outside the area of its legislative competence, since it cannot provide for imposition of ceiling on urban immovable property." However, the crucial question in the instant case with which we are concerned is whether the provisions of Chapter III of the Act also become inoperative by virtue of the resolution passed under Article 252 and particularly on the ground that it is a matter of imposition of ceiling on urban land or other matters connected therewith or ancillary and incidental thereto. A plain reading of the above provisions in the background of the objects underlying these two enactments clearly shows that the two Acts operate in two different fields to a large extent. This Court had an occasion to consider these aspects in a few cases. In Union of India and others vs Valluri Basavaiah Chowdhary and others; , this Court, in respect of effect of passing a resolution under Article 252 of the Constitution by the Andhra Pradesh Legislature, observed thus: "The effect of the passing of a resolution under clause (1) of Article 252 is that Parliament which has no power to legislate with respect to the matter which is the subject of the resolution, becomes entitled to legislate with respect to it. On the other hand, the State Legislature ceases to have a power to make a law relating to that matter. " It was further observed that: ". It is not disputed that the subject matter of Entry 18, List II of the Seventh Schedule i.e. `land ' covers `land and buildings ' and would, therefore, necessarily include `vacant land '. The expression `urban immovable property ' may mean, land and buildings or `buildings ' or `lands '. It would take in lands of every description i.e., agricultural land, urban land or any other kind and it necessarily includes vacant land. " With regards the concept of ceiling on urban immovable property and the object underlying in passing the resolution by the several State Governments under Article 252 it was further observed in the above judgment thus: ". A Working Group was constituted under the Chairmanship of the Secretary, Ministry of Works, Housing and Urban Development. The report of the Working Group shows that the proposal was to impose a ceiling on urban immovable property. In the report the said Working Group defined `urban area ' to include the area within the territorial limits of municipalities or other local bodies and also the peripheral area outside the said limits. Such inclusion of the peripheral limits in an urban area was accepted by the Government and a model bill prepared in pursuance thereof also contained such a definition. A copy of each of the report of the Working Group and the Model Bill referred to was placed on the table of the Parliament on December 15, 1970 and March 22, 1972 respectively. The said documents were forwarded to the State Government of Andhra Pradesh, besides other State Governments, for consideration by the State Legislatures before they passed a resolution authorising the Parliament to make a law in respect of urban immovable property. Their intention was to include the lands within the territorial area of an urban area and also its peripheral areas. The concept of ceiling on urban immovable property and the nature and content of urban agglomeration ultimately defined by Section 2(n) of the impugned Act was, therefore, fully, under stood by the State Governments. " Some more observations in the above judgment read thus: "It is but axiomatic that once the legislatures of two or more States, by a resolution in terms of Article 252(1), abdicate or surrender the area, i.e. their power of legislation on a State subject, the Parliament is competent to make a law relating to the subject. It would indeed be contrary to the terms of Article 252(1) to read the resolution passed by the State legislature subject to any restriction. The resolution, contemplated under Article 252(1) is not hedged in with conditions. In making such a law, the Parliament was not bound to exhaust the whole field of legislation. It could make a law, like the present Act, with respect to ceiling on vacant land in an urban agglomeration, as a first step towards the eventual imposition of ceiling on immovable property of every other description. " One other decision also arose from State of Andhra Pradesh. In Thumati Venkaiah 's case Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act which is analgous to Karnataka Land Reforms Act was challenged on the ground that the subject matter of the said law was covered by the topic of the legislation transferred to Parliament by the resolution under Article 252 passed by the Andhra Pradesh Legislative Assembly and that provisions of the Ceiling Act alone covered that subject and therefore Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act was unenforceable. In this context Supreme Court again reiterated the same in the said decision. This Court proceeded to observe as under: "The effect of passing of resolutions by the Houses of Legislature of two or more States under this constitutional provision is that Parliament which has otherwise no power to legislate with respect to a matter, except as provided in Articles 249 and 250, becomes entitled to legislate with respect to such matter and the State legislatures passing the resolutions cease to have power to make law relating to that matter. The resolutions operate as abdication or surrender of the powers of the State legislatures with respect to the matter which is the subject of the resolutions and such matter is placed entirely in the hands of Parliament and Parliament alone can then legislate with respect to it. It is as if such matter is lifted out of list II and placed in List I of the Seventh Schedule to the Constitution. " It was further observed that: "The result was that at the date when the Andhra Pradesh Act was enacted, Parliament alone was competent to legislate with respect to ceiling on urban immovable property and acquisition of such property in excess of the ceiling and all connected, ancillary or incidental matters, and the Andhra Pradesh Legislature stood denuded of its power to legislate on that subject. " On the effect of ceiling this Court stated thus: "It will thus be seen that the Central Act imposes a ceiling on holding of land in urban agglomeration other than land which is mainly used for the purpose of agriculture and agriculture in this connection includes horticulture, but does not include raising of grass, dairy farming, poultry farming, breeding of live stock and such cultivation or the growing of such plants as may be prescribed by the Rules, and moreover, in order to fall within the exclusion, the land must be entered in the revenue or land record before the appointed day for the purpose of agriculture and must also not have been specified in the master plan for a purpose other than agriculture. " Considering the contention that the whole of Andhra Pradesh Land Reforms Act was ultra vires this Court held thus: "The argument of the landholders was that the Andhra Pradesh Act sought to impose ceiling on land in the whole of Andhra Pradesh including land situate in urban agglomeration defined in Section 2(n) of the Central Act was an expansive concept and any area with an existing or future population of more than one lakh could be notified to be an urban agglomeration, the whole of the Andhra Pradesh Act was ultra vires and void as being outside the legislative competence of the Andhra Pradesh Legislature. This argument, plausible though it may seem, is in our opinion, unsustainable. It is not doubt true that if the Andhra Pradesh Act seeks to impose ceiling on land falling within an urban agglomeration, it would be outside the area of its legislative competence, since it cannot provide for imposition of ceiling on urban immovable property. But the only urban agglomerations in the State of Andhra Pradesh recognised in the Central Act were those referred to in Section 2(n)(A)(i) and there can be no doubt that, so far as these urban agglomerations are concerned, it was not within the legislative competence of the Andhra Pradesh Legislature to provide for imposition of ceiling on land situate within these urban agglomerations. It is, however, difficult to see how the Andhra Pradesh Act could be said to be outside the legislative competence of the Andhra Pradesh Legislature insofar as land situate in the other areas of the State of Andhra Pradesh is concerned. We agree that any other area in the State of Andhra Pradesh with a population of more than one lakh could be notified as an urban agglomeration under Section 2(n) (A) (ii) of the Central Act, but until it is so notified it would not be an urban agglomeration and the Andhra Pradesh Legislature would have legislative competence to provide for imposition of ceiling on land situate within such area. No sooner such area is notified to be an urban agglomeration, the Central Act would apply in relation to land situate within such area, but until that happens, the Andhra Pradesh Act would continue to be applicable to determine the ceiling on holding of land in such area. It may be noted that the Andhra Pradesh Act came into force on January 1, 1975 and it was with reference to this date that the surplus holding of land in excess of the ceiling area was required to be determined and if there was any surplus, it was to be surrendered to the State Government. It is therefore clear that in an area other than that comprised in the urban agglomerations referred to in Section 2(n)(A)(i), land held by a person in excess of the ceiling area would be liable to be determined as on January 1, 1975 under the Andhra Pradesh Act and only land within the ceiling area would be allowed to remain with him. It is only in respect of land remaining with a person, whether an individual or a family unit, after the operation of the Andhra Pradesh Act, the Central Act would apply, if and when the area in question is notified to be an urban agglomeration under Section 2(n)(A)(ii) of the Central Act. We fail to see how it can at all be contended that merely because an area may possibly in the future be notified as an urban agglomeration under Section 2(n)(A)(ii) of the Central Act, the Andhra Pradesh Legislature would cease to have competence to legislate with respect to ceiling on land situate in such area, even though it was not an urban agglomeration at the date of enactment of the Andhra Pradesh Act. Undoubtedly, when an area is notified as an urban agglomeration under Section 2(n)(A)(ii), the Central Act would apply to land situate in such area and the Andhra Pradesh Act would cease to have application, but by that time the Andhra Pradesh Act would have already operated to determine the ceiling on holding of land falling within the definition of Section 3(j) and situate within such area. It is therefore not possible to uphold the contention of the landholders that the Andhra Pradesh Act is ultra vires and void as being outside the Legislative competence of the Andhra Pradesh Legislature. " The above observations throw a flood of light on the question involved before us. It can be seen that entire power to legislate in respect of several matters falling under the wide scope of Entry 18 List II is not transferred. The power transferred is only in respect of imposition of ceiling on urban immovable property. There can be several topics in respect of the subject matters of regulatory legislations governing the lands or other immovable properties. The imposition of ceiling on owning property is one such topic and there can be laws regulating ceiling on owing the property, relationship of lessor and lessee, payment of rent, manner of granting the lease, conferment of ownership on the lessee etc. It is the concept of a welfare State which is the underlying object in such welfare legislations. When viewed from that angle it is axiomatic that imposition of ceiling on urban land is a distinct and independent subject as compared to imposition of ceiling on owning or holding agricultural land or any other kind of property which do not attract the Urhan Ceiling Act. Likewise it cannot be said that the pith and substance of the law governing the conferment of ownership of land on the tenant is a law regulating the imposition of ceiling on land holding. Equally it cannot be said that the pith and substance of the law imposing the ceiling on land holding covers the subject of conferring ownership of land on the tenant. These are two distinct powers and therefore the law making competence can be in two different legislative bodies. Consequently it is difficult to hold that the provisions of Chapter III of the Karnataka Land Reforms Act are outside the legislative competence of the State Legislature. In Calcutta Gas Company (Proprietory) Ltd. vs State of West Bengal and others, this Court observed as under: "The entries in the three Lists are only legislative heads or fields of legislation; they demarcate the area over which the appropriate Legislatures can operate. It is also well settled that widest amplitude should be given to the language of the entries. But some of the entries in the different Lists 1 or in the same Lists may overlap and sometimes may also appear to be in direct conflict with each other. It is then the duty of this Court to reconcile the entries and bring about harmony between them. " It is well settled that the legislative power of the State has to be reconciled with that of the Parliament and that in their respective fields each is supreme. Even assuming that the State enactment has same effect on the subject matter falling within the Parliament 's legislative competence, that by itself will not render such law invalid or inoperative. In Kannan Devan Hills Produce Company Ltd. vs The State of Kerala etc. ; , this Court held as under: "It seems to us clear that the State has legislative competence to legislate on Entry 18, List II and Entry 42 List III. This power cannot be denied on the ground that it has some effect on an industry controlled under Entry 52 List 1. Effect is not the same thing as subject matter. If a State Act, otherwise valid, has effect on a matter in List I it does not cease to be a legislation with respect to an entry in List II or List III. " However, in the instant case, we are clearly of the view that there is no conflict. The imposition of ceiling on urban immovable property is an independent topic and cannot be construed as to nullify the other subject left in the domain of the State Legislature under Entry 18 inasmuch as imposition of ceiling is a distinct and separately identifiable subject and does not cover the other measures such as regulation of relationship of landlord and tenant in respect of which the State Legislature has competence to legislate. Thus the one topic that is transferred in the resolution passed under Article 252 is distinct and separately identifiable and does not include the remaining topics under Entry 18 in respect of which the State alone has the power to legislate. An examination of the various provisions of the State Act makes this aspect clear. The object underlying the Act is to make a uniform law in the State of Karnataka relating to agrarian relations, conferment of ownership on tenants, ceiling on land holdings etc. Chapter II of the Act contains general provisions regarding tenancy, deemed tenancy, regulation of relationship between landlord and tenant etc. Sections 44 to 62 of Chapter III provide for vesting of tenanted lands in the State Government with effect from 1.3.74 and conferment of occupancy rights on the tenants. Chapter V controls the eligibility to purchase or possess agricultural lands. Chapters VI to XI have many other provisions regarding agrarian reforms. We, however, find a ceiling provision under Section 45(2) providing for computation of the area in respect of which the tenant may be granted occupancy rights. But it is clear that ceiling on the area in this context is only for the purpose of Section 45. These are all topics regarding the conferment of occupancy rights on the respective tenants and they do not in any way conflict with the subject matter transferred to the Parliament by the resolution passed under Section 252. Consequently these Special Leave Petitions are dismissed. Petitions dismissed.

In the year 1972 the Karnataka Legislature passed a resolution under Article 252 of the Constitution imposing a ceiling on urban immovable property and the acquisition of such property in excess of the ceiling is limit for public purposes and all the matters connected therewith shall be regulated in the State by Parliament by law. On 1.4.74 the Karnataka Land Reforms (Amendment) Act was enacted and under the Act the tenant of the land covered by the Act was entitled to the grant of occupancy rights after making an application under the Act. The Act came Into force with effect from 2.1.85. But for the purpose of grant of occupancy rights, 1.4.74 was the relevant date. In the year 1975 the Karnataka Urban Agglomeration Ordinance was passed, whereunder all lands between the periphery of 8 K.Ms. of the municipal limits of Hubli Dharwad were declared as urban agglomeration land. The Parliament passed the Urban Land (Ceiling and Regulation) Act, 1976 for imposition of ceiling on urban properties and the Ceiling Act was made applicable to Karnataka also in view of the resolution passed by the State Government. The lands involved in the present cases were covered by the development plan by the Belgaum City Town Planning authority as per the Master Plan and they were included and declared as urban agglomeration in the City of Hubli under the provisions of the Ceiling Act. The owners of the agglomeration lands challenged the order of the Land Tribunal under the Land Reforms Act conferring occupancy rights on the tenants before the High Court. They contended that the lands involved in the cases were within the purview of the Ceiling Act and therefore the provisions of the Land Reforms Act had no application to such lands on the ground that the provisions of the Ceiling Act. The writ petitions were dismissed by the High Court. The owner 's writ appeals were also dismissed by a common judgment by the Division Bench of the High Court. The Division Bench held that there was no conflict between the two enactments. The judgment of the Division Bench was challenged in S.L.P. (Civil) No. 16041 42/88. Many of the similar writ petitions that were pending before the High Court were transferred to the Land Reforms Appellate Tribunal. The Appellate Tribunal dismissed the petitions by a common order following the judgment of the Division Bench of the High Court. Several Civil revision petitions filed by the land owners against the order of the Appellate Tribunal were dismissed by the High Court. Some of the special leave petitions were filed against the order of the High Court in the said civil revision petitions. The petitioners land owners contended that when in pursuance of the resolution of the State Legislature passed under Article 252 of the Constitution the Parliament legislated in respect of the topic covered by the resolution. The Parliamentary law repealed or superseded the existing State legislation on the topic and therefore such law could not be enforced thereafter; and that vesting of tenanted land in the State and conferment of occupancy rights under the provisions of the State Act directly fall under the subject of imposing ceiling on land holding and other matters incidental or ancillary to the main topic of imposing ceiling and therefore they were fully covered by the Ceiling Act passed by the Parliament and the same superseded the State enactment in respect of such lands. The respondents submitted that "imposition of ceiling" was a distinct and separately identifiable subject and the Parliament was empowered to legislate; that the power of the State to legislate in respect of the remaining part of the subject matter was unaffected; that when two distinct powers came into existence, vesting law making competence in the State and Parliament, the pith and substance of the laws made by each of them had to be examined to see whether any one of them encroached the field set apart as falling within the competence of the other body; that in any event the provisions of Chapter III of the Karnataka Land Reforms Act had nothing to do with the imposition of ceiling on the urban land and that conferring of occupancy rights etc. to the tenants under Chapter III of the Karnataka Land Reforms Act did not come under the category of "the matters connected therewith or ancillary or incidental to the imposition of ceiling" on urban immovable property. Dismissing the special leave petitions, this Court, HELD: 1.01. Article 252 empowers the Parliament to legislate for two or more States on any of the matters with respect of which the Parliament has no power to make law except as provided under Articles 249 and 250. This power to legislate is vested in the Parliament only if two or more State Legislatures think it desirable to have a law enacted by Parliament on such matters in List II, i.e. with respect to which the Parliament has no power to make law for the State. The passing of the resolutions by the State Legislatures is a condition precedent for vesting the Parliament with such power. [339 C D] 1.02. The scope of Entry 18 is very wide and the land mentioned therein may be agricultural or non agricultural and may be rural or urban. The subject matter carved out of Entry 18 under the resolutions passed by The various State Legislatures related to only "urban immovable property" and by virtue of the resolution the law that can be enacted by the Parliament should be a law "imposing a ceiling on such urban immovable property." [340 B, C] 1.03. From the resolution it is clear that the subject matter that was resolved to be entrusted to the Parliament was the one imposing a ceiling on urban immovable property and acquisition of such property in excess of the ceiling. This subject matter is the topic that falls within Entry 18 of List II of Schedule VII to the Constitution and the subject matter of Entry 18 has been originally kept apart for the State Legislature to make law and Parliament had no competence in respect of those matters falling under the wide scope of Entry 18. By virtue of this resolution a part of the area falling under Entry 18 is transferred to the domain of Parliament to make law relating to the matters within the transferred area. [339 G, H; 341 A] 2.01. The primary object and the purpose of the Urban Land (Ceiling and Regulation) Act, 1976 is to provide for the imposition of ceiling on vacant land in urban agglomeration and for acquisition of such lands in excess of the ceiling limit and to regulate the construction of buildings on such lands and for matters connected therewith. [340 H; 341 A] 2.02. The Karnataka Land Reforms Act as amended in 1974 is a welfare legislation. The object of the Act was to have a uniform law in the State of Karnataka relating to agrarian reforms, conferment of ownership on tenants, ceiling on land holdings and for certain other matters contained therein. [342 D] 2.03. In respect of imposing ceiling on the land under urban agglomeration the provisions of the Ceiling Act alone are applicable and to that extent the provisions of Chapter IV of the Karnataka Land Reforms Act which also deal with the imposition of ceiling would not be applicable. [344 C] 2.04. The land in the instant case comes under the urban agglomeration the imposition of the ceiling should naturally be under the provisions of the Urban Ceiling Act and not under the Karnataka Land Reforms Act. [344 B, C] 2.05. Imposition of ceiling on urban land is a distinct and independent subject as compared to imposition of ceiling on owning or to hold agricultural land or any other kind of property which do not attract the Urban Ceiling Act. These are two distinct powers and therefore the law making competence can be in two different legislative bodies. Consequently it is difficult to hold that the provisions of Chapter III of the Karnataka Land Reforms Act are outside the legislative competence of the State Legislature. [350 C, D] 2.06. The one topic that is transferred in the resolution passed under Article 252 as distinct and separately identifiable and does not include the remaining topics under Entry 18 in respect of which the State alone has the power to legislate. [351 D] 2.07. The legislative power of the State has to be reconciled with that of the Parliament and that in their respective fields each is supreme. Even assuming that the State enactment has same effect on the subject matter falling within the Parliament 's legislative competence that by itself will not render such law invalid or inoperative. [350 G H] 2.08. There is no conflict between the Ceiling Act and the State Act. The imposition of ceiling on urban immovable property is an independent topic and cannot be construed as to nullify the other subject left in the domain of the State Legislature under Entry 18 inasmuch as imposition of ceiling is a distinct and separately identifiable subject and does not cover the other measures such as regulation of relationship of landlord and tenant in respect of which the State Legislature has competence to legislate. [351 C D] 2.09. There is a ceiling provision under Section 45(2) of the Karnataka Land Reforms Act providing for computation of the area in respect of which the tenant may be granted occupancy rights. But it is clear that ceiling on the area in this context is only for the purpose of Section 45. [351 F] 2.10. Provisions in the Chapters II, III, V, VI to XI of the Karnataka Land Reforms Act deal with the conferment of occupancy rights on the respective tenants and they do not in any way conflict with the subject matter transferred to the Parliament by the resolution passed under Section 252. [351 E,F] Thumati Venkaiah and others vs State of Andhra Pradesh and of others; , ; Union of India and others vs Valluri Basavaiah Chowdhary and others; , ; Calcutta Gas Company (Proprietory) Ltd. vs State of West Bengal and others, and Kannan Devan Hills Produce Company Ltd. vs The State of Kerala etc.; , referred to.

Appeal No. 563 of 1967. Appeal from the judgment and order dated September 15, 16, 19, 1966 of the Bombay High Court in Civil Reference No. 8 of 1964. G.B. Pai, Bhuvanesh Kumari and O. C. Mathur, for the appellants. L. M. Singhvi, Ram Panjawani and section P. Nayar, for the respondent. The Judgment of the Court was delivered by P.Jaganmohan Reddy, J. In exercise of the powers under Sec. 96(1)(b)of the (hereinafter referred to as 'the Act ') relating to "the procedure to be followed in proceedings before such Courts and the execution of orders made by such Courts", the Government of Bombay made the following Rule; "17. Limitation: (1) Every application to the Court shall be brought within twelve months from the date on which the cause of action arose or as the case may be the claim became due : Provided that the Court may entertain an application after the said period of twelve months if it is satisfied that the applicant had sufficient reasons for not making the application within the said period. 870 (2)Subject as aforesaid the provisions of and III of the Indian Limitation Act, 1908 (IX of (1908), shall so far as may be appli ed to very such application", The vires of this Rule was challenged by the Employees State Insurance Corporation (hereinafter referred to as 'the Corporation) when it filed an application on 7th October 1963 against the Appellant in the Employees Insurance Court (hereinafter referred to as the Insurance Court ') claiming payment of the contributions due from it for the period 1st September 1957 to 31st July 1963. In those proceedings the Appellant had 'taken the plea that the application was barred under Rule 17 as it was not presented within twelve months from the date when the cause of action arose or as the case may be when the amount became due. As the plea raised before ' it was important the Insurance Court made a reference under Section 81 of the Act on the following question for the decision of the High Court of Bombay : (1)Whether rule 17 of the Employees ' State Insurance Rule is ultra vires the rule making power of the State Government under Sec. 96(1) of the ? (2)If yes, what, if any, limitation applies to appli cationsfiled by the Corporation to the Employees ' In surance Court ? The High Court of Bombay having considered the several cases and the contentions and submissions mad . before it held that the clear and unambiguous terms of section 96 (1) (b) exclude the grant of the power to any State Government to make a rule prescribing a period of limitation on claims ennumerated in Sec.75(2). It was lb further of the view that where two interpretations of the terms of Sec. 96(1) (b) were possible that interpretation should be accepted which excludes the grant of such a power, because it appeared to it clear from the scheme of the Act and the provisos thereof that the legislature did not intend to confer such power on the State Governments. It therefore answered the first question in affirmative namely that Rule 17 is ultra vires the rule making power of the State Government under See. 96(1) (b) of the Act. On the second question it held that an application filed in a Court before 1 1 1964 for relief under Sec. 75 of the Act was not subject to any period of limitation, but an application filed on or after 1 1 64, would, however, be covered by article 137 of the Limitation Act of 1963 which provides a limitation of 3 years from the date when the right to apply accrues. This appeal has been filed against that decision by certificate under article 1 3 3 (1) (c) of the Constitution. 871 This question has been the subject matter of the decisions in Employees State Insurance Corporation vs Madhya Pradesh Government & Ors. (1) M/s Solar Works, Madras vs Employees State Insurance cc Corporation, Madras & Anr.(2) M/s. A. K. Brothers vs Employees ' State Insurance Corporation, ( 3 ) United India Timber Works, Yamunanagar & Anr. vs Employees State Insurance Corporation, Amritsar, ( 4 ) Roshan Industries Pvt. Ltd. Yamunagar vs Employees ' State Insurance Corporation(3), E.S.L.C. Hyderabad vs A. P. State Electricity Board, Hyderabad (6) . All the High Courts in these cases except that of Allahabad held that the rule is ultra vires the powers conferred on the State Government under Sec. 9 6 ( 1 ) (b) inasmuch as it is not empowered to make rules prescribing periods of limitation for applications to be filed before the Court, though in Madhya Pradesh case it was also said that "Even if it be taken that clause (b) of Sec. 96(1), as it is worded, is wide enough to cover a rule of limitation, that cannot authorize the Government to frame a rule regulating limitation for the recovery of contributions. . . because according to it the validity of the rule does not necessarily depend on the ascertainment of "whether it confers rights or merely regulates procedure, but by determining whether it is in conformity with the powers conferred by the statute and whether it is consistent with the provisions of the statute". These decisions also held that the scheme of the Act was such that the Legislature did not and could not have intended to confer any power upon the State Government to make rules prescribing a period of limitation for application under Sec. 75(2). The question which directly confronts us is whether the power to prescribe periods of limitation for initiating proceedings before the Court is a part of, and is included, in the power to prescribe "the procedure to be followed in proceedings before such Courts". The answer to this question would involve the determination of the further question whether the law relating to limitation is pro cedural or substantive or partly procedural and partly substantive. If it is procedural law does it make any difference whether it relates to the time of filing application for initiation of proceedings before the Court or whether it relates to interlocutory applications or other statements filed before it after the initiation of such pro ceedings,. The contention on behalf of the Appellant is that the law relating to limitation is merely procedural, as such it makes (1) AIR 1964 (Vol. 51) Madhya Pradesh 75. (2) AIR 1964 (Vol. 51) Madras 376. (3) AIR 1965 (Vol. 52) Allahabad 410. (4) AIR 1967 (Vol. 54) Punjab 166 (FB). (5) AIR 1968 (Vol. 55) Punjab 56 (SB). (6) 1970 Labour & Industrial cases 921. 872 no difference whether it relates to the time of filing an application or it deals with the time for filing interlocutory applications or other statements. There is also it is submitted no indication in the scheme of the Act that it is otherwise or that there is any impediment for the Government to prescribe under the rule making authority the period of limitation for applications under Sec. 75 (2). Before we consider the scheme of the Act it may be necessary to examine the scope and ambit of the terms 'procedure ' as used in Sec. 96(1)(b). The topic of procedure has been the subject of academic de bate and scrutiny as well as of judicial decisions over a long period but in spite of it, it has defied the formulation of a logical test or definition which enables us, to determine and demarcate the bounds where procedural law ends and substantive law begins, or in other words it hardly facilitates us in distinguishing in a given case whether the subject of controversy concerns procedural law or substantive law. The reason for this appears to be obvious, because substantive law deals with right and is fundamental while procedure is concerned with legal process involving actions and remedies, which Salmond defines "as that branch of law which governs the process of litigation", or to put it in another way, substantive law is that which we enforce while procedure deals with rules by which we enforce it. We are tempted in this regard to cite a picturesque aphorism of Therman Arnold when he says "Substantive law is canonised procedure. Procedure is unfrocked substantive law(1)". The manner of this approach may be open to the criticism of having over simplified the distinction, but nonetheless this will ,enable us to grasp the essential requisites of each of the concepts which at any rate "has been found to be a workable concept to point out the real and valid difference between the rules in which stability is of prime importance and those in which flexibility is a more important value (2 ) ". Keeping these basic assumptions in view it will be appropriate to examine whether the topic of limitation belongs to the Branch of procedural law or is outside it. if it is a part of the procedure whether the entire topic is covered by it or only a part of it and if so what part of it and the tests for ascertaining them. The law of limitation appertains to remedies because the rule is that claims in respect of rights cannot be entertained if not commenced within the time prescribed by the statute in respect of that right. Apart from Legislative action prescribing the time, there is no period of limitation recognised under the general law and therefore any time fixed by the statute is neces (1) XLV Harvard Law Journal 617 & 645. (2) American Juris prudence Vol. 51 (Second Edn.) 605. 873 sarily to be arbitrary. A, statute prescribing limitation however does not confer a right of action nor speaking generally does it confer on a person a right to relief which has been barred by eflux of time prescribed by the law. The necessity for enacting periods of limitation is to ensure that actions are commenced within a particular period, firstly to assure the availability of evidence documentary as well as oral to enable the defendant to contest the claim against him; secondly to give effect to the principle that law does not assist a person who is inactive and sleeps over his lights by allowing them when challenged or disputed to remain dormant, without asserting them in a court of law. The, principle which forms the basis of this rule is expressed in the maxim vigilantibus, non dormientibus, jura subveniunt (the laws give help to those who are watchful and not to those who sleep). Therefore the, object of the statutes of limitations is to compel a person to exercise his right to action within a reasonable time as also to dis courage and suppress stale, fake or fraudulent claims. While this is so there are two aspects of the statutes of limitation the one concerns the extinguishment of the right if a claim or action is not commenced with a particular time and the other merely bars the claim without affecting the right which either remains merely as a moral obligation or can be availed of to furnish the consideration for a fresh enforceable obligation. Where a statute prescribing the limitation extinguishes the right, it affects substantive rights while that which purely pertains to the commencement of action without touching the right is said to be procedural. According to Salmond the law of procedure is that branch of the law of actions which governs the process of litigation, both Civil and Criminal. "All the residue" he says "is substantive law, and relates not to the process of litigation but to its purposes and sub , ject matter". It may be stated that much water has flown under the bridges since the original English theory justifying a statute of limitation on the ground that a debt long overdue was pre sumed to have been paid and discharged or that such statutes are merely procedural. Historically there was a period when substantive law was inextricably intermixed with procedure; at a later period procedural law seems to have reigned supreme when forms of action ruled. In the words of Maine "So great is the ascendancy of the Law of Actions in the infancy of Courts of Justice, that substantive law has at first the look of being gradually secreted in the interstices of procedure()". Even after the forms of action were abolished Maitland in his Equity was still able to say "The forms of action we have buried but they still rule us from their graves", to which Salmond added "In their life they were powers of evil and even in death they have not wholly ceased from troubling(2)". Oliver Wendal Holmes had however observed in "The (1) Maine, Early Law and Custom 389. (2) 874 Common Law", "wherever we trace a leading doctrine of sub stantive law far enough back, we are likely to find some forgotten circumstance of procedure at its source". It does not therefore appear that the statement that substantive law determ.nes rights and procedural law deals with remedies is wholly valid, for neither the entire law of remedies belongs to procedure nor are rights merely confined to substantive law, because as already noticed rights are hidden even "in the interstices of procedure". There is therefore no clear cut division between the two. A large number of decisions have been referred before us both English and Indian some of antiquity in support of the proposition that the law prescribing the time within which an action can be commenced is purely procedural and therefore when a statute empowers the Govt. to make rules in respect of procedure it confers upon it also the rights to prescribe limitation. To this end have been cited the cases of Manoel Francisco Lopez & Ors. vs Lieut. Godolnhon James Burslem(l), and Ruckmaboye vs Lulloobhoy Mottichund(2). An examination of these cases would. show that what was being considered was whether the law of limitation was part of the lex fori which foreigners and persons not domiciled in the country have to follow if they have to have recourse to actions in that country. In the latter case the Privy Council observed at page 265 "The arguments in support of the plea are founded upon the legal character of a law of limitation or prescription, and it is insisted, and the Committee are of opinion, correctly insisted, that such legal character of 'the law of prescription has been so much considered and di cussed among writers upon jurisprudence, and has been so often the subject of legal decision in the courts of law of this and other countries, that it is no longer subject to doubt and uncertainty. In truth, it has become almost an axiom in jurisprudence, that is law of prescription, or law of limitation, which is meant by that denomination, is a law relating to procedure having reference only to the lex fori". These observations as well as those in the earlier case must be understood in the light of the principles governing conflict of laws. What was in fact being examined was whether they are part of the procedural law in the sense that the Municipal laws will be applicable on the question of limitation for the commencement of actions because if limitation was purely a question of substantive law that would be governed by the law of the country of the (2) (1849 54)_(V_Moore Indian Appeals 234). 875 domicile of the person who is having recourse to the Courts of the other country. In other words the substantive rights of the parties to an action are governed by a foreign law while all matters pertaining to procedure are governed exclusively by the lex fori. The cases cited at the Bar, of the various High Courts in this country show that they were construing the rules prescribing limitation in respect of proceedings in Court i.e. proceedings afterthe institution of the suit or filing of the Appeal. In Sennimalai Goundan vs Palani Goundan & 4nr.(1), the question was. whether &,,a High Court by framing a rule under Sec. 122 Civil Procedure Code could make Section 5 of the Limitation Act applicable to applications under sub rule (2) of Rule 13 of Order IX. While holding that it could, Coutts Trotter, J as he then was made this pertinent observation : "Whatever may be the case of the statute prescribing say 3 years for an action to be brought I am quite clear that the Articles in the Act limiting applications of this nature which are almost entirely interlocutory deal clearly with matters of procedure. . This was also the view of the Full Bench in Krishnamachariar vs Srirangammal & Ors.(2), which was followed by the Bombay High Court in Bandredas vs Thakurdev ( 3 ). It was contended in Velu Pillai vs Sevuga Perumal Pillai(4), that rule 41 (A) (2) of the Appellate side Rules of the Madras High Court providing for the presentation of a petition to the High Court within 90 days from the date of the order passed in an execution proceedings was ultra vires, because the High Courts were not entitled by rules to regulate or enlarge the periods in the Limitation Act in respect of the proceedings to which the Limitation, Act apply 'This contention was negatived on the ground that such a powerwas inherent in Sec. 122 of the Civil Procedure Code. The argument of the petitioner that he had a vested right to go up in revision at any time and that the decision of the Full Bench in Krishnamachariar vs Srirangammal & Ors. (2 ) does not affect his right, was rejected on the ground that Sec. 122 Civil Procedure Code empowers the High Courts to make rules regu lating their own procedure and the procedure of the subordinate Courts subject to their superintendence. There were earlier decisions of the Allahabad High Court and Lahore High Court as also a decision of the Bombay High Court rendered under Sec. 602 of the old Civil Procedure Code 1. AIR 1917 Madras 957. (2) ILR 47 Madras 824. (3) ILR 53 Bombay 453. (4) AIR 1958 Madras 392. 876 referred to by Krishnan, J., in his referring order in Krishnamachariar 's case which took the view that the High Court has riot the power by rule under Sec. 122 or the corresponding Sec. 602 of the old Civil Procedure Code to make rules for altering the period of limitation prescribed by the Indian Limitation Act see Narsingh Sahai vs Sheo Prasad(l), and Chunilal Jethabhai vs Dahvabhai Amulakh(2). Again a similar question arose as to whether clause 27 of the Letters Patent of the Lahore High Court (there are similar clauses in the Letters Patent of the other High Courts) could validly empower the making of rule 4 prescribing a period for filing an appeal under Clause 10 of the Letters Patent. Clause 27 of the Letters Patent empowered the High Court from time to time to make rules and orders for regulating the practice of the Court etc. This Court in Union of India vs Ram Kanwar & Ors. ( 3 ) , approved the view of a Full Bench of the Punjab High Court in Punjab Cooperative Bank Ltd. vs Official Liquidators Punjab Cotton Press Company Ltd. (in liquidation) (4), where it was held that rule 4 is a special law within the meaning of Sec. 29 (2) of the Limitation Act. Subba Rao, J., as he then was said at page 320 "Rule 4 is made by the High Court in exercise of the legislative power conferred upon the said High 'Court under cl. 27 of the Letters Patent. As the said rule is a law made in respect of special cases covered by it, it would certainly be a special law within the meaning of section 29(2) of the Limitation Act". In that case no question was raised as to whether rule 4 was dealing with a procedural matter or dealt with a substantive right. These cases are of little assistance and if at all they lay down the principle that interlocutory proceedings before the Court do not deal with substantive rights and are concerned with mere procedure and can be dealt with by rules made under the powers conferred on the High Court to regulate the procedure. It is therefore apparent that whether the fulfilment of a particular formality as a condition of enforceability of a particular right is procedural or substantive has not been, as we had already noticed free from difficulty. What appears to be a self evident principle will not become so evident when we begin to devise tests for distinguishing procedural rule from substantive law. It appears to us that there is a difference between the manner in which the jurisprudential lawyers consider the question and the %way in which the Judges view the matter. The present tendency (1) All. 1 (FB). (2) , Bom. 14 (FB). 877 is that where a question of limitation arises, the distinction between so called substantive and procedural statutes of limitation may not prove to be a determining factor but what has to be considered is whether the statute extinguishes merely the remedy or extinguishes the substantive right as well as the remedy. Instead of generalising on a principal the safest course would IV to ' examine each case on its own facts and circumstances and determine for instance whether it affects substantive rights and extinguishes% them or whether it merely concerns a procedural rule only dealing with remedies or whether the intendment to prescribe limitation is discernible from the scheme of the Act or is inconsistent with the rule making power etc, Apart from the implications inherent in the term procedure appearing in Sec. 96(1)(b) the power to prescribe by rules any matter falling within the ambit of the term must be the "Procedure to be followed in proceedings be fore such Court". The word 'in ', emphasised by us, furnishes a clue to the controversy that the procedure must be in relation to proceedings in Court after it has taken decision of the matter, which obviously it takes when moved by an application presented before it. If such be the meaning the application by which the Court is asked to adjudicate on a matter covered by Sec. 75(2) is outside the scope of the rule making power conferred on the Government. In the East & West Steamship Company, George Town, Madras vs section K. Ramalingam Chettiar(1), one of the questions that was considered by this Court was whether the clause that provides for a suit to be brought within one year after the delivery of the goods or the date when the goods should have been delivered, only prescribes a rule of limitation or does it also provide for the extinction of the right to compensation after certain period of time. It was observed by Das Gupta, J, at page 836 : "The distinction between the extinction of a right and the extinction of a remedy for the enforcement of that right, though fine, is of great importance. The legislature could not but have been conscious of this distinction when using the words "discharged from all liability" in an article purporting to prescribe rights and immunities of the shipowners. The words are apt to express an intention of total extinction of the liability and should, specially in view of the international character of the legislation, be construed in that sense. 878 It is hardly necessary to add that once the liability is extinguished under this clause, there is no scope of any acknowledgement of liability thereafter". What we have to consider is, apart from the question that the Government on the terms of Sec. 96(1) (b) is not em powered to fix periods of limitation for filing applications under Sec. 75 (2) to move the Court, whether on an examination of the Scheme of the Act, rule 17 affects substantive rights by extinguishing the claim of the Corporation to enforce the liability for contributions payable by the Appellant. An examination of the purpose and intendment of the Act and the scheme which it effectuates, leaves no doubt that it was enacted for the benefit of the employees and their dependents, in case of sickness, maternity and 'employment injury ', as also to make provision for certain other matters. 40 makes the employer liable in the first instance to pay the contributions of the employer as well as the employee to the Corporation subject to the recovery from the employee of the. amount he is liable to contribute. This liability on the employer is categorial and mandatory. He is further required under Sec. 44 to submit to the Corporation returns as specified therein. Chapter V com prised of Sections 46 to 73, deals with the benefits which includes among others, sickness and disablement benefit of the employee, his eligibility for receiving payments and. the compensation payable to his dependents. If the employee fails or neglects to pay the contributions as required, the Corporation has the right to recover from him under Sec. 68, the amounts specified in that Section as an arrear of land revenue. 94 provides that the contributions due to a corporation are deemed to be included in the debts under the Insolvency Acts and the Company 's Act, and are given priority over other debts in the distribution of the pro perty of the insolvent or in the distribution of the assets of a Company in liquidation. Chapter VI deals with adjudication of disputes and claims, of which Sec. 74 provi des for he Constitution of the Insurance Court; Sec. 74 specifies the matters to be decided by that Court; Sec. 76 and Sec. 77 deal with the institution and commencement of proceedings and Sec. 78 with the powers of the Insurance Court. 80 deals with the non admissibility of the claim, if not made within twelve months after the claim is due while Sec. 82(3) prescribes the period within which an appeal should be filed against the order of the Insurance Court. These provisions in our view unmistakably indicate that the whole scheme is dependent upon the contributions made by the employer not only with respect to the amounts payable by him but also in respect of those payable by the employee. No limitation has been fixed for the recovery of these amounts 879 by the Corporation from the employer; on the other hand Sec. 68 empowers the Corporation to resort to coercive process. If any such steps are proposed to be taken by the Corporation and the employer is aggrieved he has a right to file and apply to the Insurance Court and have his claim adjudicated by it in the same way as the Corporation can prefer a claim in a case where the liability to pay is disputed. 75 (2) (d) clearly envisages this course when it provides that "the claim against a principal employer under Sec. 68" shall be decided by the Employees Insurance Court. It may be useful to read Sec. 68 and 75 (2) (d) which are given below Sec. 68 (1)If any principal employer fails or neglects to pay any contribution which under this Act he is liable to pay in respect of any employee and by reason thereof such person becomes disentitled to any benefit or entitled to a benefit on a lower scale, the Corporation should have been paid by the principal employer, pay to the person the benefit at the rate to which he would have been paid by the principal employer, pay to the person the benefit at the rate to which he would have been entitled if the failure or neglect had not occurred and the Corporation shall be entitled to recover from the principal employer either (i) the difference between the amount of benefit which is paid by the Corporation to the said person and the amount of the benefit which would have been payable on the basis of the contributions which were in fact paid by the employer; or (ii) twice the amount of the contribution which the employer failed or neglected to pay; whichever is greater. (2)The amount recoverable under this Section may be recovered as if it were on arrear of land revenue. Sec.75 (2) The following claim shall be decided by the Employees ' Insurance Court, namely (d)Claim against a principal employer under Section 68; It is contended by the learned Advocates for the Appellant that Sec. 68 is a crucial provision as it indicates that the right of the Corporation to enforce its claim for payment has been preserved 880 subject to tile provision that the omission or neglect by the principal employer to make contribution deprives the employee of any benefit either totally or 'at a reduced scale. It is only in these circumstances he submits that the Corporation can recover the amount by coercive process but in any other case the Corporation 's claim to recover by an application to the Insurance Court can be made subject to a period of limitation by a rule made under Sec. 96(1)(b). We are unable to appreciate the logic of this submission because the benefit of an employee can be negatived or partially admitted for instance either by reason of the employer not showing him in the return as an employee of his or showing him as drawing a lesser wage than what he is entitled to or as it may happen mostly, when he fails to make the payments even according to the returns made by him. In all these cases the employee 's benefits will be affected because the basis of the scheme of conferring benefit on the employee is the contribution of both the employer and the employee. It is clear therefore that the right of the Corporation to recover these amounts by coercive process is not restricted by any limitation nor could the Government by recourse to the rule making power prescribe a period in the teeth of Sec. What Sec. 75(2) is empowering is not necessarily the recovery of the amounts due to the Corporation from the employer by recourse to the Insurance Court but also the settlement of the dispute of a claim by the Corporation against the principal employer which implies that the principal employer also can, where he disputes the claim made and action is proposed to be taken against him by the Corporation under See. 68 to recover the amounts said to be due from him. While this is so there is also no impediment for the Corporation itself to apply to the Insurance Court to determine a dispute against an employer where it is satisfied that such a dispute exists. In either case neither Sec. 69 nor Sec. 75 (2) (d) prescribes a period of limitation. It may also be mentioned that Sec. 77 which deals with the commencement of the proceedings, does not provide for any limitation for filing an application to the Insurance Court even though it provides under sub sec. (2) of that Section that every such application shall be in such form and shall contain such particulars and shall be accompanied by.such fee, if any, that may be prescribed by rules made by the State Government in consultation with the Corporation. This was probably an appropriate provision in which the legislature if it had intended to prescribe a time for such applications could have provided. Be that as it may in our view the omission to provide a period of limitation in any of these provisions while providing for a limitation of a claim by an employee for the payment of any benefit under the regulations, shows clearly that the legis lature did not intend to fetter the claim under Sec. 75(2)(d). It appears to us that where the legislature clearly intends to pro 881 vide specifically the period of limitation in respect of claims arising thereunder it cannot be considered to have left such matters in respect of claims under some similar provisions to be provided for by the rules to be made by the Government under its delegated powers to prescribe the procedure to be. followed in proceedings before such Court. What is sought to be conferred is the power to make rules for regulating the procedure before the Insurance Court after an application has been filed and when it is seized of the matter. That apart the nature of the rule bars the claim itself and extinguishes the right which is not within the pale of procedure. Rule 17 is of such a nature and is similar in terms to Sec. 80. There is no gain saying the fact that if an employee does not file an application before the Insurance Court within 12 months after the claim has become due or he is unable to satisfy the Insurance Court that there was a reasonable excuse for him in not doing so, his right to receive payment of any benefit conferred by the Act is lost. Such a provision affects substantive rights and must therefore be dealt with by the legislature itself and is not to be inferred from the rule making power conferred for regulating the procedure unless that is specifically provided for. It was pointed out that in the Constitution also where the Supreme Court was authorised with the approval of the President to make rules for regulating generally the practice and procedure of the Court, a specific power was given to it by article 145 (1) (b) to prescribe limitation for entertaining appeals before it. It is therefore apparent that the legislature does not part with the power to prescribe limitation which it jealously retains to itself unless it intends to do so in clear and unambiguous terms or by necessary intendment. The view taken by the Madhya Pradesh, Madras, Punjab and Andhra Pradesh High Courts in the cases already referred to are in consonance with the view we have taken. In the decision of the Punjab High Court, Dua, J, as he then was expressed the view of the Full Bench with which Palshaw C. J., and Mahajan J, agreed. After examining the provisions of the Act he observed at page 170 171 "At this stage, I consider it appropriate to point out, what is fairly well recognised, that what is necessarily or clearly implied in a statute is an effectual as that, which is expressed because it often speaks as plainly by necessary inference as in any other manner. The purposes and aims of an Act as discernible from its statutory scheme are accordingly important guideposts in discovering the true legislative intent. One who considers only the letter, of an enactment, goes but, skin deep into its true meaning; to be able to fathom the real statutory intent it is always helpful to inquire into the object intended to be accomplished. 882 Considering the entire scheme of the Act before us, it is quite clear that fixation of any period of limitation for the Corporation to realise the contributions from the employer may tend seriously to obstruct the effective working and enforcement of the scheme of insurance". It may be of interest to notice that Palshaw C. J. had earlier taken a different view in Chanan Singh vs Regional Director, Employees State Insurance Corporation(1), but said that he, had no hesitation in agreeing with Dua J 's view because he realised that his earlier view was based on an over simplification. In the latest case the Andhra Pradesh High Court also following the earlier decision of Madhya Pradesh, Madras and Punjab held that the State Government had exceeded its powers to frame Rule 17 as no such power to prescribe limitation under the provisions ,of Sec. 96 (1 ) (b) or under Sec. 78 (2) can be said to have been delegated to the State Government. We, however, find that Sec. 78(2) does not delegate any power to the Government to make rules but only requires the Insurance Court to follow "such pro cedure as may be prescribed by rules made by the State Government" which rules can only be made under Sec. 96 of the Act. In the view we have taken it is unnecessary to examine the question whether legislative practice also leads to the same conclusion though in the Madras and the Punjab decisions that was also one of the grounds given in support of their respective conclusions. The contrary view expressed by a Bench of the Allahabad High Court is in our opinion not good law. We may before parting with this case point out that the legislature since chosen to specifically prescribe 3 years as limitation period by addition of sub sec. (1A) to Sec. 77 while deleting Sec. 80. See 77(1A) provides that "Every such application shall be made within a period of three years from the date on which the cause of action arose". By this amendment the claim under clause (d), as well as, the one under clause (f) of sub section (2) of Section 75 which provides for the adjudication of a claim by the Insurance Court for the recovery of any benefit admissible under the Act for which a separate limitation was fixed under Sec. 80, is now to be made within 3 years from the date of the accrual of the cause of action. amendment also confirms the view taken by this Court that the power under Section 96 (1) (b) does not empower the Government to prescribe by rules a period of limitation for claims under Sec. 75. In the result this appeal is dismissed with costs. K.B.N. Appeal dismissed.

In exercise of the power conferred by section 96(1)(b) of the , to "Prescribe by rule the procedure to be followed in proceedings" before the Insurance Court, the State Government made r. 17 prescribing a period of limitation of twelve months for every application to the Court. The Employees ' State Insurance Corporation filed an application before the Court claiming payment of the contribution due from the appellant. The appellant took the plea that the application was barred as it was not presented within the period prescribed. The High Court, on a reference, held that section 96(1) (b) did not grant power to Government to make a rule prescribing a period of limitation on claims enumerated in section 75(2) and, therefore, r. 17 was ultra vires the rule making power under section 96(1). On the question whether the power to prescribe a period of limitation 'for initiating proceedings before the court is a part of, and is included in, the power to prescribe "the procedure to be followed in proceedings" before such courts, HELD : The power under section 96(1) (b) does not empower the government to prescribe by rule a period of limitation for claims under section 75. (i) The law of limitation to remedies because, the rule is that claims in respect of rights cannot be entertained if not commenced within the time prescribed by the statute in respect of that right. The object of the statutes of limitation is to compel a person to exercise his right to take action within a reasonable time, as also, to discourage and suppress stale, fake and, fraudulent claims. While this is so, there are two aspects of the statutes of limitation, the one concerns the extinguishment of the right if a claim or action is not commenced within a particular time; the other merely bars the claim without affecting the right which either remains merely a moral obligation or can be availed of to furnish the consideration for fresh enforceable obligation. Where a statute prescribing limitation extinguishes the right it affects substantive rights, while, that which purely pertains to the commencement of action without touching the right is procedural. The statement that substantive law determines rights and procedural law deals with remedies is not wholly valid, for, neither the entire law of remedies belongs to procedure, because, rights are hidden even in the "interstices of procedure". There is, therefore, no clear cut division between the two. [872 G, 873 C E, 874 B] (ii)There is difference between the manner in which jurisprudential lawyersconsider the question and the way in which judges view the matter. Where a question of limitation arises, the present tendency is towards the view that statutes of limitation may not prove to be a deter mining factor. But, what has to be considered is whether the statute 868 extinguishes merely the remedy, or extinguishes the substantive right as well as the remedy. The safest course would be to examine each case on its own facts and circumstances and determine, for in stance, whether it affects substantive 'rights and extinguishes them, whether it merely concerns a procedural rule only dealing with remedies, whether the intendment to Prescribe limitation is discernible in the scheme of the Act, or whether it is inconsistent with the rule making power. , [876 H] (iii) Apart from the implications inherent in the term "Procedure" appearing in section 96(1) the word in furnishes a clue, to the controversy, that the procedure must be in relation to the proceedings in court after it has taken seisin of the matter. Therefore, the application by which the court is asked to adjudicate a matter covered by section 75(2) is outside the scope of the rule making power. [877 D] (iv)The provisions of the Act clearly indicate that the whole scheme is dependent upon the contributions made by the employer not only in respect of the amounts payable by him but also in respect of those payable by the employee. No limitation has been fixed for the recovery of these amounts by the Corporation from the employer; on the other hand section 68 empowers the Corporation to resort to coercive process. If any such steps are proposed to be taken by the Corporation and the employee is aggrieved he has a right to file and apply to the Insurance Court and have his claim adjudicated by it in the same way as the Corporation can prefer a claim in a case where the liability to pay is disputed. Section 75(2) (d) clearly envisages this course when it provides that the claim against a principal employer under section 68 shall be decided by the Insurance Court. The fact that neither section 75(2) (d) nor section 68, nor section 77 which deals with the commencement of the proceedings, prescribe any period of limitation, while a period of limitation is provided in the case of a claim by an employee for the payment of any benefit under the regulations, clearly shows that the legislatures did not intend to fetter the claim under section 75 (2) (d). Where the legislature clearly intends to provide specifically the period of limitation in 'respect of claims arising thereunder, it cannot be considered to have left such matters in respect of claim under some similar provisions to be provided for by the rules to be made by, government under its delegated powers to prescribe the procedure to be followed in proceedings before such court. [878 H 879 C, 880 F] (v)Nor does section 78(2) delegate any power to the government to make rules. The section only requires the Insurance Court to follow "such procedure as may be prescribed by rules made by the State Government". And these rules can only be made under section 96 of the Act. [882 D] (vi)Further, the nature of the rule bars the claim itself and extinguishes the right which is not in the pale of procedure. A provision by which an employee loses his right to 'receive payment of any benefit conferred 'by the Act, if he does not file an application within 12 months after the claim has become due, affects substantive rights, and must, therefore. be dealt with by the legislature itself and is not to be inferred from the rule making power conferred for regulating the procedure unless that is specifically provided for. The legislature does not part with the power to prescribe limitation which it jealously retains to itself unless it intends to do so in clear and unambiguous terms or by necessary intendment. [881 B F] Employees ' State insurance Corporation V. Madhya Pradesh Government & Ors., A.I.R. 1964 (51) M.P. 75, M/s. Solar Works, Madras vs Employees ' State Insurance Corporation, Madras A.I.R. 1964 (51) Mad. 869 376, United India Timber Works, Yamunagar & Anr. vs Employees ' State Insurance Corporation, Amritsar A.I.R. 1967 (54) Punjab, 166 (FB) and E.S.L.C. Hyderabad vs A.P. State Electricity Board, Hyderabad, 1970 Labour & Industrial cases 921, approved. View contra in M/s. A. K. Brothers vs Employees ' State Insurance Corporation, A.I.R. 1965 (52) All. 410, disapproved. Roshan Industries Pvt. Ltd., Yamunagar vs Employees ' State Insurance Corporation, Manoel Francisco Lonez A Ors. vs Lieut. Godoluhin James Burslem, (1843) IV M.I.A. 300, Ruckmaboye vs Lulloobhoy Mottichund, (1849 54) V M.I.A. 234, Sennimalai Goundan vs Palani Gonndan & Anr. A.I.R. 1917 Madras 957, Krishna mzchariar vs Srirangammal & Ors., I.L.R. 47 Madras 824, Bendredas vs Thakurdev, I.L.R. , Velu Pillai vs Sevuga Perumal Pillai, A.I.R. 1958 Madras 392, Narsingh Sahai vs Sheo Prasad, All 1(FB), Chunilal Jethabhai vs Dhyabhai Amulakh, Bom. 14(FB). Union of India vs Ram Kanwar & Ors. ; , Punjab Cooperative Bank Ltd. vs Official Liquidators Punjab Cotton Press Company Ltd. (in Liquidation), A.I.R. 1941 Lah. 57 (FB), and East & West Steamship Company, George Town, Madras vs section K. Ramalingam Chettiar, , referred to.

Appeal No. 1552 of 1981. From the Judgment and Order dated 1.2.1980 of the Jodh pur High Court in D.B. Civil Appeal No. 9 & 31 of 1977. Soli J. Sorabji, Tapas Ray, L.C. Agarwal, Mrs. Pratibha Jain, Pradeep Aggarwal, Sushil Kumar Jain, Sudhansu Atreya and S.D. Sharma for the Appellant. Dalveer Bhandari, Badridas Sharma, B.Y. Kulkarni, S.K. Mehta, D. Mehta, S.M. Satin, Aman Vathher, Atul Nanda, Mrs. P.S. Shroff, 54 R. Sasiprabhu, S.S. Shroff, S.A. Shroff, R.Jagannath Goulay and D. Goburdhan for the Respondents. The Judgments of the Court were delivered by SABYASACHI MUKHARJI, J. This appeal by special leave is directed against the judgment and order of the High Court of Rajasthan at Jodhpur in D.B. Civil Special Appeals Nos. 9 and 31 of 1977 and which raised common questions of law and fact, and were disposed of together. Writ Petition No. 17 of 1976 was filed by M/s Parekh Automobiles, respondent No. 1 in C.A. No. 1552/81. The said appeal may be taken up and disposal of the same would lead to the disposal of other appeals. In the said writ petition, the petitioner prayed for a direction or an order restrain ing the respondents therein from realising any tax on die sel, etc. which are supplied to the respondent herein at Dangiawas by the Indian Oil Corporation. being the respond ent No. 2 herein. It was further prayed that the respondents therein be ordered to refund the octroi tax as mentioned in the Schedule to the said petition which, it was alleged, had been illegally realised from the petitioner. It was further prayed that the respondent No. 1 be directed to provide transport passes to the Indian Oil Corporation under rule 13 of the Rajasthan Municipal Octroi Rules, 1962 read with section 133 of Rajasthan Municipalities Act. It was the case of the petitioner in the High Court, respondent No. 1 here in, that the Municipal Council had no jurisdiction to levy octroi tax on the goods brought within the municipal limits but not sold, consumed or used therein and subsequently exported outside the said limits. The case of the respondent No. 2 was that H.S.D. (diesel) which was brought by the Indian Oil Corporation within the local limits of Jodhpur Municipality was ultimately exported and sold to respondent No. 1 at Dangiawas for use, consumption or sale outside the Municipal limits and as such the Municipal Council had no jurisdiction to levy octroi tax on the same. In reply to the said writ petition, it was stated by the Municipal Council, being the appellant herein, that the sale of H.S.D. (diesel) by the respondent No. 2 to respondent No. 1 took place at Jodhpur, and only the delivery was effected at Dangiawas as respondent No. 1 did not have its own tankers but for this the respondent No. 2 was charging mileage for transmission of goods from its depot to Dangiawas. It was stated that the appellant was charging octroi from the respondent No. 2 and not from respondent No. 1. It was stated that the question whether the contract of sale between the respondent No. 2 and respondent No. 1 took place at Jodhpur or at Dangiawas was a disputed question of fact to be decided by reference to the original agreement qua each transaction. It was further stated that the disputed question of fact could not be adjudicated under Article 226 of the Constitution. In reply to para 6, it was stated that the current account facility was still provided and had not been stopped, that respondent No. 2 did not make the declaration as required by rule 9 and rule 13(4) of the Rajasthan Municipal Octroi Rules, 1962 and that the goods exported were to be 55 lessened only if such goods had not been sold within the Municipal limits and were exported out within a period of six months ' from the date of entry. The relevant provisions of section 104 of the Rajasthan Municipalities Act, 1959 (herein after referred to as 'the Act ') are as follows: "Sec. 104: Obligatory Taxes Every board shall levy, at such rate and from such date as the State Government may in each case direct by notification in the official gazette and in such manner as is laid down in this Act and as may be provided in the rules made by the State Government in this behalf, the following taxes, namely: (1) . (2) an octroi on goods and animals brought within the limits of the municipality for consumption, use or sale therein; and (3) . Section 133 of the Act provides as follows: "133. POWER TO KEEP ACCOUNT CURRENT WITH FIRM OR PUBLIC BODY IN LIEU OF LEVYING OCTROI ON INTRODUCTION OF GOODS: The Board if it thinks fit instead of requiting payment of octroi due from any mercantile firm or public body to be made at the time when the articles in respect of which it is leviable are introduced within the octroi limits of the municipality, at any time direct that an account current shall be kept on behalf of the board of the octroi so due from any such firm or body as the board specifies in this behalf. (2) Every such account shall be settled at intervals not exceeding one month and such firm or public body shall make such deposit or furnish such security as the board or any committee or officer authorised by it in this behalf shall consider sufficient to cover the amount which may at any time be due from such firm or body in respect of such dues. Every amount so due at the expiry of any such interval shall, for the purposes of Chapter VIII be deemed to be and shall be recoverable in the same manner as amount claimed on account of any tax recoverable under the same Chapter. " The Rules, being Rajasthan Municipal Octroi Rules, 1962, framed thereunder are relevant and rule 13 of the said Rules provided as follows: "13. FACILITIES FOR CURRENT ACCOUNTS: (1)The Board shall maintain a list, in Form 6, of all persons whether firms Or individuals allowed special facilities under section 133 of the Act for the payment of octroi. The list shall be kept corrected 56 upto date and a copy of the list signed by the Executive Officer shall be kept at each octroi out post. (2) The person to whom such facilities are given, printed books of entry passes in dupli cate shall be supplied in Form No. 7 on pay ment of such price as may be fixed by the Board. When such a person wishes to bring his goods into the Municipality, he shall fill up the entry pass, the goods shall be dealt with under the ordinary rules. On receipt of the entry pass, the Incharge of the octroi out post shall see that the person who has signed it is named on his list, and if so, he shall, after satisfying himself that the goods agree with the details entered in the entry pass, fill up the certificate the at foot thereof as well as the coupon. He shall then tear off the coupon, deliver it to the person who presents the entry pass, and admit the goods named in the pass. He shall send the entry passes to the Octroi Superintendent, where they shall be examined that the certificate covers the details of the entry pass and the amount of octroi due shall be debited to the account of the person concerned. (3) The persons to whom special facilities have been given, a printed book of transport passes shall be supplied in Form No. 5 on payment of such a price as may be fixed by the Board. When such a person wishes to transport h*is goods from the Municipality, he shall fill up a transport pass and send it with his good to the octroi gut post of exit. On re ceipt of the Transport pass, the Incharge of octroi out post shall see that the person who has signed it is named on the list; and if so, he shall after satisfying himself that the goods to be transported agree with the details entered in the Transport pass, fill up the certificate at the foot thereof as well as the coupon. He shall then tear off the coupon and deliver it to the person who presents the Transport pass. He shall send the transport passes to the Octroi Superintendent, where they shall be examined to see that the certif icate covers the details of the transport pass and shall be filed separately under the name of each such person. (4) In cases provided for in sub rule (3) amount of octroi duty payable shall be based on the total amount of the octroi as shown by the entry passes less the total amount of goods transported outside the Municipal limits as shown by the transport passes: Provided that in computing the octroi duty payable under sub rule (4), the goods transported outside the Municipal Limits shall be lessened only if such goods have not been sold within the Municipal limits and if they have been exported out of such limits within a period of (six months) from the date of their import in such limits. 57 (5) Payments by such person shall be made strictly in advance, and at the expiry of his period for which facilities have been given, the name of the person shall immediately be struck off. " Rule 6 deals with the payment of octroi duty and provide as follows: "6. PAYMENT OF OCTROI DUTY: No goods liable to payment of octroi shall, except as otherwise provided in these rules, be brought within the Municipal limits until the octroi duty levi able in respect of such goods has been paid at the octroi out post situated on the route of entry as notified by the Board from time to time for the purpose. " Rule 9 deals with the declaration of goods brought into the Municipal limits and provides as follows: "9. DECLARATION OF GOODS BROUGHT INTO THE MUNICIPAL LIMITS: (1) Every person bringing within the Municipal limits goods liable to payment of octroi shall produce such goods at the octroi oUt post and shall declare whether goods are intended: (i) for consumption, use or sale within the municipality; or (ii) for immediate transportation outside the Municipality; or (iii) for temporary detention within Municipal limits and eventual transportation outside Municipal limits. (2) Declaration under clause (i) of sub rule (1) may be oral, declaration under clauses (ii) and (iii) shall be, in writing in Form No. 1 and shall be tendered to the incharge of the octroi outpost at the time of bringing the goods shall be treated as having been brought within the Municipal limits for consumption, use or sale therein. " It was urged by the appellant that the respondent No. 2 had not made the declaration as required by rule 9 and that under rule 13(4) of the rules, the goods exported were only. to be lessened only if such goods had not bee sold within the municipal limits and were exported out within a period of six months ' from the date of entry. The Municipal Council also raised the plea that there was no privity of contract between respondent No. 1 and the Municipal Council as the demand of octroi tax was not made from respondent No. 1. The Writ petition of the respondent No. 1 along with another writ petition being No. 82 of 1976 filed by one Shri Sukh Sampat Raj was heard by the learned Single Judge of High Court of Rajasthan. The learned Single Judge by his judgment dated 28th January, 1977 allowed the writ petition and restrained the appellant from charging or realising octroi on the goods brought within the municipal limits by the Indian Oil Corporation but re exported outside the said municipal limits to its retail outlets for the use 58 and consumption of the ultimate consumers outside the limits of the Municipal Counsel. The prayer for refund of the octroi tax was, however, refused. Appeals were filed there from against the judgment and order of the learned Single Judge. The appellant herein filed the appeal No. 9 arising out of the Writ Petition No. 17 of 1976 and also Special Appeal No. 13 arising out of Writ Petition No. 82 of 1976. M/s Parekh Automobiles also filed a Special Appeal being Special Appeal No. 31 of 1977. Thus, three appeals were filed. All the three appeals were heard by the Division Bench of the High Court and by its judgment and order dated 1st February, 1980, the Division Bench dismissed the Special Appeal Nos. 9 and 13 filed by the appellant herein. The special appeal filed by M/s Parekh Automobiles was partly allowed. It was directed that the Municipal Council would have to refund to the Indian Oil Corporation the amount of octroi duty paid on the petroleum products re exported by it to Dangiawas outlet for supply to the writ petitioner who would recover the same from the Indian Oil Corporation. It is not necessary for the purpose of this appeal to deal with the facts agitated and found by the High Court. We will, however, refer to the same in brief. Respondent No. 1 had been allotted retail outlet allotted by the respondent No. 2, Indian Oil Corporation, for sale of petroleum products such as diesel oil, mobile, iii, etc. at Dangiawas, which was outside the limits of Jodhpur Municipal Council, appellant herein. The respondent No. 2 had its depot ear Raikabag Station at Jodhpur where it stored petroleum products. The respondent No. 2 from its depot at Jodhpur supplied the petroleum products to various pump stations situated within the limits of appellant as well as situated outside the limits of appellant in several districts such as Districts of Jodhpur, Pali, Barmet, Jalore, Nagaur, etc. including the retail outlet of the appellant at Dangiawas. The respondent No. 2, being a public sector undertaking, was provided current account facilities under section 133 of the Act, and so the respondent No. 2 had not to pay octroi tax on such consignment at the time of entry of goods within the limits of appellant. It was alleged by respondent No. 1 that under rule 13 of the said Rules, respondent No. 2 was sup plied printed books for entry passes in duplicate in Form No. 7 appended to the said Rules. Rule 13 provides, as noted before, that if the goods which are imported within the Municipal limits are not used, consumed or sold within the Municipal limits and are exported out of Municipal limits for supply at various other retail outlets no octroi duty is charged on those goods for the reason that under rule 13(4) octroi tax payable shall be based on the total amount of octroi tax as shown by the entry passes less the octroi tax on the total amount of goods transported outside the Munici pal limits. It was contended that the appellant had been following the aforesaid procedure till 24th July, 1975, but a11 of a sudden on 25th July, 1975, it was alleged, the appellant had suspended the transport facilities to the respondent No. 2 and took the stand that octroi would be charged from respondent No. 2 on the goods brought within the municipal 59 limits even though these were exported by it outside the municipal limits, if these were sold within the limits of appellant although such goods were meant for use and con sumption of the consumers outside the Municipal limits. The appellant, it is alleged, cancelled the transport passes supplied to the respondent No. 2 from 25th July, 1975. As a consequence of this action of the appellant, the respondent No. 1 was charged octroi duty on supplies made to the re spondent No. 1 at Dangiawas by the respondent No. 2 since 25the July, 1975 by adding the amount of octroi tax in the bills for the supplies made to the respondent No. 1 's retail outlet at Dangiawas. The respondent No. 2 challenged the right of the appellant to charge the octroi on such goods and approached the State Government. Upon that, the State Govt. by its letter wrote to the appellant that it having granted current account facilities under section 133 of the Act to the respondent No. 2 should charge octroi on the basis of petroleum products imported by respondent No. 2 minus the goods exported by it to its other distributing centres in Rajasthan. The respondent No. 1 also made representation to the appellant challenging its right to realise octroi on the petroleum products which were received at the depot of the respondent No. 2 at Jodhpur but were transported by it to its retail outlets but of no avail. The case of the respond ent No. 1 was that the goods were not sold at Jodhpur but actually the sale took place at Dangiawas, the retail outlet of the respondent No. 1 Secondly, even if the sale was held to have taken place at Jodhpur merely on that account octroi could not be levied unless the goods so sold Were meant for the use or consumption of the consumers within the octroi limits. Respondent No. 2, Indian Oil Corporation, supported the case of respondent No. l. Respondent No. 2 is a public sector undertaking and has got vast network of retail out lets, i.e., distribution centres for distribution of petro leum products throughout Indian including Rajasthan. For the purpose of distribution, it had got its depots at various important places where it stored its petroleum products for supply to its various retail outlets, i.e., distributing centres. Likewise the respondent No. 2 had got its depot situated near Raikabag Station, Jodhpur where it stored its petroleum products for sale and supply of its petroleum products to its numerous retail outlets situated within the districts of Jodhpur, Pali, Barmet, Jalore, Jaisalmer, Nagaur, Sirohi, etc. It was further alleged by respondent No. 2 that it stored petroleum products in its depot at Jodhpur for purposes which might be classified into differ ent classes, namely. (1) for sale by respondent No. 2 to its consumers such as Railways, Police, etc. and to its dealers of retail outlets situated within Municipal limits of Jodhpur city who distributed or sold the petroleum products within the area covered by municipal limits of Jodhpur city, (2) for re export by itself for supply to its dealers in charge of various retail outlets situated outside the municipal limits of Jodhpur city within the various districts specified above. Such retail outlets distrib uted or sold the petroleum products to ulti mate consumers 60 outside the limits of Jodhpur Municipal Council. According to the respondent No. 2, it had allotted the retail outlets to various dealers under dealers agreement. Under the terms of the said agreement, the respondent No. 2 was obliged to transport petroleum products out of its depots and supplied petroleum products to its dealers at the destination in its own truck tankers or the tankers of its contractors and obtained the signatures of the dealers of the retail outlet in token of the delivery of the goods and till the supplies were made at the destination the goods were at the risk of the respondent No. 2. It was further alleged by respondent No. 2 that the pump tank and other outfits which were fitted at the retail outlets belonged to it and these were its property. It was, therefore, alleged that the goods supplied at retail outlets situated outside the limits of Municipal Council, Jodhpur were sold at the retail outlets where the deliveries were made and not at Jodhpur although the dealers were required to deposit the price of the petroleum products in the respondent No. 2 's account in the bank unless they were allowed credit facili ties but the sale took place only when the respondent No. 2 delivered its products at the dealers ' retail outlets out side the municipal limits as per the terms of the dealers ' agreement. The appellant, Municipal Council, had, however, disputed the aforesaid position. It contended that whenever the sale was made at the Jodhpur depot at Jodhpur, Octroi was chargeable irrespective of the fact where it was con sumed or used. It was further contended that whether a contract of sale had taken place at Jodhpur or retail outlet is a question of fact and unless the contracts (agreements) were placed on the record by the respondent No. 1, the Court should not decide whether the sale by the respondent No. 2 had taken place at Jodhpur or at Dangiawas. Rule 13(4) of the said Rules would be operative only in those cases where the goods had not been sold within the Municipal limits or if they had been exported out of such limits within a period of six months from the date of its import. The Municipal Council 's further case was that the respondent No. 2 sold the goods at Jodhpur. The respondent No. 2 never submitted its declaration as required by rule 9 of the said Rules and, therefore, the goods brought within the limits of Municipal Council were, according to the appellant, liable to octroi. It was contended on behalf of the respondent No. 1 that the appellant was not entitled to levy the octroi on the petro leum products which were re exported by the respondent No. 2 to the retail outlet of the respondent No. 1 at Dangiawas as the goods were neither brought for consumption or use in the limits of the Municipal Council of Jodhpur, nor sold in the Municipal area. It was further contended that even if it was assumed that the petroleum products which had been exported to the respondent No. 1 's outlet at Dangiawas have been sold at Jodhpur then to the appellant had no jurisdiction to levy the octroi and realise the same as good so sold were not meant for the use of ultimate consumer in the municipal area. The taxable event for the purpose of levy of octroi duty takes place, according to respondent No. 1, only if the entry of the goods in the limits of appellant was 61 meant for the use of ultimate consumer or user. It was contended that the petroleum products which had been export ed to the respondent No. 1 's retail outlet at Dangiawas were meant for the use of ultimate consumer for use outside the limits of the Municipal Council so these were not chargeable to octroi. It is not necessary in view of the findings of the High Court to deal with the preliminary objections of the appellant, namely, respondent No. 1 was a firm and not competent to bring the writ petition, that the respondent No. 1 had no locus standi to file the writ petition, or that there was an alternative remedy under rule 40 of the said rules and as such writ petition would not be maintainable. The learned Single Judge of the High Court rejected these contentions of the appellant. Two main contentions involved before the High Court and us were and are, namely, where the taxable even took place and whether respondent No. 1, in the facts and the circumstances of this case, was liable to pay octroi duty and secondly, whether in view of the maintenance of the current account facilities, as mentioned hereinbe fore, the Municipal Council was entitled to charge the octroi duty in the manner it has purported to do from the 25th July, 1975 and whether that the appellant was liable to refund the said duty. Section 104 of the Act by sub section (2) provides that an octroi on goods and animals brought within the limits of the municipality for consumption, use or sale therein, is liable to be charged by the State Government. It was con tended on behalf of the respondent No. 1 that the taxable event in respect of the goods supplied at its real outlet at Dangiawas had not taken place within the limits of the appellant. It was submitted that the goods brought by the respondent No. 2 and exported to the respondent No. 1 's retail outlet at Dangiawas were in the first place not sold at all within the Municipal limits; secondly, even if the sale of the goods so exported was held to have taken place within the Municipal limits than too the taxable event had not taken place as such goods were not meant for sale or use or consumption of the ultimate consumer residing within the local limits of the appellant but were meant for the con sumption of the ultimate consumer residing outside the local limits of the appellant. It was contended that the word 'sale ' occurring under section 104 of the Act cannot be read without reference to use or consumption. Sale simplicitor by itself did not attract the levy of octroi, it was submitted, unless the goods were meant for use or consumption of the ultimate consumer in the area of the appellant. Reference was made before the High CoUrt as before us to the decision of this Court in Burmah Shell Oil Storage & Distributing Co. India Ltd. vs The Belgaum Borough Municipality, 216 as well as the decision of this Court in Hiralal Thakorlal Dalai vs Broach Municipality & Ors., [1976] Supp. SCR 82. In Burmah Shell 's case (supra), the company was a dealer in petrol and petroleum products which it manufac tured in its refinery situated outside the octroi limits of Belgaum Municipality. It brought those products inside that area either for use or consumption by itself or for sale generally to its dealers and the licensees who in their turn 62 sold these to others. According to the Company, the goods brought by it within the octroi limits could be divided into four separate categories, namely: (i) goods consumed by the company within the octroi limits, (ii) goods sold by the company through its dealers or by itself and consumed within the octroi limits by persons other than the company, (iii) goods sold by the company through its dealers or by itself inside the octroi limits to other persons to be consumed by them outside the octroi limits. (iv) goods sent by the company from its depot inside the octroi limits to extra munic ipal points where these were brought and consumed by persons other than the company. In that case, the company had objected to the levy of octroi on the goods which were sent by it out of the octroi limits for the outside ultimate consumers and claimed refund of the amount so charged as octroi. Clause (4) of sub sec tion (1) of section 73 of the Bombay Municipal Boroughs Act, 1925 which was under consideration in that case was analo gous to subsection (2) of section 104 of the present Act in question. The words 'use or sale ' were substituted for the words 'for use ' by the Bombay Act of 35 of 1954. This Court examined the scheme of the taxation under the Bombay Bor oughs Act and the Rules and bye laws made by the Municipali ty for the levy of octroi. After examining the history of octroi, this Court in that decision held octrois were tax on goods brought into the local area for consumption, use or sale and that they were leviable in respect of goods put to some use or other in the area but only if they were meant for such user. ' This Court specifically clarified that the word 'sale ' was included only in 1954 in order to bring the description of the octroi in the Act in line with the Con stitution of India. While doing so this Court further ob served that the expression 'consumption ' and 'use ' together 'connote ' the bringing in of the goods and animals not with a view to taking them out again but with a view to their retention either for use without using them up or for con sumption in manner which destroys, wastes or uses them up. This Court further observed in that case that octroi and terminal tax resemble each other in the sense that they are both leviable in respect of goods brought into a local area. Otherwise, these are quite different from each other. While terminal taxes are leviable on goods 'imported or exported ' from municipal limits denoting thereby that they are con nected with the traffic of goods, octrois are leviable in respect of the goods brought into a municipal area for consumption or use or sale. The history of these two taxes showed that while terminal taxes were a kind of octroi which were 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 con sumption, use or sale. These 63 Were leviable in respect of the goods put to some use or the other in the area but only if these were meant for such user. Another difference between the two is that there is no system of refund under terminal tax but that is so for octroi. This Court held that the sale by it directly to consumer or dealers was merely the means for putting the goods in the way of use or consumption and that the word therein does not mean that all the acts of consumption must take place in the area of the municipality. Hidayatullah, J. (as the learned Chief Justice then was) speaking for this Court observed at p. 233 of the report as follows: "In other words, a sale of the goods brought inside, even though not expressly mentioned in the description of octroi as it stood former ly, was implicit, provided the goods were not re exported out of the area but were bought inside for use or consumption by buyers inside the area. In this sense the amplification of the description both in the Government of India Act 1935 and the Constitution did not make any addition to the true concept of 'octroi ' as explained above. That concept included the bringing in of goods in a local area so that the goods come to a repose there. When the Government of India Act, 1935 was enacted, the word 'octroi ' was deliberately avoided and a description added to forestall any dispute of the nature which has been raised in this case. In other words, even without the description the tax was on goods brought for 'consumption, use or sale '. The word 'octroi ' was also avoided because termi nal taxes are also a kind of octroi and the two were to be allocated to different legisla tures. In our opinion, even without the word 'sale ' in the Boroughs Act the position was the same provided the goods were sold in the local area to a consumer who bought them for the purpose of use or consumption or even for resale to others for the purpose of use or consumption by them in the area. It was only when the goods were re exported out of the area that the tax could not legitimately be levied and in this case the municipality has agreed to refund the amount of tax on goods re exported without being used or consumed in the municipal area. In this view of the mat ter, it was not necessary for the municipality to follow the procedure for imposing taxes when the section was amended. The tax still remained the same. Its nature. incidence or rate were not altered. " The aforesaid observations were approved by this Court in Hiralal Thakorlal Dalal vs Broach Municipality & Ors., (supra). On the basis of the aforesaid decisions of this Court, the Division Bench of the High Court in the instant case in appeal filed from the aforesaid judgment of the learned Single Judge held that sale simplicitor would not attract the levy of the 64 octroi. The word 'sale ', in this context, has to be read in reference to the use or consumption, according to the Divi sion Bench and 'sue, consumption and sale ' have to be read in disjunctive manner. Reference, in this connection, was made to rule 6 of the said Rules, which provides that no goods liable to payment of octroi shall except as otherwise provided in these Rules be brought within the Municipal limits 'until the octroi duty leviable in respect of such goods have been paid at the octroi outpost situated on the route of the entry as notified by the Board from time to time. Rule 9 of the said Rules further provides that every person bringing within the Municipal limits goods liable to payment of octroi shall produce such goods at the octroi. outpost and shall declare whether the goods are intended (i) for consumption, use or sale within the Municipality, or (ii) for immediate transport outside the Municipality or (iii) for temporary detention within Municipal limits and eventual transportation outside the Municipal limits. It further provides that if no such declaration is made the goods shall be treated as having been brought within the Municipal limits for consumption, use or sale therein. On the basis of these rules, it was contended before the Divi sion Bench that as soon as the goods enter within the octroi limits it gives rise to taxable event unless a declaration as contemplated rule 9 has been made by the person bringing such goods. It was submitted that no such declaration had been made in this case, and therefore, a conclusive presump tion arose that the goods should be treated as having been brought within the Municipal limits for consumption, use or sale therein. The division bench was unable to accept this submission. The division bench was of the view that this argument ignored the import of rule 13. Rule 13 dispensed with the requirements of rules 6 and 9 and it was a special rule applicable to the persons, firms and individuals under section 133 of the Act. Section 133 of the Act provides that the Board if it thinks fit instead of requiting payment of octroi due from any mercantile firm or public body it may at the time when the articles in respect of which it is levi able are introduced within the octroi limits of the munici pality, direct that an account current shall be kept on behalf of the Board of the octroi so due from any such firm or body as the Board specifies in this behalf. It further provides that every such account shall be settled at the intervals not exceeding one month and such firm of public body shall make such deposit or furnish such security as the Board of any committee or officer authorised by it in this behalf shall consider it sufficient to cover the amount which may at any time be due to such firm or body in respect of such dues. Rule 13, therefore, dispenses with the re quirement of rule 6. It further dispenses with the require ments of rule 9 in regard to declaration. The division bench of the High Court also referred to sub rule (3) of rule 13, which has been set out before. The High Court held that rule 13 is a special provision in regard to the persons who had been granted current account facilities and this rule is not subject to either rule 6 or rule 9 but is a over riding rule independent of rules 6 and 9. The High Court found that respondent No. 2 had been granted current account 65 facilities and, therefore, the octroi duty shall be charged from it under sub rule (4) of rule 13 on the goods brought by it in the Municipal area minus the goods transported by it outside the Municipal limits. Therefore, the contention of the appellant herein on rules 6 and 9 was rejected. It is, therefore, necessary for these appeals to consider the validity or otherwise of the said findings of the High Court in these appeals. The High Court dealt with the contentions based on sub rule (4) of rule 13 and considered if the sale of the goods had taken place within the Municipal limits to see if the octroi shall be leviable or not. The High Court felt that the rule had to be construed in consonance with section 104 of the Act As mentioned hereinbefore, section 104 of the Act was anologous to section 73 of the Bombay Boroughs Act which had been interpreted by this Court in the aforesaid two deci sions, wherein it was held that the sale in order to attract levy of octroi should be for the purpose o fuse or consump tion of the ultimate consumer in the area. (Emphasis sup plied). The High Court further observed that the meaning of the word 'sale ', therefore, has to be given as per this Court 's view and any other meaning to 'sale ' contained in the rules shall not be justified as it will be repugnant to section 104 of the Act. The High Court found that the goods were re exported by the Indian Oil Corporation from its depot to its retail outlet for the use or consumption of the ultimate consumer outside the municipal limits. (Emphasis supplied). The Municipal Council was not entitled to levy octroi on goods so exported by respondent No. 2 to its retail outlet for use and consumption by the ultimate consumer outside the local limits of the Municipal Council. Therefore, it was held that the Municipal Council had no jurisdiction to levy octroi on the goods re exported by the respondent No. 2, the Indian Oil Corporation to the retail outlets of its dealers located outside the Municipal limits for the use of the ultimate consumers outside the Municipal limits. Though the aforesaid finding of the High Court has been assailed before us in this appeal, in view of the decision of this Court referred to hereinbefore and in view of the principles laid down therein and the language of section 104 of the Act and the facts, we are unable to accept the challenge on behalf of the appellant herein. It was, however, contended by the respondent No. 1 before the High Court that the taxable even had taken place at Dangiawas and not at the octroi limits of Jodhpur as the sale had not taken place in the octroi limits but had taken place at Dangiawas. It was contended by the respondent No. 1 that goods were supplied by the respondent No. 2 in its tankers at Dangiawas and till the goods were supplied at the respondent No. 1 's outlet at Dangiawas, the risk in respect of the goods was with the respondent No. 2, the Indian Oil Corporation. This fact, it was stated, had been admitted by the Corporation in its return wherein it had been clearly admitted that till the goods are supplied to the respondent No. 1 's outlet stations the goods were at the risk of respondent No. 2. It was, therefore, contended that till the goods were delivered at Dangiawas, there was no contract for sale. The contract for sale, it was contend ed, had taken place at Dangiawas where the 66 goods were delivered at the respondent No. 1 's outlet and receipt was obtained from the respondent No. 1 's outlet acknowledging the delivery of the goods at that place. In this connection, reference was made to para 25 of the model agreement exhibit B. 1. According to para 25, the quantity of petroleum and other allied products shall be delivered by the Corporation as measured by the Corporation 's measuring device and a receipt signed by or on behalf of the dealer at the time of delivery by the Corporation would be conclusive evidence that the petroleum products mentioned therein were in fact delivered to the dealer. It was submitted that the delivery was made by the respondent No. 2 's tankers at Dangiawas and the receipt obtained there. On the other hand before the High Court. as mentioned hereinbefore, it was contended on behalf of the appellant that this question involved disputed questions of facts. which was beyond the pale of jurisdiction under Article 226 of the Constitution. It was submitted that neither indents in regard to the transactions of sale had been produced nor there was any evidence as to the quantities for which the sale had taken place and in the absence of material documents it was not possible to determine the question as to where the sale had taken place. It further appeared that the respondent No. 1 used to deposit the amount in advance against the supplies to be made to its retail outlet at Jodhpur. According to the appellant, as the material and relevant evidence had not been produced on the record, it would be hazardous to reach a definite conclusion as to where the contract of sale had taken place. The High Court held that it was difficult and inappropriate to go into under Article 226 of the Constitu tion. The High Court referred to certain decisions. The High Court. however. rested on the view that even if the sale took place within the octroi limits of Jodhpur Municipal Council for the use or consumption of the ultimate consumer outside the octroi limits of Jodhpur then the taxable event did not take place in the octroi limits of Jodhpur. In those circumstances. the High Court held that the Municipal Coun cil had no jurisdiction to levy octroi on the goods so exported. We have considered the submissions of the appel lant on this point. We are, however, in view of the facts and circumstances of the case, of the opinion that the High Court was right. The High Court issued an order of re straint. It directed that the Municipal Council be re strained by way of Mandamus not to levy octroi on the goods exported by the respondent No. 2 for the use of the ultimate user outside the octroi limits of Municipal Council even if the sale took place within the octroi limits of Municipal Council, Jodhpur. The next aspect of the matter, is, whether the respond ent No. 1 was entitled to refund of the octroi realised from respondent No. 2. It had been contended by the respondent No.1 that although the octroi had been realised directly from the respondent No. 2 but in fact and in reality it was the respondent No. 1 who had been made to pay the octroi as the same had been realised by the respondent No. 2 by adding the octroi realised by the Municipal Council in its bills for the supply of the goods made to respondent No. 1. It was contended on behalf of the appellant that there was no privity 67 of obligation between respondent No. 1 and the appellant and therefore, respondent No. 1 had no right to ask for a refund of the octroi. Secondly, it was urged that the respondent No.1 had realised the amount of octroi while selling the petroleum products to the retail consumers by adding the same in the retail price charged from the consumers. So far as the first contention is concerned, the division bench found that there was no privity of obligation between re spondent No. 1 and the appellant. The same had not been realised from the respondent No. 1. It was, therefore, held that there being no privity of obligation between respondent No. 1 and the appellant, the respondent No. 1 could not ask for a refund of the money which it has not paid to the appellant. There was no provision for refund in the Act or in the Rules which enabled the respondent No. 1 to claim refund from the appellant even though it had been paid by the respondent No. 1 indirectly. There was, however, an undertaking given to the High Court by the appellant on 3rd February, 1976 in the High Court. On that date, the appel lant had given an undertaking that the appellant would refund the octroi charged from the respondent No. 1 on the diesel re exported outside the Municipal limits of Jodhpur in case the writ petitions were allowed. The undertaking is however, confined to the refund of the amount charged from the respondent No. 1 by the appellant and not from respond ent No. 2. The basis for refund of the amount undertaking from respondent No. 2 has not been established. To that extent, the writ petition was bound to fail, the High Court held. If that was the position, there cannot be any basis for refund of the same on the basis of the undertaking. The Division Bench of the High Court held that as the challenge in this case was that the words 'use or sale ' could not make any difference so far as the event of taxability was con cerned, as according to this Court, 'sale ' simplicitor would not attract the levy of the octroi. The sine qua non for levy of octroi is consumption, according to this Court. Therefore, no octroi could be levied in respect of goods which were re exported for consumption or use outside the Municipal limits, the Division Bench held. In that view of the matter, the Division Bench of the High Court held that in view of the decisions of this Court, no octroi was levi able on petroleum prod acts re exported to the retail out lets situated outside the municipal limits for consumption and use outside the limits. In our opinion, the division bench is right insofar as it held as aforesaid. It was, however, submitted that the ratio of the deci sions of this Court had no application because of rules 6 and 9 of the said Rules. We have referred to the said rules. The contention of the appellant on the basis of the afore said rule was that since the goods were brought within the octroi limits, these became liable to octroi unless a decla ration as contemplated by rule 9 had been made by the person bringing such goods. It was submitted by the appellant that no such declaration had been made in the present case. According to the High Court rule 13 contemplates, as we have noticed, special facilities for current account under which in case of a person to whom such facilities are given, amount of octroi duty payable is determined by 68 deducting the total amount of goods transported outside the municipal limits as shown by the transport passes from the total amount of octroi as shown by the entry passes. The High Court noted that section 133 of the Act confers power on the Board to direct that current accounts may be kept on behalf of the Board with the firm or public body in lieu of octroi on introduction of goods. The Division Bench was of the opinion that section 133 of the Act along with rule 13 of the said Rules left no doubt that no conclusive presumption of the goods having been brought within the municipal limits for consumption, use or sale therein, could be drawn in cases where special current account facilities were given to a person. In the instant case, special facilities for cur rent accounts had been given to the respondent No. 2. There fore, rule 9 had no application according to the Division Bench. Learned counsel for the respondent No. 1 had contend ed before the Division Bench that at the time of entry of petrol or diesel, it was not possible for the Indian Oil Corporation to give a declaration as to how much would be re exported to retail outlets situated outside the Municipal limits. The Division Bench found that the argument on behalf of the Municipal Council regarding necessity of giving a declaration was vital. The appeal filed by the Municipal Council was, therefore, dismissed. Coming to the appeal for refund, it was urged before the Division Bench that Munici pal Council had given an undertaking that it would refund the octroi charged from the respondent No. 1 on the petrole um products re exported outside the Municipal limits of Jodhpur. The Division Bench noted that the learned Single Judge had disallowed this firstly on the ground that the octroi had been charged from the respondent No. 2 and not from the respondent No. 1 and, secondly, the respondent No. 1 had not succeeded in establishing his claim for refund against the respondent No. 2. The Division Bench held that the refund was not possible. In this connection, reliance was placed on the decisions of this Court in M/s Motilal Padarnpat Sugar Mills Co. Ltd. vs State of Uttar Pradesh & Ors., ; and State of Madhya Pradesh & Anr. vs Bhailal Bhai etc. ; , The Division Bench of the High Court, therefore, held that the claim for refund is not sustainable but the High Court found that the octroi had been paid by the Indian Oil Corporation and not by the respondent No. 1 and therefore, directed that the Municipal Council would have to refund to the Indian Oil Corporation the amount of octroi paid on the petroleum products re exported by it to Dangiawas outlet for supply to the re spondent No. 1 and the respondent No. 1 may recover the same from the Indian Oil Corporation. The appeals were allowed to the extent indicated above. Otherwise, the decision of the learned Single Judge was confirmed. As mentioned hereinbe fore, being aggrieved, the appellant came up for appeal by special leave to this Court. On behalf of the appellant, Shri Soli Sorabjee and Shri Tapash Ray made their submissions. On the main point as held by the division bench of the High Court there was not much substantial challenge. We agree with the High Court. It was, however, contended that during the period in respect of 69 which the claim had been made by the respondent, there was no continuation of the current account facilities in favour of the respondent No. 2, Indian Oil Corporation as provided under section 133 of the Act read with rule 13 of the said Rules, and the question was whether the goods brought within the Municipal limit by the Indian Oil Corporation were liable to payment of octroi because of non compliance with the proce dure in rules 6 and 9 of the said Rules. The other question which required consideration is that assuming that current account facilities in favour of respondent No. 2 existed, whether by reason of such, respondent No. 2 was exempted from complying with the rules 6 and 9 of the said Rules. Council submitted that it was strange that the respondent No. 1 was purporting to make out a case that the current account facility to the respondent No. 2 by the appellant was not withdrawn and the same was still continuing. An affidavit in support of this contention was filed by one Shri R.C. Parekh after the conclusion of the hearing in this case on the 30th September, 1988. The case was reargued again in Feb. 1989. It was contended that the Writ Petition in M/s Parekh Automobiles ' case showed beyond doubt that the writ petition was made on a positive case that all of a sudden on 25th July, 1975, the appellant had suspended the current account facilities in respect of also the goods which were exported out of Jodhpur Municipal limit by the respondent No. 2 and supplied to respondent No. 1 at Dangia was. It was further the case of M/s Parekh Automobiles that upon suspending such current account facility the municipal ity was charging octroi on all petroleum products brought by respondent No. 2 within the Municipal limits without making a distinction amongst goods which were exported outside the Municipal limits. In this connection, reference was made to paragraph 9 of the writ petition. On behalf of the appel lant, it was contended that the term 'export facilities ' used in that paragraph was to mean 'current account facili ty ' as it appeared from the pleadings of the respondent No. 1 in paragraph 16 of the said writ petition. Reference was also made to other paragraphs of the writ petition, namely, paragraph 10, paragraph 11 and paragraph 12 which proceeded on the basis that current account facilities had been with drawn and a complaint was made on that basis. Reference was also made to the paragraph 17 at p. 107 of the appeal paper book. The Municipal Council, Jodhpur filed a reply to the writ petition where also statements were made. It was sub mitted that reading of the said pleadings make it clear that the respondent No. 2 was not making any declaration under rule 9 of the said Rules. A declaration under rule 9 of the said Rules was to be made in Form 1, a specimen copy of which was enclosed to the written argument. it was further stated that in the affidavit of the Indian Oil Corporation, nowhere it was stated that the said current account facility had not been suspended and was still continuing. It was the case of the appellant that current account facilities were not provided to the respondent No. 2 as contemplated under section 133 of the Act. It was the case of the municipality that even now the facilities are provided to a public sector undertaking provided they act in compliance with the provi sions of section 104 of the Act read with rules 6 and 9 of the said Rules. But so far as the facts of this 70 case are concerned, it was submitted that during the period in dispute as also today there is no facility to the re spondent No. 2 under rule 13 of the said Rules and as admit tedly, the respondent No. 2 was not complying with the requirements of rules 6 and 9 of the said Rules and was not filing any declaration, the Municipality had the right to treat the goods, brought within the Municipal limits, as those brought for consumption, use or sale under sub rule (2) of rule 9 of the said Rules and thereby attracting octroi. The Division Bench of the High Court, it was con tended by the appellant, failed to appreciate the implica tion of the aforesaid provisions of law and the fact that in respect of the period in question, admittedly, the current account facility was not available with the Indian Oil Corporation and as admittedly, the Indian Oil Corporation did not file any declaration under rule 9 of the said Rules, the petroleum products brought within the Municipal limits by the Indian Oil Corporation were to be presumed to be for consumption, use or sale and as such liable to octroi duty. The High Court, according to Shri Ray for the appellant, should have appreciated that the questions raised, gone into but the questions decided by the High Court were not germane to the issue and as such were not required to be gone into the decided. On this aspect, it was submitted that the appeals should be allowed so far as refund was concerned, and the impugned decisions of the High Court should be set aside. It was further submitted that an analysis of law while dealing with this point would indicate that a declara tion under section 133 of the Act read with rule 13 of the said Rules cannot be interpreted as one dispensing with the requirement of the declaration under rule 9 of the Rules and if that be so then the presumption of non declaration would be available to the Municipality. It would, therefore, be a case of deemed use or consumption. It was submitted that the aspect whether sale alone would be sufficient to levy octroi or along with sale there should be consumption or use within the municipal limits, would require consideration. It was submitted that conceivably goods can be brought within the municipal limits of a municipality for the purposes of (i) use, consumption or sale; or (ii) for immediate transporta tion outside the Municipality; or (iii) for temporary deten tion within the Municipal limits and eventual transportation outside the Municipal limits; or (iv) goods brought by a travelling agent for sale or exhibiting them for the pur poses of securing orders for sale thereafter. Octroi, it was submitted, can only be levied on goods which are brought within the municipal limits for the purpose of consumption, use or sale therein. No octroi can be charged on any goods which are brought within the municipal limits either for immediate transportation outside the municipality or for temporary detention within the municipal limits or for sale or exhibition by a travelling agent, it was submitted. The provisions of the Act and the Rules have been made for the different categories in different ways. it was submitted. section 104 of the Act is the charging section and authorises munic ipality to impose octroi on goods and animals brought within the limits of the municipality for consumption. use or sale. The said section, it was submitted, is to be read with rule 6 providing for payment of octroi duty on goods liable to 71 payment of octroi. Rule 6 of the said Rules, would indicate that octroi is to be paid only on goods liable to payment of octroi and not other goods. Rule 7 indicates that import of the goods should be through prescribed routes. This has been made for preventing clandestine importation of goods. Rule 8 provides that the importers are to furnish documents and information in respect of the dutiable goods to be brought. Rule 9 enjoins that the person bringing within the municipal limits good liable to payment of octroi, shall produce such goods at the octroi outpost and shall declare whether the goods are intended for consumption, use or sale within the municipality or for immediate transportation outside the municipality or for temporary detention within the municipal limits. Referring to the scheme of the Act and the rules, it was submitted on behalf of the appellant that an analysis of section 133 and the current account facility therein indicate that only on the goods for use consumption or sale octroi is leviable. Grant of current account facility does not mean providing facility to bring within Municipal limits which are liable to payment of octroi without complying with the other rules specifically applicable in respect of Such goods. It was submitted that respondent No. 1 knew well that current account is in respect of those goods which are brought within the Municipal limits for use, consumption and sale. In this connection, reference was made to certain paragraphs in the pleadings. There was no current account facility, according to the appellant. It was submitted that when the writ petition was moved at the particular point of time the current account facility stood suspended. Xerox copy of the Order Sheet of the Trial Court was relied upon. It would appear from that the trial court did not grant any stay because there was nothing to be stayed as by the time the writ petition was moved the current account facility stood suspended, it was submitted. If the Court desired, a mandatory order reviving the current account facility was required to be made. That was not done. Therefore, the court of first instance heard the writ petition and disposed of the same. The Court of first instance did not grant any relief to the writ petitioner and as such the writ petition er filed the appeal before the Division Bench. In the appeal the appellate Court refused to stay the operation of the writ issued by the learned Single Judge. Therefore. by reason of that order also, there was no revival of the current account facility to the respondent No. 2, according to the appellant. The Division Bench, as appears from the said order dated 1st April, 1977, restrained the payment of the octroi duty by the respondent No. 2 to the Municipality pending the said appeal and directed the Indian Oil Corpora tion to maintain a separate account in respect of the same and to keep the same in a separate bank account with the State Bank of India, Jodhpur. The said order speaks of deposit of the octroi tax payable in respect of such des patches. As the Division Bench partly allowed the writ petition, the Municipality moved this Court and this Court stayed the operation of that order. Therefore, when the petitioner moved this Court, the Current Account facility stood suspended, according to the appellant, and at no stage thereafter till now the same stood revived by any order or otherwise. 72 But it may be noted, as mentioned hereinbefore, that an affidavit was filed by one Shri R.C. Parekh. It was stated that current account facility as mentioned in section 133 of the Act was provided to the respondent No. 2, but the said facility was never discontinued even after 25th July, 1975 and is still being provided till the date of the hearing of the matter before this Court. The current account facility under section 133 of the Act is not to recover octroi tax on goods at the time of entry but to keep current account and recover it periodically. Reference was made to paragraph 6 of the writ petition and in reply, the Municipal Council admitted para No. 6 of the writ petition and stated that the facilities are still provided and has not been stopped. Therefore, it is clear, according to the deponent, and according to the respondent, that according to the Municipal Council, Jodhpur itself current facilities as provided under section 133 of the Act were never withdrawn and therefore, any submissions made by the Municipal Council to the contrary are totally unfounded. It could not have been withdrawn unilaterally without notice to the Indian Oil Corporation. According to the deponent, the petitioner never stated that the current account facility provided to the Indian Oil Corporation had been withdrawn by the Municipal Council. It only stated in paragraph 9 of the writ petition that sudden ly on 25th July, 1975, the Municipal Council, Jodhpur sus pended the export facilities provided to the respondent No. 2 and informed the respondent No. 2 that henceforth octroi tax would be charged from the respondent even on those goods which were exported outside the Municipal limits and which were not used or consumed within the municipal limits. The export facility, i.e., facility on the issue of transport passes under rule 13 of the said Rules was only with the object to ascertain that quantity of petroleum products that have been exported out of Jodhpur Municipal limits and it did not amount to withdrawal of current account facilities. The object of current account facilities is not to realise octroi tax on each consignment of goods at the time of its entry in Municipal limits of Jodhpur, but to keep current account and realise octroi tax after specified time periodi cally. It is the case of the respondent No. 1 that the current account facility was never discontinued and it is still continuing. In fact it is the duty of the Municipal Council to provide passes under rule 13 to person who have been provided current account facility. In reply to para 9 of the writ petition, it was stated by the Municipal Council that it never suspended the export facilities of Indian Oil Corporation. It was further stated that it was decided between the officers of the Indian Oil Corporation and Administrator that export facility shall remain in force only for goods exported to such distribution centres in respect of goods of which no sale is done at Jodhpur. There fore, the affidavit stated that there was no suspension. Reference was made to the order of the High Court dated 9th February, 1976 and other orders. Shri Soli Sorabjee referred to the scheme of the Act and submitted that the two decisions of this Court referred to by the High Court were not applicable. Neither of these cases, it was submitted, was concerned with the 73 situation where the goods were sold within the octroi limits and thereafter exported for consumption outside the said limits. In the Burmah Shell 's case (supra), there was no sales by the company to its dealers. The company sold goods through its dealers to the customers both within and outside the local area. He submitted that the observations of this Court to the effect that octroi is chargeable on goods brought into the area for sale to consumers must be under stood in that context. It was submitted that there was nothing in the said judgments of this Court to the effect that if goods are brought into a local area for sale to a dealer who then transports the goods outside the local area for sale to consumers, no octroi would be chargeable. It was submitted that as the goods were brought into the local area for sale within that area, octroi would be chargeable. It is significant to note, it was submitted, that the Burmah Shell 's case (supra) makes it clear that to attract liabili ty to pay octroi duty it is not necessary that the goods should be consumed within the octroi limits. We are, however, unable to accept these contentions. If the goods were brought within the municipal limits for the purpose of sale (sale means passing of the title to the purchaser), then different considerations might have ap plied. But in view of the facts of this case, the title passed to the goods outside the municipal limits even in respect of the petroleum products which were sold within the municipal limits. It was contended by Shri Sorabjee that rule 13 had no application. Shri Sorabjee drew our attention to certain paragraphs of the writ petition, in particular to paragraph 18(b) where it was stated that it is obligatory for the respondent No. 1 to grant respondent No. 2 transport passes and it had no jurisdiction to withdraw that facility. It was submitted with reference to that and other paragraphs that it was the case of the respondent No. 1 that facility was withdrawn and suspended and prayer was made for restoration of that facility. It was, therefore, submitted on behalf of the appellant that in the absence of facilities being grant ed under rule 13, it was incumbent on the parties to make a declaration under rule 9 of the said Rules. As no such declarations had admittedly been made, rule 9(2) of the said Rules was attracted. Accordingly, the goods in the present case were to be treated as having been brought within the municipal limits for consumption use or sale therein and as such liable for octroi duty, according to the appellant. Therefore, Shri Sorabjee submitted that this appeal should only be confined to the applicability of rule 9(2) of the said Rules. On the other hand, it was disputed by Shri Dalveer Bhandari and others that it is incorrect to say that the facility was suspended or withdrawn. Reading of the plead ings, according to Shri Bhandari, would make it clear that these were not suspended or withdrawn. Reference was made to paragraphs 6 and 7 of the reply to the writ petition at p. 116 of the paper book to the effect that it was the case of the appellant that facilities provided to the Indian Oil Corporation were never stopped and this submission has been 74 repeated several times. It was further submitted that when current account facility has been provided, there is no question of payment of octroi at the time of entry of petro leum products. On the other hand, the octroi tax is paid at the time of settlement of periodical account, say after every month. question of complying with rule 6 or rule 9 of the said Rules does not arise as they apply when octroi tax is paid at the time of entry of goods. In fact. the account of petroleum products imported and exported is kept by delivery of entry passes and transport passes by Indian Oil Corporation at Octroi outpose, which passes are given by Municipal Council. In fact, it is obligatory duty, according to counsel, of Municipal Council to provide entry passes and transport passes to Indian Oil Corporation which have been provided current account facilities. The delivery of entry passes and transport passes is only to facilitate settlement of octroi account on goods which have been retained in Municipal area for use and consumption. If municipality does not provide transport passes, it cannot take advantage of its own default, according to Shri Bhandari. It is obligato ry duty of Municipality, it was urged, to provide transport and entry passes to Companies and persons who have been provided current account facilities. In any way, even it transport passes are not given by the Municipal Council, the quantity exported can be ascertain by other means also. In the present case, there is no dispute regarding diesel exported to Dangiawas from Jodhpur Municipality. The Municipal Council has not refuted in its reply in para 11 at p. 117 of the paper book, the quantity of petroleum products exported to Dangiawas as mentioned in Schedule 'A ' (p. 104 of paper book) from 25th July, 1975 to date of writ peti tion. The Municipal Council gave an undertaking to refund the octroi tax charged from the petitioner on the diesel exported to Dangiawas outside the limits of Municipal Coun cil, Jodhpur as will be clear from the order of the learned Single Judge dated 7th February, 1976. It was also stated that the Division Bench vide its order dated 1st April, 1977 has already ordered that respondent No. 2 would deposit the octroi tax on diesel exported to Dangiawas. Thus, the octroi tax which became due on diesel exported to Dangiawas from 1st April, 1977 upto date is being deposited in the Bank account and there is no dispute regarding quantity of diesel exported to Dangiawas. Thus, it appears to us that the controversy raised by Municipal Council referring to cancel lation of transport passes is unfounded. The object of the transport passes was to ascertain the quantity of diesel exported to Dangiawas. There appears to be no dispute re garding quantity of diesel exported to Dangiawas from 25th July, 1975. The Depot Superintendent of Indian Oil Corpora tion, Jodhpur had deposed that current account facilities to Indian Oil Corporation is being continued till today. It was stated that the octroi is paid periodically on settlement of account between Municipal Council and Indian Oil Corporation and not at the time of entry of petroleum products. It appears that the contention that cancellation of transport passes is equivalent to cancellation of current account facilities, 75 made on behalf of the appellant, is incorrect. A perusal ot section 133 would show that current account facility is provided by substantive section, whereas rule 13 of the said Rules is procedure provided with the object of providing facility of settlement account of payment of octroi tax. In other words, according to rule 13(4), octroi tax is charged on quantity mentioned in entry passes minus the quantity mentioned in transport passes, i.e., on quantity of petroleum products used or consumed within the Municipal limits of Jodhpur Municipality. It is also unsustainable, according to Shri Bhandari to contend that M/s Parekh Automobiles has recov ered octroi tax from consumers. It has been asserted in the writ petition on oath as well as before this Court on filing affidavit that no octroi was recovered by M/s Parekh Automo biles from consumers. On the other hand, it is the case of M/s Parekh Automobiles that it had to pay octroi tax out of commission which it received from Indian Oil Corporation on sale of diesel. This fact, according to Shri Bhandari was never refuted by the Municipal Council or the Indian Oil Corporation. Thus there is no question of unjust enrichment, and as such M/s Parekh Automobiles is entitled to octroi tax which was recovered from it and which is lying deposited in separate Bank Account by the Indian Oil Corporation as per order of Division Bench dated 1st April, 1977 upto date. For period before 1st April, 1977, the Municipal Council has already given an undertaking to refund octroi tax. Pleadings in this case and the averments are rather confusing. On the consideration of all the facts and the circumstances of the case, we are of the opinion that the principles of the aforesaid two decisions of this Court have been correctly applied by the High Court in the facts and the circumstances of the case. The octroi duty is, there fore, not chargeable on the transactions mentioned herein. We are further of the opinion that in view of the confused state of the pleadings and averments, it is not possible to hold that current account facilities were withdrawn or cancelled. If that is the position, then there is no ques tion that the High Court was right in the order it passed and the direction it gave. In view of the aforesaid, appeals must fail and are accordingly dismissed. In the facts and the circumstances of the case, however, we make no orders as to costs. RANGANATHAN. J. I have gone through the judgment pro posed to be delivered in the above cases by my learned brother Sabyasachi Mukharji, J. I agree but I would like to add a few words on one of the questions raised. The controversy before us I shall refer only to the facts in CA. 1552/1981 for purposes of the discussion relates to the claim of the Municipal Council, Jodhpur (appellant) to octroi on the petroleum products sent from the depot of the Indian Oil Corporation (IOC) at Jodhpur, to retail outlets at Dangiawas where they are sold by Parekh 76 Automobiles Co. (hereinafter referred to as 'the dealer ') for sale at Dangiawas. Dangiawas is admittedly situated outside the limits of Jodhpur Municipal Council. The case of IOC and the dealer is that the goods in question are not sold at Jodhpur. According to them, the actual sale took place only at Dangiawas and, since neither the sale nor the consumption nor the use of the petroleum products in ques tion took place within the limits of the municipality of Jodhpur, the appellant council was not entitled to levy any octroi thereon. Alternatively, it was contended that, even if the sale is held to have taken place at Jodhpur, still, octroi cannot be levied as the goods so sold were meant for use or consumption outside the municipal limits, in view of the decision of this Court in Burmah Shell Oil Storage & Distributing Co. India Ltd. vs The Belgaum Borough Munici pality, [1963] Supp. (2) SCR 216 as followed in Hiralal Thakorlal Dalal vs Broach Municipality & Ors., [1976] Supp. SCR 82. The learned Single Judge in the High Court did not permit the petitioners to raise the question that the sale took place only outside the municipal limits of Jodhpur since that involved an investigation into facts which could not be undertaken in a writ petition and proceeded on the footing that the sale of the products in question took place within the limits of Jodhpur. He, however, accepted the contention of IOC and the dealer that even if the sale is taken to have been effected within Jodhpur, no octroi was leviable as admittedly the goods had been sold in Jodhpur only for their onward transmission for use and consumption in Dangiawas outside the Municipal limits. The Division Bench of the High Court has also approved of this conclusion and, in our opinion, rightly. As pointed out by my learned brother in his detailed discussion on this aspect, this issue is covered by the two decisions of the Supreme Court which have already been referred to. I have nothing to add, so far as this part of the case is concerned. It was urged before the High Court. on behalf of the Municipal Council, that the levy of octroi could be justi fied on the terms of rule 9 of the Rajasthan Municipalities (Octroi) Rules, 1962, (hereinafter referred to as 'the rules '). It is unnecessary to set out again the terms of this rule which have already been extracted in the judgment of my learned brother. Under sub rule (1) of this rule, every person bringing his goods within the municipal limits should make a declaration in terms thereof. In the present case, it is common ground that no such declaration had been made. It is, therefore, urged that by virtue of the closing words of rule 9(2), the goods in question should be treated "as having been brought within the Municipal limits for consumption, use or sale therein" and thus attract the charge of tax under clause 2 of sub section (1) of section 104 of the Rajasthan Municipalities Act, 1959 (hereinafter referred to as 'the Act '). The respondents have 77 attempted to counter this argument by urging that this provision regarding declaration does not apply in their case. Their argument is that their case is covered by sec tion 133 of the Act read with rule 13 of the rules. The argument is that rule 13 is a special provision applicable to a class of persons which has been allowed current account facilities under section 133 of the Act and that the proce dure under rule 13 overrides the requirements of rule 9. This argument has been accepted by the High Court. The question is whether the High Court 's conclusion on this issue is correct. I think that the High Court rightly ac cepted this argument and I should like to elaborate a little my reasons for this conclusion. Chapter II of rules provide for the manner of assessment and collection of octroi duty. Rules 3 to 5 provide for the establishment of octroi outposts with powers to the inspect ing staff to stop the vehicles at the outposts. Rule 6 lays down that no goods liable to payment of octroi shall, except as otherwise provided in these rules, be brought within the Municipal limits until the octroi duty leviable in respect of such goods has been paid at the octroi outposts. Where goods arrive at an octroi outpost they may be coming in either for consumption, use or sale within the Municipal Limits or for transportation outside those limits, whether immediately or after a period of time. If they have come in merely for the purpose of transportation, they are not liable to pay octroi duty. It, therefore, became necessary to make a detailed provision as to the manner of assessment and collection of duty having regard to this consideration. That is why rule 9 requires every person bringing goods within the municipal limits to make a declaration as to what the goods are intended for. If any of the goods are intended for consumption, use or sale within the Municipality, a declaration could be made orally to this effect; thereupon the octroi would be collected then and there in respect of those goods. If, however, the goods are intended for immedi ate or eventual transportation outside the Municipality, a written declaration should be filed by the importer. In respect of goods declared intended for immediate transporta tion, the officer in charge of the octroi outpost receives by way of deposit such amount as may be equivalent to the duty payable thereon and issues a transit pass to the im porter. The importer should transport the goods outside the Municipal limits within a period not exceeding eight hours (which can be extended to 24 hours at the most). On such transportation being effected, the amount of octroi deposit ed in respect of the goods so transported is returned to.the importer and the transit pass taken back. This is the proce dure envisaged in rule 11. (Certain refinements in procedure in the case of travelling agents is provided for in rules 11A & 11B, with which we are not concerned). Where, however, the goods are not immediately to be transported outside the Municipal limits but are to be temporarily detained within 78 the Municipal limits and eventually transported outside the Municipal limits, rule 12 is attracted. In the case of such goods they have to be sent to a bonded warehouse. The goods may be withdrawn from time to time either on payment of octroi in the event of their being consumed, used or sold within the Municipal limits or without any payment of octroi duty in case of their being transported outside the Munici pal limits. This procedure is outlined in rules 12 and 16 to 22. But one important condition is that the maximum period for which the goods can be placed in the bonded warehouse is 6 months. If the goods are not removed within the said time limit, they are liable to be sold by public auction and the warehouse charges and octroi recovered from the sale pro ceeds. This is the normal procedure for the assessment and collection of octroi duty. It is in respect of this proce dure that the declaration in rule 9 becomes important. The terms of the declaration determine the incidents of the duty. Regarding the first category of goods mentioned in rule 9(1), the collection of duty is immediate; regarding the second category, a deposit is demanded which can be refunded on transportation within a few hours; and in re spect of the third, duty has to be paid unless the goods are transported outside the municipal limits within 6 months. Rule 13, however, contemplates a totally different scheme for the assessment and collection of octroi for the special type of cases envisaged therein. From the terms of section 133. it would appear to be intended to cover mercantile firms or bodies which may be bringing goods into, or taking goods out of, the municipal limits frequently and, perhaps, also firms or bodies about whose capacity to pay the duty in due course the Municipal Board has confidence. These persons are given the facility of having a current account with the Municipality and the amount of duty payable by such a person is determined and collected from time to time. Such an account is opened on the firm or body making such deposit or furnishing such security as the Municipality may require, for the due discharge of its liabilities under the Act and the Rules. When this facility is provided, the procedure to be followed is set out in rule 13. Here what is done is that the firm or body is given a book of entry passes and a book of transport passes from time to time. As and when the firm or body brings goods into the Municipality, it is required to fill in one of the entry passes setting out the details of the goods which are being brought in under any particular consignment and present the same at the octroi outpost of entry. After verifying that the details of the goods brought in tally with the details of the goods entered in the entry pass, the details are passed on to the octroi Superintendent who debits the account of the person concerned with the amount of octroi payable in respect of the goods 79 listed in the pass. As and when the firm or body wishes to transport the goods out of the MUnicipality, it fills up a transport pass containing the details of the goods proposed to be transported outside and presents it to the octroi outpost of exit. The officer at the outpost verifies that the goods mentioned in the pass and the goods sought to be transported tally with each other. Then the transport pass duly certified by him is passed on to the octroi Superin tendent. The octroi Superintendent, after verification, files the certificates of export separately in respect of each such body or firm. The amount of octroi payable in these cases is based on the total amount of octroi on the goods shown by the entry passes less the goods transported out under the transport passes. In other words, in the case of persons who have the current account facilities, the duty is calculated on the basis of the total amount of goods that have. come in as reduced by the total amount of the goods that have gone out, the balance being presumed to have been consumed, used or sold within the Municipal limits. In order to ensure that there is a correspondence between the goods that have come in and those that have gone out, the proviso to sub rule (4) of rule 13 provides that, in computing the octroi duty payable, the goods transported outside the Municipal limits shall be lessened only if (a) such goods have not been sold within the Municipal limits and (b) they have been transported out of such limits within a period of 6 months from the date of their import. A comparison of the above two sets of provisions will make it clear that they are two independent and mutually exclusive modes of assessment and collection of duty. Under the cash system of payment, a declaration under rule 9 is absolutely essential because the officials at the outpost will have to determine the mode of dealing with the goods on the basis of such declaration. The octroi duty has to be collected then and there in respect of the goods which are to be consumed, used or sold within the Municipal limits; a deposit has to be taken in respect of those goods which are intended to be immediately transported outside; and the rest of the goods on which the transportation is to be effected on a future time, have to be directed to a bonded warehouse. The mode of collection of duty in respect of a person having current account facilities, however, does not depend upon any such declaration or upon the mode of utilisation of the goods as indicated in such declaration, because, in the case of the current account holders, the duty payable in respect of the entirety of the goods brought in is straightaway debited to his account on the basis of entry passes. The duty payable in respect of the goods transported outside is later on credited to his account on the basis of the trans port passes. The difference is the amount of the duty pay able by him and this is recovered 80 from the person concerned from time to time either by ad justment out of the deposits earlier obtained from him or by other processes of recovery. The procedure as to issue of transit passes or storage in a warehouse are also irrelevant for the purposes of dealing with the goods under rule 13. It, therefore, appears to me that High Court was fully justified in holding that the terms of rules 6 and 9 have no relevance to the payment of duty in cases covered by the current account facility envisaged under rule 13. The High Court was, therefore, right in holding that the present case cannot be brought within the terms of proviso to rule 9(2) on the basis of a deemed consumption, use or sale within the Municipal limits. It is true that the proviso to sub rue 4 of rule 13 also envisaged the exclusion from levy of octroi duty only where the goods are not sold within the Municipal limits. It may be contended that, in the present case, as the IOC has sold the goods within the Municipal limits, and the subsequent transport to Dangiawas, though effected by the IOC, was really on behalf of the dealer the goods so transported and entered in the transport passes of the IOC should be exclud ed from deduction under sub rule (4) of rule 13. But this construction, in my view, cannot be accepted. The expres sions used in the proviso to sub rule (4) cannot be inter preted differently from the words used in section 104, on the basis of which chargeability to duty arises. If, as we have held, there can be no octroi duty at all levied by the Jodhpur Municipality in respect of the goods solo by the IOC within, but clearly intended to be transported for use or consumption outside, the Municipal limits, then this statu tory limitation cannot be defeated by interpreting the proviso in such a way as to make all goods sold within the Municipality liable to duty even if the sale is in pursuance of a clear intention that the goods are to be despatched outside. The terms of the proviso and the main section have to be read harmoniously. The result of the above discussion is that the present case is governed by the terms of rule 13 and the IOC is entitled to go on paying octroi duty on the basis of the goods brought by it within the Municipality less the goods transported outside the Municipality even where the trans port outside the Municipality may be in pursuance of a sale within the Municipality so long as such sale is in pursuance of an intention that the goods should be consumed or used outside the Municipal limits. As we have already said, in cases where rule 13 applies, rule 9 is excluded and, there fore, the High Court rightly held that the octroi charged on the IOC in respect of the impugned sales was not justified. 81 Before concluding I wish to refer to three aspects. The first is as to whether even assuming that rule 9 was ap plicable to a case where the current account facility has been provided, the terms of that rule can be read in such a manner as to militate against the very concept of octroi duty as explained in the Burmah Shell case. A question may arise whether the terms of rule 9(2) so interpreted would be intra vires the rule making power of the legislature. I express no opinion on this issue as I have already expressed my view that rule 9 has no application to the present case. The second aspect, which I wish to touch upon, is a point sought to be raised on behalf of the appellant in the course of,the present hearing that the current account facility granted to the IOC had been revoked. My learned brother has referred to the pleadings in this regard at great length and, as pointed out by him, the factual position is by no means clear. I do not think that the appellant should be permitted to raise at this stage a new plea when all along, in the earlier proceedings in the High Court, the case has proceeded on the footing that the IOC had been having and continues to have current account facilities. The third aspect to which I would like to make a reference is that we have principally based out decision only on the facts in regard to the sales to Parekh Automobiles Ltd. We are told that there are a number of suits, other than those before us today, which are pending at various stages in which various pleas have been raised, I would only like to make it clear that we express no opinion regarding the factual position in those cases and those cases will have to be disposed off in the light of the legal position set out in our judgment. Except for the above clarifications I have nothing to add to what my learned brother Mukharji, J. has said and I respect fully agree with his conclusion that the appeals must fail and are dismissed. R.S.S. Appeals dismissed.

M/s. Parekh Automobiles Ltd., respondent No. 1, had been allotted retain outlet by Indian Oil Corporation, respondent No. 2, for sale of its petroleum products at Dangiawas, which was outside the limits of the appellant. Respondent No. 2 had its depot near Raikabag Station at Jodhpur where it stored petroleum products for supply to various pump stations situated within the limits of the appellant as well as situated outside its limits. Respondent No. 2, being a public sector undertaking, was provided current account facilities under section 133 of the Rajasthan Municipalities Act, 1959, and so respondent No. 2 had not to pay octroi tax on such consignments at the time of entry of goods within the limits of the appellant. For this purpose, respondent No. 2 was provided with the export facilities and supplied with entry passes under Rule 13 of the Rajasthan Municipal Octroi Rules 1962. Under rule 13(4), the amount of duty payable, in the case or persons who had the current account facilities, was determined and collected on the basis of the total amount of goods that had come in as reduced by the total amount of goods that had gone out, the balance being presumed to have been consumed, used or sold within the municipal limits. It was alleged that the appellant suspended the current account facility under section 133 of the Act and took the stand that octroi would be charged from Respondent No. 2 on the goods brought within the municipal limits if these were sold within the limits of the appellant although such goods were mean for use and consumption of the consumers outside the municipal limits. As a consequence of this action of the appellant, respondent No. 2 charged octroi duty on supplies made to respondent No. I at Dangiawas by adding the amount of octroi tax in the bills. Respondent No. 1 filed a writ petition in the High Court praying inter alia for a direction or an order restraining the Municipal Council from realising any tax on diesel, etc. which were supplied to respondent No.1 at Dangiawas by respondent No. 2, and for refund of octroi tax already paid. It was contended on behalf of respondent No. 1, in the High Court, that the Municipal Council had no jurisdiction to levy octroi on the goods brought within the municipal limits but not sold, consumed or used therein and subsequently exported outside the said limits; that actual sale took place only at Dangiawas and since neither the sale nor the consumption nor the use of the petroleum products in ques tion took place within the limits of the municipa 50 lity of Jodhpur, and Municipal Council was not entitled to levy any octroi thereon; alternatively, even if the sale was held to have taken place at Jodhpur, still, octroi could not be levied as the goods so sold were meant for use of con sumption outside the municipal limits; and that the word 'sale ' occuring under section 104 of the Municipalities Act could not be read without reference to use or consumption, as sale simplicitor by itself did not attract the levy of octroi, unless the goods were meant for use or consumption of the ultimate consumer in the area of the Municipal Council. The defence of the Municipal Council was that because the sale took place at Jodhpur, octroi was chargeable irre spective of the fact where it was consumed or used; that as soon as the goods entered the octroi limits, it gave rise to taxable event unless a declaration as contemplated under rule 9 had been made; that respondent No. 2 did not make the declaration as required by rule 9 and rule 13(4) of the Octroi Rules; and that under sub rule (4) of rule 13 the goods exported were to be lessened only if such goods had not been sold within the municipal limits and were exported out within a period of six months from the date of entry. The claim of refund was contested on the ground that there was no privity of contract between respondent No. 1 and the Municipal Council as the demand of octroi was not made from respondent No. 1. The case of the Indian Oil Corporation, respondent No. 2, was that under the terms of the agreement respondent No. 2 was obliged to transport petroleum products out of its depots and supply petroleum products to its dealers at the destination in its own truck tankers, and till the supplies were made at the destination, the goods were at the risk of respondents No. 2 and therefore the goods were sold at the retail outlet where the deliveries were made and not at Jodhpur. The learned Single Judge did not permit the petitioners to raise the question that the sale took place only outside the municipal limits of Jodhpur since that involved an investigation into facts which could not be undertaken in a writ petition, and proceeded on the footing that the sale of the products in question took place within the limits of Jodhpur. He, however. accepted the contention of IOC and the dealer that even if the sale was taken to have been effected within Jodhpur, no octroi was leviable as admittedly the goods had been sold in Jodhpur only for their onward trans mission for use and consumption in Dangiawas outside the municipal limits. The prayer for refund of the octroi tax was, however, refused. The Division Bench dismissed the appellant 's appeal and partly allowed the appeal filed by respondent No. 1. On the basis of the judgments of this Court in Burmah Shell Oil Storage & Distribution Co. India Ltd. vs The Belgaum Borough Municipality, [1963] Supp. 2 SCR 216 and Hiralal Thakorlal Dalai vs Broach Municipality, [1976] Supp. SCR 82 wherein it was held that the sine qua non for levy of octroi was con sumption, and that the sale in order to attract levy of octroi shall be for the purpose of use or consumption 51 of the ultimate consumer, the Division Bench held that sale simplicitor would ot attract the levy of the octroi, that the word 'sale ' in this context had to be read with refer ence to the use or consumption and 'use, consumption and sale ' had to read in a disjunctive manner. The Division Bench further held that rule 13 was a special provision in regard to; the persons who had been granted current account facilities and this rule was not subject to either rule 6 or rule 9 but was an overriding rule independent of rules 6 and 9. The Division Bench was of the opinion that section 133 of the Municipalities Act, alongwith rule 13 of the octroi Rules left no doubt that no conclusive presumption of the goods having been brought within the municipal limits for consumption, use or sale therein could be drawn in cases where special current account facilities had been given to a person. The Division Bench also held that the claim of refund by respondent No. 1 was not maintainable. The Bench however directed that the Municipal Council would have to refund to the Indian Oil Corporation, respondent No. 2, the amount of octroi duty paid on the petroleum products re exported by it to Dangiawas outlet for supply to respondent No. 1, who would recover the same from the Indian Oil Corporation. M/s. Motilal Padampat Sugar Mills Co. Ltd. vs State of Uttar Pradesh & Ors., ; and State of Madhya Pradesh & Anr. vs Bhailal Bhai, ; , relied upon. Before this Court, the parties reiterated their conten tions raised before the High Court. In addition, it was contended on behalf of the appellant that there was nothing in the two judgments of this Court to the effect that if goods were brought into a local area for sale to a dealer who then transported the goods outside the local area for sale to consumers, no octroi would be chargeable. It was further contended that during the period in dispute, as also today, there was no current account facility to the respond ent No. 2 under rule 13 of the Octroi Rules and as admitted ly the respondent No. 2 was not complying with the require ments of rules 6 and 9 of the said Rules and not filing any declaration, the Municipal Council had the right to treat the goods brought within the Municipal limits, as those brought for consumption, use or sale under sub rule (2) of rule 9 of the said Rules and thereby attracting octroi. On the other hand, it was contended on behalf of the respond ents that it was incorrect to say that the current account facility was suspended or withdrawn. Dismissing the appeal, this Court, HELD: (Sabyasachi Mukharji and M.H. Kania, JJ. Per Sabyasachi Mukharji, J). (1) The High Court was right in holding that it was difficult and inappropriate under Article 226 to determine the question as to where the sale 52 took place, and that even if the sale took place within the octroi limits of Jodhpur Municipal Council for the use or consumption of the ultimate consumer outside the octroi limits of Jodhpur then the taxable even did not take place in the octroi limits of Jodhpur. [66F G] (2) In view of the decisions of this Court and in view of the language of section 104 of the Municipalities Act and the facts, the High Court was right in holding that no octroi was leviable on petroleum products re exported out side the municipal limits for consumption and use outside the municipal limits. [65F] Burmah Shell Oil Storage & Distributing Co. Ltd. vs The Belgaum Borough Municipality, [1963] Supp. 2 SCR 216 and Hiralal Thakorelal Dalai vs Broach Municipality & Ors., [1976] Sup. SCR 82, followed. (3) In view of the facts of this case, the title passed to the goods outside the municipal limits even in respect of the petroleum products which were sold within the municipal limits. If the goods were brought within the municipal limis for the purpose of sale (sale means passing of the title to the purchaser), then different considerations might have applied. [73D] (4) Analysis of Section 133 and the current account facility therein indicates that only on the goods for use, consumption or sale, octroi is leviable. Under this provi sion, octroi tax is paid at the tune of settlement of peri odical account, say after every month. Thus, question of complying with rule 6 or rule 9 does not arise as they apply when octroi tax is paid at the time of entry of goods. The delivery of entry passes and transport passes is only to facilitate settlement of octroi account on goods which have been retained in Municipal area for use and consumption. [73H; 74A] (5) A perusal of section 133 would show that current account facility is provided by substantive section, whereas rule 13 is procedure provided with ' the object of providing facility of settlement of account of payment of octroi tax. In other words, according to rule 13(4), octroi tax is charged on quantity mentioned in entry passed minus the quantity mentioned in transport passes, i.e., on quantity of petroleum products used or consumed within the Municipal limits of Jodhpur Municipality. [75A B] (6) In view of the confused state of pleadings and averments, it was not possible to hold that current account facilities were withdrawn or cancelled. If that is the position, then there is no question that the High Court was right in the order it passed and the direction it gave. [75E] Per Ranganathan, J. (1) When goods arrive at an octroi outpost, they may be coming in either for consumption, use or sale within the municipal limits or for transportation outside these limits. Rule 9 requires every person bringing goods within the municipal limits to make a declaration as to what the goods are intended for. [77E] 53 (2) Under the normal procedure for the assessment and collection of octroi duty, the declaration under Rule 9 becomes important and the terms of the declaration deter mines the incidence of the duty. Rule 13, however, contem plates a totally different scheme for the assessment and collection of octroi for the special type of cases. [78C D] (3) A comparison of the two sets of provisions will make it clear that they are two independent and mutually exclu sive modes of assessment and collection of duty. Under the cash system of payment, a declaration under rule 9 is abso lutely essential. The mode of collection of duty in respect of a person having current account facilities, however, does not depend upon any such declaration or upon the mode of utilisation of the goods as indicated in such declaration, because in the case of the current account holders, the duty payable in respect of the entirety of the goods brought in is straightaway debited to his account on the basis of entry passes. The duty payable in respect of the goods transported outside is later on credited to his account on the basis of the transport passes. [79E G] (4) The High Court was fully justified in holding that the terms of rules 6 and 9 have no relevance to the payment of duty in cases covered by the current account facility envisaged under rule 13, and that the present case cannot be brought within the terms of proviso to rule 9(2) on the basis of a deemed consumption, use or sale within the munic ipal limits. In cases where rule 13 applies, rule 9 is excluded. [80B] (5) The present case is governed by the terms of rule 13 and the Indian Oil Corporation is entitled to go on paying octroi duty on the basis of the goods brought by it within the Municipality less the goods transported outside the Municipality, may be in pursuance of a sale within the Municipality, so long as such sale is in pursuance of an intention that the goods should be consumed or used outside the Municipal limits. [80G] (6) The appellant should not be permitted to raise at this stage a new plea that the current account facility granted to the Indian Oil Corporation had been revoked when all along, in the earlier proceedings in the High Court, the case had proceeded on the footing that the Indian Oil Corpo ration had been having and continued to have current account facilities.

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

Under a quolnama the assessee company was granted exclusive rights in the nature of a monopoly to extract Shahabad Flag Stones without limit to quantity or measurement from quarries situated in six villages for a period of 12 years on annual payment of Rs. 28,000 but not to manufacture cement. The stones had to be extracted methodically and skilfully before they could be dressed and sold. The assessee company paid an initial sum of Rs. 96,000 as security and the balance of Rs. 20,000 was payable each year in monthly instalments of Rs. 1,666 10 8 each. The payments were to be made even if no stones were extracted or could not be extracted. The question was whether the amounts paid were allowable as business expenditure under section 12(2)(xv) of the Hyderabad Income Tax Act: Held (Per Kapur and Hidayatullah, jj. section K. Das, J., dissenting), that under the quolnama the assessee acquired by his long term lease a right to win stones and the lease conveyed to him a part of land. The stones in situ were not his stock intrade in a business sense but a capital asset from which after extraction he converted the stones into his stock in trade. The payment though periodic in fact was neither rent nor royalty but a lump sum payment in instalments for acquiring a capital asset of enduring benefit to his trade. The right acquired is to a source from which the raw material was to be extracted. The expenditure was outgoings on capital account and was not allowable as deductions under section 12(2)(XV) Of the Hyderabad Income Tax Act. Per section K. Das, J. That on its true construction the trans action was the sale of raw materials coupled with a licence to the assessee to come on the land and remove the materials sold, the purchase price being paid partly in a lump sum and partly in monthly instalments, that the object was the procuring of the stones for making flag stones and not the acquisition of an enduring asset or advantage, that the payments made were the price of raw materials and that the assessee was therefore entitled to claim them as business expenditure under section 12(2)(xv) of the Hyderabad Income Tax Act. Assam Bengal Cement Works Ltd. vs Commissioner of Income Tax, West Bengal, , distinguished.

Appeal No. 451 of 1960. Appeal from the judgment and order dated September 18, 1957, of the Bombay High Court in I.T.R. No. 8 of 1957. K. N. Rajagopal Sastri and D. Gupta, for the appellant. 894 Bishan Narain, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the respondent,. February 21. The Judgment of the Court was delivered by KAPUR, J. This is an appeal pursuant to a certificate of the High Court of Bombay under section 66A(2) of the Indian Income tax Act (hereinafter called the " Act "). For the year of assessment 1949 50 the respondent was assessed to a sum of Rs. 1,80,646/14/ as income tax and super tax on June 2, 1954. A notice of demand under section 29 of the Act was served on the respondent to pay that amount on or before July 17, 1954. On his application the respondent was allowed to pay by instalments. The last instalment of Rs. 30,646/14/ was payable on or before March 20, 1955. As there was a default in the payment of this instalment the Income tax Officer on March 31, 1955 imposed a penalty of Rs. 3,000/ under section 46(1) of the Act. On April 20, 1955 the respondent filed an appeal to the Appellate Assistant Commissioner but by that date the last instalment had not been paid and it was paid on May 16, 1955. The Income tax Officer raised a preliminary objection before the Appellate Assistant Commissioner that the appeal was not competent 'because the last instalment of the tax had not been paid. This was upheld by the Appellate Assistant Commissioner. Against this order the respondent took an appeal to the Income tax Appellate Tribunal which held that the right of appeal was conferred by section 30(1) of the Act and is not taken away by section 30(2) of the Act, only the remedy is barred. It further held that as the right had not been destroyed the appeal became good appeal as soon as the assessee paid the arrears of tax and the only effect of the payment on May 16, 1955, was that the appeal shall be taken to have been preferred before the Appellate Assistant Commissioner on that date and it was then for the Appellate Assistant Commissioner to decide whether it was a fit case for extension of time and condonation of delay. The Tribunal therefore directed the. Appellate Assistant Commissioner to dispose of the appeal in accordance with law. At the instance of the Commissioner 895 of Income tax, who is. the appellant before us, the Tribunal stated the following question of law to the High Court: " Whether the appeal filed before the Appellate Assistant Commissioner on 20th April, 1955, became a proper and complete appeal though barred by limitation and the Appellate Assistant Commissioner should have decided the question of the condonation of delay ? " The High Court answered the question in the affirmative. The Commissioner of Income tax has come in appeal against this judgment. Appeals are provided against assessments under section 30 of the Act. There is a, proviso to section 30(1) in regard to the payment of taxes in the following 'Words: " Provided that no appeal shall lie against an order under sub section (1) of section 46 unless the tax has been paid. " The controversy between the parties revolves round the words " no appeal shall lie." The contention which was raised before us was that these words mean that there is no right of appeal till the tax is paid and therefore if the tax has not been paid the memorandum of appeal cannot be filed and if filed it is merely a waste paper. In our opinion the meaning of the words " no appeal shall lie " in the proviso is not that no memorandum of appeal can be presented. All that it means is that the appeal will not be held to be properly filed until the tax has been paid. If, for instance, the memorandum of appeal is filed 'on the 20th day, i.e.,. 10 days before the period of limitation expires and the tax is paid within the rest of the 10 days, the appeal will be a proper appeal; it will be within time and no question of limitation will arise but if the tax is paid after the period of limitation has expired it will be taken to have been filed on the day when the tax is paid even though the memorandum of appeal was presented earlier and within the period of limitation. , The question, will then have to be decided whether there was sufficient cause for condonation of delay and that is exactly what the Tribunal had ordered 896 and that in our opinion is the effect of the proviso to section 30(1) read with sub section (2) of section 30 of the Act. It is unnecessary therefore to refer to the two cases referred to by the High Court, i.e., Raja of Venkatagiri vs Commissioner of Income tax (1) and Kamdar Brothers vs Commissioner of Income tax (2). The appeal is without force and is therefore dismissed with costs. Appeal dismissed.

Against an order imposing penalty under section 46(1) of the Indian Income tax Act on account of failure to pay an instalment of Income tax, an appeal was preferred. Though the memorandum of appeal was presented with the period of limitation, the tax was paid after the period of limitation prescribed for presenting the appeal had expired. Held, that the expression " No appeal shall lie " in the proviso to section 30(2) of the Indian Income tax Act means that the appeal cannot be held to be properly filed until the tax is paid, and not that no memorandum of appeal may be presented. The effect of proviso to section 30, sub section (1) read with sub section (2) of the Act is that the appeal will be deemed to be filed on the date when the tax due is paid and the question will then have to be decided whether there is sufficient cause for condonation of delay.

Civil Appeal No. 1653 of 1979. Appeal by special leave from the Judgment and Order dated 23.5.1979 of the Delhi High Court in E.F.A. No. 8/76. Madan Bhatia and Sushil Kumar for the Appellant. S N. Kacker, S.K.Mehta, P.N. Puri, E.M.S. Anam and M.K. Dua for the Respondents. The Judgment of the Court was delivered by A.N. SEN J. The principal question which falls for determination in this appeal by Special Leave granted by this Court, is whether Gyan Chand Jain, the Respondent No. 1 in this appeal, who purchased a two and half storeyed Bungalow at No. 5 C/96, W.E.A. Karol Bagh, New Delhi, at an auction sale held pursuant to the terms of the compromise decree between the morgagor and the morgagee, is entitled to recover actual physical possession of the portions in the occupation of the appellants as lessees, the leases in respect of which were created after the decree in the mortgage suit by consent between the parties had been passed, in an application made by the auction purchaser Gyan Chand Jain under O.XXI, rules 95 & 96 of the Code of Civil Procedure. There is no serious dispute with regard to the facts material for the purpose of appeal. Des Raj Agarwal, the sole proprietor of M/s. 178 Raj Kumar & Co., mortgaged the 2/1/2 storeyed bungalow No.5 C/96, WEA. Karol Bagh, New Delhi (herein after referred to as the premises) along with various other properties with Oriental Bank of Commerce (hereinafter referred as the Bank) on 28.6.1960 by deposit of title deeds. The Bank filed a suit to recover its dues on the mortgage on 6.11.1962. On 3.9.1963, a decree was passed by consent of the parties in favour of the plaintiff mortgagee for the sum of Rs. 479177.49 with costs and future interest at 6% till realisation of the decretal amount. The other relevant terms of the consent decree which are contained in clauses 8 and 9 of the compromise are to the following effects: "8. If the judgment debtor pay Rs. 479177.49 less costs and interest as after March, 1961 within two years of the decree, then whole of the decree shall stand satisfied. If full amount of the decree with costs and interest is not paid as agreed above, within two years of the decree, then the decree holder shall be free to enforce the decree against the property mortgaged which shall be sold in execution of the same and the decree holder shall be entitled to proceed against other property and person of the judgment debtor in the case of the proceeds of the property not being sufficient to satisfy the decree". After the decree had been passed on 3.9.1963, it appears that the judgement debtor leased out different portions of the premises to Dev Raj Dogra, Ish Kumar Khosla and Balwant Singh, the appellants herein, 1966, 1967 and 1970 respectively. The judgment debtor failed to make payment of the decreetal dues in terms of the provisions contained in the consent decree and the premises in question resold by public auction on 28.10.1971. Gyan Chand Jain whose bid was the highest, was declared to be the purchaser of the premises and the sale in his favour was confirmed on 6.8.1973. On 25.10.76 an application was made on behalf on Gyan Chand Jain, the auction purchaser, in the Delhi High Court under O. XXI rules 95 and 96 and also S.151 of the Code of Civil Procedure for the following reliefs: (i) Warrants of possession with the direction that vacant physical possession of the entire property be delivered to the applicant, be issued and vacant physical possession of the entire property be got delivered to the applicant; 179 (ii) in case the Hon 'ble Court comes to a conclusion that the applicant is not entitled to vacate physical possession of any part of the property symbolic possession of that part of the property be granted to him; (iii) notices be issued to the persons mentioned in para 9 above to show cause why vacant physical possession of the portion of the property in their occupation be not delivered to the applicant. The three tenant who were in possession of the respective portions leased out to them and on whom notices had been served, contested the said application. A learned Single Judge of the Delhi High Court passed an order of physical possession of the said portions in the respective occupation of the tenants, the appellants before us, to be made over to the auction purchaser Gyan Chand Jain. The Learned Judge held that the tenancies in favour of the tenants had been created after institution of the suit by the Bank and after the passing of the compromise decree in the said suit; and, the said tenancies would have no effect on the rights acquired by the auction purchaser, in view of the provisions contained in section 52 of the Transfer of property Act. The Learned Judge had relied on the judgment of a Division Bench of the Bombay High Court in the case of Ramdas Popat Patil vs Fakira Pandu Patil and Ors.(1) and also on decision of Division Bench of the Gujarat High Court in case Jagjiwandas a Firm vs Lakhiram Haridasmal and Ors.(2) The tenants preferred an appeal against the said order of the learned Judge. Before the Division Bench of the Delhi High Court, it was urged on behalf of the tenants that the decision of the Division Bench relied on by the learned Single Judge had been subsequently over ruled by a decision of the Full Bench of the Bombay High Court in case of Anaji Thamaji Patil vs Ragho Bhivraj Patil and Anr.(3) and the correctness of the decision of the Gujarat High Court had also been questioned in this Full Bench judgment. Various other arguments were also advanced before the Division Bench on behalf of the tenants and the said arguments have been noted in the judgment of the Division Bench. The Division Bench however, dismissed the appeal, accepting the contention put forward on behalf of the respondent auction purchaser that the decision of this Court in the case of M/s Supreme General Films Exchange Ltd. vs His Highness Maharaja Sir Brijnath Singhji. 180 Deo of Maihar and Ors., concludes the controversy. The Division Bench also referred to the decision of this Court in case Jayaram Mudaliar vs Avva Swami and Ors.(2) Against the judgment and decision of the Delhi High Court the tenants have preferred this appeal after obtaining special leave from this Court. Mr. Bhatia, learned counsel appearing on behalf of the tenants the appellants before us, has urged that section 52 of the has no application to the facts and circumstances of this case, as the conditions laid down in the said Section for the applicability of the said section are not satisfied. It is the argument of Mr. Bhatia that the requirements of the said Section are (1) there must be a suit or proceeding which is not a collusive one and any right to immovable property must be directly and specifically in question in the said suit or proceeding and (2) transfer or otherwise dealing with the property by any party to the suit or proceeding must affect the right of any other party thereto under any decree or order which may be passed therein. Mr. Bhatia has contended that in the instant case the right that the mortgagee had was only to put the property to sale in the event of the mortgagor failing to pay the decreetal amount in terms of the provisions of the compromise decree. It is his contention that the right to put the property to sale cannot be said to be a right to immovable property directly and specifically in question in the suit. He also referred to section 65A of the which empowers the mortgagor while lawfully in possession of the mortgaged property to grant lease in terms of the provisions contained in the said Section. He has submitted that section 65A should be read along with section 52 and both these sections have been incorporated with the object of preserving the interest of the mortgagee by making suitable provisions so that the security of the mortgagee might not in any way be affected by any act done by the mortgagor after the creation of the mortgage and also after the institution of any suit for enforcement of the mortgage. It is his submission that in section 65A of the the Legislature has made it manifestly clear that the mortgagor will be entitled to grant a lease of the property in conformity with the provisions of the said Section and he submits that when a mortgagor grants a lease of the mortgaged property in terms of the provisions of Section 65 A of the , it cannot be said that the granting of any such lease affects the right of the mortgagee. Mr. Bhatia has next contended that in any event S.52 makes provisions for the 181 parties to the suit or proceeding and can have no application to any outside auction purchaser who is not a party to the suit or proceeding and who only acquires his right after the sale in execution of the decree has been confirmed. Mr. Bhatia argues that the judgment of the learned Single Judge of the Delhi High Court must be held to be wrong, as the learned Single Judge came to his decision relying on the decision of the Division Bench of the Bombay High Court in the case of Ramdas Popat Patil vs Fakira Pandu Patil and Ors. (supra) and the decision of the Gujarat High Court in the case of Jagjiwandas a Firm vs Lakhiram Haridasmal and Ors. (supra) and the decision of the Division Bench of the Bombay High Court in Ramdas Popat Patil 's case has been over ruled by the Ful Bench decision of the Bombay High Court in Anaji Thamaji Patil vs Ragho Bhivraj Patil and Anr. (supra) in which the correctness of the decision of the Gujarat High Court has also been questioned. Mr. Bhatia has commented that the decisions of this Court in the case of M/s. Supreme General Films Exchange Ltd. vs His Highness Maharaja Sir Brijnath Singhji Deo of Maihar and Ors. (supra) and in the case of Jayaram Mudaliar vs Ayya Swami and Ors. (supra) do not conclude the question involved in the instant case. He has submitted that the rights of a third party auction purchaser to get physical possession of the property purchased at the auction sale was not considered by the Supreme Court in any of these two decisions; and he has further submitted that in these two cases the Supreme Court had indeed proceeded on the assumption that section 52 of the was applicable without considering whether the requirements of the said Section had been complied with or not, as these aspects were not argued before the Supreme Court in these two cases. Mr. Bhatia has drawn our attention to O.XXI, rule 95 and also to rule 96 of the Code of Civil Procedure and has submitted that the rights of an auction purchaser are governed by the provisions contained therein. It is the argument of Mr. Bhatia that in view of the provisions contained therein, the auction purchaser cannot claim physical possession of the portions in the occupation of the appellants, even though the appellants might have been inducted as tenants after the compromise decree in the suit had been passed. Mr. Kakkar, learned counsel appearing on behalf of the auction purchaser, has submitted that as the tenants in the instant case were inducted not only after the institution of the suit for enforcement of the mortgage but also after the compromise decree had been passed, therein section 52 of the must be held to be applicable and it must be held that the tenancies were illegal and were created in breach of the provisions contained in section 52 of the 182 . Mr. Kakkar has argued that section 65 A of the does not, in any way, control section 52 of the said Act. It is his argument that section 65 A makes provisions with regard to the powers of the mortgagor to grant leases of the mortgaged property after the creation of the mortgage but before the institution of suit, while, on the other hand section 52 makes provisions for cases of transfer or otherwise dealing with any property after the institution of a suit or proceeding and section 52 imposes a complete ban on the transfer of any kind or dealing with immovable property except with the authority of the Court during the pendency of the suit or proceeding in which any right to immovable property is directly or specifically in question so that the rights of any party may not be affected when any decree or order is passed in the suit or in the proceeding. Mr. Kakkar has referred to S.58 of the in support of his contention that in case of a mortgage, there is a transfer of an interest in specific immovable property for the purpose of securing of the payment of money advanced or to be advanced by way of loan. He has argued that in a suit for the enforcement of mortgage it must, therefore, be held that the right to immovable property is directly and specifically in question; and he has further argued that after the decree for sale is passed in a mortgage suit the mortgagor loses even his right to redeem the property. He has submitted that in the instant case tenancies have been created long after the compromise decree in which provision for sale of the mortgaged property had been made and the right of the mortgagee decree holder to put up the mortgaged property to sale had also arisen for failure on the part of the mortgagor judgment debtor to pay the decretal dues in terms of the compromise decree and the tenancies created by the mortgagor must be held to be illegal and void as they are clearly in contravention of the provisions contained in section 52 of the . He submits that there cannot be any manner of doubt, that the creation of a tenancy affects the value of the property and to that extent affects the security, even though it may be said that the Legislature in its wisdom has thought it fit to permit the mortgagor to grant leases of the mortgaged property in terms of the provisions contained in section 65 A of the . It is his argument that the Legislature has thought it fit not to impose any kind of absolute prohibition in respect of the dealing with any property by the mortgagor after the creation of a mortgage and has imposed only such restrictions which the Legislature thought would not prejudicially effect the security of the mortgagee; but the Legislature, however, in section 52 of the Act has thought fit to impose complete ban on the transfer 183 of or otherwise dealing with any property after the institution of a suit or proceeding in which the right to property is directly or specifically in question, so that the rights of any party thereto may not be affected under a decree or order which may be made in the suit or proceeding. Mr. Kakkar has next submitted that the auction purchaser at the Court sale acquires all the right, title and interest of the mortgagor and also of the mortagee as a result of the purchase and the auction purchaser, therefore, steps into the shoes of the mortgagee and becomes entitled to obtain physical possession of the property purchased in the same manner as the mortgagee himself would have been able to do. Mr. Kakkar in this connection has referred to the decision of this Court in the case Mangru Mahto and Ors. vs Shri Thakur Taraknath Tarakeshwar Math and Ors.(1); and also to the decision of the Supreme Court in M/s. Supreme General Films Exchange Ltd. vs His Highness Maharaja Sir Brijnath Singhji Deo of Maihar and Ors. (supra) It is the submission of Mr. Kakkar that the decisions of this Court in the case of M/s. Supreme General Films Exchange Ltd. (supra) and also in the case of Jayaram Mudaliar (supra) conclude the question involved in the present appeal and the Division Bench rightly dismissed the appeal relying on the said decisions. Before we proceed to deal with the respective contentions of the parties, it will be convenient to consider the material provisions of the relevant statutes to which we were referred in the course of submissions made from the bar. Section 52 of the reads as follows: "During the pendency in any Court having authority within the limits of India excluding the State of Jammu and Kashmir or established beyond such limits by the Central Government of any suit or proceeding which is not collusive and in which any right to immovable property is directly and specifically in question, the property cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the rights of any other party thereto under any decree or order which may be made therein, except under the authority of the Court and on such terms as it may impose. [Explanation For the purposes of this section, the pendency of a suit or proceeding shall be deemed to commence from the date of the presentation of the plaint or the institu 184 tion of the proceeding in a Court of competent jurisdiction, and to continue until the suit or proceeding has been disposed of by a final decree or order, and complete satisfaction or discharge of such decree or order has been obtained, or has be come unobtainable by reason of the expiration of any period of limitation prescribed for the execution thereof by any law for the time being in force.]" Material provisions of section 58 (a) and (b) of the said Act are in the following terms: "(a) A Mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability. The transferor is called a mortgagor, the transferee a mortgagee; the principal money and interest of which payment is secured for the time being are called the mortgage money, and the instrument (if any) by which the transfer is effected is called a mortgage deed. (b) Where, without delivering possession of the mortgaged property, the mortgagor binds himself personally to pay the mortgage money, and agrees, expressly or impliedly, that, in the event of his failing to pay according to his contract, the mortgagee shall have a right to cause the mortgaged property to be sold and the proceeds of sale to be applied so far as may be necessary, in payment of the mortgage money, the transaction is called a simple mortgage and the mortgagee a simple mortgagee." section 65A which was subsequently introduced into the Act by section 30 of the Transfer of Property (Amendment) Act, 1929 provides: "(1) Subject to the provisions of sub section (2), a mortgagor, while lawfully in possession of the mortgaged property, shall have power to make leases thereof which shall be binding on the mortgagee. (2) (a) Every such lease shall be such as would be made in the ordinary course of management of the property concerned, and in accordance with any local law, custom or usage. 185 (b) Every such lease shall reserve the best rent that can reasonably be obtained, and no premium shall be paid or promised and no rent shall be payable in advance. (c) No such lease shall contain a covenant for renewal. (d) Every such lease shall take effect from a date not later than six months from the date on which it is made. (e) In the case of a lease of buildings, whether leased with or without the land on which they stand, the duration of the lease shall in no case exceed three years. and the lease shall contain a covenant for payment of the rent and a condition of re entry on the rent not being paid within a time therein specified. (3) The provisions of sub section (1) apply only if and as far as a contrary intention is not expressed in the mortgagedeed; and the provision of sub section (2) may be varied or extended by the mortgage deed and, as so varied and extended shall, as far as may be, operate in like manner and with all like incidents, effects and consequences, as if such variations or extensions were contained in that sub section. Rules 95 and 96 of O.XXI of the Code of Civil Procedure under which the auction purchaser in the instant case had made the application for possession are in the following effect: "95. Where the immovable property sold is in the occupancy of the judgment debtor or of some person on his behalf or of some person claiming under a title created by the judgment debtor subsequently to the attachment of such property and a certificate in respect thereof has been granted under rule 94, the Court shall, on the application of the purchaser, order delivery to be made by putting such purchaser or any person whom he may appoint to receive delivery on his behalf in possession of the property, and, if need be, by removing any person who refuses to vacate the same. Where the property sold is in the occupancy of a tenant or other person entitled to occupy the same and a certificate in respect thereof has been granted under rule 94, the Court shall, on the application of the purchaser, order delivery to be made by affixing a copy of the certificate of sale in 186 some conspicuous place on the property and proclaiming to the occupant by beat of drum or other customary mode, at some convenient place, that the interest of the judgment debtor has been transferred to the purchaser. An analysis of section 52 of the indicates that for application of the said section the following conditions have be satisfied: 1. A suit or a proceeding in which any right to immovable property must be directly and specifically in question, must be pending; 2. The suit or the proceeding shall not be a collusive one; 3. Such property during the pendency of such a suit or proceeding cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the right of any other party thereto under any decree or order which may be passed therein except under the authority of Court. In other words, any transfer of such property or any dealing with such property during the pendency of the suit is prohibited except under the authority of Court, if such transfer or otherwise dealing with the property by any party to the suit or proceeding affects the right of any other party to the suit or proceeding under any order or decree which may be passed in the said suit or proceeding. It has to be noted that this section imposes a prohibition on transfer or otherwise dealing with any property during the pendency of a suit provided the conditions laid down in the section are satisfied. section 58 makes it clear that in case of a mortgage there is a transfer of an interest in the specific immovable property mortgaged for the purpose of securing the payment of money advanced or to be advanced by way of a loan, an existing or future debt, or the performance of an engagement which may gives rise to pecuniary liability. It further confers, in case of a simple mortgage where, without delivering the possession of the mortgaged property, the mortgagor binds himself personally to pay the mortgage money, a right on the mortgagee to cause the mortgaged property to be sold and the proceeds of sale to be applied, so far as may be necessary in payment of the mortgage debt, 187 section 65A which as we noticed earlier, was introduced by the Amending Act, 1929 in recognition of the mortgagor 's powers exercised bona fide to grant lease of the mortgage property in the usual course of management, makes provision with regard to the exercise of such powers by the mortgagor, while the mortgage subsists and the mortgagor is in lawful possession of the mortgaged property. This section further makes it clear that any lease granted by the mortgagor in accordance with the provisions of this section would be binding on the mortgagee. Rules 95 and 96 of O.XXI of the Code of Civil Procedure makes provisions for enabling a purchaser of immovable property in a Court sale after obtaining the necessary certificate from the Court in terms of the provisions contained in rule 94 of the Code to apply for delivery of possession of the immovable property purchased by him at the Court sale. Rule 95 provides for actual physical possession and rule 96 provides for symbolic possession. A plain reading of rule 95 which we have earlier set out, clearly establishes, that the purchaser will be entitled to physical possession of property purchased and the Court will direct delivery of actual possession of the property sold to him by removing any person who refuses to vacate the same, if need be, if the following conditions are satisfied: 1. The property sold must be in the occupation of the judgment debtor; 2. The property sold must be in the occupancy of some person on behalf of the judgement debtor: 3. The property sold must be in the occupation of some person claiming under a title created by the judgment debtor subsequently to the attachment of the property. Rule 96 on the other hand makes it clear that where the property sold is in the occupancy of a tenant or other person entitled to occupy the same, symbolic possession of the property in the manner provided in the said rule is to be made over to the purchaser after the purchaser has obtained the necessary certificate under rule 94 of the Code. We shall now proceed to consider the decision of this Court in the case of M/s. Supreme General Films Exchange Ltd. vs His Highness Maharaja Sir Brijnath Singh Deo of Maihar and Ors. (supra) and also the decision of this Court in Jayaram Mudaliar vs Ayya Swami and Ors (supra). In the case of M/s. Supreme General Films Exchange 188 Ltd., the plaintiff respondent who were the mortgagee of a cinema theatre of which the appellant Supreme General Films Exchange Ltd. claimed to be a lessee in occupation, had filed a suit against the mortgagor and a decree by compromise had been passed in the said suit on 7th May, 1960. By the said compromise decree it was agreed that the amounts due to the mortgagee decree holder would be realised by the sale of the theatre. The Central Bank of India, another creditor of the mortgagor, assigned its rights under the decree to the plaintiff decree holder. The theatre was attached in the course of execution of the decree. The original lease of 1940 on the basis of which the appellant, the Supreme General Films Exchange Ltd. had entered into possession, expired in 1946 but thereafter the Company had continued in possession as a tenant holding over until the impugned lease deed of 1946 in favour of the company was executed. The company filed a suit in 1954 for specific performance of the agreement to lease and the lease deed of 1956 was executed in compliance with the terms of the compromise decree passed in the said suit filed by the appellant company. In the said suit for specific performance by the appellant company, the plaintiff mortgagee was not impleaded as a party. The plaintiff mortgagee thereafter filed a suit claiming that the lease of 1956 was void as the same came within the mischief of Ss. 52 and 65A of the and also section 64 of the Code of Civil Procedure. The appellant company contested the said suit contending inter alia that the suit of this nature filed by the plaintiff mortgagee did not lie as it fell outside the purview of section 42 of the Specific Relief Act. The trial Court decreed the said suit of the plaintiff mortgagee and granted the declaration asked for. The appellant company preferred an appeal against the decree of the trial Court to the High Court which dismissed the said appeal. Thereafter the appellant company filed a further appeal to this Court by special leave granted by this Court. This Court for reasons recorded in the judgment held that the plaintiff was entitled to the declaration asked for on proper construction of section 42 of the Specific Relief Act. One of the contentions which was raised on behalf of the appellant in this Court was that section 52 of the was not attracted to the lease in question. Dealing with contention this Court observed at pp. 243 244 as follows: "The contention that the case fell outside the purview of section 52 of the as the lease was executed in purported satisfaction of an antecedent claim rests upon the terms of an agreement of 1948, embodied in a letter, on the strength of which the defendant appellant had 189 filed his suit for specific performance. We find that the terms of the compromise decree in that suit and lease deed of 1956 purported to confer upon the defendant appellant new rights. Indeed, there are good grounds for suspecting that the compromise in the suit for specific performance was adopted as a device to get round legal difficulties in the execution of the lease of 1956 in favour of the defendant company. We are unable to accept the argument, sought to be supported by the citation of Bishan Singh and Ors. vs Khazan Singh and Anr. (AIR that the lease was merely an enforcement of an antecedent or pre existing right. We think that it purported to create entirely new rights pendent lite. It was, therefore struck by the doctrine of lis pendens, as explained by this Court in Jayaram Mudaliar vs Ayyaswami and ors. [1973 SCR. 139] embodied in Section 52 of the . An alternative argument of the appellant was that a case falling within section 65A (2) (a) of the , confining the duration of a lease by a mortgagor to three years, being a special provision, displaces the provisions of section 52 of the . This argument overlooks the special object of the doctrine of lis pendens which applies to a case in which litigation relating to property in which rights are sought to be created pendente lite by acts of parties, is peening. Moreover, for the purposes of this argument, the defendant appellant assumes that the provisions of Section 65A(2) (e) are applicable. If that was so, it would make no substantial difference to the rights of the defendant appellant, which would vanish before the suit was filed if Section 65A applies. We, however, think that, as the special doctrine of lis pendens, is applicable here, the purported lease of 1956 was invalid from the outset. In this view of the matter, it is not necessary to consider the applicability of Section 65A (2) (e), which the defendant appellant denies, to the facts of this case." This Court further held agreeing with the concurrent findings of the Trial Court and the High Court that the lease of 1956 was also struck by the provisions of section 64 of the Civil Procedure Code, as the property continued to remain under attachment at the time of the grant of the lease in 1956. 190 It may be noted that in the case the validity of the lease had been questioned by the mortgagee decree holder in a suit for appropriate declaration. The claim was not for possession by a third party auction purchaser in a proceeding under rr. 95 and 96 of O.XXI of the Code of Civil Procedure and the merits of an application under the said provisions of the Code and the scope and effect thereof did not come up for consideration, In the case of Mangru Mahto and Ors. vs Shri Thakur Taraknath Tarakeshwar Math and Ors. (supra), the mortgagor had granted lease of the mortgaged property to certain persons. In execution of the mortgage decree, the mortgagee himself purchased the property at the auction. The lessees of the mortgaged property had allowed the property to be sold and had not applied for being added as a party. The mortgagee had also obtained the money decree against one of the lessees and in execution of the decree had attached the mortgaged land. The lessees filed claim petitions objecting to the attachment under O.XXI, rule 58 of the Code of Civil Procedure. The claim petitions filed by the lessees were allowed and the executing court held that the leases were genuine. The mortgagee auction purchaser did not file any suit under Order XXI, rule 63 but latter filed a suit against the mortgagor and the lessees for recovery of possession of the lands, alleging that the leases were collusive transactions and were otherwise not binding on him. The Trial Court dismissed the suit holding that the leases were genuine; but the High Court decreed the suit holding that the leases were sham transactions and were made in contravention of section 65A of the . The lessees thereafter preferred and appeal to this Court under certificate granted by the High Court. One of the contentions raised before this Court was that as the mortgagee did not file a suit under o. XXI, rule 63 of the Code of Civil Procedure after the claim petitions of the lessees under O.XXI rule 58 of the Code of Civil Procedure had been allowed and the mortgagee was not entitled to maintain the suit for recovery of possession of the mortgaged land and for mense profits on the allegation that the leases were collusive transactions and were otherwise not binding on him. This contention was negatived by this Court for reasons recorded in the judgment. This Court further held that the validity of the leases granted by the mortgagor was not affected by section 65A of the as the leases were granted before the enactment of section 65 A. As these aspects do not have any material bearing on the question involved in the present appeal, it does not become necessary for us to pursue these two aspects any further. This Court, however, held that the leases in question were not granted by the mortgagor in the ordinary 191 course of management as the agent or bailiff of the mortgagee and were not binding on the mortgagee and in that view of the matter this Court dismissed the appeal. This Court observed at p. 132 as follows: "A lease granted by the mortgagor, out of the ordinary course of management, though not binding on the mortgagee is binding as between the mortgagor and the lessee. Such a lessee acquires an interest in the right of redemption and is entitled to redeem. If such a lease is created before the institution of a suit relating to the mortgage, the lessee must be joined as a party to the suit under O. 34, r. 1, C.P.C.; otherwise he will not be bound by the decree passed in the suit and will continue to retain his right of redemption. But in view of section 52 of the , if the mortgagor grants such a lease during the pendency of a suit for sale by the mortgagee, the lessee is bound by the result of the litigation. If the property is sold in execution of the decree passed in the suit, the lessee cannot resist a claim for possession by the auction purchaser. The lessee could apply for being joined as a party to the suit and ask for an opportunity to redeem the property. But if he allows the property to be sold in execution of the mortgage decree and they have now lost the present case, the lessees allowed the suit lands to be sold in execution of the mortgage decree and they have now lost the right of redemption. They cannot resist the claim of the auction purchaser of recovery of possession of the lands. " It may be noted that the Court immediately after the aforesaid observations has further observed as follows: "If a mortgagor in possession of the mortgaged property executes a lease of the property in the ordinary course of management as the agent or bailiff of the mortgagee during the pendency of a suit by the mortgagee to enforce the mortgage, a question may arise whether such a lease is in the eye of the law a lease granted by the mortgagee through his agent and therefore binding on him. But in the present case, that question does not arise as the leases were not granted by the mortgagor in the ordinary course of management as the bailiff or agent of the mortgagor. " It is to be noticed that this decision arose out of the suit instituted by the mortgagee auction purchaser for recovery of possession of 192 mortgaged property sold in execution of the mortgage decree and purchased by the mortgagee himself and the decision in the case rested mainly on the basis that the lease was not granted by the mortgagor in the usual course of business. This case was also not concerned with an application by an outside auction purchaser for physical possession of the property purchased by him in an application made under O.XXI, rr. 95 and 96 of the Code of Civil Procedure, and the Court did not have to consider this scope and effect of a proceeding under O.XXI, rr. 95 and 96 of the Code of Civil procedure. In our opinion, it cannot, therefore, be said that these two decisions of this Court conclude the question involved in the present appeal before us. It may be true that section 52 and section 65 A of the operate in different spheres. S.65 A, as we have earlier noticed deals with the powers of the mortgagor to grant a lease of the mortgaged property., while the mortgagor remains in lawful possession of the same. section 52 deals with cases of transfer of or otherwise dealing with any immovable property after any suit or proceeding in which any right to the said immovable property is directly and specifically in question, has been filed. It is also to be noted that section 65 A which came to be inserted by the Amending Act 1929, is neither made 'subject to ' nor 'not withstanding the provisions ' contained in section 52 of the Act. section 52 will, however, be only applicable, if the requirements of the said section are satisfied. We have earlier noticed what the requirements of the said section are. In the instant case, it does not become necessary for us to consider whether the grant of any lease by a mortgagor in conformity with the provisions of section 65 A of the during the pendency of a suit by the mortgagee to enforce the mortgage will attract the provisions of section 52 of the Act or will be outside the mischief of the provisions of the said section on the ground that the creation of such a lease may not affect the rights of the mortgagee under any decree or order which may be passed in the suit. We have earlier quoted the observations of this Court in the case of Mangru Mahto (supra) and it will be noticed that the Supreme Court in the said case did not decide this question and left this question open. In the instant case an outside auction purchaser is seeking recovery of the physical possession of the property purchased by him at the auction from the appellants who are in possession of different portions of the said premises as tenants of the said por 193 tions. The auction purchaser in the instant case was not the mortgagee and he was no party to the suit in which the compromise decree was passed. section 52 in clear terms speaks of the rights of the parties to the suit or proceeding. In this connection it may be noted that this Court in the case of Jayaram Mudaliar (supra) held at p. 153 as follows: "It is evident that the doctrine, as stated in section 52, applies not merely to actual transfers of rights which are subject matter of litigation but to other dealings with it by any party to the suit or proceeding, so as to affect the right of any other party thereto. Hence it could be urged that where it is not a party to the litigation but an outside agency such as the tax collecting authorities of the Government, which proceeds against the subject matter of litigation, without anything done by a litigating party, the resulting transaction will not be hit by section 52. Again, where all the parties which could be affected by a pending litigation are themselves parties to a transfer or dealings with property in such a way that they cannot resile from or disown the transaction impugned before the Court dealing with the litigation the Court may bind them to their own acts. All these are matters which the Court could have properly considered. The purpose of Section 52 of the is not to defeat any just and equitable claim but only to subject them to the authority of the Court which is dealing with the property to which claims are put forward. " The auction purchaser derives his right to obtain possession only after the sale in his favour has become absolute and sale certificate has been obtained by him. The mode and manner of obtaining such possession are regulated by rr. 95 and 96 of the Code of Civil Procedure. It is of interest to note that in the instant case, the auction purchaser had applied for obtaining possession under r. 95 which provides for actual possession and also under r. 96 which provides for symbolic possession. We have earlier set out the provisions of these two rules. In the facts and circumstances of this case, the auction purchaser, in view of the provisions contained in rule 95 which regulates the rights of the auction purchaser to obtain physical possession of the property purchased, is not entitled to recover the physical possession of the portions in the occupation of the appellants as tenants. The appellants are not the judgment debtors. They are not in occupation of the property on behalf of the judgment debtor. They are also not claiming to be in occupation under 194 a title created by the judgment debtor subsequently to any attachment of the property. There has been no question of any attachment in the instant case. The appellants are in the occupation of the respective portions as tenants and they claim to occupy the same as such. The question of validity or otherwise of the tenancy may have to be considered and determined in an appropriate proceeding. In the present proceeding, the auction purchaser who is an outsider and was not a party to the suit resulting in the compromise decree in execution of which the property was put up for sale, is not entitled to recover physical possession from the appellants in view of the provisions contained in O. XXI, rule 95, and the auction purchaser must be held to be entitled to symbolic possession in terms of the provisions contained in O.XXI, rule 96 in respect of the portions in occupation of the appellants. We, accordingly, allow this appeal. We set aside the judgment and order passed by the High Court directing physical possession of the portions in the occupation of the appellants to be made over to the auction purchaser Gian Chand Jain, We direct that symbolic possession of the portions in occupation of the appellants is to be made over to the auction purchaser Gian Chand Jain. In the facts and circumstances of this case, we make no order as to costs. N.V.K. Appeal allowed.

Order XXI Rules 95 and 96 of the Code of Civil Procedure enable a purchaser of immovable property in a Court sale, to apply for delivery of possession. Rule 95 provides for actual physical possession and rule 96 provides for symbolic possession. A purchaser will be entitled to physical possession of the property purchased if the property sold is in the occupation of the judgment debtor, of some person on behalf of the judgment debtor or some person claiming under a title created by the judgment debtor subsequent to the attachment of the property. If the property sold is in the possession of a tenant or other person entitled to occupy the same, symbolic possession is to be made over to the purchaser under Rule 96. The first respondent was an auction purchaser of property, of which the three appellants were tenants occupying different portions. The property was mortgaged by its owner with a Bank. As the amount due was not paid, the Bank instituted a suit for its recovery. A decree was passed by consent of the parties which provided that if the amount was not paid within two years, the Bank could enforce the decree by sale of the property. After the compromise decree was passed, the owner leased out different portions of the property to the appellants. As the owner failed to make payment of the decreetal dues, the property was sold by Court auction and the first respondent, whose bid was the highest, was declared to be the purchaser of the premises, and the sale in his favour was confirmed. The first respondent/auction purchaser filed an application under Order XXI, Rules 95 and 96 read with Section 151 of the Code of Civil Procedure in the High Court, for delivery of vacant physical possession of the entire property and prayed that if it was not possible to grant vacant physical possession of any part of the property, symbolic possession of that part may be granted. This application was contested by the three appellants/tenants. A Single Judge of the High Court holding that the tenancies in favour of the appellants having been created after the institution of the suit by the Bank and after the passing of the compromise decree in the said suit, and the said tenancies would have no effect on the rights acquired by the auction purchaser in view of Section 52 of the , and relying on the Division Bench Judgments of the Bombay High Court in Ramdas Popat Patil vs Fakira Patil and Ors. AIR 1959 Bom 19 and of the Gujarat High Court in Jagjiwandas a Firm vs 175 Lakhiram Haridasmal and Ors. AIR 1968 Guj 193 passed an order for delivery of physical possession of the portions in the respective occupation of the appellants. In appeal it was contended that the Full Bench decision of the Bombay High Court in Anaji Thamaji Patil vs Ragho Bhivraj Patil and Anr. AIR 1973 Bom 75, over ruled the Bombay Division Bench decision and doubted the correctness of the Gujarat decision, but the Division Bench of the High Court dismissed the appeal accepting the contention put forward on behalf of the respondent purchaser that the decision of this Court in M/s Supreme General Films Exchange Ltd. vs His Highness Maharaja Sir Brijnath ; concluded the controversy. In the appeal to this Court, it was contend on behalf of the appellants that: (1) Section 52 of the has no application to the facts and circumstances of this case as the conditions laid down therein for its applicability are not satisfied. (ii) The right that the mortgagee had was only to put the property to sale in the event of the mortgagor failing to pay the decreetal amount in terms of the provisions of the compromise decree, and this right cannot be said to be a right to immovable property directly and specifically in question in the suit. (iii) Section 65A of the should be read alongwith Section 52 and both these sections have been incorporated with the object of preserving the interest of the mortgagee by making suitable provisions so that the security of the mortgagee might not in any way be affected by any act done by the mortgagor after the creation of the mortgage and also after the institution of any suit for enforcement of the mortgage. (iv) Section 52 makes provisions for the parties to the suit or proceeding and can have no application to any auction purchaser who is not a party to the suit or proceeding and who only acquires his right after the sale in execution of the decree has been confirmed. (v) The right of the third party auction purchaser to get physical possession of the property purchased at the auction sale was not considered by the Supreme Court in M/s Supreme General Films Exchange Ltd. vs His Highness Maharaja Sir Brijnath Singhji Deo of Maihar and Ors. and Jayaram Mudaliar vs Ayya Swami and Ors. AIR (vi) Order XXI, Rule 95 and Rule 96 of the Code of Civil Procedure provides that the rights of an auction purchaser are governed by the provisions contained therein and that the auction purchaser cannot claim physical possession of the portions in the occupation of the appellants even though they might have been inducted as tenants after the compromise decree in the suit had been passed. On behalf of the first respondent auction purchaser it was submitted that (1) as the tenants were inducted not only after the institution of the suit for enforcement of the mortgage but also after the compromise decree that has been passed therein, Section 52 of the must be held to be applicable 176 and it must be held that the tenancies were illegal and were created in breach of these provisions. S.(2) 65A the does not in any way control section 52. S 65A makes provisions with regard to the powers of the mortgagor to grant leases of the mortgaged property after the creation of the mortgage but before the institution of suit, while section 32 makes provisions for cases of transfer or otherwise dealing with any property after the institution of a suit or proceeding and section 52 imposes a complete ban on the transfer of any kind or dealing with immovable property except with the authority of the Court during the pendency of the suit or proceeding so that the rights of any part may not be affected when any decree or order is passed. Section 58 of the provides that a mortgage is a transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan. In a suit for the enforcement of a mortgage, the right to immovable property is directly and specifically in question and after the decree for sale is passed, the mortgagor loses even his right to redeem the property. The tenancies in the instant case having been created long after the compromise decree, are illegal and void and in contravention of section 52 of the Act. The decisions of this Court in M/s Supreme General Films Exchange Ltd. Manager Mahto and Ors. and Jayaram Mudaliar conclude the question involved in the appeal. On the question whether the 1st Respondent as auction purchaser in an application under Or. XXI, rules 95 and 96, of the Code of Civil Procedure is entitled to recover actual physical possession of the portions in the occupation of the appellants as lessees, the lease in respect of which were created after the decree in the mortgage suit by consent between the parties had been passed. Allowing the appeal ^ HELD 1. The Judgment and Order passed by the High Court directing physical possession of the portions in the occupation of the appellants to be made over to the auction purchaser Respondent No. 1 is set aside. Symbolic possession of the portions in occupation of the appellants to be made over to the auction purchaser respondent. [194 D] 2. In the case of M/s Supreme General Films Exchange Ltd., the validity of the lease had been questioned by the mortgagee decree holder in a suit for declaration. The claim was not for possession by a third party auction purchaser in a proceeding, under rules 95 and 96 of order XXI of the Code of Civil Procedure and the merits of such an application and the scope and effect of the said provisions of the Code did not come up for consideration. In Mangru Matho and Ors. vs Shri Thakur Taraknath Tarakeshwar Math and Ors. a suit was instituted by the mortgagee auction purchaser for recovery of possession of mortgaged property sold in execution of the mortgage decree and purchased by the mortgagee himself and the decision rested mainly on the basis that the lease was not granted by the mortgagor in the usual course of business. This case was also not concerned with an application by an outsider auction purchaser for physical possession of the property purchased by him in an application made under order XXI Rules 95 and 96 of the Code of Civil Procedure. These two decisions do not therefore conclude the question involved in the present appeal.[190 A B, 191 H 192 C] 177 3. The auction purchaser derives his right to obtain possession only after the sale in his favour has become absolute and sale certificate has been obtained by him. The mode and manner of obtaining such possession are regulated by Rules 95 and 96 of the Code of Civil Procedure.[193 F] In the instant case a third party auction purchaser is seeking recovery of the physical possession of the property purchased by him at the auction from the appellants who are in possession of different portions of the said premises as tenants of the said portions. The auction purchaser was not the mortgagee and he was no party to the suit in which the compromise decree was passed. The auction purchaser in view of the provisions contained in Rule 95 which regulate the rights of the auction purchaser to obtain physical possession of the property, is not entitled to the recover the physical possession of the portions in the occupation of the appellants as tenants. The appellants are not the judgment debtors. They are not in occupation of the property on behalf of the judgment debt or. They are also not claiming to be in occupation under a title created by the judgment debtors subsequent to any attachment of the property. There is no question of any attachment in the case. The appellants are in the occupation of their respective portions as tenants and they claim to occupy the same as such. The auction purchaser must therefore be held to be entitled to only symbolic possession in terms of the provisions contained in Or XXI rule 96 in respect of the portions in occupation of the appellants. [192 H 193 A, 193 H 194 A, C]

Appeals Nos. 104 of 1954 and 169 of 1956. Appeal by special leave from the judgment and decree dated November 13, 1950, of the Madras High Court in A. section No. 484 of 1947 arising out of the judgment and decree dated December 21, 1946, of the Court of the Subordinate Judge, Devakottai in Original Suit No. 156 of 1944 and Appeal from the judgment and decree dated September 17, 1952 and October 24, 1952, of the Madras High Court in A.S. No. 243 of 1947 arising out of the judgment and decree dated December 21, in Original Suit No. 164 of the Subordinate Judge, Devakottai in Original Suit No. 164. A.V. Vishwanatha Sastri and M. section K. Aiyangar, for the appellants in C.A. No. 104 of 1954. 216 A.V. Vishwanatha Sastri and U. section K. Sastri, for the appellants in C.A. No. 169 of 1956. K.S. Krishnaswamy Iyengar and R. Ganapathy Iyer, for respondent No. 1 (in both the appeals). May 24. The judgment of Jagannadhadas and B. P. Sinha JJ. was delivered by Jagannadhadas J. Govinda Menon J. delivered a separate judgment. JAGANNADHADAS J. These two are appeals against two separate decrees of the High Court of Madras arising, out of two suits as between the same contesting parties with reference to a connected set of facts. Civil Appeal No. 104 of 1954 is before us by virtue of special leave granted by this Court under article 136(1) of the Constitution. Civil Appeal No. 169 of 1956 has come up by reason of certificate granted by the High Court under article 133(1)(a) of the Constitution. The parties to the litigation are Nattukottai Chetties, a wealthy banking community in South India who, at the time, were having large banking transactions in Burma and other places in South East Asia. One AL. Periakaruppan Chettiar (hereinafter referred to as Periakaruppa) owned and possessed considerable properties. He adopted one AL. Alaska Chettiar (hereinafter, referred to as Alaska) in or about the year 1914. 'there arose acute differences between them from about the year 1924 owing to the alleged wasteful habits of Alagappa who ran into debts. This led to criminal complaints between them, each against the other, in 1926. (See Exs. P 5 and D 12). One of Alagappa 's creditors obtained a decree against him and attached Alagappa 's half share in the family residential house including the site on which it was situated. This resulted in a regular suit in which the question at issue was whether the site was ancestral site and whether the super structure was constructed out of the ancestral funds. It was found that the site was ancestral Periakaruppa maintained that the super structure which was substantial in value compared with the site was built out of his self acquired funds and was not joint family property, while Alagappa and the attaching 217 creditor contended to the contrary. The litigation went up to the High Court and the High Court accepted the contention of Periakaruppa and made a declaration that the site was ancestral and that the super structure was the self acquisition of Periakaruppa. The judgment of the High Court was dated November 19, 1926, and is reported in Periakarappan vs Arunachalam (1). During the pendency of this litigation in the High Court the adopted son Alagappa filed a suit on September 9, 1926, on behalf of himself and his minor son by name AL. Periakaruppan Chettiar (hereinafter, for distinction, referred to as junior Periakaruppa) represented by his mother and next friend by name Mutbayi Act. It has to be mentioned that in or about June 27, 1926, Periakaruppa purported to make a second adoption of a 'young boy by name AL. Ranganathan Chettiar (hereinafter referred to as Ranganatha) on the footing that such an adoption was permitted by special custom in Nattukottai Chetti families. The suit O.S. No. 114 of 1926 filed by Alagappa and his minor son, junior Periakaruppa, was therefore filed as against Periakaruppa and his second adopted son Ranganatha, who at the time was also a minor. It was for delivery of a half share of the properties of the family on the footing that all the properties were joint family properties and for a declaration that the second adoption was invalid. The first defendant therein, Periakaruppa, filed a written statement contesting both these matters and claiming that all the suit properties in their entirety were his self acquisition and that the plaintiffs had absolutely no rights therein and also asserting that the second adoption was valid. Before the suit proceeded to the stage of issues and trial, the dispute between the parties was compromised by a Rajinama brought about by four Panchayatdars, who were all respectable members of the Nattukottai Chetti community. Some of the questions that arise in the present appeals centre round the proper construction of some of the terms of this. Rajinama, which will be noticed later. It is sufficient to state at this stage that by that Rajinama the two plaintiffs, Alagappa and his (1) Mad. 582, 28 218 minor son, junior Periakaruppa, obtained Rs. 75,000 each and Alagappa 's wife Muthayi Achi, the mother of the minor son and his next friend in the suit, was to get a sum of Rs. 14,000 as her Stridhan, These amounts were paid by means of four hundis, Rs. 25,000 and Rs. 50,000 for Alagappa, Rs. 75,000 for junior Periakaruppa and Rs. 14,000 for the mother, Muthayi Achi, on Nattukottai Chetti bankers of Periakaruppa in Burma. It was one of the express terms of the Rajinama that all the properties mentioned in the plaint in that suit and other properties belonging to the first defendant, Periakaruppa, were admitted to be his self acquisitions and that the plaintiffs therein had. no right and connection whatsoever in any of them or in the charities founded by Periakaruppa and in the properties belonging thereto or their management, either in the lifetime of Periakaruppa or subsequent thereto. It was also one of the specific terms of the Rajinama that the plaintiffs should remove themselves from the family house with all their belongings and that the possession of the aforesaid house be delivered to Periakaruppa. It was also expressly stipulated that the petition then pending for leave to appeal to the Privy Council against the judgment reported in Periakaruppan vs Arunachalam (1) was to be withdrawn. This compromise was certified to be for the benefit of the minor plaintiff concerned, as also of the minor defendant Ranganatha and was accepted by the Subordinate Judge before whom the compromise petition was filed. As a result, the compromise was accepted by the court on August 15, 1927, and the suit was dismissed in terms thereof on the same date. About a year and a half later Periakaruppa executed a will on April 4, 1929. The genuineness and due execution thereof are not in question. But the effect of that will is also one of the main points in dispute. Periakaruppa died about three months later i.e. on July 14, 1929, and his wife Lakshmi Achi died within a year thereof on March 11, 1930. By the will, broadly speaking, Periakaruppa made arrangements for certain religious gifts and (1) Mad. 219 charities and made arrangements for the management thereof and gave the residue of the property to his wife Lakshmi Achi for her life and thereafter to his second adopted son Ranganatha. Ranganatha, who, some time in or about the date of Lakshmi Achi 's death in 1930, appears to have attained majority, has been in undisputed possession and enjoyment of Periakaruppa 's properties ever since till late in 1944. Alagappa 's son junior Periakaruppa attained majority in December, 1943, and filed two suits on November 11, 1944, in the Subordinate Judge 's Court of Devakottai, one numbered as O.S. 156 of 1944 and the other as O.S. 160 of 1944. O.S. No. 156 of 1944 was on the footing that Rs. 75,000 which was given to him under the above mentioned Rajinama of the year 1927, was, under the terms thereof constituted a trust for his benefit during his minority under the trusteeship of Periakaruppa himself and another person A. P. section Chockalingam Chettiar of Athangudi, (hereinafter referred to as Chockalingam) the junior paternal uncle of the minor 's mother, Muthayi Achi, and that the money was wrongly appropriated by Chockalingam owing to his straightened circumstances. His case was that Periakaruppa as a co trustee with Chockalingam was equally responsible for breach of the trust and that therefore he was entitled to have the moneys found due on account, paid out of the estate of Periakaruppa in the hands of Ranganatha as well as from the estate of Chockalingam in the hands of his son. The second suit O.S. No. 164 of 1944 was a suit to recover the entire properties of Periakaruppa in the possession of Ranganatha for himself and his father Alagappa who was made the first defendant in the suit, on the ground that Ranganatha 's adoption was invalid, that the will of Periakaruppa was ineffective and that the properties devolved on himself and his father Alagappa. It may be noticed that so far as the father Alagappa is concerned the suit would prima facie be time barred since it has been filed about 15 years after the death of Periakaruppa. The plaintiff junior Periakaruppa however filed the suit on the footing that in view of his minority for all this period until December, 1943, 220 the suit was not barred. Hereinafter, for convenience, the first suit O.S. No. 156 of 1944 will be referred to as the trust suit, and the second suit O.S. No. 164 of 1944 will be referred to as the succession suit, In the succession suit the main questions that arose for decision were: (1) whether the adoption of Ranganatha as a second adopted son was valid; (2) if not, whether the will was effective to convey the property of Periakaruppa to Ranganatha after the death of his wife Lakshmi Achi, notwithstanding the invalidity of his adoption; (3) whether, in case the will was ineffective the properties of Periakaruppa devolved on both Alagappa and his son junior Periakaruppa together or on Alagappa alone to the exclusion of junior Periakaruppa ; (4) if the devolution was on both together, whether the rights of junior Periakaruppa were barred by reason of section 7 of the Indian Limitation Act, 1908 (Act IX of 1908). This involved the further questions: (a) whether by and under the Rajinama Alagappa and his son became divided in status inter se so as to make section 7 inapplicable. (b) whether in case the devolution was on both together as members of a joint family, section 7 had application to the factual situation in the family. So far as the adoption of Ranganatha was concerned both the courts below, while holding that the adoption as a fact was proved, have found against existence of the custom pleaded as to its validity and hence concurrently found the adoption to be invalid. That conclusion is no longer in dispute in this Court. As regards the will both the courts held that the will was ineffective to vest any title in Ranganatha though on slightly different grounds. As regards question No. 4 relating to limitation, the two courts came to different conclusions with the result that the trial court dismissed the suit as barred by limitation, while the High Court reversed it and granted a decree for the half share of 221 Periakaruppa 's properties in favour of junior Periakaruppa holding that in respect of the other half share the rights of Alagappa were barred and that Ranganatha acquired the same by his adverse possession. As regards question No. (3) and the subordinate questions (a) and (b) of question No. (4), there appears to have been no serious question raised in the trial court by the defendant as to the exclusion of junior Periakaruppa by Alagappa in the matter of succession to Periakaruppa 's properties, or any serious questions raised by the plaintiff as to the Rajinama bringing about a partition inter se between the father Alagappa and his minor son junior Periakarpppa and of Alagappa not being the de facto manager of the family. It was accordingly found by the trial court that both of them succeeded as members of the joint family and that therefore the minor, junior Periakaruppa, was barred by virtue of section 7 of the Limitation Act. When the matter came up on appeal to the High Court, a question was raised that section 7 would not be applicable in this case unless it was further made out that the father Alagappa was the de facto manager of the family consisting of himself and his minor son of which it is alleged there was no proof or finding. Both the Judges allowed this point to be raised and called upon the trial court to take evidence and submit a finding in respect of that contention. The trial court accordingly took evidence in regard thereto and returned a finding that on the evidence, both the father and the minor son were living as members of a joint family and that the father was in fact the de facto guardian. When the matter was rehear by the same Bench of the High Court on the return of the finding, the Bench did not go into the correctness or otherwise of this finding, on the view that this finding was of no consequence, if it is found that by virtue of the Rajinama both the father and the minor son became divided inter se. The learned Judges while realising that the finding was called for on the undisputed assumption that the father and the son were undivided in status, were of the opinion that there was nothing to prevent them from reopening 222 the same and held on a construction of the Rajinama that it brought about divided status inter se between the father Alagappa and his minor son junior Periakaruppa. In that view they found section 7 of the limitation Act had no application to the case and same to the conclusion that the succession suit by junior Periakaruppa was not barred by limitation in so far as it related to his own share though barred in respect of Alagappa 's share. Hence the succession suit ended in favour of junior Periakaruppa in respect of a half share of the properties left by Periakaruppa. As regards the trust suit the contentions raised were : (1)that under the Rajinama both Periakaruppa and Chockalingam became trustees in respect of the sum of Rs. 75,000 to be invested in Chetti firms as provided in the Rajinama; (2)that as a fact the amount was invested with Chockalingam, one of the trustees themselves, contrary to the law; (3)that such investment itself constituted breach of trust for which Periakaruppa was also responsible. It appeared on the evidence that out of the trust amount, a sum of Rs. 30,000/ was invested in the purchase of a house at Athangudi in South India (the place of Chocklingam) and that Alagappa and his minor son, the junior Periakaruppa, and his family have been since that purchase on July 23,1928, living in that house. At the trial, therefore, credit was given to this amount as being proper investment of the trust funds in the matter of account taking by concession of the lawyer for junior Periakaruppa. The defendant Ranganatha in addition to contending that no trust was created, also contended that as a result of subsequent transactions junior Periakaruppa got the benefit not only of the purchase of the house above referred to but also of a mortgage executed in favour of himself and another by Chockalingam in 1930 for a lakh of rupees of which Rs. 70,000 was his, of which he obtained the benefit, and that therefore the alleged breach of trust must be taken to have been waived and that in any case he was entitled to have 223 the mortgage document as much as the purchase of the house to be taken into consideration for reducing his liability in respect of the alleged breach of trust. These contentions were negatived by both the courts with the result that there was a decree against Ranganatha and his minor son in respect of half the loss occasioned by the breach of trust, payable out of the half share of Periakaruppa 's properties in their hands. The result of the two judgments of the High Court in both the suits was against Ranganatha and hence the two present appeals before us by him. It will now be convenient to take up first the con sideration of the succession appeal. The points arising therein have already been set out in the preliminary narration and need no repetition. The main points argued before us on this appeal are (1)The conclusion of the High Court that the will of Periakaruppa was ineffective is erroneous and Ranganatha took under the will as persona designata. (2) In case the will is held to be ineffective and in the view taken by the High Court that Alagappa and junior Periakaruppa became divided in status under the Rajinama the property of Periakaruppa devolved on Alagappa to the exclusion of junior Periakaruppa and hence the plaintiff has no right to sue. (3)The conclusion of the High Court that the Rajinama brought about divided status inter se between the father Alagappa and the minor son junior Periakaruppa is erroneous and hence the suit is barred by virtue of section 7 of the Limitation Act. A few other minor points have been raised on both sides which, after consideration, appeared to be unsubstantial and we intimated our view at the hearing and it is not necessary to refer to and deal with them any further. We have heard elaborate arguments on the above three points and have given our careful consideration to them. It is obvious that having regard to the course of events in this family narrated earlier the primary question for consideration is whether or not the will left by Periakaruppa has brought about an effective disposition of his properties 224 in favour of Ranganatha. It is only if that has become ineffective that the other questions argued before us on this appeal as set out above arise for consideration. In view of the fact that the genuineness of the will is not disputed and no question arises as to the disposing capacity of Periakaruppa, the plaintiff in this case, junior Periakaruppa, can succeed only if he displaces the will. He has accordingly raised three contentions. 1.That there is no effective dispositive clause in the will. 2.That the disposition, if any, in favour of Ranganatha under the will was an attempt to create an estate in tail male and hence invalid. 3.The disposition in favour of Ranganatha was by reason of and on account of, his having been considered by the testator as his duly adopted son, i.e., the validity of the adoption was the basis and the condition for the disposition. Since that has now been found to be invalid, the disposition fails. Of these three questions the first two though upheld by the trial court have been rejected by the High Court. We agree with the reasoning of the High Court on these two points and they do not call for any further consideration. We are satisfied that there is no substance in these contentions. The real question that arises on a consideration of the will is whether the disposition of the residue in favour of Ranganatha contained therein was to him as a _persona designata or is dependent on his being a duly and validly adopted son. For a proper appreciation of this contention on both sides, it is necessary to set out the relevant clauses in the will. "(1) I am now 68 years of age, taking into consideration the fact that I have been in indifferent health for sometime past I have decided to make an arrangement after my lifetime in regard to my properties and in regard to the charities established by me and accordingly I have executed this will wholeheartedly. (2)All the immovable and movable properties entirely, which belong to me as my own and which are 225 in my possession are my self acquired properties. Excepting myself no other person has any interest or right whatever in the said properties. (3). . . . . . . . . . . (4)Sometime back I took as my foster (son), Alagappan, son of Nachandupatti Chidambaram Chettiar, and brought him up in my house and also got him married. But the aforesaid Alagappan conducted himself in immoral ways and had evil intentions and further fell into bad company and after being duped brought into existence several documents falsely and colourfully by making it appear that he had borrowed debts to the tune of about one lakh of rupees and also caused decrees to be passed in respect of some of the abovementioned debts and estranged my feelings and became inimical towards me, and left my family and was living separately for the past about 10 years and he was also living in. his father in law 's house. (5)Thereafter while the aforesaid person had instituted a suit O.S. No. 114 of 1926 against me in the Sub Court of Devakotta for his share in the properties which were in my possession, some of our community people acted as the panchayatdars and gave an award in the above suit and a razinama was filed in the Court, and all the amounts which were payable by me according to the said razinama were already paid by me entirely. Neither the aforesaid Alagappa Chetti nor his heirs shall have any manner of right or interest whatever in the properties which are now in my possession and in the properties which might be acquired hereafter. (6)Subsequently I took in adoption Nachandupatti Ramanathan Chettiar 's son, namely, Ranganathan, aged about 17 1/2 years, and he is living with me. (7)to (12). . . . . . . . (13)My adopted son Ranganathan and his male heirs shall after the lifetime of my wife Lakshmi Achi properly conduct the aforesaid charities. In order to supervise and see whether Ranganathan conducts the charities properly without any defect whatever, I have 29 226 appointed the following persons as the executors, namely, (1) my son in law Arunachalam Chettiar, son of Alagapuri Alagappa Chettiar who is interested in both myself and Ranganathan, the two sons of Kanadukathan AL. K. Chandra Mouli Chettiar, namely, (2) Karuppan Chetty, (3) Peria Karuppan Chetty, and (4) Murugappan, son of Konapattu Subra manian Chettiar. The said persons shall accordingly supervise (the performance of the charities) in a proper manner. (14) I am entertaining a desire that I should spend my lifetime and die at Tiruvarur alone. My body shall not be cremated according to our caste custom, and a samadhi (tomb) shall be erected for me, and a lamp shall be lit therein daily and a person shall be appointed to perform Neivedhiyam (by preparing food) with 1/4 measure of rice by the big measure daily. Guru pooja shall be performed once a year in the Star in which I die, by distributing food to the mendicants, and by spending an amount to the extent of Rs. 250 (Rupees two hundred and fifty) every year by inviting my relations. A sum of Rs. 15,000 (rupees fifteen thousand) shall be sent for and obtained from the Saigon firm from out of my own funds for the aforesaid Tirupani (service) in the temple and my wife shall conduct the aforesaid Tirupani. The daily expenses of the Samadhi aforesaid and Guru pooja etc. , shall be met from the Patasala charity funds and conducted. (15) Apart from the properties which have been set apart for the abovementioned charities and the properties which have to be newly purchased hereafter for the same, as my adopted son Ranganathan and his male heirs have to take all the immovable and movable properties belonging to me and as the aforesaid adopted son namely Ranganathan is now a minor the said Ranganathan shall after he attains majority and if he is of good behaviour (take in his possession) the aforesaid properties after my lifetime and after the lifetime of my wife Lakshmi Achi and enjoy them. (16) In case the aforesaid Ranganathan does not conduct himself properly or if my wife Lakshmi Achi 227 does not like, the following two persons, namely, (1) K. AS. P. Rm. Ramaswami Chettiar, son of Athangudi Palaniappa Chettiar, and (2) PL. T. Rm. Ramasami Chettiar, son of Karaikudi Thenappa Chettiar shall manage my properties after the lifetime of my wife Lakshmi Achi till Ranganathan comes of good behaviour. The amount which may be found just for family expenses shall be paid till such time when the aforesaid Ranganathan begins to conduct himself properly and when the properties are delivered in his possession. (17). . . . . . . . . . . (18) For the expenses of the maintenance right, etc., of my wife Lakshmi Achi and for the necessary expenses of pilgrimage to sacred places a sum of Rs. 15,000 (fifteen thousand) dollars has been credited in her name in the Saigon firm, and she shall send for and obtain the amount of interest alone got for the said amount every year and spend it according to her pleasure. My adopted son Ranganathan and his male heirs shall take the principal amount. (19). . . . . . . . . . . (20)As regards the substantial tiled building which belongs to me and which is in my own place and which I am residing, and one bungalow building built by me in the Therodam veedhi (street in which the chariot is drawn) in the said place, my wife shall enjoy them after my lifetime and after her my adopted son Ranganathan and his male heirs shall permanently and for ever enjoy the said buildings. Apart from enjoying the abovementioned two buildings, none of them shall have any right to alienate them in any manner. (21)If apart from the matters specified by me herein, it is necessary that any documents should be brought into existence after my lifetime during the lifetime of my wife regarding the properties belonging to me and regarding the charity properties and regarding the family maintenance from time to time I have hereby given authority to my wife Lakshmi Achi mentioned above to execute such documents regarding 228 the same. My adopted son Ranganathan shall perform the funeral obsequies for myself and for my wife. (22 and 23). . . . . . (Sd.) A.L. P.R. Periakaruppan Chetty. " In order to understand the background of this will, it is necessary to recapitulate the previous family history which has already been adverted to at the commencement of this judgment. That is as follows. Periakaruppa adopted Alagappa in or about 1914. He apparently was a spendthrift in his habits and incurred many debts. There developed ill feeling between them which led to mutual criminal complaints against each other in 1926. One of his creditors obtained a decree and attached the family house. This led to litigation in which Periakaruppa asserted and succeeded in establishing that the super structure of the family house, which was a costly one, was his own self acquisition. During the pendency of this litigation Periakaruppa adopted for the second time, Ranganatha, claiming to do so by way of custom in the Nattukottai Chetti community. This led to a suit for partition by Alagappa claiming all the properties to be joint properties and for a declaration that the second adoption was in valid. This suit was at a very early stage compromised on the terms that Alagappa and his son were to take away as between themselves a sum of Rs. 1,50,000 in cash and would have no claim of any kind to any of the properties in the possession of Periakaruppa and no claim to interfere in any manner with the various charities and religious endowments which Periakaruppa made The properties were all admitted to be the self acquisitions of Periakaruppa and his right to alienate the property by will was specifically recognised. Alagappa with his wife and son was to clear out of the family house with all their belongings. Alagappa got his share of the cash under the Rajinama by means of two hundis one for Rs. 25,000 and another for Rs. 50,000. They were specifically delivered over, as recited in one of the terms of, the Rajinama, to one Chockalingam who was made responsible to discharge all the encumbered debts so far incurred by Alagappa, from out of the moneys 229 of those two hundis so as to make sure that no liability would arise out of the debts previously incurred by Alagappa which might affect Periakaruppa. It is in evidence that after this compromise Alagappa and his family consisting of his wife and son cleared out of the original family house built by Periakaruppa and that they were living separate from Periakaruppa. Periakaruppa and his second adopted son Ranganatha were presumably living together in that original family house as stated in the will. This Rajinama was on August 15, 1927, and the will was executed on April 4, 1929, i.e., a year and eight months thereafter. It may be noticed at this stage that the Rajinama while it admits one of the points in controversy in suit, viz., that the property is self acquired property of Periakaruppan, is silent about the other question at issue, viz., as to the validity of the second adoption and in fact the suit was terminated by a formal dismissal thereof presumably leaving this disputed question at large. The will starts with an assertion that all the movable and immovable properties in his possession are his self acquired properties and that excepting himself no other person has any interest or right therein. It asserts that Alagappa conducted himself in immoral ways, fell into bad company, brought into existence several false and colourable documents and borrowed debts to the tune of about a lakh of rupees and caused decrees to be passed in some of them and became inimical towards him. It asserts that Alagappa left his family and was living separately for the past about ten years. Notwithstanding that he was an undisputed adopted son, he referred to him in the will as 'Abhimanaputra ' (foster son). In contrast with this he states that Ramganatha was taken in adoption by him, that Ranganatha was at the time of the will about 17 1/2 years old and that he was liviny with him. Clauses 7 to 14 of the will refer to various religious and charitable endowments which he had made and the properties which he gave to them. It also enumerates the arrangements for their management. By cl. 8 he makes provision for the construction and maintenance of 230 Brahmana Veda Patasala attached to the temple of Sri Sri Theagarajaswami in Thiruvarur. Clauses 8 and 9 set apart certain properties for the due maintenance of the said Patasala. Clause 10 relates to the establishment of three charities in addition to the above Patasala charity, to be conducted and maintained out of the income of the same properties as have been set apart for the Patasala charity. In cl. 11 he states that no person shall have any right to alienate or encumber the properties set apart for the charities. By cl. 12 he appoints his wife Lakshmi Achi as the manager to conduct the above charities after his lifetime. By el. 13 he directs that his adopted son ' Ranganatha and his male heirs shall after the lifetime of his wife Lakshmi Achi properly conduct the above said charities. He appoints three persons as executors to supervise the management by 'Ranganatha '. By cl. 14 he expresses a desire to spend the rest of his lifetime at Thiruvarur and die there. He says that his body shall not be cremated according to custom but that a samadhi (tomb) should be erected for him and that a lamp is to be lit there daily and that a person should be appointed to perform Neivedhiyam daily, of a specified quantity of rice. By the same clause he also enjoins that Guru pooja should be performed once ail year in the star in which he dies by distributing food to the mendicants by spending Rs. 250 every year. He does not specifically indicate who is to perform the Guru pooja. The context may well be taken to indicate that the paid employee was to do it. He indicates that a sum of Rs. 15,000 was set apart for the above purpose in a Saigon firm and that it should be sent for and utilised by his wife for the aforesaid Tirupani. This, in the context, seems to refer to the construction of the Samadhi. He also says that the daily expenses of the samadhi and the Guru pooja expenses should be met from the Patasala charity funds. Thereafter come the various provisions relating to the disposition of the residue of his property. The effect of these provisions in cls. 15 and 16 is that after his lifetime his wife, Lakshmi Achi should enjoy the residue and that thereafter the "adopted son Ranganatha" is to take them 231 into his possession and enjoy them (after the death of himself and his wife) on his attaining majority and if he is of good behaviour. It is specifically provided that if " the aforesaid Ranganatha " does not conduct himself properly or if his wife Lakshmi Achi does not like (him) two specified persons, K.AS.P.Rm. Ramaswamy Chettiar and PL. T. Rm. Ramasami Chettiar should manage the properties after the lifetime of Lakshmi Achi till "Ranganatha" comes of good behaviour and that he should be paid by them just enough for his family expenses till such time when 'the aforesaid Ranganatha ' begins to conduct himself properly and that the properties are to be delivered into his possession then. Under el. 18 the 'adopted son Ranganatha ' should take the principal amount of Rs. 15,000 set apart for his wife Lakshmi Achi after her death. There is also el. 20 which provides that the substantial tiled building belonging to him which is in his own place and in which he was residing and one bungalow built by him in the Therodum Veedhi (Car Street) shall be enjoyed by his wife after his own lifetime and that after her lifetime "his adopted son Ranganatha" and his male heirs shall permanently and for ever enjoy the said buildings. There area few other specific legacies in cls. 17 and 18 which require no notice. The scheme of the will is clear, viz., that Periakaruppa wanted his own wife to enjoy the properties and to manage the charities so long as she was alive and that the adopted son Ranganatha should do the same after her death, that in respect of the charities he set up a committee of supervision over his management (but not in respect of his wife 's management) while as respects enjoyment of the properties he specifically provided that the adopted son Ranganatha should enjoy his properties after be attains majority only if he is of good behaviour and that so long as he was not of good behaviour or his wife ' did not like him, he was to get only some maintenance out of the properties. These provisions are reminiscent of his past experience with the first adopted son Alagappa and are obviously inspired by the experience of bad conduct and wasteful 232 ways which he thought the first adopted son was guilty of. In the will he refers to "adopted son Ranganatha" in quite a number of places and to "aforesaid Ranganatha " or to " Ranganatha " in some places. There is no doubt that in what may be taken to be the dispositive clause, el. 15, he refers to him as "my adopted son Ranganatha" though in the next connected clause, cl. 16, he refers to him as ,aforesaid Ranganatha " or as " Ranganatha ". The question for consideration is whether the validity of adoption was the condition for the effectiveness of these dispositions. The question as to whether a disposition in such terms is to the person intended therein as a persona designata or by reason of his filling a particular legal status which turns out to be invalid is one of some difficulty and has been considered by the courts in quite a large number of cases, some of which have been cited before us. An elaborate consideration of these various cases cannot finally determine the question that arises in individual cases, which must ultimately depend on its own facts and the terms of the particular document containing the disposition. It is enough to refer to two cases of the Privy Council cited before us, viz., Nidhoomoni Debya vs Saroda Pershad Mookerjee (1) and Fanindra Deb Raikat vs Rajeshwar Das (2 ). As pointed out in the first case the question in all such cases is whether the gift of the property by the testator to a person who is referred to as having been adopted is one which is dependent on whether all the requisites of a valid adoption have been complied with or whether it is to a designated person notwithstanding that it was desired and expected that the requisites for a valid adoption were complied with. As pointed out by their Lordships in the second case "the distinction between what is description only and what is the reason or motive of a gift or bequest may often be very fine, but it is a distinction which must be drawn from a consideration of the language and the surrounding circumstances". In that case their Lordships gave an illustration which is very apt for the present case. It is as follows: (1) (1876) L.R. 3 I.A. 253. (2) (1884) L.R. 12 I.A. 72, 89. 233 " If a man makes a bequest to his "wife A.B.", believing the person named to be his lawful wife, and he has not been imposed upon by her, and falsely led to believe that he could lawfully marry her, and it afterwards appears that the marriage was not lawful, it may be that the legality of the marriage is not essential to the validity of the gift. Whether the marriage was lawful or not may be considered to make no difference in the intention of the testator." Now in the present case learned counsel for the res pondent very strongly relies on the repeated reference to Ranganatha in the will in the dispositive clauses as the adopted son and says that the disposition was made in his favour by reason of the fact that he was adopted and that he was believed to be duly and validly adopted. He points out that Periakaruppa was apparently a religious man as seen from the various charitable and religious endowments he had made in the will itself. He also placed stress on the fact that by virtue of cl. 21 of the will, he directs that his adopted son shall perform the Putra krutyangal (ceremonies to be performed by a son) for himself and his wife (after their respective deaths). It is said that the performance of the various ceremonies after death by a person who was not a son in the eye of sastras would be abhorrent to any devout Hindu which Periakaruppa clearly appears to be. This contention is not without force. But taking an overall picture of the provisions in the will and the background of the previous history, it is not possible to say in this case that the validity of the adoption was contemplated by Periakaruppa as the condition on which the validity of disposition should depend. As has been previously pointed out the will has been clearly in spired by his previous experience with his first adopted son Alagappa. When Alagappa did in fact challenge the validity of the second adoption in the suit which he filed and asked for a specific declaration in respect thereof by his plaint, that suit was allowed to be merely dismissed and there was no reference to the validity or otherwise of the second adoption in the Rajinama. Apparently it left the question at large. The will having been executed only within about one 30 234 year and eight months after the Rajinama in the suit, the testator Periakaruppa must have been conscious of the fact that the second adoption was open to serious challenge. In this context the reference to Ranganatha as the adopted son in the will as against the reference to Alagappa as a mere Abhimanaputra may indicate no more than that testator is anxious to make it quite clear that he would acknowledge Ranganatha as his adopted son in preference to Alagappa and is indicative of his clear intention that he desires him to get his properties to the exclusion of Alagappa and his minor son. That her is desirous of excluding by his will Alagappa and his son is apparent from his very categorical statement in cl. 5 of the will that neither the aforesaid Alagappa nor his heirs shall have any manner of right or interest whatever in the properties which were then in his possession and any properties which may be acquired thereafter. The will itself is, therefore, obviously intended to exclude them from succeeding to his property. Being aware of the likelihood of the challenge as to the validity of adoption of Ranganatha he could not have intended the ' disposition to fail in the contingency of the second adoption being held invalid thereby letting in the very persons whom he wanted to exclude. The provisions in the will which give the property to Ranganatha, only if he is of good behaviour seem rather to indicate that he attached greater importance to the character of the boy rather than to his legal status as an adopted son. It is true that he contemplated ceremonies to himself and his wife after their death being performed by the adopted son Ranganatha. But it is noteworthy that he chose the course of having his body enshrined in a tomb after his death and making arrangements for worship being conducted every day and Guru pooja on the day of his own annual sradh day. This may well have been felt by him to be a substitute for the regular annual sradh by an undisputedly valid adopted son whom he did not like. It is also noteworthy that there is no indication that he contemplated the Guru pooja as having to be done by Ranganatha, after the death of his wife. How exactly the testator viewed the second adoption of 235 Ranganatha and the alleged custom enabling him there unto may well be gathered from para. 8 of his written statement in O. section 114 of 1926 which is as follows: "The allegations in paragraph 11 of the plaint are false. This defendant has really taken in adoption the 2nd defendant. The aforesaid adoption is valid in accordance with the custom of Nattukottai Chettiars. There are many differences in the matter of adoption between Nattukottai Chettiars and other caste people as stated below. Their custom alone can prevail in the matter of the adoption taken by them and neither the law nor the Sastras can bind them. As adoption is made among Nattukottai Chettiars only with the intention that the adopted son should render them help and assistance (1) those who make adoption pay money to the parents Vagaira as price for the adopted boy. (2) Neither Dattaka Chandrika or Dattaka Mimamsa can bind them. (3) If one person has two wives, the two wives adopt two sons. (4) If the son of a person dies leaving his widow, the father takes a boy in adoption for himself, and the widowed daughter inlaw takes another boy in adoption. (5) If a grandson by son is born to one person and the son dies, the aforesaid person takes a boy in adoption even when the aforesaid grand son is living. The customs with regard to adoption among Nattukottai Chettiars are in existence as stated above. (6) As the aforesaid Chettiars are traders, a person can take in adoption another boy, if the adopted son acts against the will of the adoptive father without improving the property. " This seems to indicate that in his view such a customary adoption was made for temporal rather than for spiritual reasons. Taking an overall picture of the various provisions in the will, it appears to be reasonably clear that Ranganatha notwithstanding his description as adopted son in the will in several places, was intended by the testator to take the property as persona designata and that the will was therefore effective to convey title to him to residue of properties left by Periakaruppa after his death, 236 No question has been raised that the condition in the will that Ranganatha is to take the property only if he is of good conduct and behaviour, has operated to prevent the title vesting in him and it may be doubtful whether if a clear intention of the testator can be gathered from the will, to bequeath the residue to Ranganatha as persona designata the condition of good conduct and behaviour would be valid to prevent the vesting of the title. We have, therefore, come to a clear conclusion that Ranganatha obtained title to the properties of Periakaruppa under the will. This is in accord with the conduct of Alagappa for over 14 years after the death of Periakaruppa and his wife, in keeping silent and allowing Ranganatha to enjoy the. properties without laying any claim to the property on the ground of the invalidity of the will and the invalidity of the adoption, thereby indicating how he understood the will. In this view the other questions raised in this appeal do not call for consideration. This appeal, i.e., Civil Appeal No. 169 of 1956, is accordingly allowed with costs throughout and the plaintiff 's suit dismissed. The questions that arise for decision in the trust appeal may now be taken up for consideration. The plaintiff in the trust suit also is junior Periakaruppa. There were five defendants in the suit. First and second defendants are Ranganatha and his minor son. The third defendant is the son of Chockalingam. The fourth and fifth defendants are the father, Alagappa and Muthayi Achi, mother of junior Periakaruppa. The plaintiff 's case as set out in the plaint is that by the terms of the compromise in O.S. No. 114 of 1926 on the file of the Subordinate Judge of Devakottai " Periakaruppa and Chockalingam were constituted joint trustees for himself who was then a minor and that they were enjoined the duty of having the amount invested from time to time in Cheyenne firms, that the above terms were accepted by all the parties concerned including Periakaruppa and that consequently both Periakaruppa and Chockalingam accepted the position of joint trustees for the plaintiff for duly safeguarding and improving 237 his moneys." He alleges that the "said trustees were, therefore, bound to see to the proper investment of the said moneys in reliable and sound Chetti firms and for their accumulation with accrued interest during the plaintiff 's minority and to pay the *accumulation to the plaintiff on his demand on his attaining majority." He says further in the plaint that he learned after attaining majority that the entire amount was appropriated by Chockalingam for discharging his own personal debts and that he made it appear as if he had credited the trust amount in his own firm, that eventually when his firm became involved (financially) he (Chockalingam) appears to have executed of his own accord a simple mortgage dated May 3, 1930, (i.e., during the minority of junior Periakaruppa) of his house at Athangudi (in South India) together with a small item of property in Burma in favour of the plaintiff and another creditor for a sum of Rs. 1,00,000 of which Rs. 70,000 was intended to be the plaintiff 's money and the other Rs. 30,000 of the other creditor. The plaintiff further says in his plaint that the house which was the main item of security in the mortgage had no marketable value, that the mortgage was a one sided affair and that he repudiates the same. He claims accordingly that both the trustees Periakaruppa and Chockalingam were bound to render to him an account of the trust amount and if they had not properly invested it they were bound to repay it to the plaintiff with interest. He alleges that the trustees were bound to invest the amount in securities authorised by law and that they were bound to invest the moneys in sound third party Chetti firms. He also alleges that Periakaruppa knew at the time the involved circumstances of his co trustee and either colluded with him or failed in his duty to protect the plaintiff 's interests. He accordingly claims that Peria karuppa jointly with Chockalingam were liable for the gross breach of trust in respect of the said amount. He further alleged that on the, death of Periakaruppa on July 14,1929, and of Chookalingam in September/ October, 1934, he the plaintiff was entitled to recover the amount due to him from the estate of Periakaruppa 238 in the hands of defendant No. I and of Chockalingam in the hands of defendant No. 3. The first defendant filed, along with his minor son the second defendant, an elaborate written statement the substance, of which was that Periakaruppa was not constituted a trustee nor did he accept or assume the position of or acted as a trustee for the plaintiff in respect of the sums mentioned in the plaint. He states that, on the other hand, the only persons who were competent to act on behalf of the plaintiff were his guardians or his parents and the Rajinama conferred no right on Periakaruppa to override any acts done by play Dtiff 's legal guardians on behalf of the plaintiff 's moneys. It is further stated that there was nothing improper on the part of Chockalingam along with the plaintiff 's father and mother in realising the ,same under the hundi (for Rs. 75,000 due to junior Periakaruppa) and handing it over to Rangoon A.P.S. Firm (Chockalingam 's firm) for being invested. He further states that the said firm was in a flourishing and solvent condition then and during all the time Periakaruppa was alive, and that there was absolutely no negligence or improper motive on the part of any body in entrusting to the said firm for investment or in investing in the said firm, the money realised for the said hundi drawn by Periakaruppa. It was further stated that the first defendant therein understood that out of the said moneys with Chockalingam 's firm a sum of Rs. 30,000 was withdrawn by the parents and guardians of the plaintiff and invested the same bona fide in the purchase of a house for the benefit of the plaintiff on July 23,1928, which was proved to be in the possession of the plaintiff and continued to be so and that the plaintiff must be taken to have ratified the said purchase. The written statement also states that in or about the year 1930 after the death of Periakaruppa there were some disturbances in Burma and that the parents and guardians of the plaintiff, with a view to safeguard the interests ,of the plaintiff completely and effectively, wanted from the said Chockalingam security of landed property and thus obtained the mortgage referred to in the plaint of his residential 239 house and bungalow at Athangudi and of the business premises of Chockalingam at Bogale in Burma. The written statement proceeds to say that the plaintiff is bound by the acts of his parents and guardians in entering into such an arrangement made in his interest and for his benefit. It is also further stated that on February 17, 1936, the house and bungalow of Cbockalingam at Athangudi which was the subject matter of the mortgage above mentioned, were purchased in court auction by Alagappa the father of junior Periakaruppa for a small sum of Rs. 1,000 subject to the mortgage and that this course was adopted as a means of realising the amount due to the plaintiff on the mortgage deed without the necessity to incur any costs of a suit. It is thus claimed that the mortgage as well as the subsequent purchase of equity of redemption were all transactions by Alagappa for the benefit of his minor son and acting for him and that the plaintiff is not entitled to repudiate these transactions. The third defendant, son of Chockalingam, also filed a written statement denying that there was any trusteeship or acceptance thereof by his father, that the relations between the minor represented by his mother and father on one side, and Chockalingam on the other side, with whom the moneys were kept was solely one of creditor and debtor and that the minor 's money was properly invested with Chockalingam and that by then he was in a flourishing condition, that the hypothecation of May 3, 1930, was more than sufficient to cover the debt due and that the Properties covered by the mortgage were brought to sale in court auction subject to the mortgage and were purchased by the plaintiff 's father acting in his interest, that one of the properties so purchased has been resold and the sale proceeds realised by the plaintiff, that the other property is still in possession and enjoyment of the plaintiff and that therefore there was no loan outstanding. He further says that the remedy, if any, of the plaintiff was against his father and mother and not against himself. The suit was decreed in the trial court by ordering defendants 1 to 3 to pay a sum of Rs. 1,39,672 13 6 with interest from out of the assets of Periakaruppa 240 and Chockalingam in their hands. Now, it does not appear that the third defendant appealed against this decree either to the High Court or to this Court. His liability under that decree is not, therefore, in any way affected by the subsequent proceedings on appeal to the High Court and this Court and it is unnecessary to refer to him or his liability in what follows. The contention of the plaintiff 's counsel that Periakaruppa and Chockalingam constituted joint trustees for the sum of Rs. 75,000 payable to him under the compromise dated August 15, 1927, is one that is founded on the terms of the compromise. It is necessary therefore to set out the relevant terms thereof. "1.As settled by the four Panchayatdars, viz (1)N. AR. Arunachalam Chettiar of A. Muthupattanam, (2) SP. section Chidambaram Chettiar of Athangudi, (3) M.T.A.M. Muthiah Chettiar of Kottaiyur, and (4) RM. Alagappa Chettiar of A. Muthupattanam directing the first defendant to pay to the plaintiffs separately in respect of the right claimed by the plaintiffs in the suit filed by the plaintiffs herein for partition on the ground that they are also entitled to a share in the properties mentioned in the plaint in this suit, the first defendant has executed 3 hundis mentioned hereunder and issued on the 29th Ani, Prabhava (13th July 1927) in the names of the plaintiffs for Rs. 1,50,000, i.e., Rs. 75,000 to the first plaintiff and 75,000 to the second plaintiff with instructions to separately pay to the aforesaid plaintiffs and accordingly the plaintiffs have, at any time hereafter, no right and future connection whatever either in the properties mentioned in the plaint in this suit, or in any other property in the possession of the first defendant, or in any property that the first defendant shall hereafter acquire. The first defendant alone shall, as he pleases, enjoy as usual the aforesaid entire properties, as hisself acquired properties with all Swatantrani and right and powers of alienation such as gift, exchange, sale, etc. The first defendant has the right also to alienate the aforesaid entire properties either by a will or otherwise. 241 2. The first defendant shall for the hundis Nos. 1 and 2 out of the 3 hundis for Rs. 1,50,000 mentioned in paragraph I herein, pay the principal of Rs. 75,000 and interest within Purattasi of this Prabhava year (16th October 1927). The principal of Rs. 75,000 under the remaining hundi No. 3 shall be paid within the 30th Panguni of the year Prabhava (11th April 1928). The Sridhanam amount of Rs. 14,000 of Muthayi Achi., mother of the second plaintiff, and the second plaintiff 's amount of Rs. 75,000 out of the aforesaid amount of Rs. 1,50,000 under the hundis, shall be invested in Chetti houses in the name of the second plaintiff to the order of Periakaruppan Chettiar, the first defendant, and to the order of A.P.S. Chockalingam Chettiar of Athangudi, the junior paternal uncle of the aforesaid Muthayi Achi, and the aforesaid two persons shall be in management. The signature letters and accounts pertaining to the aforesaid amounts shall be with the aforesaid Chockalingam Chettiar. 4 to 9. . . . . 10. As A.P.S. Chockalingam Chettiar is liable for the discharge of the encumbrances that have been created by the first plaintiff as mentioned in paragraph 4 herein, the first plaintiff Alagappa Chettiar has endorsed on the undermentioned first and second hundis that they are payable to the order of the aforesaid Chockalingam Chettiar and they have been delivered to the aforesaid Chockalingam Chettiar. It is therefore prayed that the Court may be pleased to record the razinamah in the suit and to dismiss this suit. Details of the hundis. The hundi for Rs. 50,000 issued on the 29th Ani of the year Prabhava (13th July, 1927) directing Rangoon Thamappan PL. T. RM. Karuppan Chettiar to pay money with Rangoon nadappu interest. The hundi for Rs. 25,000 issued on the 29th Ani of the year Prabhava (13th July, 1927) directing Rangoon M. A. M. section Meiyappa Chettiar to pay money with Rangoon nadappu interest, 242 3. Hundi for Rs. 75,000 issued on the 29th Ani of the year Prabhava (13th July, 1927) directing Rangoon RM. P. A. Muthiah Chettiar to pay money with Rangoon nadappu interest. " The whole argument for the plaintiff is based on the provision contained in para 3 that the Sridhanam amount of Rs. 14,000 of Muthayi Achi, mother of the second plaintiff (which, it is said, has been given up by the plaintiff 's mother in his favour) and the second plaintiff 's amount of Rs. 75,000 out of Rs. 1,50,000 under the hundis, shall be invested in Chetti houses in the name of the second plaintiff to the order of Periakaruppa Chettiar and to the order of A. P. section Chockalingam Chettiar of Athangudi. This provision it is contended, shows that the money under the hundi meant for the minor was to be invested, by Peria karuppa and Chockalingam in Chetti houses in the name of the plaintiff but to their order. It is said that the amount so invested was, therefore, payable to themselves or to their order and that they were charged with the duty of seeing that the money was properly invested by operating on the minor 's deposit in their joint names and changing the investments when found necessary. It is urged that, therefore, both of them were constituted thereby as the legal owners of the amount, the beneficial ownership remaining with the minor and that to this legal ownership was attached the obligation of seeing to the proper investment of the money and the augmentation of fund by the addition of substantial interest obtainable from reliable Chetti firms. In order to determine whether this contention is correct, it is necessary to notice the terms of the relevant hundi of the same date as the Rajinama. This and other hundis issued by reason of the Rajinama must be taken to be part of the Rajinama inasmuch as they were referred to therein by description under the heading "Details of the hundis". Learned counsel for the respondent, junior Periakaruppa, urges that for this purpose it is the Rajinama alone that has to be looked into but not the terms of the hundi. We are unable to agree with this contention. We have no doubt that the Rajinama and the hundis are integrally 243 one and must be read together. The hundi dated August 15, 1927, for Rs. 75,000 issued by Periakaruppa for the benefit of junior Periakaruppa as part of the Rajinama is as follows: "Credit to minor Periakaruppa Chetti, son of AL. Alagappa Chetti of A. Muthupattanam Debit to AL. Periakaruppan Chettiar. Out of the sum of Rs. 1,50,000 payable by me according to the razinamah entered into in 0. section No. 114 of 1926 of the file of the Sub Court, Devakotta, on the 29th Ani of this year (13th July, 1927). . . . . the amount towards your share for improving the same by making investments in Chetti firms for interest in your name and to my order and to the order of Athangudi A. P. section Chockalingam Chettiar, is Rs. 75,000. Rangoon RM. P. A. Muthiah Chetti shall, on demand, pay money for this sum of Rs. 75,000 together with Rangoon nadappu interest from the 29th Ani of this year (13th July, 1927) to the order of the three viz., (1) AL. Alagappa Chetti, (2) Muthayi Achi, mother and guardian of minor Periakaruppan Chetti, son of the aforesaid person, and (3) A. P. section Chockalingam Chettiar of Athangudi, and debit it in my account with endorsement of payment made herein. Periakaruppan Chettiar. " Now taking para 3 of the Rajinama and this hundi together, it is clear that the banker of Periakaruppa one RM. P.A. Muthiah Chetti of Rangoon was to pay this amount to the order of the three persons, Alagappa, Muthayi Achi, and Chockalingam and that the said amount was to be invested in the name of the minor in Chetti firms to the order of Periakaruppa and Chockalingam. Now it is the contention of the learned counsel for junior Periakaruppa that the word 'order ' used in both these places has the same meaning as in the , (XX VI of 188 1) and that therefore what is contemplated is that the money under the hundi was in the first instance payable by Muthiah Chetti on whom it was drawn on the joint signatures of all the three persons named in the hundi 244 i.e., Alagappa, Muthayi Achi and Chockalingam and that what is further contemplated is the investment of that money by Periakaruppa and Chockalingam in Chetti firms in the name of junior Periakaruppa to the joint order of both of them. On this view, it is said that both these persons have the power to draw the money so invested whenever they choose and have the control of the money and in that sense have the legal ownership of the money vested in themselves notwithstanding that the amount is invested in the name of the minor to indicate his beneficiary ownership. Learned counsel for the appellant Ranganatha contends that this is not the proper interpretation of the word ' order ' as used in reference to the joint names of Periakaruppa and Chockalingam. He refers us to certain cases of the Madras High Court which recognised the practice of Chetti firms receiving deposits in the name of a particular person to the maral of certain other person or persons and that the idea of maral is merely to indicate that the change of investment was to be made with the consent of the maraldar without in any way affecting the ownership of the person in whose name the money is deposited. According to the cases on which he relies, the maraldar has no right to operate on the account and withdraw the money. It has been pointed out to us on the other side that the material word used in this context both in para 3 of the Rajinama and in the hundi itself is " order ' and not maral '. It is also urged that the word maral has acquired no such settled meaning, as the appellant ascribes to it. There are decisions showing that the question as to what the word maral means is one that must depend on the proof in each particular case of usage of that word by the Nattukottai Chetti firms. This has been laid down by the Privy Council in Arunachalam vs Vairavan (1) and in Muthuraman vs Periannan (2). In view of these decisions and the fact to which our attention has been drawn that there is no pleading in this case as to the meaning of the word 'maral ' or that the word 'order ' in the context of this case has been used in the sense (1) A.I.R. 1929 P.C. 254, 256. (2) A.I.R, 1934 Mad. 621, 622. 245 of maral, we are not prepared to uphold the contention that the word ' order ' in this case can be given the meaning which is attributed to the word 'maral ' in some of the cases which have been cited to us for the appellant. It does not, however, follow that the word ' order ' in this case in its application to the two persons Periakaruppa and Chockalingam, is used in the sense which it has under the Negotiable Instruments,Act. Learned counsel for the respondent, junior Periakaruppa, relies on section 13(1), Explanation (iii), taken with sections 8, 9, and 78 of the . He urges that in the case of a negotiable instrument the person who is indicated as the ' orderer ' (if that word may be used in this context) is the holder thereof and is the person who is entitled to receive the amount thereunder and to give a discharge in respect thereof and that, therefore, he is virtually the legal owner thereof. If, as held in Krishnashet bin Ganshet Shetye vs Hari Valjibhatye (1), the , (in the absence of any local usage to the contrary) applies to hundis, what is urged above may well be applicable to the money of the original hundi for Rs. 75,000 drawn on Muthiah Chetti and specifically payable on demand to the order of the three persons, Alagappa, Muthayi Achi and Chockalingam. But the position as regards the amount so collected, and thereafter invested in the name of junior Periakaruppa, is not necessarily the same. It is true that para 3 of the Rajinama and the narration in the relevant hundi clearly show that the amount of the hundi (apparently after realisation thereof) is to be invested in Chetti firms in the name of minor Periakaruppa and that such investment is to be to the order of both Periakaruppa and Chockalingam. This is obviously nothing more than a deposit in the name of the minor after such collection. The investment would presumably be covered by an ordinary deposit receipt in the name of the minor. A deposit receipt of that kind does not fall within the definition of 'negotiable instrument ' under section 13 of the . There is no authority for showing that such a deposit receipt is a# (1) Bom. 246 document to which the notions of as to the use of the word order ' and the legal implications thereof would be applicable. On the other hand there appears to, be authority to the contrary. See Sethna vs Hemmingway(1) and In re Travancore National and Quilon Bank Ltd.(1). Both these cases indicate that a deposit receipt is not a negotiable instrument. It is true that in the language of the hundi, at both places, i.e., (1) where the hundi is to be cashed, and (2) at the place where the cash so collected is to be invested, the same word 'order ' is used with reference to different sets of persons. It is, therefore, suggested that they have to be understood in the same sense. But the hundi, though intended for the minor and credited to him, is not drawn specifically in favour of the, minor but only to the order of certain named individuals, while the investment is to be made specifically in the name of the minor indicating that he is the owner thereof. It would be begging the question to say that the orderdars in this context are the legal owners and that hence this indicates only his beneficial ownership. It appears to us reasonably clear that merely because para 3 of the Rajinama and the narration in the relevant hundi both contemplate the amount of hundi on realisation to be invested in Chetti firms in the name of the minor to the order of both Periakaruppa and Chockalinga, it does not ipso facto follow as a matter of law that both of them are authorised to operate on it in the sense that they can withdraw the money and have the control of it in the same way as a person, to whose. order a bill of exchange or a cheque is payable, can have. While it is true that the appellant Ranganatha has not made out that the word 'order ' is used in the ,sense of the word 'maral ' and has not pleaded or proved what maral or order in this case means, the plaintiff has not equally made out that the word 'order ' in para 3 of the Rajinama in its application to Periakaruppa and Chockalingam in the context, authorises them to obtain absolute control of the money deposited. But it is urged that this is implicit (1) A.I.R. 1914 BOM. 286, 287. (2) A.I.R. 1940 Mad. 157, 159. 247 in the language of para 3 which refers to investment and management. Undoubtedly under the terms of the Rajinama the amount is to be invested in Chetti firms in the name of the second plaintiff and the two persons, Periakaruppa and Chockalingam, are to be associated with the investment, by its being designated as being to their order, whatever that may mean, and they are also enjoined and associated with it in the following terms. " Iruvarghalum mel parthu varavendiyadu This clause which is in Tamil language has been translated in the official translation as " the aforesaid two persons shall be in management. " Two out of us in this Bench who have a fairly working acquaintance with Tamil language are not satisfied that ' management is a correct translation for the word 'mel parthu '. What the clause contemplates is ' mel parve ' which literally means 'over seeing '. It conveys the idea of ,;supervision ' and does not imply the capacity to operate on the deposit. But it is suggested that the relevant clause taken as a whole indicates that both together have the power of investment and reinvestment as indicated by the use of the phrase in Tamil, viz., 'koduthu vangi ', which means 'giving and taking ', i.e., 'lending and taking back. ' This phrase is generally used to indicate 'investing. ' But it is not very clear in the structure of the sentence in which this phrase occurs that it is the two persons Periakaruppa and Chockalingam that are to do this 'investing. ' The word 'iruvarkalum ' in this sentence follows 'koduthu vangi ' and precedes 'mel parthu varavendiyathu` and indicates rather that their joint responsibility relates to only 'mel parvai ' and not 'koduthu vangal '. In a matter like this, however, relating not merely to the meaning of a particular word such as ' mel parthu ' as above but to the contextual meaning of an entire clause in which a particular phrase like 'koduthu vangi ' is used, we do not wish to base the decision on our own impression as to the implication of that phrase in the context and would prefer to go by the official English translation which is as follows; 248 "The amount. . . shall be invested in Chetti houses in the name of the second plaintiff, to the order of Periakaruppan Chettiar, the first defendant, and to the order of A.P.S. Chockalingam Chettiar of Athangudi, the junior paternal uncle of the aforesaid Muthayi Achi, and the aforesaid two persons shall be in management. " But even this does not indicate that the power of investment is vested in them but only 'mel parve ' which, in our view, has been wrongly translated as 'management. ' Taking the whole of this clause carefully we are not satisfied that the language clearly indicates that the power of operating in respect of the deposit by way of withdrawing the amount and being in control thereof is vested in Periakaruppa and Chockalingam. All that the language indicates with certainty is that these two persons are specially enjoined to supervise the investments and that they are "orderdars," whose meaning has not been made out. In such an ambiguous situation as to the, meaning of the words used and the intention of the parties thereto, it is permissible to look into and consider what the contemporaneous actings of the parties are which may be treated as virtually part of the same transaction. The hundi for Rs. 75,000 for the benefit of junior Periakaruppa dated August 15, 1927, was, according to para 2 of the Rajinama, payable by April 11, 1928. There is an endorsement on the hundi signed by Alagappa, Muthayi Achi and Chockalingam dated May 31, 1928, to the effect that the money due under that hundi is to be paid to Rangoon A. P. section Firm (which means Chockalingam 's firm) together with interest thereon. On the terms of the hundi the interest was payable from July 13, 1927, on which date the Panchayatdars appear to have settled the terms of the Rajinama. This shows that the amount was actually drawn on the signatures of the three persons and was intended to be collected by Chockalingam 's firm at Rangoon. The hundi also bears a note signed by Chockalingara 's agent, A. P. section Somasundaram, that the principal and interest of the hundi amounting to Rs. 80,726 15 3 was received through another banker 249 named KM. Somasundaram Chetti as per letter of Periakaruppa to KM. Somasundaram Chetti on April 10, 1928. It is in the evidence of this A. P. section Somasundaram, clerk of Chockalingam, who was examined as P.W. 2 on commission, that after its withdrawal the money was in fact credited on or about June 19, 1928, in the accounts of A. P. section Firm at Rangoon in the name of junior Periakaruppa, to the order of (senior) Periakaruppa and Chocklingam under the directions of Chockalingam. It is the evidence of this Somasundaram that Chockalingam directed him to invest the amount in Rs. 4,000 or Rs. 5,000 in reliable and sound Chetti firms, presumably meaning thereby that the idea was to keep the money in the A.P.S. Firm provisionally until he was able to invest the money safely by distributing it over several reliable Chetti firms in comparatively small sums. That this was the real intention of everybody concerned in entrusting the money to the A.P.S. Firm is confirmed by what is narrated in exhibit P 4, a receipt issued in favour of Periakaruppa, for the total sum of Rs. 75,000 collected in respect of the two hundies for the amounts of Rs. 50,000 and Rs. 25,000 respectively, belonging to Alagappa under the compromise. That receipt shows the collection of a sum of Rs. 76,274 1 9 being the principal and interest of the two hundies, and recites also some other matters. It ends with the following significant narration : "We shall obtain money for the hundi for Rs. 75,000 of minor Periakaruppan Chettiar and for the hundi for Rs. 14,000 credit it in the firm of Rangoon A.P.S. invest it in our Nattukottai Chetti firms for thavani to the order of (1) AL. Periakaruppan Chetti of A. Muthupattanam, and (2) A.P.S. Chockalingam Chetti of Athangudi, and deliver the copy of the aforesaid debit and credit account, and copies of the signature letters. " This is signed by A.P.S. Chockalingam Chettiar as the power agent of AL. Alagappa Chettiar and also by Muthayi Achi for herself and for minor Periakaruppan Chetti. This narration in the receipt 32 250 indicates quite clearly that it was the father and the mother of the junior Periakaruppa that took the responsibility of authorising the A.P.S. firm to collect the hundi amount and of investing it in other Nattukottai Chetti firms for thavanai. The intention clearly appears to be that it is Chockalingam that was to collect the money on the hundi and it was Chockalingam that was to arrange for the investment of the same (on the legal responsibility of Alagappa and Muthayi Achi, the natural guardians of the minor). This is exactly what is borne out as to what happened thereafter as appears from the evidence of Chocka lingam 's clerk, Somasundaram, P. W. 2. This seems really to indicate that what the parties throughout intended was that while the collection of the money under the hundi was to be under the signature of all the three, viz., Alagappa, Muthayi Achi and Chockalingam, the agency actually to collect was to be the firm of Chockalingam in Rangoon and it is that firm that was to arrange for distributing the money over various other Nattukottai Chetti firms by way of safe and good investments on the implied authority of the natural guardians, viz., the father and mother. This obviously would take some time and during this time Chockalingam 's firm would naturally have to be in charge of the funds. It appears reasonably clear, however, that a long term investment in Chockalingam 's firm as such was not contemplated. This may be inferred from the wording in para 3 of the Rajinama which says that "the signature letters and accounts pertaining to the aforesaid amount shall be with the aforesaid Chockalingam Chettiar. In the context this obviously means that the deposit receipt and the periodical accounts relating to that deposit by way of addition of interest and so forth were to be in the custody of Chockalingam. Thus Chockalingam was the person primarily intended to collect the money and to be in charge of the investment, that pending final investment Chockalingam was to have temporary custody of the amount. The point to be noted about this subsequent conduct of the persons concerned is that in respect of these various matters Periakaruppa 251 does not at all come into the picture. The narration in the receipt, exhibit P 4, which recites under the two signatures thereto, of Chockalingam as agent of Alagappa and Muthayi Achi as guardian, is that they undertake to obtain the money and invest it in Nattukottai Chetti firms for thavanai. It does not indicate that it will be so invested on the instructions or consent also of Periakaruppa. Nor does Somasundaram, P.W. 2, in his evidence give any indication that the collection by and investment in, Chockalingam 's firm was actually done under the instructions of Periakaruppa or that it was thereafter contemplated that in splitting the amount into smaller sums, it would have to be under instructions of Periakaruppa also. There is no evidence that Chockalingam sent his instructions to his clerk Somasundaram with the knowledge and consent of Periakaruppa or in collaboration with him. It is also significant that the only further act of reinvestment which was made during Periakaruppa 's lifetime, viz., the purchase of a house for Rs. 30,000 at Athangudi in the name of junior Periakaruppa and of which the minor is admittedly enjoying the benefit, does not. appear to have been with the knowledge or consent of Periakaruppa. Thus looking at the actings of the parties concerned, there is nothing to show that the parties understood the term in para 3 of the Rajinama as laying on Periakaruppa the responsibility of actually making investments and reinvestment for that purpose to operate and withdraw the amounts from the banker or bankers with whom the hundi money after collection was to be invested. Learned Judges of the High Court were greatly influenced by the assumption that it could not have been the intention of Periakaruppa to allow a spendthrift like Alagappa to handle the funds of the minor for purposes of investment or change of investment, and that therefore it must have been intended that both the persons Periakaruppa and Chockalingam were to have that power and that this was what was meant by directing that the minor 's money must be invested " to the order of Periakaruppa and Chockalingam ". It is true that the handling of the minor 's funds by his 252 father Alagappa alone was not likely to have been contemplated. But that does not necessarily mean that Periakaruppa took upon himself the responsibility for such handling either by himself or jointly with Chockalingam. On the other hand it looks as though that it was Chockalingam that took such responsibility. Though not himself a panchayatdar he must have helped to bring about the compromise on the side of Alagappa, Muthayi Achi and junior Periakaruppa. This is indicated by his having signed the Rajinama as a witness thereto. The entire set up of the Rajinama and the subsequent actings show that all the parties concerned including Periakaruppa himself had con fidence in Chockalingam who was no other than the paternal uncle of Muthayi Achi, the mother of the minor. In fact even as regards the sum of Rs. 75,000/payable to Alagappa himself under the two hundies it was Chockalingam alone that was constituted virtually the trustee for collecting the said hundi amounts and paying thereout the debts which had by then been incurred by Alagappa. This is clear from the fact appearing in paras 4 and 10 of the Rajinama. Para 10 says that the plaintiff Alagappa has endorsed on the two hundies belonging to him that they are payable to the order of Chockalingam and it further recites that the hundies have been delivered to the aforesaid Chockalingam. It is specifically stated in that para that Chockalingam was liable for the discharge of encumbrances that have been created by the first plaintiff therein (Alagappa). This was reiteration of what was stated in para 4 which says that whatever be the encumbrances created by the first plaintiff in respect of any property mentioned in the plaint in the suit, the aforesaid Chockalingam shall discharge them without any liability whatever to the first defendant. It is clear that Periakaruppa was willing to trust Chocklingam completely even in respect of a matter which would directly affect him, viz., the discharge of Alagappa 's debts incurred by way of encumbrances, so as to relieve him from all liabilities for such debts. It is unreasonable, therefore, to assume that he was not prepared to leave the responsibility for the collection 253 and investment of the minor 's funds also with Chockalingam but that he undertook a joint responsibility with him in respect of the same. Undoubtedly para 3 of the Rajinama indicates that the amount was to be deposited to the order of Periakaruppa as also Chockalingam and that both together are to have 'mel parve ' (supervision). But whatever may be the connotation of this provision, it does not appear to us, with great respect to the learned Judges of the High Court, reasonable to attribute to Periakaruppa the undertaking of the responsibility of a trustee on its basis. Trusteeship is a position which is to be imputed to a person on clear and conclusive evidence of transfer of ownership and of the liability attached to such ownership on account of confidence reposed, and on such liability having been accepted by the alleged trustee. There is no clear and conclusive proof of any of these elements in the present case so far as Periakaruppa is concerned. Learned counsel for the respondent has also relied upon a statement in the affidavit of Muthayi Achi,mother of junior Periakaruppa dated August 6, 1927, in respect of the application for compromise the litigation on behalf of the minor in which it is stated as follows: " The first defendant (meaning Periakaruppa) has given a hundi for Rs. 75,000 to my junior paternal uncle A. P. section Chockalingam Chettiar on behalf of the minor 2nd plaintiff in accordance with the award of the Panchayatdars. It has been settled that the aforesaid amount of Rs. 75,000 should be deposited in Chetti firms in the name of the aforesaid minor, to the order of the 1st defendant and the aforesaid A. P. section Chockalingam Chettiar and improved. " It is urged that when the hundi itself has been handed over to Chockalingam, as this affidavit indicates, the very property belonging to the minor must be taken to have been delivered over to Chockalingam as one of the two persons in whose order the money was to be deposited and that this, in law, amounts to transfer of ownership to one, on behalf of both, with the obligation attached and that the acceptance thereof 254 must be assumed in view of the fact that the whole of the Rajinama including this term was agreed to by Periakaruppa along with the others. It is quite clear, however, in this case that the mere delivery of the hundi to Chockalingam cannot be treated as itself transfer of ownership of the money which was to be collected in respect thereof. Paras 1 and 2 of the Rajinama itself are in substance as follows: " That the Panchayadars directed the first defendant (Periakaruppa) to pay to the plaintiffs a total of 1,50,000, and that the first defendant accordingly executed three hundies in the names of the plaintiffs. " Thus by virtue of the direction to pay, the compromise brought about between Periakaruppa on one side and Alagappa and junior Periakaruppa on the other the relationship of debtor and creditor. It is obvious that until the hundies are realised that relation would continue. There is no transfer of ownership till then. (See In re Beaumont, Beaumont vs Ewbank(1). Further, as has already been noticed, the hundi issued by Periakaruppa in respect of junior Periakaruppa 's share of Rs. 75,000 was originally issued upon Muthiah Chettiar of Burma but was ultimately realised through one KM. Somasundaram Chetti on a letter written by Periakaruppa to him. This indicates that for some reason or other the hundi could not be cashed on the original banker and had to be realised through another banker. In this state of facts it is not feasible to say that the mere handing over to Chockalingam of the original hundi drawn on Muthiah Chettiar on the date of the compromise itself (as mentioned in the affidavit of Muthayi Achi) can be treated as transfer to Chockalingam of the very property of junior Periakaruppa under the Rajinama. The trust, therefore, if any, in respect of that amount must attach only after realisation of the amount and by reason of the acting of the parties subsequent thereto implying acceptance of the obligations under the trust. The more fact that Periakaruppa agreed to all the terms of the Rajinama does not constitute such acceptance. It is at best only indication of a prospective willingness to accept. As already stated there is absolutely no evidence of an (1) 255 actual acceptance after the hundi was cashed and the amount was in fact treated by Chockalingam as an investment in his firm. Indeed even if it be assumed that Periakaruppa became a joint trustee with Chockalingam in respect of the amount belonging to the minor it does not follow that Periakaruppa was responsible for the breach of trust in this case, committed obviously by Chockalingam only. As already stated ' it appears quite clearly that collection by Chocka lingam of the minor 's hundi and his keeping custody thereof in his own firm until the amount is regularly invested in other Chetti firms was a matter which was under the initial contemplation of everybody concerned and in particular of the father and the mother who are his natural guardians. That this was the position as late as July, 1928, is quite clear from the evidence of Chockalingam 's clerk, Somasundaram, P. W. 2. Periakaruppa died in July, 1929, about an year later. There is absolutely nothing to indicate that 'the provisional retention of the amount in Chockalingam 's firm for that period, was unreasonable or that Periakaruppa had any notion that Chockalingam was financially in embarrassed circumstances and that he made use of the funds. It is true that, under law, the investment of funds by a trustee with himself would constitute breach of trust. But before a co trustee can be made liable therefor some kind of knowledge or connivance or gross negligence or the like contributing factor on his part has got to be made out. It may be that in this case the minor 's funds have been frittered away by the embarrassed circumstances of Chockalingam in whom everybody seems to have reposed confidence. If that was in fact what happened, it may be unfortunate for the minor. But that cannot be any reason for affecting Periakaruppa or his estate with the liability for Chockalingam 's breach on an assumed construction of what appears at best to be equivocal and ambiguous language in the Rajinama. The burden is on the plaintiff, junior Periakaruppa, to make out clearly that by the Rajinama Periakaruppa became a trustee for the minor 's fund and incurred 256 liability therefor for his co trustee 's breach. At the time of the compromise the minor was less than two years in age. Periakaruppa was more anxious to get rid of all his liabilities arising from his son 's past and wanted his son 's family to clear out bag and baggage from the family house. In such a situation if he was anxious for the minor boy 's welfare to the extent of taking responsibility for his money on himself though it be jointly with Chockalingam, clearer and decisive language was to be expected. In our opinion this has not been made out. Hence this suit of the plaintiff, junior Periakaruppa, also fails, against Ranganatha and his minor son. The appeal is accordingly allowed and the suit is dismissed as against defendants 1 and 2 with costs throughout. GOVINDA MENON J. I am in perfect agreement with the reasoning and conclusions contained in the judgment of my learned brother B. Jagannadhadas J. in Civil Appeal No. 169 of 1956, and I agree that the appeal be allowed with costs. In Appeal No. 104 of 1954, 1 have considerable doubts regarding the construction of cl. (3) of Exhibit P. 1. If Periakaruppa and Chockalingam were entrusted with the duty of investment, there can be no doubt whatever that they are constituted trustees. The Tamil expression 'Koduthu Vanghi ' clearly signifies investment, but the question is who is to make the investment. If Periakaruppa and Chockalingam have merely to supervise the investment, as the Tamil expression 'Mel Parthu ' means, and not actually invest the amount then the view taken by my learned brothers is right. I am inclined to think that the duty of investment is cast on Periakaruppa and Chockalingam, but as this is a matter which is not free from doubt, not without hesitation, I agree with the order passed by my learned brothers. Appeals allowed.

P adopted A in 1914 but on account of the acute differences which arose between them later, he made a second adoption of the first appellant in 1926 on the footing that such an adoption was permitted by special custom in Nattukottai Chetti families. In the partition suit filed by A for himself and on behalf of his minor son, the first respondent, the validity of the second adoption was challenged, but the matter was compromised by a Rajinama under which P was directed to pay the plaintiffs therein Rs. 75,000 each separately in lieu of their right to partition. Under the terms of para 3 of the Rajinama and the hundi executed by P in favour of the first respondent, the amount was to be paid to the order of three persons, viz., the father and mother of the first respondent and C, and the amount itself was to be invested in the name of the first respondent in Chetti firms to the order of P and C who were to be in management. In 1929 P executed a will whereby he made arrangements for certain religious gifts and charities and gave the residue of the property to his wife for her life and thereafter to his second adopted son, the first appellant. On attaining majority in 1943 the first respondent filed two suits. The first was on the footing that the amount of Rs. 75,000 which was given to him under the Rajinama was constituted a trust for his benefit during his minority under the trusteeship of P and C, that the money was wrongfully appropriated by C, contrary to the terms of the Rajinama, and that P as a co trustee with C was equally responsible for C 's breach of trust and that the first respondent was entitled to have the amount paid out of the estate of P in the hands of the appellants. The second suit was for the recovery of the entire properties of P on the ground that the second adoption was invalid and that the will executed by P was ineffective. It was found that the adoption of the first appellant was invalid and that the customary adoption set up by P was made for temporal rather than spiritual purposes, and the question was whether, notwithstanding his description as adopted son in, the will in several places, the intention was that he was to take the property as Persona designata. As regards the terms of para 3 of the 215 Rajinama the language used was ambiguous, whether the power of investment was vested in both P and C, but looking at the subsequent conduct of the parties it was found that it was C who was authorised to collect the amount of the hundi and to arrange for the investment of the same on the responsibility of the father and mother of the first respondent. Held:(1) The question whether a disposition to a person is intended as a Persona designata or by reason of his filling particular legal status which turns out to be invalid, depends on the facts of the case and the terms of the particular document containing the disposition, and in the instant case, in view of the exclusion of the validly adopted son and his heirs from succession and the conduct of the parties for over 14 years in allowing the first appellant to retain the property, taking an overall picture of the various provisions of the will, it was clear that the first appellant was intended by the testator to take the property as persona designata and that the will was therefore effective to convey title to him. Nidhoomoni Debya vs Saroda Pershad Mookerjee, (1876) L.R. 3 I.A. 253 and Fanindra Deb Raikat vs Rajeswar Das, (1884) L.R. 12 I.A. 72, referred to. (2)Trusteeship is a position which is to be imputed to a person on clear and conclusive evidence of transfer of ownership and of the liability attached to such ownership on account of confidence reposed, and on such liability having been accepted by the alleged trustee, and in the present case there was no proof that P became a trustee for the minor 's fund and incurred liability for C 's breach of trust.

Appeal No. 1397 of 1969. Appeal from the judgment and order dated January 1, 1968 of theKerala High Court in O. P. No. 2413 of 1965. V.A.Seyid Muhammad and A. G. Pudissery, for the appellant. alias A. R. Somanatha Iyer and P. Kesava Pillai for the respondent. The Judgment of the Court was delivered by Hegde J. One K. C. Sreemanavikraman alias Eattan Raja was the Zamorin of Calicut. He was a Sthanamdar. In respect of the sthanam property, he was liable to pay agricultural income tax under the Kerala Agricultural Income tax Act, 1950 (in brief the Act) for the period from November 1, 1956 to March 31, 1958. Sreemanavikraman Raja died on May 2, 1958. Thereafter on May 12, 1958, Sthanam Properties (As sumption of Temporary Management and Control) and Hindu Succession (Amendment Act of 1958 came into force. After the death of Sreemanavikraman Raja, the sthanam property was taken possession of by Kunhammaman Raja claiming to be the succeeding sthanamdar. In respect of the assessment due for the, period November 1, 1956 to March 31, 1958, Kunhammaman Raja was assessed to tax as the successor sthanamdar. The said Kunhammaman Raja died on December 23, 1960 without making any payment. Thereafter the next senior most member in the Zamorin family, P. C. Cheria Kunjunni Raja took possession of the sthanam property. He also died soon after. During the life time of P. C. Cheria Kunjunni Raja, the Agricultural Income tax Officer imposed a penalty of Rs. 5,000/ for non payment of the tax referred to earlier. P. C. Cheria Kunjunni Raja paid a sum of Rs. 20,100/out of the tax and penalty due, as coercive proceedings were threatened to be taken against him. On the death of P. C. Cheria Kunjunni Raja, the next senior most member in the Zamorin family was K. C. Cheria Kunjunni Raja. When the 936 Agricultural income tax Officer attempted to collect the tax imposed under the assessment order mentioned earlier from K. C. Cheria Kunjunni Raja, he filed a petition before that officer representing that he had nothing to do with the sthanam property and the sthanam property stood divided under section 7(3) of the on the death of Sreemanavikraman on May 2, 1958. The had come into force on June 18, 1956. After the receipt of that representation, the Agricultural Income tax Officer passed an order on March 25, 1963 stating that as the successors of the Zamorin who died on 2 5 1958 had designated themselves as Zamorin Rajas, they have the liability to pay the arrears due to the Government. He directed K. C. Cheria Kunjunni Raja to pay the tax and penalty imposed. Aggrieved by that order K. C. Cheria Kunjunni Raja filed a writ petition in the Kerala High Court challenging the validity of the threatened proceedings against him. The High Court quashed the demand notices issued by the Agricultural Income tax Officer to K. C. Cheria Kunjunni Raja. It held that the assessment having been made on Kunhammaman Raja, his share alone was liable to be proceeded against. It further held that the liability ' to pay that tax and penalty was that of the personal heirs of Kunhammaman Raja and that only to the extent, they had come into possession of the assets of the said Raja. Thereafter the Inspecting Assistant Commissioner, Kozhikode ordered that as the entire sthanam property had devolved on the 693 members, all those persons were liable to pay the arrears of the tax and penalty. This order was made without notice to the parties. Meanwhile in the partition suit in the Zamorin 's family, the court appointed two joint receivers. The receivers objected to the order of the Assistant Commissioner demanding the arrears of tax referred to earlier from them. They represented to him that the estate in their hands is not liable to pay the arrears of tax and penalty demanded. But those representations were not accepted by the authorities. They threatened to proceed against the assets in the hands of the receivers. At that stage, the receivers filed the writ petition from which this appeal arises. Therein they challenged the right of the Agricultural Income tax Officer to collect the arrears of tax and penalty from out of the properties in their hands. The question before the High Court was whether the tax due from Manavikraman Raja was realisable from the assets in the hands of the receivers. The writ petition was heard by a full bench of three judges. By a majority, the High Court came to the conclusion that the only persons who were liable to pay the tax in question were the personal heirs 937 of Sreemanavikraman Raja who had received the income. The Court held that in view of section 7(3) of the , the sthanam property stood divided at the time of the death of Sreemanavikraman Raja into 693 shares, out of which 692 shares went to members of the Tarwad of the deceased and one share to his Personal heirs wife and children. It opined that the tax due from Manavikraman Raja could have been levied and collected only from his personal heirs as they alone were liable to pay that tax. As a result of that conclusion, it quashed the impugned demand. Section 7 of the provides for the devo lution of interest in the property of a tarwad, tavazhi, kutumba, kavaru, or illom. Section 7(3) provides : "Notwithstanding anything contained in sub section (1) when a sthanamdar dies after the commencement of this Act, the sthanam property held by him shall devolve upon the members of the family to which the sthanamdar belonged and the heirs of the sthanamdar as if the sthanam property had been divided per capita immediately before the death of the sthanamdar among himself and all the members of his family then living and the shares falling to the members of his family a the heirs of the sthanamdar shall be held by them as their separate property." "Explanation For the purposes of this sub section the family of a sthanamdar shall include every branch of that family, whether divided or undivided, the male members of which would have been entitled by any custom or usage to succeed to the position of sthanamdar if this Act had not been passed. " We have considered the scope of this section in Civil Appeal No. 1137 of 1969. Hence it is sufficient for our present purpose to state that in view of section 7(3) of the , it must be held that on the death of Sreemanavikaraman Raja, each of the members of his tarwad took a per capita share in the sthanam property as co owners and not as his heirs. His personal heirs took the share which the deceased was deemed to have got as his share when he was taking his last breath. Section 7(3) of the embodies a fiction. The purpose of that fiction was to gradually abolish the sthanams and to provide for the devolution of the sthanam properties on the members of sthani 's tarwad except as regards one per capita share which the personal heirs of the sthanamdar are to inherit as the heirs of the sthanamdar. 938 The nature of a sthanam was considered by this Court in K. K. Kochuni and ors. vs The State of Madras and ors. (1) Therein this Court observed that according to the custom, Sthanam means a position of dignity and respect and for maintaining that position, properties were attached to that office and the same was held by the "stani". Stani is solely entitled to the income of that property during his life time. The senior most member of a tarwad usually became the sthanamdar of the sthanam attached to that tarwad. On his succession to stanom. he stood separated from the rest of the family. He solely became entitled to the stanom property but he gave up his right in the tarwad property. All the same he and the members of his tarwad had the same right of succession to the properties of each other as if his severance from the family had been the result not of his succession to the stanom, but a voluntary division between him and the rest of the family. Whatever might have been the customary law, section 7(3) of the Hindu Succession Act the validity of which was not in issue before us by a fiction deems that the sthanam property stood divided amongst the stani and the members of his tarwad, a split second before his death. From the language of the section. it is clear that the members of the tarwad took the property as co owners and not as the heirs of the deceased stani. This fiction was created for the purpose of providing for the devolution of the sthanam properties. The Act 28 of 1958 came into force only on May 12, 1958. Therefore that Act cannot have any effect on the sthanam with which we are concerned in this case because that stanom stood destroyed on May 2, 1958. Hence we need not refer to the provisions of that Act. The income of the sthanam property during November 1, 1956 to March 31, 1958 was the exclusive property of Sreemana vikaraman Raja. He was alone entitled to that income. Therefore he alone was liable to pay the tax. Under the Agricultural ,Income tax Act, no charge is created on property in respect of the arrears of agricultural income tax. That being so, the liability to pay the arrears of tax due from the deceased stani fell on his personal heirs and that only to the extent they received any of his assets. This position is clear from section 24(1) of the Act which provides that "when a person dies, his executor, administrator or other legal representative shall be liable to pay out of the estate of the deceased person to the extent to which the estate is capable of meeting the charge, the agricultural income tax assessed as payable by such person or any agriculture income tax which would have been payable by him under this Act, if be had not died". (1) 939 The assessment made on Kunjunni Raja in his capacity as the successor sthanamdar was an invalid assessment. Legally he, never became the sthanamdar. There was no sthanam after the, death of Manavikraman Raja. With the death of Manavikraman Raja the sthanam came to an end. The only persons who could have represented the estate of Sreemanavikraman Raja were his personal heirs. They were not made parties to the assessment. No notice of the assessment proceedings was given to them. Kanjunni Raja was not one of his legal representatives. Even if it is considered that the sthanam properties had devolved on the members of the tarwad by succession. Kanjunni Raja alone could not have represented the entire body of successors numbering 692. There was no question of any bona fide enquiry by the assessing authority. It was clearly a case of misunderstanding the legal position. Further, it does not appear that Kunjunni Raja was assessed as the legal representative of the deceased stani. He appears to have been assessed as the successor stani liable to pay the debts due from the estate. Hence the assessment was not made in accordance with law, see Income tax Officer, Kozhikode vs Mrs. Susheela Sadananda and anr.(1). In this view of the matter it is not necessary for us to consider the other provisions of the Act providing for the assessment and collection of the tax due from a deceased person. In the result this appeal fails and the same is dismissed with costs. V.P.S. Appeal dismissed.

Section 7(3) of the , by a fiction deems that the Sthanam property stands divided amongst the sthani and the :members of his tarwad, a split second before the death of the sthani. The members of the tarwad took the property as co owners and not as heirs ,of the deceased sthani. The purpose of the fiction was to gradually abolish the sthanams and to provide for the devolution of the sthanam properties on the members of sthani 's tarwad except as regards one per capita share which the personal heirs of the sthani are to inherit as the heirs of the sthani. On May 2, 1958, the Zamorin of Calicut died. In respect of the agricultural income tax under the Kerala Agricultural Income tax Act, 1950, which he was liable to pay for the period November 1, 1956 to March 31, 1958, the person who took possession of the sthanam property claiming to be the succeeding sthani was assessed to tax as the sursthani After his death, the Agricultural Income tax Officer attempted to collect the tax from the successive senior most members of the Zamorin 's family. The validity of the assessment was challenged and the High Court held that the liability to pay the tax and penalty imposed was only that of the personal heirs of the person who took possession of the properties immediately after the death of the Zamorin, and that, only to the extent of the assets of that person which had come into their possession. Thereafter, it was ordered by the Department that, as the entire Sthanam property bad devolved on the 693 members of the tarwad all those persons were liable to pay the tax and penalty, but the order was made without notice to the parties. When the authorities threatened to proceed against the properties in the hands of the Receivers, who were appointed in the par tition suit in the Zamorin 's family, the Receivers filed a writ petition challenging the right of the Agricultural Income tax Officer to collect the arrears of tax and penalty from out of the properties in their hands. The High Court quashed the demand holding that the only persons who were liable to pay the tax were the personal heirs of the Zamorin as it was they who had received the income. Dismissing the appeal to this Court, HELD:Under the law relating to sthanams the sthani was alone entitled to the income of the sthanam properties. Therefore the income of the sthanam property in the present case, during November 1, 1956 to March 31, 1958 was the exclusive property of the Zamorin who has the sthani. Hence, he alone was liable to pay the tax. Under the Agricultural Income tax Act, no charge is created on property in respect of the arrears of agricultural income tax. Under section 24(1) of the Act the liability to pay 935 the arrears of tax due from the deceased sthani fell on his personal heirs and that, only to the extent they received any of his assets. The assessment made of the person who took possession of the properties after the Zamorin 's death as the successor sthani was an invalid assessment, because, legally he never became the sthani. On the death of the Zamorin the sthanam came to an end and the only persons who could have represented the estate of the Zamorin were his personal heirs who, however, were not made parties to the assessment. [938 F H; 939 A B] Income tax Officer, Kozhikode vs Mrs. Susheela Sadananda, , K. K. Kochuni vs State of Madras, and M. K. B. Menon vs Asstt. Controller of Estate Duty, C.A. No. 1137/1969 dt. 5 10 1971, referred to.

Appeal No. 81 of 1977. (Appeal by Special Leave from the judgment and order dated 6 12 1976 of the Delhi High Court in C.R. No. 248/76). F.S. Nariman, N.S. Sistani and K.C. Dua for the appellant. K.K. Jain, S.K. Jain and P. Dayal, for respondent No. 1. 314 The Judgment of the Court was delivered by KRISHNA lYER, J. Delhi, the home of Power and the nidus of paradoxes, presents many pathological problems to the students of history, social science, politics and law, often inter acting with each other. We are here concerned with the socio legal malady of accommodation scarcity and the syndrome of long queues of government employees waiting, not knowing for how long, for allotment of government quar ters at moderate rents and the co existence of several well to do officers enjoying, by virtue of their office, State allotted residential accommodation while owning their own but letting them out at lucrative rents, making sub stantial incomes in the bargain. The law awoke to end this unhappy development and to help the helpless nonallottees get government accommodation. Such is the back drop to section 14A which, read along with section 25B, of the Delhi Rent Control Act, 1958 (Act LIX of 1958) (for short, the Act), falls for our consideration in the present appeal by special leave. A deeper understanding of the need for the new provi sions just mentioned and the construction that they bear in the context necessitates stating a little more in detail the social setting. The seat of the capital of a vast country with varied activities naturally will be honeycombed with government offices, public organisations and growing armies of employees. The higher echelons in public service, over the decades, have made generous use of the availability of government lands at low prices and of the know how of utilising, to their advantage, the immense developmental potential in the years ahead if buildings were constructed with foresight. Thus many neatly organised colonies blossomed all around Delhi whose owners were in many in stances officers who had the telescopic faculty to see the prospective spread out of Delhi of the future. Taking time by the forelock, they wisely invested money (often on soft loans from Government) in buildings which secured ambi tious rents when India 's headquarters did, as it was bound to, explosively expand. Most of such officials let their premises for high rents to big businessmen, foreign estab lishments, company executives and others of their link. Where did the officers themselves reside ? The strange advantage of Delhi is that houses, with lawns, servants ' quarters and other amenities, built by government long years back are allotted to government servants on rents which are a fraction of what similar accommodation in the private sector may fetch oftentimes. The bigger officials according to the hierarchical system (almost perfected into some sort of official castes and sub castes based on status and position in the ministries and not on the heads of their families or office) occupied the classified quar ters, the official `brahmins ', of course, getting the best. The rents they paid as tenants were negligible compared to the returns they made as landlords. Indeed, a sociological research into the whole system may perhaps unravel the semi survival of quasifeudal life styles and the unlovely phenomenon of public servants paying little and collect ing large. The socio economic sequel was worse than this. An astronomical increase in the number of government servants led to a terrific pressure for accommodation because, most of them particUlarly at the lesser 315 (Krishna lyer, J.) levels had no worthwhile salaries and were priced out of the private sector where rentals had unconscionably rocket ed. This rack renting abuse can be checked, in some meas ure, by an activist policy of relentlessly enforcing fair rents through penal tags. That, of course, depends on the will and wisdom of Parliament and Government, and the court may not make any comment. Anyway, currently, controls in this essential area of human accommodation, in the capital city of our socialist republic, are a statute book virtue. Similarly, the suggestion, in the course of his submissions, made by counsel for the appellants, that the true solution is for the State to build more accommoda tion for its servants and not eject tenants like his client is commendable as a text book panacea but `a consum mation to be wished ' in practical expectations! Nevertheless, the State took cognizance of the sinister development of several officers owning private residences and occupying government premises and making handsome dividends out of the disparity in rents and, ergo, a large number of less fortunate officials having to wait in a queue for years hoping against hope that some day some government quarters would be allotted! These latter, with broken domestic budgets, huddle together in small private tenements (or even servants ' quarters) paying rents beyond their means. The politics and economics of scarcity are well known. Out of this distressing situation was born section 14A of the Act. A fasciculus of clauses creating substantive and procedur al provisions to meet the evil and advance the scheme in that behalf came in, first by ordinance 24 of 1975 in Decem ber 1975, duly replaced by the Delhi Rent Control (Amend ment) Act, 18 of 1976. The chronic disease needed dras tic treatment and the legislative draftsmen created a chain of stiff provisions. Speaking generally, the government, after satisfying itself about the official having let out his residential building and occupying officially allotted quarters, directed the person to vacate government premises but he had quickly to get back his own house. So a new right (section 14A) was created,accelerated remedial procedures were prescribed (section 25A and 25B).This appeal turns on the meaning of section 14A. The purpose of the project has been explained by Chandrachud J. in Sarwan Singh(1): "The object of Section 14A, as shown by its marginal note, is to confer a right on certain landlords to recover immediate possession of premises belonging to them and which are in the possession of their tenants. In the sig nificant language of the marginal note, such a right is `to accrue ' to a class of persons. The same concept is pursued and clarified in the body of Section 14A by providing that in the contingencies mentioned in the section, a right will accrue to the landlord 'to recover immediately possession of any premises let out by him '. " * * * * "Whatever be the merits of that philoso phy, the theory is that an allottee from Central Government or a local (1) Sarwan Singh vs Kasturi Lal, ; , 272 274. 316 authority should not be at the mercy of law 's delays while being faced with instant eviction by his landlord save on payment of what in practice is penal rent. Faced with a Hob son 's choice, to quit the official residence or pay the market rent for it, the allottee had in turn to be afforded a quick and expedi tious remedy against his own tenant. With that end in view it was provided that nothing, not even the Slum Clearance Act, shall stand in the way of the allottee from evicting his tenant by resorting to the summary procedure prescribed by Chapter IIIA. The tenant is even deprived of the elementary right of a defendant to defend a proceeding brought against him, save on obtaining leave of the Rent Controller. If the leave is refused, by section 25B(4) the statement made by the landlord in the application for eviction shall be deemed to be admitted by the tenant and the landlord is entitled to an order for eviction. No appeal or second appeal lies against that order. Section 25B(8) denies that right and provides instead for a revision to the High Court whose jurisdiction is limit ed to finding out whether the order complained of is according to law. " It is a notorious fact that, vesting a right is long years ' distance away from getting the remedy, thanks to our legal process with its slow motion mood. A jurisprudence of quick acting and comprehensive remedies, demanding re structuring and streamlining of the judicative apparatus and imparting operational speed and modernisation of the whole adjectival law and practice, is urgent and important an observation we make hoping that Parliament will programme for such a constructive change for the good of the communi ty, in consultation with the Court and the Bar. That legal instrumentality alone truly sustains the rule of law which delivers justice with inexpensive colority, finality and fullness. The big right remedy gap is the bane of our system. We regard it our duty to, mention this dimension of justice and this desideratum of systemic reform so that repetitive litanies to end law 's delays may be intelligently heeded by the law makers instead of joining the chorus against the court. Back to the statute. Section 14 A, with a non obstante rider, follows upon and is partly supplemental to section 14 which primarily governs eviction by landlords of tenants. We may extract a part of section 14 and the whole of section 14A: "14(1) Notwithstanding anything to the contrary in any other law or contract, no order or decree for the recovery of possession of any premises= shall be made by any court or Controller in favour of the landlord against a tenant: Provided that the Controller may, on an application made to him in the prescribed manner make an order for the recovery of possession of the premises on one or more of the following grounds only, namely, (a) to (d) * * * * 317 (Krishna Iyer, J.) (e) that the premises let for residential purposes are required bona fide by the land lord for occupation as a residence for himself or for any member of his family dependent on him, if he is the owner thereof, or for any person for whose benefit the premises are held and that the landlord or such person has no other reasonably suitable residential accom modation: Explanation. For the purposes of this clause, "premises let for residential pur poses, includes. any premises which having been let for use as a residence are, without the consent of the landlord, used incidental ly fo.r commercial or other purposes, . " X X X X "14A. Right to recover immediate posses sion of premises to accrue to certain persons. (1) Where a landlord who, being a person in occupation any residential premises allotted to him by the Central Government or any local authority is required, by, or in pursuance of any general or special order made by that Government or authority, to vacate such resi dential accommodation, or in default, to incur certain obligations, on the ground that he owns, in the union territory of Delhi, a residential accommodation either in his own name or in the name of his wife or dependent child, there shall accrue, on and from the date of such order, to such landlord, notwith standing anything contained elsewhere in this Act or in any other law for the time being in force or in any contract (whether express or implied), custom or usage to the contrary, a right to recover immediately possession of any premises let out by him: Provided that nothing in this section shall be construed as conferring a right on a landlord owning, in the union territory of Delhi two or more dwelling houses, whether in his own name or in the name of his wife or dependent child, to recover the possession of more than one dwelling house and it shall be lawful for such landlord to indicate the dwelling house, possession of which he intends to recover. (2) Notwithstanding anything contained elsewhere in this Act or in any other law for the. time being in force or in any contract, custom or usage to the contrary, where the landlord exercises the right of recovery conferred on him by sub section (1 ), no compensation shall be payable by him to the tenant or any person claiming through or under him and no claim for such compensation shall be entertained by any court, tribunal or other authority: Provided that where the landlord had received, 318 (a) any rent in advance from the tenant, he shall, within a period of ninety days from the date of recovery of possession of the premises by him, refund to the tenant such amount as represents the rent payable for the unexpired portion of the contract, agreement or lease; (b) any other payment, he shall, within the period aforesaid, refund to the tenant a sum which shall bear the same proportion to the total amount so received, as the unexpired portion of the contract or agreement, or lease bears to the total period of contract or agreement or lease; ' Provided further that, if any default is made in making any refund as aforesaid, the landlord shall be liable to pay simple inter est at the rate of six per cent per annum on the amount which he has omitted, or failed to refund." A summary remedy is provided by section 25B which reads: "25.B. Special procedure for the disposal of applications for eviction on the ground of bona fide requirement. (1) Every application by a landlord for the recovery of possession of any premises on the ground specified in clause (a) 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 acquisi tion 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 actu ally 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 re ceived 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. 319 (Krishna Iyer, J.) (4) The tenant on whom the summons is dully 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 an affidavit stating the grounds 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 committed 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 (a) of the proviso to sub section (1) of Section 14, or under Sec tion 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 17, the Controller shall, while holding an inquiry in a proceed ing 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 posses sion 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 XL VIX of the first Schedule to the Code of Civil Procedure, 1908 (5 of 1908). (10) Save as otherwise provided in this Chapter, the procedure for the disposal of an application for eviction on the ground speci fied in clause (e) of the proviso to subsec tion (1) of Section 14, or under Section 14A, shall be the same as the procedure for the disposal of applications by Controllers. " 320 The landlord respondent No. 1 was a government servant who had let his own building to the .appellant tenant (a company) to carry on business and use part of it for its manager 's residence. He himself was occupying residential premises allotted by the Central Government and, since he was directed by that Government to vacate, on the ground that he had let out 'residential accommodation ' of which he was owner, he sought refuge under section 14A. The eviction proceeding was resisted, inter alia, on the score that the ground did not fail within the sweep of section 14A, the premises 'having been let out for a residential cum commercial pur pose to a joint stock company which was carrying on its business . besides using it for the residence of its Managing Director '. This plea did not cut ice with the Controller who refused leave to contest under section 25B(4). of the Act. The refusal would ordinarily have led to an order for eviction but this consequence was intercepted by a writ petition under article 226 of the Constitution and a revision to the High Court, as provided by the proviso to subs. (8) of section 25B of the Act. Dismissal of these proceedings has brought the appellant, special leave having been granted, to this Court as the last hope. Of course, the issue is of some moment, legally and otherwise. For while solving the twin problems, viz. making more accommodation available to government servants in need and ending the vice of officers gaining by letting their own residential houses, section 14A creates another, viz., the ejectment of tenants by summary procedure on a new ground. Maybe, as between the two. hardships Parliament has made the choice and the Court implements the law based on the policy decision of the legislature. Mr. Nariman sought to expose the weakness of this legislative, policy by stating that nothing in section 14A compelled the officer landlord to occupy the premises after evicting the tenant. He could still let it for a higher rent, take on lease from the private sector a small house and make a gain flowing from the difference in rents. While we, as Judges, cannot fail to apply the provision merely because dubious ingenuities can circumvent it, we will later interpret the section eliminating the possible evil pointed out. The short but insistent submission made by the counsel for the appellant was that the Controller could not shut him out from being heard, as he did, if only a triable issue emerged from the affidavit in opposition filed under 'section 25B(4). Such an issue (in fact, more than one) was obviously present here, urged counsel. But we make it plain even at this stage that it is fallacious to approximate (as was sought to be done) section 25B(5) with Order 37, r. 3 of the Code of Civil Procedure. The social setting demanding summary proceeding, the nature of the subject matter and, above all, the legis lative diction which has been deliberately designed, differ in the two provisions. The legal ambit and judicial dis cretion are wider in the latter while, in the former with which we are concerned, the scope for opening the door to defence is narrowed down by the strict words used. The Controller 's power to give leave to contest is cribbed by the condition that the affidavit filed by the tenant dis closes such facts as would disentitle the landlord from obtaining an order for the recovery of posession of the premises on the ground specified in cl. (e) of the proviso to sub section (1) of section 14 321 (Krishna lyer, J.) or under section 14A. Disclosure of facts which disentitle recovery of possession is a sine qua non for grant of leave. Are there facts disentitling the invocation of section 14A ? The thrust of Shri Nariman 's contention is that section 14A does not apply at all, as a matter of construction of the expression 'residential premises '. This is net something factual but essentially legal and perhaps the question deserves our decision. For, if we explain, as declaratory of the law, what the true scope of section 14A is, vis a vis the premises involved, the Controller may then proceed on that footing and decide whether there is any fact disclosed which disentitles eviction. Let us break down section 14A, to the basic components crea tive of the new right to recover possession of premises let to a tenant. `Premises ', by definition, covers any building or part of a building let for use, residential, commercial or other (section 2(i)). We confine ourselves to the considera tions relevant to our case. To attract section 14A, the landlord must be in occupation of `residential premises ' allotted to him by the Central Government. He must be required by order of that Government to vacate such 'residential accommoda tion '. These are fulfilled here. The ground for such order to vacate must be 'that he owns, in the Union Territory of Delhi, a residential accommodation '. If so, there accures to such landlord the right 'to recover immediately posses sion of any premises let out by him ' (emphasis added). The bone of contention between the parties is as to whether the premises let out are 'residential accommoda tion '. It may be a pursuit of subtle nicety to chase the reason for using different expressions like 'residential premises ' and 'residential accommodation ' in the same sec tion. If at all, 'accommodation ' is ampler than 'premises '. What is residential accommodation ? If the building in dispute answers that description, the tenant must submit to eviction. So this is the key question. Admittedly, the building was let out for commercial purpose also. Is the purpose of the lease decisive of the character of the accommodation ? For a long time it was used as an office of the tenant 's business, the manager also residing in a part thereof. Does user clinch the issue ? At present, the main use to which the building is put is as residence of the manager. The Delhi Development Authority granted the land to the government servant respondent for construction of a residen tial building although he later let it out for non residen tial use, apparently for getting large rents, silencing his compunction about the basis on which he secured the allot ment of the land at low cost. But can the court conclude from the object of the land assignment whether the building later put up is residential or not ? Marginal relevance there may be in these diverse factors, telling value they do not possess, Law, being 6 436SCI/77 322 pragmatic, responds to the purpose for which it is made, cognises the current capabilities of technology and life style of the community and flexibly fulfils the normative role, taking the conspectus of circumstances in ,the given case and the nature of the problem to solve which the stat ute was made. LegiSlative futility is to be ruled out so long as interpretative possibility permits. Residentiality depends for its sense on the context and purpose of the statute and the project promoted. Guided by this project oriented approach, we reject the rival extreme position 's urged before us by Shri Nariman and Shri Jain. Residential premises are not only these which are let out for residential purposes as the appellant would have it. Nor do they cover all kinds of structures where humans may manage to dwell. If a beautiful bungalow were let out to a businessman to run a show room or to a meditation group or music society for meditational or musical uses, it re mains none the less a residential accommodation. Otherwise, premises may one day be residential, another day commercial and, on yet a later day, religious. Use or purpose of the letting is no conclusive test. Likewise, the fact that many poor persons may sleep under bridges or live in large hume pipes or crawl into verandahs of shops and bazars cannot make them residential premises. That is a case of reductio ad absurdum. Engineering skills and architectural designing have advanced far enough to make multi purpose edifices and, by minor adaptations, make a building serve a residential, commercial or other use. The art of building is no longer ' rigid and the character of a house is not an 'either or '. It can be both, as needs demand. It is so common to see a rich home turned into a business house, a dormitory into a factory. Many small scale industries are run in former living quarters. To petrify engineering concepts is to betray the law 's purpose. Whatever is suitable or adaptable for residential uses, even by making some changes, can be designated 'residential premises '. And once it is 'residen tial ' in the liberal sense, section 14A stands attracted. Dic tionary meaning, commonsense understanding and architectur al engineering concur in the correctness of this construc tion. What falls outside the ambit of 'residential purposes ' may be limited but not non existent. A shop in Connaught Place, a factory in an area prescribed by any municipal regulation for residential use or any structure too patently non residential such as a hothouse for botanical purposes or a bath and toilette or teashop by the road margin are obvi ous instances. We may visualise other cases but that is not our purpose here. The house we are considering was built on land given for constructing a residence is being used even now for residence, is suitable otherwise for residence and is being credibly demanded for the respondent 's residence. Residential suitability being the basic consideration, this building fills the bill. Nothing said in the affidavit in opposition puts it out of the pale of residential accommoda tion. A building which reasonably accommodates a residen 323 (Krishna Iyer, J.) tial user is a residential accommodation nothing less, nothing else. The circumstances of the landlord are not altogether out of place in reaching a right judgment. The 'purpose test ' will enable officers who own houses to defeat the government by pleading that they do not own 'residential premises ' because the lease is for commercial use, built though it was and stumble ,though it is, for residence. Similarly, the 'possibility test ' may make nonsense of the provision. The contrast in the phraseology between section 14(1)(e) and section 14A strengthens our inference. The legislature has, in the former provision, used the expression 'premises let for residential purposes ', thus investing the purpose of the lease with special signifi cance. The deliberate omission of such words in section 14A and, instead, the use of the flexible but potentially more com prehensive, though cryptic, expression 'residential accom modation ' cannot be dismissed as accidental. Shri Nariman argued that the court must have the power to consider whether the order of the government stating that the government servant 's building is residential, is valid or not. We do not deny that in the last resort it is within the Court 's province to do so. But it must give due not deadly weight to the decision of the government that the premises owned by its officer is residential. Perversity and mala fides will, of course, invalidate government orders here, as elsewhere. They are the exceptions but as a prac tical guideline, the government 's order may be taken as correct. For, after all, while courts must finally pro nounce, others familiar with the work a day world and en quire before passing orders are not too inexpert or incompe tent to be brushed aside. The power to render binding decisions vests in the judicial process, not because it is infallible or occult but because it is habitually independ ent and professionally trained to consider contending view points aided by counsel for a adversaries. The humility that makes for wisdom behoves the judge to show respect for not obedience to the view of an administrative agency. There remains the conundrum raised by Shri Nariman. Supposing the landlord, after exploiting the easy process of section 14A, re lets the premises for a higher rent; the social goal boomerangs because the tenant is ejected and the landlord does not occupy, as he would have been bound to do, if he had sought eviction for bona fide occupation under section 141(e). Section 19 obligates the landlord in this behalf. In literal terms, that section does not apply to eviction obtained under section 14A. But the scheme of that section definitely contemplates a specific representation by the petitioner landlord to the Controller that because he has been ordered to vacate the premises where he is residing, therefore he requires immediate possession for his occupa tion. The non obstante clause, the vesting of a right to immediate recovery, the creation of a summary process under section 25B and the package of connected provisions, all empha size that the amendments have to be viewed as a whole, that the Court cannot be fooled and the statute mocked at. The law, as Mr. Bumble (in Oliver Twist) said. `is a ass a idiot ', but today the socio economic project cannot be frustrated by legalistics. Underlying the whole legislative plan and provision is the fundamental anxiety to recover, for the officer 's occupation, his own premises. Once we grasp this cardinal point, the 324 officer 's application for eviction under section 14A can be entertained only on his averment that he, having been asked to vacate, must get into possession of his own. For in stance, if he has a vacant house of his own and, on getting an order to vacate, he moves into his vacant house, he cannot thereafter demand recovery under section 14A. The cause of action is not only the government order to vacate, but his consequential urgency to recover his own building. That is the rationale legis. To interpret otherwise is to vindicate Mr. Bumble ! We hold that Shri Nariman 's apprehen sion is unfounded and section 14A is largely a rider to .s. 14 and the condition indicated in section 19 must, mutatis mutandis, bind the landlord. Parliament cannot be assumed not to intend the obviouS, or to intend the ludicrous. Literality not right where absurdity is the result. The same result is reached by reading into every appli cation for eviction by a landlord a necessarily implied representation to court that for the reason of his being directed to get out he must be given possession of his own residence for his own occupation with the aid of the judi cial process. If the finale is reached and possession obtained, the Court will not allow a party to reduce its process to a mere make . believe, or a clever parody, break ing faith with the judicial process itself. Such paths can be interdicted by the use of the inherent power of the court. The re letting to someone else or non occupation, even after a reasonable time or without reasonable cause, will be regarded as an abuse of the process of the court and, at the instance of the affected tenant or otherwise, the eviction order cancelled and possession restored. We affirm this legal position lest overly cute but qualmless landlords should hopefully hoax the court and reduce its decree to a joke. Every tribunal has the inherent power to prevent its machinery from being made a sham, thereby run ning down the rule of law itself as an object of public ridicule. It will and must prove any strategem self defeat ing if a party indulges in making the law the laughing stock, for, the court will call him to order. We are not adventuring into any innovation of legal principle in inhibiting unconscionability in the enforce ment of rights. Lord Denning M.R. said: "What is the justification for the courts in this or any other case, departing from the ordinary meaning of words ? If you examine all the cases you will, I think, find that at bottom it.is because the clause (relieving a man from his own negligence) is unreasonable or is being applied unreasonably in the cir cumstances of the particular case. The judges have then, time after time, sanctioned a departure from the ordinary meaning . Are the courts then powerless ? Are they to permit the party to enforce his unreasonable clause, even when it is unconscionable, or applied so unreasonably as to be unconscion able ? When it gets to this point, I would say, as I said many years ago: `There is the vigilance of the common law which, while allowing freedom of contract, watches to see that it is not abused. '" X X X X 325 (Krishna Iyer, J.) He continued: "I know that the judges hitherto have never confessed openly to the test of reasona bleness. But it has been the driving force behind many of the decisions. "(1) We agree that, in the words of Lord Erakine, 'there is no branch of the jurisdiction of this court more delicate than that, which goes to restrain the exercise of a legal right '. But the principle of unconscionability clothes the court with the power to prevent its proc ess being rendered a parody. The justice of the law steps in end, the area of eviction of a tenant by a landlord, the tribunal cannot tolerate double dealing or thwarting the real in tendment of the statute. The same conclusion can be reached through another line of reasoning expressed by Justice Jackson of the Supreme Court of the United States in D ' Cench Duhme:(2) "If the judicial power is helpless to protect a legislative program from schemes for easy avoidance, then indeed it has become a handy implement of high finance . Once the purpose or effect of the scheme is clear, once the legislative policy is plain, we would indeed forsake a great tradition to any we were helpless to fashion the instruments for appropriate relief. " The doctrine that the judicial machinery, while enforc ing the law, shall forbid its being misused is another dimension of two deeply rooted, but inter connected maxims. Actus curiae neminem gravabit (An act of the court shall prejudice no man: Jenk. 118) and Actus legis est damnosus (The act of the law is hurtful to no one: 2 Inst. 287): Actus legis nemini facit in juriam (The act of the law does injury to no one: 5 Coke. This principle is fundamental to any system of justice and applies to our jurisprudence. An Afterword The possibility of the power of government to issue orders to vacate being used discriminatorily should be carefully avoided. If exceptions are made in the case of big officers, naturally the middling and the lesser minions of government may have a grievance. It may perhaps be proper if government, when allotting good premises for high offi cers who make from their own houses large returns by way of rentals, makes them pay into government coffers some equita ble part of the gain so made, giving consideration to cir cumstances like loans, investments and the like. This, again, is a matter falling with (1) 39 Mod. L.R. 379 (1976) (2) Referred to in , at 366 67; Quoted in Univ. of Pennsylvania Law Review VoL. 117 (1968) p. 1, 63. 326 in the province of the sense of justice of the Administra tion. But we mention it only to save the legislation from the aspersion of invidiousness in the exercise of the power. In the view we have already taken, it follows that the appeal must be dismissed and we hereby do so; but the par ties, in the circumstances, will bear their own costs throughout. P.H.P. Appeal dismissed.

The respondent No. 1 landlord let out his building to the appellant, a company to carry on business and use part of it for its manager 's residence. The landlord was occupying residential premises allotted by the Central Government. After the amendment of the. Delhi Rent Control Act, 1958, by Ordinance 24 of 1975 which was later replaced by Delhi Rent Control (Amendment) Act, 1976, section 14A and 25B were added to the Statute. Section 14 permits a landlord to evict the tenant if the premises let for residential pur pose are required bonafide by the landlord for occupation as a residence for himself or for any member of his family dependent upon him. Section 14A provides that where a landlord is in occupation of any residential accommodation ,allotted to him by the Central Government or any local authority and if he is required by order made by that Gov ernment or authority to vacate such residential accommoda tion on the ground that he owns in the Union Territory of Delhi a residential accommodation either in his own name or in the name of his wife or dependent child, there shall accrue to the landlord a right to recover immediately pos session of any premises let out by him. The said provision has been given effect notwithstanding anything to the con trary in the Delhi Rent Act or any other law or the custom or usage. Section 25B provides for a summary remedy. It provides that 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 for obtaining an order for the recovery of possession on the ground specified in section 4(1)(c) or 14A. The re spondent was directed by the Government to vacate the Gov ernment accommodation on the ground that he had let out residential accommodation of which he was owner. The respondent No. 1 accordingly filed eviction proceedings against the appellant claiming possession under Section 14A. The appellant contended before the Rent Controller that the ground did not fail within the sweep of section 14A since the premises were let out for residential rum com mercial purposes to, a joint Stock Company which was carry ing on business besides using for the residence of its Managing Director. This plea did not cut ice with the Con troller who refused leave to contest. The appellant filed a writ petition in the High Court under Art 226 of the Consti tution which was dismissed. In appeal by special leave, the appellant contended that 1. Nothing in s.14A compels the landlord to occupy the premises after evicting the tenant. He could still let it for a higher rent, take on lease from the private sector a small house and make a gain, from the difference flowing in rent. The Controller could not shut him out from being heard if a triable issue emerged from the affidavit in opposition. In the present case such issues were present and, therefore, the Rent Controller was not justi fied in refusing leave to contest. Section 14A does not apply in the present case since the premises were not residential premises as they were let out both for commercial and residential purposes. 313 (Krishna lyer, J.) Dismissing the appeal, HELD: (1) It is fallacious to approximate section 25B(5) with Order 37 rule 3 of the Code of Civil Procedure. The social setting demanding summary proceeding, the nature. of the subject matter and above all, the legislative diction which has been deliberately designed, differ in the two provisions. Disclosure of facts which disentitle recovery of possession is a sine qua non for grant of leave. [320 F A, 321A] (2) The definition of premises in section 2(i) covers any building or part of the building leased for use, resi dential, commercial or other. To attract section 14A the landlord must be in occupation of residential premises allotted to him by the Central Government. He must be required by order of that Government to vacate his residen tial accommodation. The Delhi Development Authority granted the land to respondent No. 1 for construction of a residen tial building although it was let out for commercial pur pose. Residential premises are not only plots which are let out for residential purposes nor do all kinds of structures where humans may manage to. dwell are residential. Use or purpose of the letting is no conclusive test. Whatever is suitable or adaptable for residential use, even by making some changes, cart be designated residential premises. Once it is residential in the liberal sense, section 14A strands attracted. In the present case the house was built on land given for constructing a residence, is being used even now for residence is suitable otherwise for residence and is being credibly demanded for the respondent 's residence. Residential suitability being the basic consideration, the building is residential. The `purpose test ' will enable officers who own houses to defeat the statute that they do not own residential premises though it was suitably built for residence. The scheme of section 14A definitely contem plates a specific representation from landlord to the Controller that because he has been ordered to vacate the premises where he is residing he requires immediate posses sion for his occupation. It 's non obstante clause, the vesting of a right to immediate recovery, the creation of a summary process and the package of connected provisions all emphasize that the amendments have to be viewed as a whole, that the court cannot be fooled and the statute mocked at. The cause of action is not only the Government orders to vacate but consequential urgency to recover his own build ing. Parliament cannot be. assumed not to intend the obvi ous, or to. intend the ludicrous. Literality is not right where obscurity is the result. [321 C D, G H 322 C D, 323 A B, G H] Gillespie Brothers & Co. Ltd. vs Roy Bowles Transport Ltd. quoted in 39 MUd. L.R. 379 (1976) and Anderson vs Abbott ; at 366 67 quoted in Univ. of Pennsylvenia Law Review Vol. 117 (1968) p. 1, 63, quoted with approval. (3) Judicial machinery while enforcing the law shall forbid its being misused. [325 E] (4) The possibility of the power of Government to issue orders to vacate being used discriminately should be care fully avoided. If exceptions are made in the case of big officers, naturally the. middling and the lesser minions of Government may have a grievance. It may ' perhaps be proper for Government when allotting good premises for high offi cers who made from their own houses large returns to pay into the Government coffers some: equitable part of the gain so made, giving consideration to circumstances like loans investment and the like. [325 G H]

Civil Appeal No. 411 of 1959. Appeal by special leave from the judgment and order dated 9th January 1959 of the Allahabad High Court in First Appeal No. 448/A of 1958. L. K. Jha, P. Rama Reddy R. K. Garg and R. Patnaik for the appellant. G. section Pathak, G. N. Dikshit, Udai Pratap Singh, J. P. Goval, M. section Gupta and P. C. Aggarwala, for respondent No. 1. 1960. February, 23. The Judgment of Sinha, C. J. Imam, Wanchoo and Shah, JJ. was delivered by Shah, J. Sarkar, J. delivered a separate Judgment. SHAH J. Three candidates, Balwan Singh (hereinafter referred to as the appellant), Ram Dulari and Gaya Prasad, contested the election to the U. P. Legislative Assembly from the Akbarpur Rural Assembly Constituency No. 6, at the last general elections held in 1957. 'The polling of votes took place on February 28, 1957, and the result of the election was declared on March 2, 1957. The appellant secured the highest number of votes and was declared duly elected. A voter named Lakshmi Narain who will hereinafter be referred to as the first respondent submitted an application to the Election Commission of India to declare the election of the appellant Balwan Singh 93 void on the ground inter alia that the appellant " and/ or his election agent and/or other persons with his consent, had committed corrupt practices and the result of the election was materially affected by such corrupt practices committed in his interest. " In Cl. (f) of para 9 of the petition, which is material for this appeal, it was averred by the first respondent, that in villages set out in annexure D, the appellant, his agents and workers with the consent of the appellant, hired and procured bullock carts and tractors for conveying women electors to and from the polling station. In Sch. D, was set out a list of 30 villages. This election petition was referred for trial to the District Judge, Kanpur, who was constituted the Election Tribunal for trying the petition. The appellant by his written statement contended that the averments made in Cl. (f) of para. 9 were untrue; that neither he nor his agents or workers had ever hired or procured bullock carts or trucks to convey women voters from the villages set out in Annexure D or any other village to the polling station. He also submitted that the first respondent had not disclosed the names of the voters nor the particulars of the conveyances, and that the latter could not in view of the defective pleading be permitted to challenge the election of the appellant on that charge. On July 15, 1957, the first respondent applied for leave to amplify the particulars set out in the various clauses of para. 9, including the particulars set out in Cl. (f) and prayed for leave to amplify the recitals in that clause by incorporating Ann. D 1 in the petition. In Ann. D 1, the first respondent set out the nature of the vehicles used, the names of the owners of the vehicles, the names of 'the villages from which women voters were conveyed at the expense of the appellant to the polling station and back, the hire paid, and the description of the families to which the women voters who were conveyed belonged. The appellant submitted in rejoinder that by his application, the first respondent in substance sought not to amplify the particulars given by him, but to make allegations about fresh corrupt practices, and prayed that several clauses including Cl. (f) of para. 9 be deleted. On July 29, 1957, the Election Tribunal 94 rejected the application of the first respondent. He observed that: " Merely saying that the corrupt practice was followed in the villages whose list was given in annexure 'D ' does not amount to giving particulars as were required to be furnished by the aforesaid Section 83 (1)(b) of the Representation of the People Act. " and directed that certain paragraphs including Cl. (f) para. 9 and Annexure D be struck off. Relying upon a judgment of the Allahabad High Court delivered on September 9, 1957, Mubarak Mazdoor vs K. K. Banerji and another (1) in which, the practice to be followed in dealing with allegations of corrupt practices, made in an election petition, on the ground of vagueness, was enunciated the first respondent applied for review of that order. The Election Tribunal, by its order, dated September 13, 1957, accepted the plea of the first respondent for review of the order, and directed that the order dated July 29, 1957, beset aside. The appellant applied under article 227 of the Constitution, to the High Court of Judicature at Allahabad, challenging the correctness and propriety of the order ,of the Election Tribunal reviewing its order dated July 29, 1957. By its order dated March 6, 1958, the High Court substantially confirmed the order passed by the Tribunal. The High Court observed that the Tribunal had jurisdiction to review its earlier order, and that in the circumstances of the case it was unnecessary to decide whether the order dated September 13, 1957, was properly passed, because the order dated. July 29, 1957, was " unjust and improper ", and the matter having been brought before it in a proceeding under article 227 of the Constitution, the High Court could rectify the error by setting aside the earlier order. Pursuant to the order passed by the High Court, the averments made in Cl. (f) of para. 9 were restored, and Ann. D 1 was incorporated in the petition. By its order dated August 16, 1958, the Tribunal dismissed the petition holding that the first respondent failed to establish the corrupt practices on which (1) 95 the petition was founded. Dealing with the corrupt practice set out in Cl. (f) of para. 9, the Tribunal observed that the corrupt practice described in section 123 (5) of the Representation of the People Act, lies in the act of hiring or procuring vehicles by a candidate or his agent, and that this corrupt practice is not committed merely by conveying the voters, and as the particulars of hiring and procuring of the vehicles were not furnished in the petition, and the evidence adduced by the first respondent to support his case of hiring or procuring vehicles was unsatisfactory the case of the .first respondent about the commission of a corrupt practice by the appellant stood unsubstantiated. In an appeal under section 116A of the Respresentation of the People Act, against the order of the Election. Tribunal the High Court of Judicature at Allahabad set aside the order and declared the election of the appellant void. The High Court held that the petition was defective in that it omitted to set out the date and place of the hiring of the tractor, which was proved to have been used for conveying voters to the polling station, but no prejudice was caused to the appellant as a result of that omission. In the view of the High Court the testimony of A. P. Malik, the Presiding Officer at Naholi polling station, corroborated by exh. 22, a petition submitted on the date of the polling by one Raghuraj Singh, agent of Ram Dulari, a contesting candidate, and further supported by the evidence of witness Kalika Prasad and another witness Raghuraj Singh, established that voters were conveyed in a trailer attached to a tractor, at the instance of the appellant to the Naholi polling station, and that the evidence of one Hanuman Singh established the contract of hiring the tractor used for conveying voters to the polling station. The High Court accordingly held that the appellant had committed the corrupt practice of hiring a vehicle for conveying voters to the polling station. Against the order passed by the High Court declaring the election of the appellant void, this appeal has by special leave been filed. Section 83(1)(b) of the Representation. of the People Act, as amended provides that an election petition 96 shall set forth full particulars of any corrupt practice the petitioner alleges, including as full a statement as possible of the names of parties alleged to have committed such corrupt practice and the date and place of the commission of each such practice. Section 123 sets out what shall be deemed to be corrupt practices for the purposes of the Act, and by Cl. (5) thereof, as it stood at the material date, it was in so far as it is relevant, provided: " The hiring or procuring, whether on payment or otherwise, of any vehicle or vessel by a candidate or his agent or by any other person for the conveyance of any elector (other than the candidate himself, the members of his family or his agent) to or from any polling station provided under section 25 or a place fixed under sub section (1) of section 29 for the poll. " Neither in the petition as originally filed nor as amended, the date and place of hiring the tractor which was alleged to have been used for conveying the voters, and the names of the persons between whom the contract of hiring was settled, were set out. The question which then falls to be determined is : Whether the election petition was liable to be rejected because it did not set forth particulars of the date and place of hiring the vehicle alleged to have been used in conveying voters? In the opinion of the High Court the corrupt practice described in section 123(5) being the hiring or procuring of a vehicle for conveying voters to the polling station, in the absence of a detailed statement as to the time and place of the hiring, the petition was defective. In so opining, the High Court relied upon an earlier decision of that Court, Madan Lal vs Syed Zargham Haider and others (1). In that case, Bhargava, J., delivering the judgment of the Court, observed: ". under section 123(5) of the Representation of the People Act, a corrupt practice consists in the act of hiring or procuring certain types of vehicles by a candidate or his agent or by any other person for the conveyance of any elector to or from any polling station. A corrupt, practice is, therefore, (1) , 97 committed not by conveying the voter but by the act of hiring or procuring the conveyance. In clause (b) of section 83(1), an election petitioner is required to set forth full particulars of the corrupt practice including as full a statement as possible of the 1 names of the parties alleged to have committed such corrupt practice and the date and place of the commission of each such practice. The language used in this provision of law requires the setting forth of the full particulars of the corrupt practice and specially mentions at leapt three particulars which must be given. These are the names of the parties alleged to have committed the corrupt practice, the date when the corrupt practice was committed and the place of the commission of the corrupt practice." Not the contract of hiring but the fact of hiring for conveying voters to and from the polling station is declared by section 123(5) a corrupt practice. A petition which sets forth the particulars about the use of a vehicle for conveying voters to and from the polling station, with details as to the time and place coupled with as full a statement as possible in support of the plea that the vehicle was hired or procured by the candidate or his agent or another person substantially complies with the requirement of section 83(1)(b). In considering whether a corrupt practice described in section 123(5) is committed, conveying of electors cannot be dissociated from the hiring of a vehicle. The corrupt practice being the hiring or procuring of a vehicle for the conveyance of the electors, if full particulars of conveying by a vehicle of electors to or from any polling station are given, section 83 is duly complied with, even if the particulars of the contract of hiring, as distinguished from the fact of hiring, are not given. Normally, the arrangement for hiring or procuring a vehicle, is within the special knowledge of the parties to that agreement and it is difficult to assume that it was intended to require the petitioner in an election dispute to set out the particulars of facts within the special knowledge of the other party, and expose the petition to a penalty of dismissal if those particulars could not be given. If particulars in support of the 13 98 plea of the vehicle being hired or procured by the candidate or his agent or by another person was used for conveying voters to or from the polling station are set out, failure to set out particulars of the contract of hiring or arrangement of procuring will not render the petition defective. By The Representation of the People Act, 195 1, as amended by Act 27 of 1956, a penalty of dismissal of a petition or the striking out of the plea of a corrupt practice merely because particulars in that behalf are not set out is not imposed. By section 90, cl. (5) of the Act the Tribunal is authorised to allow particulars of any corrupt practice alleged in the petition, to be amended or amplified in such manner as may, in its opinion, be necessary for ensuring a fair and effective trial of the petition. By section 90(1) of the Act every election petition is, subject to the provisions of the Act and Rules made thereunder to be tried as nearly as may be in accordance with the procedure appli cable under the Civil Procedure Code to the trial of suits: and for failure to furnish particulars after being so ordered but not before the Tribunal may strike out a defective plea. The practice to be followed in cases where insufficient particulars of a corrupt practice are set forth in an election petition is this. An election petition is not liable to be dismissed in limine merely because full particulars of a corrupt practice alleged in the petition, are not set out. Where an objection is raised by the respondent that a petition is defective because full particulars of an alleged corrupt practice are not set out, the Tribunal is bound to decide whether the objection is wellfounded. If the Tribunal upholds the objection, it should give an opportunity to the petitioner to apply for leave to amend or amplify the particulars of the corrupt practice alleged; and in the event of noncompliance with that order the Tribunal may strike out the charges which remain vague. Insistence upon full particulars of corrupt practices is undoubtedly of paramount importance in the trial of an election petition, but if the parties go to trial despite the absence of full particulars of the corrupt practice alleged, and evidence of the contesting parties is led on the plea 99 raised by the petition, the petition cannot thereafter be dismissed for want of particulars, because the defect. is one of procedure and not one of jurisdiction of the Tribunal to adjudicate upon the plea in the absence of particulars. The appellate court may be justified in setting aside the judgment of the Tribunal if it is satisfied that by reason of the absence of full particulars, material prejudice has resulted; and in considering whether material prejudice has resulted failure to raise and press the objection about the absence of particulars before going to trial must be given duo weight. Assuming that in the case before us, the petition was defective because particulars as to the persons between whom the contract of hiring was entered into, and the date and place thereof,. have not been set out, the High Court, was right in holding that no material prejudice was occasioned thereby. In the written statement to the petition as originally filed, it was not expressly contended that because of the absence of particulars as to the names of the persons between whom the contract of hiring took place, and the date and place of the contract, the appellant was unable to meet the charges made against him. Even after the petition was amended, no such objection was raised by the appellant. Before the Tribunal, at the hearing of the argument, a plea that the petition was defective, because of lack of particulars relating to the names of the persons who entered into the contract of hiring, and the time and place thereof was apparently raised. But all the evidence relating to the hiring and the time and place thereof, was without objection admitted on the record. It is not even suggested that because of the absence of the particulars, the appellant was embarrassed in making his defence, or that he could not lead evidence relevant to the plea of corrupt practice set up by the first respondent. We are therefore unable to hold that any material prejudice was occasioned because of the absence of those particulars in the petition. The order of the Tribunal rejecting the application of the first respondent for amplification of the particulars of the corrupt practice alleged in the election 100 petition was, for reasons already set out, erroneous; and in that view the question whether the High Court misdirected itself in holding itself bound, at the hearing of the appeal, by its earlier judgment delivered on the writ petition, does not fall to be determined. Counsel for the appellant urged that in any event, the High Court was not justified in disagreeing with the considered judgment of the Tribunal on questions purely of appreciation of evidence. But this appeal has been filed with special leave granted under article 136 of the Constitution. It is the settled practice of this Court to grant leave to appeal under article 136 only if exceptional and special circumstances exist, or that substantial and grave injustice has been done and the case presents features of sufficient gravity to warrant a review of the decision appealed against. Merely because the appeal has been admitted by special leave, the entire case is not at large, and the appellant is not free to contest the findings of fact of the subordinate tribunals. Only those points on which special leave may initially be granted, can be urged at the final hearing; and normally, special leave will not be granted by this Court under Art 136(1) of the Constitution on a plea of error committed by the Courts below in the appreciation of evidence. This would be sufficient to justify us in refusing to entertain the argument advanced by the counsel for the appellant. We may, however, observe that even on a review of the evidence, we are satisfied that the High Court was right in its conclusion. There was before the Tribunal the evidence of Mr. A. P. Malik, the Presiding Officer at the Naholi polling station, who testified that he had seen on the day Of Polling a tractor at a distance of 100 to 150 yards from the polling booth. The witness stated that be did not remember having seen any flag or poster on the tractor. The witness, however, had made a note in his diary about an application submitted to him by Raghuraj Singh. P. W. 30. A copy of that application has been produced, and it is recited in that application that a tractor had come to the polling booth and was parked near "the line of voters"; that some persons a majority of whom were women, were sitting on the 101 tractor; that a red flag was hoisted and posters of the socialist party were pasted on the tractor; and that some men and women, who came on the tractor, were placed in the queue of voters. There was also the evidence of. Raghuraj Singh, P.W. 38, a voter in the constituency. He stated that he had seen the tractor belonging to Chandra Bahadur Pandey of village Chapargatha, near the polling station; that a red flag was hoisted and posters were pasted over the tractor with the symbol of a banyan tree which was the emblem of the party of the appellant. He further stated that one Kalika Prasad and some female members of his family had come on the trailer and Radhey Shyam, an agent of the appellant, had taken all these voters and had given them slips of paper. Kalika Prasad was also examined and he stated that he and his wife and several other villagers had gone to the Naholi polling station to exercise their franchise on the trailer attached to the tractor; that a red flag was hoisted and posters were pasted on the trailer; and that there was on the posters the legend that votes be cast in favour of the appellant. It is established by unimpeachable evidence that a tractor was brought to Naholi Polling Station on the date of the polling. The Tribunal accepted the evidence of Mr. Malik, but rejected the testimony of other witnesses on somewhat fanciful theories. The Tribunal observed that at the material time no tractor was brought near the polling booth, and if one was brought, the owner of the tractor may possibly have given a free lift to the voters to the polling station and back. The Tribunal also suggested that the tractor may have been brought without the consent of the appellant or his agents. But the fact that a tractor was brought to the polling station, is clearly established by the evidence of Mr. Malik. That on the tractor was carried a red flag of the party of the appellant, is established by the evidence of the two witnesses, Raghuraj Singh, P.W. 30 and Raghuraj Singh P.W. 38, and also by the evidence of Kalika Prasad. It is also established on the evidence that on the tractor, were displayed posters bearing the symbol of a banyan tree, which was the election emblem of the party of the appellant at the election. There was no 102 sufficient reason for discarding this testimony. Witness Hanuman Singh P.W. 56 deposed that he was present at the time of the settlement of the bargain of hiring the tractor belonging to Chandra Bahadur for conveying voters. The High Court accepted that evidence and we do not think, judged in the context of the other evidence that the High Court, was in error in so doing. The appeal, therefore, fails and is dismissed with costs. SARKAR, J. I agree that this appeal fails. The appellant had been declared elected at an election. The first respondent filed an election petition under the Representation of the People Act, 1951 to to have the appellant 's election declared void. Among other things it was said that the appellant had committed a corrupt practice which was described in the petition substantially in these words: In villages mentioned in annexure D the appellant hired a tractor for conveying women electors from their houses to places of polling and back. The appellant applied to have this allegation struck out as it did not contain sufficient particulars of the corrupt practice alleged. The respondent in his turn sought permission to give particulars of this corrupt practice by amending his petition by the substitution of a new annexure to his petition marked DI in the place of the existing annexure D. The Election Tribunal first made an order refusing the, amendment and striking out the allegation as desired by the appellant. Later it made another order reviewing its earlier order and thereby cancelled that order. By this order it directed the restoration of the allegation struck out and the substitution of annexure D by annexure DI. The appellant moved the High Court at Allahabad under articles 226 and 227 of the Constitution against the latter order of the Tribunal. The High Court held that the Tribunal had the power to review any order made by it and that the order made on review allowing the amendment was correct. It also held that if the Tribunal had no power of review, the High Court 103 being itself seized of the matter, would be deemed to have set aside the first order of the Tribunal and made an order allowing the amendment. The appellant did not appeal from this order of the High Court. The parties then went to trial before the Tribunal. The appellant led his evidence without any objection as to the petition being defective for want of any particulars. The Tribunal took the view that the corrupt practice alleged had not been proved and dismissed the petition. On appeal the High Court held that the corrupt practice had been proved and set aside the election of the appellant. Hence this appeal. It is said that the election petition should have been dismissed because sufficient particulars of the corrupt practice alleged had not been given in the petition. The corrupt practice alleged is of the kind mentioned in section 123 (5) of the Act which is in these words: The hiring or procuring, whether on payment or otherwise, of any vehicle or vessel by a candidate . . . . for the conveyance of any elector . . . to or from any polling station. It is contended that the hiring of the vehicle is an essential element of the corrupt practice mentioned in this section. I am leaving out of consideration the procuring of a vehicle because that is not the case here. It is said that the petition must, therefore, state the particulars of the date and place of the contract of hiring and the parties to it. Reference is made to section 83 of the Act where it is provided that, " An election petition shall set forth full particulars of any corrupt practice that the petitioner alleges, including as full a statement as possible of the names of the parties alleged to have committed such corrupt practice and the date and place of the commission of each such corrupt practice. " The question thus arises whether the particulars of the parties to the contract of hiring and the date when, and the place where, it had been made should have been given. The respondent does not deny that the particulars of the contract of hiring had not been stated in the 104 petition. According to him the corrupt practice mentioned in section 123 (5) is not committed by the contract of hiring but by the conveyance of the electors in a hired vehicle. Hence, he says that no question as to these particulars arise& In my view the appellant 's contention is wellfounded. Under the section the hiring of the vehicle for the conveyance of electors is the corrupt practice. It is of the essence of this corrupt practice that the vehicle must have been hired, that is to say, a contract for the hiring of the vehicle must have been made. I am unable to imagine how a vehicle can be hired without a contract. Therefore it seems to me that particulars of that contract should be given. I am also unable to appreciate the respondent 's contention. It seems to me that to say that the corrupt practice is committed by the conveyance of electors in a hired vehicle is the same thing as saying that electors had been conveyed by a vehicle which had been hired, that is, a vehicle in respect of which a contract of hiring had been made. Simple conveyance of electors in a vehicle is not enough. The vehicle must be a hired vehicle. Hence there is no corrupt practice unless the hiring of the vehicle, that is, the contract of hire in respect of it is established. Whether a simple contract of the hiring of a vehicle for the conveyance of electors without actual conveyance of them would amount to a corrupt practice or not, is a question that does not arise in this case. But it seems to me that whatever view is taken of that question, that would not make the contract of hiring any the less an essential element of the corrupt practice described in section 123(5). In my view therefore the appellant was entitled to the particulars the want of which he now complains. The question then is what is the effect of the failure to supply these particulars ? I am unable to agree that the petition was thereupon liable to be dismissed. It has not been shown to us that the Act provides for such dismissal. Section 83 does not say that on failure to furnish the prescribed particulars the petition shall be dismissed. On the other hand, section 90(3) of the Act provides that, " The Tribunal shall 105 dismiss an election petition which does not comply with the provisions of section 81, section 82 or section 117. " This section does not include section 83. It therefore seems to me that the appellant was not entitled to a dismissal of the petition for want of the particulars. The appellant was certainly entitled to apply for the particulars. I conceive he would have such a right under section 83 and also section 90(1) of the Act which made the provisions of the Code of Civil Procedure applicable to a trial before an Election Tribunal, in the view that I have taken, that the contract of hiring is an essential element of the corrupt practice ' mentioned in section 123(5) of the Act. The appellant however made no such application. Instead he went to trial and led evidence without making any grievance that he was hampered in his defence for want of the particulars. He cannot at a later stage complain about the absence of the particulars. It is unnecessary to consider what would have happened if upon the appellant 's application the respondent had been directed to furnish the particulars and had failed to do so, for no such order had been made. It only remains for me to say that it is not open for the appellant to contend now that the Tribunal was wrong in reviewing its order. The High Court rejected that contention in the order made on the application under articles 226 and 227 of the Constitution. For greater safety it also made an order allowing the amendment sought by the respondent. The High Court 's decision not having been questioned by the appellant by an appeal, is binding on him. He must therefore accept the position that the amendment of the petition was proper. I may also state that if the amendment had not been properly allowed that would not have made any difference. The only result would have been that some more particulars.of the corrupt practice alleged would have been wanting. For the reasons earlier stated this would not have entailed a dismissal of the election petition. 14 106 The only other point that was argued at the bar was a question of fact, namely, whether the corrupt practice alleged had been proved. On that point I am in perfect agreement with the view expressed by my learned brothers and have nothing to add. Appeal dismissed.

The first respondent filed an election petition for an order that the election of the appellant be declared void on the ground that the appellant had committed the corrupt practice under section 123(5) of the Representation of the People Act, 1951, in that he had hired a tractor for conveying women electors from their houses to places of polling and back. By an amendment application the first respondent gave particulars about the conveying of voters, but he did not give any particulars regarding the contract of hiring nor did the appellant ask for such particulars. At the trial t~he first respondent led evidence in respect of t~he contract of hiring and the appellant raised no objection to the relevance of that evidence. The Election Tribunal dismissed the petition but on appeal the High Court held the charge proved and declared the election of the appellant void. The appellant contended that the election petition ought to have been dismissed because particulars of the contract of hiring which was an essential ingredient of the corrupt practice had not been given. Held, (per Sinha Lc. J., jafer Imam, K. N. Wanchoo and J. C. Shah, jj), that the corrupt practice under s~. I23~(5) was the conveying of electors to and from the polling station and not the contract of hiring. If the election petition gave particulars about the use of a vehicle for conveying of electors to ' and from the polling station, the failure to give particulars of the contract of hiring, as distinguished from the fact of hiring, did not render the petition defective. An election petition was not liable to be 92 dismissed in limine merely because full particulars of a corrupt practice alleged were not set out. If an objection was taken and the Tribunal was of the view that full particulars had not been set out the petitioner had to be given an opportunity to amend or amplify the particulars. It was only in the event of noncompliance with the order to supply the particulars that the charge which remained vague could be struck out. Besides, in the present case no material prejudice was caused to the appellant by the absence of the particulars of the contract of hiring. Sarkar J. Under section 123(5) the hiring of the vehicle for conveyance of electors was an essential element of the corrupt practice and it was necessary to give particulars of the contract of hiring. But the failure to give such particulars did not render the petition liable to be dismissed. Section 83 of the Act did not provide for the dismissal of the petition for failure to furnish particulars nor did section 90(3) empower the Tribunal to dismiss a petition for non compliance with the provisions of section 83. The appellant was entitled to apply for particulars but he did not do so; he could not at a later stage complain about the absence of the particulars.

Civil Appeal No. 812 of 1980 Appeal by special leave from the judgment and order dated the 23rd November, 1979 of the Allahabad High Court in Civil Misc. Writ No 479 of 1978. R.K. Garg, V.J. Francis and S.K. Jain for the Appellant. Shanti Bhushan, R.K Jain, P.R. Jain and Pankaj Kalra for Respondent No. 1. 116 The Judgment of the Court was delivered by FAZAL ALI, J. This appeal by special leave is directed against a judgment dated November 23, 1979 of the Allahabad High Court allowing a writ petition quashing the order of the Rent Control and Eviction officer and remanding the case to him for considering the question afresh in accordance with law and in the light of the observations made by the High Court. The appeal involves a short and simple point but the case appears to have had rather a long and chequered career. Put briefly, the facts of the case fall within a narrow compass so far as the points for decision are concerned. The first respondent, Smt. Rajkumari Jain, inducted Shri Thapalayal as a tenant in the premises in dispute which are situated in the town of Bijnor. The tenant intimated his intention to the Rent Control and Eviction officer to vacate the premises on 25.6.1974 on receipt of the aforesaid application of the tenant a Rent Control Inspector was directed to visit the spot and after visiting the same he reported that the premises in question were likely to fall vacant on 9.6.74. The prescribed authority by its order dated 1.6.74 allotted the premises to the appellant. In fact, the appellant had applied to the authority on 20.5.74 for allotment of the accommodation to him. It appears that these proceedings were taken behind the back of the respondent landlady who was not taken into confidence either by the appellant or by the Rent Control authorities. It was only after the prescribed authority had allotted the premises to the appellant and the respondent landlady came to know of this fact that she moved the prescribed authority for cancellation of the allotment but her prayer was rejected. Thereafter, the landlady filed an appeal before the Additional District Judge, Bijnor which was allowed and the allotment in favour of the appellant was cancelled on the ground that the provisions of section 17(2) of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 (hereinafter referred to as the 'Act ') were not complied with. Before narrating further sequence of facts, it may be necessary to examine the relevant provisions of the Act. Section 17(2) of the Act may be extracted thus: "Where a part of a building is in the occupation of the landlord for residential purposes or is released in his favour 117 under clause (b) of sub section (1) of Section to for residential purposes, the allotment of the remaining part thereof under clause (a) of the said sub section (1) shall be made in favour of a person nominated by the landlord " A perusal of this statutory provision would clearly disclose that the object of the Act was that where a tenant inducted by the landlord voluntarily vacates the premises, which are a part of the building occupied by the landlord, an allotment in the vacancy should be made only to a person nominated by the landlord. The dominant purpose to be subserved by the Act is manifestly the question of removing any inconvenience to the landlord by imposing or thrusting on the premises an unpleasant neighbour or a tenant who invades the right of privacy of the landlord. It is obvious that if the tenant has vacated the premises by himself and not at the instance of the landlord, there is no question of the Landlord occupying the said premises because he has got a separate remedy for evicting the tenant on the ground of personal necessity. The statute, however, while empowering the prescribed authority to allot the accommodation, safeguards at least the right of the landlord to have a tenant of his choice. In the instant case, the admitted position seems to be that when the prescribed authority allotted the premises to the appellant, the landlady was not taken into confidence nor was she asked to induct either the appellant or somebody else as the tenant of the premises which were likely to fall vacant or which may have fallen vacant. This was undoubtedly an essential requirement of the provisions of section 17(2) of the Act as extracted above. In these circumstances, there could be no doubt that the order of the prescribed authority allotting the premises to the appellant was completely without jurisdiction and against the plain terms of section 17(2) of the Act. It was in view of this serious legal infirmity that the District Judge allowed the appeal filed by the landlady on 27.1.1976 and cancelled the allotment of the accommodation to the appellant. On 2.2.76 the landlady herself filed an application before the District Magistrate, Bijnor for delivery of possession of the said premises to her but the District Magistrate rejected the application by his order dated 8.3.76 on the ground that as the landlady had not applied for release of the accommodation, she could not be allotted the premises straightaway. On 5.4.76 the District Supply officer, Bijnor directed the counsel for the landlady to nominate a person 118 for allotment of the premises. As against this, the landlady applied for release of the accommodation to her in terms of the provisions of section 16(1) (b) of the Act which runs thus: "16. Allotment and release of vacant building. (1) Subject to the provisions of this Act, the District Magistrate may by order: (a) xx xx (b) release the whole or any part of such building, or any land appurtenant thereto, in favour of the landlord (to be called a release order). " The prayer of the landlady under section 16(1) (b) also appears to have been ignored by the Rent Control authorities and by an order dated 15.4.76, the District Supply officer re allotted the accommodation to the appellant. This led the landlady to file another appeal before the Additional District Judge, Bijnor who by his Order dated 21.9.77 rejected the plea of the landlady, dismissed the appeal and confirmed the order of allotment. The respondent landlady there upon filed a writ petition in the High Court challenged the orders of the District Supply officer as also of the District Judge who had affirmed that order and confirmed the order of allotment in favour of the appellant. The High Court by the impugned order allowed the writ petition and sent the matter back to the Rent Control and Eviction officer to consider the question of allotment afresh in view of the observations Made by the High Court. The appellant then obtained special leave of this Court against the order of the High Court and hence this appeal before us. In support of the appeal, Mr. Shanti Bhushan, learned counsel for the appellant submitted that the High Court had no jurisdiction to interfere with the concurrent finding of fact given by the District Supply officer and the District Judge confirming the allotment in favour of the appellant and that too in a writ jurisdiction. He also submitted that the landlady was not at all in actual physical possession of the premises and had been living outside Bijnor and, there fore, neither the provisions of section 16(1) (b) nor those of section 17(2) of the Act would apply to the facts of the present case. On the other 119 hand, the counsel for the respondent submitted that initially the only question before the Rent Control Authority was whether the allotment should be made to the appellant even though he was not nominated by the landlady under section 17(2) of the Act. It is common ground that the appellant was not a nominee of the landlady and, as discussed above, the District Judge in his first order had quashed the allotment on the ground that the provisions of section 17(2) had not been complied with. It was also argued on behalf of the respondent landlady that the circumstances having changed, she now wanted to stay in Bijnor permanently and as she wanted additional accommodation she had applied to the District Magistrate under section 16(1) (b) for releasing the building in her favour. This application was not at all considered on merits by the District Magistrate or by any court for that matter. If the respondent could succeed in convincing the District Magistrate that a case for release of the entire building was made out, then the question of allotting the premises to the appellant would not have arisen at all. We have gone through the judgment of the High Court in the light of the arguments of the parties and we are inclined to agree with the view taken by the High Court that the mere fact that the lady did not actually reside in the premises which were locked and contained her household effects, it cannot be said that she was not in possession of the premises so as to make section 17(2) inapplicable. Possession by a landlord of his property may assume various forms. A landlord may be serving outside while retaining his possession over a property or a part of the property by either leaving it incharge of a servant or by putting his household effects or things locked up in the premises. Such an occupation also would be full and complete possession in the eye of law. It was further argued by Mr. Shanti Bhushan that the landlady had absolutely no reason to stay in Bijnor because she was staying with her son in some other town. That by itself is hardly a good ground for the landlady who was a widow to sever her connections with her own property. Moreover, we do not want to make any observations on the merits of this matter as the High Court has rightly remanded the case for a fresh decision on all the points involved. So far as the second point is concerned, Viz. , the question of allotment of the premises to the appellant, the High Court was fully 120 justified in quashing the order of the District Supply officer as affirmed by the District Judge because despite several opportunities no attempt had been made to approach the landlady to nominate a tenant. There is no evidence to show that either the prescribed authority or the Rent Control and Eviction officer ever approached the landlady for making a nomination in respect of the premises vacated by the original tenant and she refused to do so. All that the landlady did was to ask for the release of the premises but even if this was refused it was incumbent on the Rent Control authorities to have fulfilled the essential conditions of section 17(2) of the Act before making any allotment in favour of the appellant or for that matter any other person. It was suggested that as the landlady was not living 4 in the premises which were locked up, section 17(2) did not apply. We have already rejected this argument because even occupation of apart of a building by the owner which she may visit off and on is possession in the legal sense of the term and, therefore, it cannot be said that the provision of section 17(2) would not apply and that the Rent Control authorities could make an allotment in favour of any person without giving an opportunity to the landlady or the landlord to exercise her/his privilege of nominating a tenant. We have already pointed out that the object of the Act seems to be to arm the owner with the power of nomination so as to protect him/her from unpleasant tenants or indecent neighbours who may make the life of the owner a hell. Moreover, the conduct displayed by the appellant in this case clearly shows that if he was thrust on the respondent without her being allowed an opportunity to nominate a tenant, it will violate the very spirit and tenor of section 17(2) of the Act. As we are of the opinion that the order of the High Court has to be upheld we refrain from making any further observations on the merits or any aspect of the matter which have to be gone into afresh as directed by the High Court. We find no merit in this appeal which is dismissed with costs quantified at Rs. 1,000/ (Rupees one thousand only.). P.B.R. Appeal dismissed.

Section 16(1) (b) of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 empowers the District Magistrate to release the whole or any part of a building or any land appurtenant thereto, in favour of the landlord. Section 17(2) provides that where a part of a building is in the occupation of the landlord for residential purposes or is released in his favour under section 16(1) (b) for residential purposes the allotment of the remaining part thereof under clause (a) of sub section (1) shall be made in favour of a person nominated by the landlord. On intimation from tho tenant that he was vacating the premises, the rent control authority allotted them to the appellant without informing the landlady about the allotment. On appeal the District Judge cancelled the allotment made in favour of the appellant The landlady then made an application for delivery of possession of the premises. This application was rejected on the ground that she had not applied for release of the accommodation. Her application under section 16(1) (b) for release of the premises was rejected and the accommodation was re allotted to the appellant. The District Magistrate affirmed the order of the rent control authority. The landlady 's writ petition impugning the orders of the courts below was allowed by the High Court. The case was remitted to the courts below for reconsideration afresh of the question of allotment. In appeal to this Court it was contended on behalf of the appellant that since the landlady was not in actual physical possession of the premises neither section 16(1) (b) nor section 17(2) had any application to the facts of this case. Dismissing the appeal, ^ HELD: The order of the prescribed authority allotting the premises to the appellant was without jurisdiction and against the plain terms of section 17(2) of the Act. The District Judge had rightly allowed the landlady 's appeal and cancelled The allotment to the appellant. 115 The object of the Act is that where a tenant inducted by the landlord voluntarily vacates the premises, partly occupied by the landlord, allotment in the vacancy should be made only to a person nominated by him, the dominant purpose of such provision being to remove any inconvenience to the landlord by imposing or thrusting on the premises an unpleasant neighbour or a tenant who invades the landlord 's right of privacy. While empowering the prescribed authority to allot the accommodation, the Act safeguards the right of the landlord to have a tenant of his choice. [117 B C, D] In the instant case if a tenant was thrust on the respondent without allowing her an opportunity to nominate a tenant of her choice it would violate the very spirit and tenor of section 17(2). [120 F] Possession by a landlord of his property may assume various forms: a landlord living outside the town might retain possession over his property or a part of it either by leaving it in charge of a servant or by putting his household effects locked up in the premises. Such occupation would be full and complete possession in the eye of law. [119 F] In the instant case from the fact that the landlady was residing in another town and so was not actually residing in the premises it could not be said that she was not in possession of the premises or that she had severed her connection with her own property. [119 G] The High Court was justified in quashing the orders of the rent control authority because no attempt had been made to approach the landlady for making a nomination in respect of the premises vacated by the original tenant. All that the landlady did was to ask for the release of the premises. Even if this was refused it was incumbent on the rent control authority to have fulfilled the requirements of section 17(2) before making an allotment in favour of the appellant or anyone else. Simply because the landlady was living outside the town it could not be said that the provisions of this sub section would not apply and that the authorities concerned could make an allotment in favour of any person without giving an opportunity to her to exercise her privilege to nominate a tenant. [120 A C]

Appeal No. 270 of 1960. Appeal from the judgment and order dated February 21, 1956, of the Andhra Pradesh High Court in Case Reference No. 4 of 1955. K. N. Rajagopal Sastri and D. Gupta, for the appellant. H. J. Umrigar, Thiyagaraja and G. Gopalakrishnan, for the respondents. March 10. The Judgment of the Court was delivered by 30 234 SHAH, J. The assessees are a firm carrying on business at Kurnool, of manufacturing ground nut oil and cake. Under the Madras General Sales Tax Act IX of 1939, the assessees were entitled to a rebate of sales tax paid on goods purchased by them and used in the manufacturing process. The assessees maintained their books of account according to the Samvat Year ending with Diwali. The system of accounting was a mixture of mercantile and cash. Purchases and sales of goods on credit were duly entered in the books of account. The sales tax actually recovered by the tax authorities was debited when paid and amounts if any refunded were credited when received. The assessees had adopted the system which was permitted by the Act of paying tax calculated on the turnover of the previous year of account. Under this system, tax was provisionally assessed by the Sales Tax Officer on the basis of the turnover of the previous year, and thereafter the liability was adjusted at the end of the year of account in the light of the actual turnover of that year, and of rebate allowed in respect of groundnuts pressed into oil. As a result of the final adjustment made by the sales tax authorities, in some years the assessees were assessed to 'pay tax in excess of the amount provisionally assessed and in others they obtained refund of the excess tax paid under the provisional assessment. The following tabular statement shows the official years for sales tax, provisional demands made by the sales tax authorities, the final demands and the adjustments made in that behalf. Official Provi Filial Adjustment Year sional Refund/Addi ended. demand. demand. tional levy. Rs. Rs. Rs. Rs. 31 3 1942 2,679 1 872 807 31 3 1943 3,046 2,863 183 31 3 1944 14,509 18,402 3,893 31 3 1945 47,276 20,037 27,239 31 3 1946 45,315 13,379 31,936 For the assessment year 1946 47 (corresponding to the year of account October 18, 1944 to November 4,1945), the assessees claimed in their assessment to 235 income tax to deduct Rs. 49,633 being the amount of sales tax paid under a provisional assessment. In the year ending 31 3 1945, the assessees had paid Rs. 47,276 as sales tax provisionally assessed. They also had paid in that year Rs. 3,894 in adjustment of the liability for the previous year towards sales tax due. After giving credit for Rs. 1,537 received as rebate, the total sales tax liability under the provisional assessment was Rs. 49,633. The Income tax Officer accepted this claim, and debited it from the income in the assessment year 1946 47 in assessing the taxable income of the assessees. Deduction of salestax actually paid under provisional assessment less rebates was permitted by the Income tax Officer not only in the assessment year 1946 47 but also in the earlier years. The Excess Profits Tax Officer had also adopted for the chargeable accounting period prior to October 18, 1944 the same method of computation, but for the chargeable accounting period October 18,1944 to November 4, 1945, the Excess Profits Tax Officer allowed out of the amount of Rs. 47,276 debited to sales tax only Rs. 17,055 as properly attributable to that period in computing the Excess Profits Tax liability. According to the Excess Profits Tax Officer, the excess amount paid under he provisional assessment i.e., Rs. 30,221 could not be taken into account, because under r. 12 of Sch. 1 of the Excess Profits Tax Act, expenditure in excess of the amount reasonable and necessary for the business was not a permissible deduction. In appeal against the order of the Excess Profits Tax Officer, the Tribunal affirmed the order. Against the order passed by the Tribunal confirming the order of the Excess Profits Tax Officer, the assessees applied for and obtained an order referring the following question to the High Court of Judicature of Andhra Pradesh, "Whether there are materials for the Tribunal to hold that the aforesaid sales tax payments of Rs. 30,221 were unreasonable and unnecessary having due regard to the requirements of the business and not consequently deductible under r. 12 of Sch. 1 of the Excess Profits Tax Act?" 236 The High Court answered the question in the negative and against the order of the High Court, this appeal is preferred with leave under section 66A(2) and (3) of the Income Tax Act read with section 21 of the Excess Profits Tax Act. It is manifest that the assessees had not altered the method according to which their accounts were maintain Id. Year after year, they were paying tax provisionally assessed by the Sales tax Officer on the turnover of the previous year subject to adjustment at the close of the year of account. This system of payment of tax under provisional assessments was not adopted with a view to evade,, tax liability. Nor was recovery of the amounts ordered to be refunded to the assessees delayed because of any deliberate, inaction on the part of the assessees. It is not found that excess tax on inflated returns was paid in anticipation of the repeal of the Excess Profits Tax Act. The assessees for reasons of convenience adopted, as they were entitled under the Madras General Sales Tax Act, a system of payment of tax on provisional assessment based on the turnover of the, previous year subject to final adjustment to be made at the end of the year. The assessees could opt for the system of paying sales tax on provisional assessment, but the liability to pay tax imposed was on that account not voluntarily incurred. This system produced no direct benefit to the business and adjudged in retrospect, it undoubtedly reduced the taxable income; but if otherwise the payment was reasonable and necessary having regard to the requirements of the business, it was not liable to be ignored in assessing the Excess Profits Tax liability of the assessees. By r. 12 of Sch. 1 of the Excess Profits Tax Act, it is provided that "in computing the profits of any chargeable accounting period, no deduction shall be allowed in respect of expenses in excess of the amount which, the Excess Profits Tax Officer considers reasonable and necessary having regard to the requirements of the business;. ". It is for the Excess Profits Tax Officer to decide whether the deductions claimed are reasonable and necessary having regard to the requirements of the 237 business. But the reasonableness and necessity of the expenditure sought to be deducted in assessing Excess Profits Tax liability must be adjudged in the light of commercial expediency. The payments made by the assessees were in discharge of obligation imposed lawfully and were necessary for the proper conduct of the business. By section 10 of the Madras General Sales Tax Act, the assessees were obliged within 15 days from the date of service of the notice of assessment to pay tax and in default, the amount was liable to be recovered as if it were an arrear of land revenue. Again, by section 15, if the assessees failed to submit the return as required by the provisions of the Act or the rules made thereunder or failed to pay the tax within the time prescribed, they were liable to be penalised. Payments made in satisfaction of liability which arises by virtue of the assessment made by the Sales Tax Officer cannot be called unreasonable. Payment of sales tax as assessed being obligatory and necessary for the purpose of carrying on the business, it must in our opinion be deemed to satisfy the requirements of r. 12 of Sch. 1 of the Excess Profits Tax Act. The Excess Profits Tax Officer was, in our opinion, in error in thinking that the tax paid was in excess of the requirements of the business. We are also of the view that the Tribunal was in error in holding that by seeking to deduct only the tax properly attributable to the actual turnover during the chargeable accounting period, the Excess Profits Tax Officer was not seeking to disturb the method of accounting which was followed by the assessees and was accepted by the taxing authorities for many years. Counsel for the Commissioner submitted that the rules relating to advance provisional assessment and levy of tax framed under the Madras General Sales Tax Act, 1939 were inconsistent with the provisions of the Act and the assessees should have raised this contention and have obtained a decision from the court before paying tax on provisional assessment and not having done so, payments made cannot be regarded as either reasonable or necessary. Counsel says that in In re M. P. Kumraswami Raja (1), the Madras High (1) [1955] 6 Sales Tax Cases 113. 238 Court has declared this scheme of taxation on provisional assessment ultra Vires. But the reasonableness or the necessity of payments under r. 12 Sch. 1 of the Excess Profits Tax Act must be ascertained in the light of what may be regarded as commercially expedient and not on any legalistic considerations. It would not be expected of a businessman to start a litigation in respect of a tax which the Legislature of the State was competent to levy on the ground that the method devised for computing the tax liability was ultra vires. The tax was duly assessed and paid and the reasonableness and necessity must be adjudged in the light of the circumstances then prevailing and not in the light of subsequent developments. It may also be noticed that since the Madras High Court 's decision in In re Kumaraswami Raja 's case (1), the Madras Legislature by the Madras General Sales Tax Amendment Act VIII of 1955 retrospectively validated the levy. By virtue of this Act, assessments made provisionally and the levy of the tax were to be regarded as valid notwithstanding any initial incon sistency between the provisions of the Act and the Rules framed thereunder. It may also be pointed out that no such question was referred to the High Court and not even an argument appears to have been raised in the High Court on this question. We are of the view that the High Court was right in answering the question in the negative. The appeal therefore fails and is dismissed with costs. Appeal dismissed. (1) [1955] 6 Sales Tax Cases 118.

The respondents were entitled to a rebate of sales tax on goods purchased by them and used in their manufacturing process. They had adopted the system which was permissible under law, 233 of paying sales tax provisionally assessed by the Sales Tax Officer on the basis of turnover of the previous year, the liability being adjusted at the end of the year of account in the light the actual turnover of that year, as a result of which, in some years the respondents were assessed to pay tax in excess of the amount provisionally assessed, in others they obtained refund of the excess tax paid under the provisional assessment. The Income Tax Officer recognised the system and permitted deduction of sales tax actually paid under the provisional assessment. The Excess Profits Tax Officer had in assessing liability to excess profits tax for previous periods adopted the same method of computation, but for the chargeable accounting period, he did not allow the deduction of the full amount of tax provisionally debited to the sales tax, because in his view it was not reasonable and necessary expenditure and thus not a permissible deduction. The question was whether the sales tax payments were unreasonable and unnecessary having due regard to the requirements of the business and consequently not deductible under r. 12 Sch. 1 of the Excess Profits Tax Act. Held, that it is for the Excess Profits Tax Officer to decide whether the deductions claimed are reasonable and necessary having regard to the requirements of the business. But the reasonableness and necessity of the expenditure sought to be deducted under r. 12 Sch. 1 of the Excess Profits Tax Act in assessing excess profits tax liability must be adjudged in the light of commercial expediency, and not on any legalistic consideration. Payments made in satisfaction of liability which arises by virtue of assessment made by the Sales Tax Officer cannot be called unreasonable. Payment of sales tax as assessed being obligatory and necessary for the purpose of carrying on the business, it must be deemed to satisfy the requirements of r. 12 of Sch. 1 of the Excess Profits Tax Act. In re M. P. Kumaraswami Raja, (1955) 6 Sales Tax Cases 113, referred to.

Appeal No, 145 of 1960. Appeal by special leave from the judgment and order dated March 18, 1958, of the Kerala High Court in Tax Revision Case No. 12 of 1957. V.A. Seyid Muhamad and Sardar Bahadur, for the appellant. C.K. Daphtary, Solicitor General of India, Thomas Vellapally, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the respondent. December 15. The Judgment of the Court was delivered by 286 KAPUR, J. This is an appeal by special leave against the judgment and order of the High Court of Kerala in Tax Revision No. 12 of 1957. The respondent who is the assessee owned an estate of 590 acres in South Malabar district, now in Kerala State. Out of that area 85 acres were covered by Pepper, Arecanut, Paddy and Coconut cultivation while the rest i.e. 505 acres had rubber plantations upon it. Of that area 235 acres were occupied by immature non bearing rubber trees and 270 ' acres had mature rubber trees. The assessment relates to the year 1955 56, the accounting year being the year ending March 31, 1955. The respondent claimed from out of the income expenses relating to the maintenance and upkeep of immature non bearing rubber trees. The Agricultural Income tax Tribunal held that the expenses incurred on the whole area under rubber plantations were deductible expenses and remanded the case for ascertaining the expenses incurred in forking and manuring of the "non bearing and immature" rubber grown areas also. The appellant then preferred a revision application to the High Court under section 54(1) of the Madras Plantations Agricultural Income Tax Act, 1955 (Mad. V of 1955). The High Court held that the amount spent on the upkeep and maintenance of immature rubber trees was a deductible expenditure under section 5(e) of that Act which provides: S.5 "Computation of agricultural income: The agricultural income of a person shall be computed after making the following deductions, namely:. . . . . :. . . (e) any expenditure incurred in the previous year (not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of the plantation;". The provisions of section 5(e) of the Madras Act, applicable to the present case, are the same as those of section 5(j) of the Travancore Cochin Agricultural Income Tax Act (Act XXII of 1950). The only difference is in the last few words. In place of "for the purpose of the plantation" in the former, the words "for the purpose of 287 deriving the agricultural income" are used in the latter. If anything the words of the former Act are more favourable to the respondent. In Travancore Rubber and Tea Company Ltd. vs Commissioner of Agricultural Income Tax, Kerala (1), which was an assessment under the Travancore Cochin Act, we have decided the question of deductibility of sums expended for purposes of forking, manuring etc. of immature rubber trees. That judg ment will govern this case also. This appeal therefore fails and is dismissed with costs in this court and the High Court.

The assessee owned an Estate of 590 acres out of which 235 acres were occupied by immature non bearing rubber trees, for the maintenance and upkeep of which the respondent claimed expenses from out of the income, which was allowed both by the Agricultural Income Tax Tribunal and the High Court. The appellant came up by special leave. Held, that the provisions of section 5(e) of the Madras Planta tions Agricultural Income Tax Act, 1955 (Mad. V of 1955), applicable to the present case, and those of section 5(1) of the Travancore Cochin Agricultural Income Tax Act, 1950 (Tr. Co. XXII of 1950) being the same, the judgment in Travancore Rubber & Tea Co. Ltd. vs The Commissioner of Agricultural Income tax, Kerala, in which the question of deductibility of sums expended for purposes of forking, manuring etc. of immature rubber trees had been decided, will govern this case. Travancore Rubber & Tea Co. Ltd. vs The Commissioner of Agricultural Income tax, Kerala, ; , applied.

Special Leave Petition (Civil) Nos. 15054 57 of 1985. From the Judgment and Order dated 30.1.1985 of the Allahabad High Court in Sales Tax Revision No. 334, 418, 285 and 332 of 1984. S.C. Manchanda, R.S. Rana and Ashok K. Srivastava for the Petitioner. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This is an application for leave to 448 appeal under Article 136 of the Constitution against the Judgment and order of the High Court of Allahabad, dated 30th January, 1985. The respondent carried on the business at the relevant time in Tendu leaves. The respondent 's case was that there was no inter state sales of Tendu leaves in question. On the contrary, its case was that the entire sales of Tendu leaves were effected in Uttar Pradesh. This contention was not accepted by the assessing authority. Having failed in the first appeal, the assessee went up in second appeal and the Tribunal allowed the appeal and quashed the orders passed by the assessing authority as well as the Assistant Commissioner (Judicial). The Tribunal exhaustively discussed the facts. They found that the assessee carried on business in Tendu leaves and for the year 1976 77 the assessee had been assessed under Section 21 of the U.P. Sales Tax Act on inter state sales of Rs.21,050 to a tax of Rs.2,105 whereas the case of the assessee was that the inter state sales were nil. It was contended on behalf of the assessee that the assessee had effected the sales in U.P. According to the assessee, out of the above sales of Rs.21,050, Tendu leaves worth Rs. 10,000 were sold on 24th April, 1976 to Sri Gulam Mohammad of Kanpur and those worth Rs.11,050 were sold in cash at Lalitpur on 5th May, 1976. It was further contended that the assessee did not know if the purchasers had taken these Tendu leaves to places outside U.P. and even if they had so taken, the assessee could not be assessed to tax under the as the contract between him and the purchaser was to purchase goods in U.P. The Tribunal took notice of T.P. Form IV which is a transport permit issued by the Forest Department. The Forest Department had given in writing that this transport permit did not relate to sale but it was a certificate regarding the validity of Nikasi of Tendu leaves from the forest. It is well settled that even if it is established that the assessee had obtained T.P. Form IV that by itself will not show that the assessee had entered into inter state sales. Merely because T.P. Form had been issued, it does not follow that there were inter state sales. The principles of inter state sales were well settled. In Bengal Immunity Co. vs State of Bihar, (6 STC 446) Justice Venkatarama Ayyar had held that sale could be said to be in the course of inter state trade only if two conditions concur, namely, (1) a sale of goods and (2) a transport of those goods from one State to another. Unless both these conditions were satisfied. there could be no sale in the course of 449 inter state trade. There must be an evidence that the transportation was occasioned by the contract and as a result goods moved out of the bargain between the parties from one State to another. It is apparent from the facts found by the Tribunal that the assessee had since the very beginning been contending that he had effected only local sales. He had also filed an affidavit stating that he had not effected any sales of Tendu leaves during the course of inter state trade and commerce and that the had never applied to the Forest Department for issue of Form T.P. IV and that no such Form was ever issued to him and the Tendu leaves in dispute were not booked by him through railways or trucks for places outside U.P. The Tribunal found nothing to discredit this version of the assessee. The onus lies on the Revenue to disprove the contention of the assessee. The Tribunal found no material to do so. On these facts the Tribunal rejected the contention of the assessee. On these contentions the Revenue went up in appeal before the High Court. The question posed before the High Court was as follows: "Whether on the facts and under the circumstances of the case the Tribunal Sales Tax, Kanpur, was legally justified in knocking off the tax imposed by the assessing authority?" The High Court addressed itself to the question whether the sales effected by the respondent, were inter state sales or not. On an analysis of the findings of the Tribunal, the High Court found that the goods were not moved out of U.P. in pursuance of an agreement for sale entered into between the assessees and their customers. The existence of T.P. Form IV was taken note of but that did not conclude the matter. The condition precedent for imposing sales tax under the , is that the goods must move out of the State in pursuance of some contract entered into between the seller and the purchaser. If that is a correct principle in law, the Tribunal applied this correct principle of law to the facts of this case taking into cognizance the existence of T.P. Form. In view of the facts of this case, the High Court found no material to interfere and dismissed assessee 's contention. We are of the opinion that the High Court was right. In the premises this application for leave must fail and is accordingly dismissed. N.V.K. Petition dismissed.

% The respondent assessee carried on business in Tendu leaves. He contended before the Assessing Authority that there was no inter state sale of Tendu leaves, that the entire sales of Tendu leaves were effected in Uttar Pradesh, and that he did not know if the purchasers had taken these Tendu leaves to places outside Uttar Pradesh, and even if they have so taken the assessee could not be assessed to tax under the , as the contract between him and the purchaser was to purchase goods in U.P. This contention was not accepted and the Assessing Authority assessed the respondent. The Assistant Commissioner (Judicial) having dismissed the appeal against the order of the Assessing Authority, the respondent went in Second Appeal to the Sales Tax Appellate Tribunal. The Tribunal took notice of T.P. Form IV which was a transport permit issued by the Forest department, regarding the validity of Nikasi of Tendu leaves from the forest, and came to the conclusion that merely because T.P. Form had been issued, it does not follow that there were inter state sales. The Tribunal allowed the appeal and quashed the order passed by the assessing authority as well as First Appellate Authority. The Revenue went up in appeal to the High Court, which held that the goods were moved out of U.P. in pursuance of an agreement of sale entered into between the assessee and their customers and that the condition precedent for imposing sales tax under the Central Sales Tax 447 Act was not present and dismissed the appeal. Dismissing the Special Leave Petitions of the Department, this Court, ^ HELD: 1. Sale could be said to be in the course of inter state trade only if two conditions concur, viz. (1) a sale of goods, and (2) transport of those goods from one State to another. Unless both these conditions are satisfied, there could be no sale in the course of interstate trade. There must be evidence that the transportation was occasioned by the contract, and as a result goods moved out of the bargain between the parties from one State to another. [448H; 449A] Bengal Immunity Co. vs State of Bihar, 6 STC 446 referred to 2. The condition precedent for imposing sales tax under the , is that the goods must move out of the State in pursuance of some contract entered into between the seller and the purchaser. [449F G] 3. T.P. Form IV is a transport permit issued by the Forest Department. The Forest Department has given in writing that this permit did not relate to sale but was a certificate regarding the validity of Nikasi of Tendu Leaves from the forest. Merely because T.P. Form has been issued, it does not follow that there were inter state sales. [448F G] 4. The onus lies on the Revenue to disprove the contention of the assessee, that a sale is a local sale and to show that it is an inter state sale. [449C]

ivil Appeal No. 101 of 1950. Appeal by special leave from the Judgment and Decree dated the 20th September, 1949, of the High Court of Judica ture at Calcutta (Hurries C.J.and Chatterice J.) in Appeal No. 46 of 1949 arising out of Decree dated the 31st August, 1948, of the Hon 'ble S.B. Sinha J. of the Calcutta High Court in Suit No. 343 of 1943 instituted under the Original Jurisdiction of the High Court). M.C. Setalvad, Attorney General for India (B. Sen,with him) for the appellant. S.C. Isaac (B. Barterice, with him) for the respond ent. 1951. December 18. The leading judgment was delivered by Bose J. Fazl Ali J. agreed, 180 Bose J. This is a defendant 's appeal in a suit for contribution brought by the son of a mortgagor against the co mortgagors. The parties are related as below : Balai Lall Seal (died1917) I Megharnala Dassi (died 1945) I I I I I Bejoy Lall Biswa Lall Tarak Lall Kedar Lall NakuLall (D. 23 5 33) (D. Nov. 1936) Deft 1 Deft. 2 (Born (Born I I Jugal Lall Hari Lall 22 11 1907) 7 2 1910) (Plff.) The mortgagors were the plaintiff 's father Tarak Lall and Tarak 's two brothers Kedar and Naku. The mortgage was exe cuted on the 12th June, 1936, in favour of one Mst. Gyarsi for a consideration of Rs. 80,000. For convenience I will call this the suit mortgage though this is not a suit on the mortgage. The mortgagee sued in the year 1938 and obtained a preliminary decree for sale on the 17th of February, 1939, for a sum of Rs. 89,485 12 9 plus costs. The decree was made final on the 22nd of December, 1989. In execution the mortgagee proceeded against the proper ty of the plaintiff alone (as Tarak 's son) and, during the pendency of the execution, assigned her rights in the decree to the Hooghly Flour Mills. The Mills continued the execu tion and on the 11th of March, 1943, the claim was satisfied in this way. An order of the Court was obtained sanctioning sale of a part of the mortgaged property, 20 Round Tank Lane (which belonged exclusively to the plaintiff), to the decree holder for a sum of Rs. 1,50,000. It was directed that the consid eration should first be applied in payment of the claim and costs and that the decreeholder should execute a reconvey ance of the rest of the mortgaged properties in favour of the mortgagors. The sanction of the Court was necessary because the judgment debtor Hari Lall (present plaintiff) was a minor. 181 This was done and 20, Round Tank Lane, was conveyed by the present plaintiff to the Hooghly Flour Mills on the 18th of March, 1943. Out of the consideration a sum of Rs. 97,116 11 0 was paid to the Mills in lull satisfaction of the claim and costs then outstanding. The Mills executed a reconveyance of the rest of the properties to the mortgagors in release of the mortgage on the same day. In addition to this Rs. 97, 116 11 0, further sums of Rs. 14,400 and Rs. 8,100 had also been paid before the dates of these transactions. These sums were paid by a Receiver who had been appointed by the Court pendente lite. These sums came out of the rents which the Receiver obtained from the plaintiff 's property, 20 Round Tank Lane. The plaintiff says that in this way he paid a total of Rs. 1,19,116 11 0 in satisfaction of the mortgage. His one third share in this comes to Rs. 39,872 3 8. He claims that he is entitled to receive the balance of Rs. 79,744 7 4 from the two defendants and that each of them is liable for a half of that sum namely, Rs. 39,872 3 8. In addition to this the plaintiff had incurred costs amounting to Rs. 1,144 8 6 in resisting Mst. Gyarsi 's claim and in connection with the reconveyance. He also claims one third of this sum, namely Rs. 381 8 2, from each of the defendants. The total claim against each defendant accord ingly comes to Rs. 40,253 11 10. In addition to this the plaintiff asked for (1) "a declaration that the properties mentioned in Schedule 'A '. belonging to the defendants stand charged with the repayment of the sum of Rs. 80,507 7 8 being the aggregate amount due and payable by the two defendants," and (2) "Decree under Order XXXIV of the Civil Procedure Code in proper form." Schedule A contains a list of the rest of the mortgaged properties which belong exclusively to the defendants, 24 182 It will be seen that the plaintiff claims on the basis that each of the three mortgagors is liable to contribute in equal shares towards payment of the mortgage debt. The defendants did not deny their liability to contribute. They only challenged the basis on which it was to be comput ed. They ,pleaded a special agreement between Tarak Lal and themselves under which their liabilities were to be calcu lated in the following way. According to them, the bulk of the Rs. 80,000 was borrowed on what I have called the suit mortgage to pay off previous debts which had been incurred by the parties on earlier mortgages. The amount which went towards satisfaction of the defendant 's portion of these earlier liabilities was only Rs. 13,259 2 4. Therefore, the only benefit they got out of this Rs. 80,000 was to that extent. The plaintiff 's father Tarak on the other hand benefitted to the extent of Rs. 53,481 11 4. They therefore agreed at the date of the suit mortgage that their respec tive liabilities as between themselves should be proportion ate to the benefit derived by each as above. Sinha J., who tried the suit on the Original Side of the Calcutta High Court, held that the agreement was proved. On appeal the learned Chief Justice of the High Court and Chatterjee J. disagreed and held that it was not. As I agree with the learned appellate Judges for reasons which I shall give hereafter, it will be necessary to set out the further facts. But I need not do so in any detail as they are given in full in the two judgments of the High Court. We are only concerned here with the question of principle; so it will be more convenient to reduce the problem to its simplest terms. We are concerned here with four items of property which I shall term Chittaranjan Avenue, Strand Road, No. 16 Round Tank Lane and 20 Round Tank Lane. These properties were originally joint family properties, but in the year 1932 there was a partition which was compelled by reason of a suit filed by Tarak 183 against his brothers and mother. The upshot was that the properties were divided as follows: (1) Bejoy, Kedar, Naku and the mother Meghamala obtained Chittaranj an Avenue. (2) Tarak (plaintiff 's father) obtained 16 Round Tank Lane and 20 Round Tank Lane. (3) Kedar, Naku and Biswa Lall obtained Strand Road. Before this partition there were three mortgages: The first of these was executed on the 16th of June, 1925. All five brothers joined in it and they mortgaged the Strand Road property for Rs. 10,000. This was in favour of Bhuvan Chandra Bhur. The second was on the 11th of October, 1926. In this Bejoy and Tarak mortgaged their 2/5 share in Chittaranjan, Strand, Dum Dum and 20 Round Tank Lane for Rs. 5,000. The mortgagee was Binode Behari Sen. The third was on the 28th January, 1927. In this Bejoy and Tarak again mortgaged their 2/5 share in the same items of property for Rs. 7,000 to Binode Behari Sen and Kunja Behari Sen. All three sets of mortgagees, or their representatives, instituted suits on their respective mortgages and obtained final decrees Bejoy died on the 23rd of May, 1933, leaving a son Jugal. On the 12th of June, 1936, came what I have called the suit mortgage executed by the three brothers,Tarak, Kedar and Naku, for Rs. 80,000. The properties mortgaged were (1) the shares of Kedar and Naku in Chittaranjan Avenue and 16 Round Tank Lane; (2) 20 Round Tank Lane which had been allotted to Tarak; (3) the reversionary interest of all three in the share allotted to the mother. The consideration of Rs. 80,000 was expended as follows:Rs. 29,667 10 0 was paid by Tarak, Kedar and Naku in satisfaction of the first mortgage and the 184 later decretal charge; Rs. 11,519 11 0 in satisfaction of the second and Rs. 13,502 14 0 in satisfaction of the third. The balance of Rs. 25,310 is alleged by the appellants to have been retained by Tarak. I have taken these figures from the judgments of the High Court. I understand some of the details are disputed, so I make it clear that I am not setting out the decision of this Court regarding the de tails but only giving an overall picture. Shorn of overburdening detail the problem, reduced to its simplest terms, comes to this. Three persons A, B and C separately own properties of unequal value, Blackman, Whiteacre and Greenacre. Let us assume that their values at the material date are Rs. 30,000, Rs. 20,000 and Rs. 10,000 respectively. A, B and C, acting in various combinations from time to time, incur debts. It matters not for present purposes whether those debts are secured on these properties or not because a time must come when their separate liabilities as amongst themselves have to be ascertained and apportioned. Let us assume that when that is done, A 's responsibility extends to Rs. 2,000, B 's to Rs. 3,000 and C 's to Rs. 5,000. In order to clear off these debts, A, B and C jointly mortgage their three estates for Rs. 10,000, the total aggregate sum due at the date of the mortgage from the three of them. There is no contract between them, either in the mortgage deed or otherwise, regarding their respective shares of responsibility in the Rs. 10,000. At the date of redemption the mortgage debt has swollen to Rs. 15,000. A alone redeems by selling Blackacre, which is his separate estate, to the mortgagee for Rs. 35,000 that being the value of Blackacre at the date of redemption. Rs. 15,000 of this is applied in satisfaction of the mortgage debt and the balance of Rs. 20,000 is retained by A. What are A 's rights as against B and C ? Three solutions readily suggest themselves. One is that the three contribute equally. In that event B would pay A Rs. 5,000 and C would pay Rs. 5,000. 185 A second solution is that they pay in proportion to the extent of the benefits derived. In that event B 's share would be 3/10 of Rs. 15,000, that is to say, Rs. 4,500. and C 's would be 5/10 of Rs. 15,000, that is Rs. 7,500. A third solution is that they pay proportionately to the values of the properties mortgaged. In that event B would have to pay 2/6 of Rs. 15,000, that is Rs. 5,000, and C 1/6 of Rs. 15,000 ' which come to Rs, 2,500. The problem is to know which of these three solutions to apply. In the absence of other considerations, the most equitable solution is obviously the second. But the matter is not as simple as that. There are certain statutory provi sions which must first be examined. The learned counsel for the plaintiff respondent con tended that section 43 of the Contract Act applied. He relied on the following provision : "Each of two or more joint promisors may compel every other joint promisor to contribute equally with himself to the performance of the promise, unless a contrary intention appears from the contract. If any one of two or more joint promisors makes default in such contribution, the remaining joint promisors must bear the loss arising from such default in equal shares. " The argument is that unless a contrary intention appears from "the contract" the. loss must be borne equally. It was contended, and with that I agree, that the words "the con tract" can only refer to the main contract between the promisors on the one side and the promisee on the other. That contract in this case is the suit mortgage. There is no contract to the contrary in the document, therefore, it was contended, the section must apply. That of course would be the clear, logical and simple conclusion ii there were no other provision of law to consider. But we are dealing here with a mortgage and so we have also to look to the provisions of the Transfer of Property Act. 186 Incidentally, if this argument is pushed to its logical conclusion it would exclude any collateral or subsequent agreement between the promisors inter se which does not appear in the main contract. But we need not enter into that here. The sections of the Transfer of Property Act which concern us are 82 and 92. The first confers a right of contribution. The second a right of subrogation. I will consider section 82 first. It runs : "Where property subject to a mortgage belongs to two or more persons having distinct and separate rights of owner ship therein, the different shares in or parts of such property owned by such persons are, in the absence of a contract to the contrary, liable to contribute rateably to the debt secured by the mortgage . . " That is the position here. Next I turn to section 92. That runs " . any co mortgagor shall, on redeeming property subject to the mortgage, have, so far as regards redemption, foreclosure or sale of such property, the same rights as the mortgagee whose mortgage he redeems may have against the mortgagor . " That also applies. Now these provisions at once raise a competition between sections 82 and 92 of the Transfer of Property Act, section 43 of the Contract Act and what I might term the principle of beneficial, as opposed to proportionate or equal, distri bution of liability. I am of opinion that the second solution adumbrated earlier in this judgment, based on equities, must be ruled out at once. These matters have been dealt with by statute and we are now only concerned with statutory rights and cannot in the face of the statutory provisions have recourse to equitable principles however fair they may appear to be at first sight. The Privy Council pointed out in Rani Chhatra Kumari vs Mohan Bikram (1) that the doctrine of the (1) Pat. 851 at 869. 187 equitable estate has no application in India. So also refer ring to the right of redemption their Lordships held in Mohammad Sher Khan vs Seth Swami Dayal(1) that the right is now governed by statute, namely section 60, Transfer of Property Act. Sulaiman c. J. (later a Judge of the Federal Court) ruled Court equitable considerations in the Allahabad High Court in matters of subrogation under sections 91, 92, 101 and 105, Transfer of Property Act, in Hira Singh vs Jai Singh(2) and so did Stone C.J. and I in the Nagpur High Court in Taibai vs Wasudeorao (3). In the ease of section 82 the Privy Council held in Ganesh Lal vs Charan Singh(4) that that section prescribes the conditions in which contribution is payable and that it is not proper to introduce into the matter any extrinsic principle to modify the statutory provisions. So, both on authority and principle the deci sion must rest solely on whatever section is held to apply. So far as section 43 is concerned, I am not prepared to apply it unless sections 82 and 92 can be excluded. Both sections 43 and 82 deal with the question of contribution. Section 43 is a provision of the Contract Act dealing with contracts generally. Section 82 applies to mortgages. As the right to contribution here arises out of a mortgage, I am clear that section 82 must exclude section 43 because when there is a general law and a special law dealing with a particular matter, the special excludes the general. In my opinion, the whole law of mortgage in India, including the law of contribution arising out of a transaction of mort gage, is now statutory and is embodied in the Transfer of Property Act read with the Civil Procedure Code. I am clear we cannot travel beyond these statutory provisions. Now, when parties enter into a mortgage they know, or must be taken to know, that the law of mortgage provides for this very question of contribution. It confers rights on the mortgagor who redeems and directs that, in the absence of a contract to the contrary, he (1) (1922) 49 I.A. 60 at Nag. 206 at 216. (2) A.I.R. 1937 All. 588, at 594. (4) (1930) 57 I.A. 189. 188 shall be reimbursed in a particular way out of particular properties. The parties are at liberty to vary these rights and liabilities by special contract to the contrary but if they do not do so, I can see no reason why these provisions should be abrogated in favour of a section in the Contract Act which does not deal with mortgages. Slightly to vary the language of the Judicial Committee it is the terms and nature of the transaction viewed in the light of the law of mortgage in India which exclude the personal liability and therefore section 43, except where there is a contract to the contrary. It was suggested that the rule is inequitable and will operate harshly in cases like the present. But the remedy lies in the parties ' own hands. It is open to them to make a contract to the contrary. If they do not, then the law steps in and makes statutory rules to which effect must be given. It is not for judges to consider whether that is the best possible solution but the rule at any rate obviates the necessity of roving enquiries into the objects of a borrow ing and the application of the funds. On an overall basis it is perhaps as good as any other. But that hardly matters. The rule is there and full effect must be given to it. The learned counsel for the plaintiff respondent urged that the defendants are shut out from relying on section 82 because that was not their case and the question was never raised by them in the High Court. Such reference as there is to the section was with reference to an argument urged on behalf of the plaintiff. I am not impressed with this objection. , On the facts set out by the plaintiff it is evident that he is entitled to contribution. The method of computation is a matter of law and it is for the judges to apply the law to the facts stated and give the plaintiff such relief as is appropriate to the case. I turn now to the question of fact, the special agree ment pleaded by the defendants. The only evidence in sup port of it is that of the first defendant Kedar. According to him, the agreement was an oral one 189 though the parties contemplated writing and registration. His explanation for lack of any writing is this. He was asked whether anything was put down in writing and he re plied : "No, nothing was done then, but there was an understand ing that it would be done but Tarak went away to Darjeeling and when he came back he died soon after he came back and nothing could be done in writing. " Later, he was asked "Therefore, you, contemplated that there would be a document which would have to be registered in connection with the adjustment ?" and he replied ' 'Yes". He also tells us that the parties regarded the matter as confidential and so only three per sons were present, Tarak, Naku and himself. It is to be observed that Naku, who is the second defendant, has not entered the box. Stopping there, it is evident that we have to rely on the memory of a very interested person speaking nearly thirteen years after the event about a transaction affecting some Rs. 80,000. Nor is it the memory of some simple event which might well have fixed itself in his mind. The question whether and at what stage parties reach finality when writ ing is in contemplation is a difficult and complex one involving delicate considerations of much nicety even when the preliminaries are all in writing. The turn of a phrase here, the use of a word there, may make a world of differ ence. The law regarding this was examined by me at some length in the Nagpur High Court in Shamjibhai vs Jagoo Hernchand Shah (1). How much greater are the difficulties when we do not know the exact words the parties used and have to delve into the mind of a dead man (Tarak) through the impressions of an interested witness given some thirteen years after the event. I find it difficult to accept this version and consider it would be dangerous to do so, particularly when the (1) I.L.R. at 586 588, and 598 25 190 witness is a hesitant and reluctant one, as his examination discloses, and even evasive on some points; also when the defendants have deliberately withheld from the Court assist ance which it was in their power to render I refer to the absence of Naku, the only other person present, from the box. I am unable to accept this testimony. Nor is this the only point. Despite the insistence of the witness that the parties were on good terms and trusted each other, the fact remains that Tarak found it necessary to institute a suit for partition against his brothers and fight it to a finish. They were not able to arrange matters amicably. it was suggested in argument that was probably because of creditors who could not be persuaded to agree and it was pointed out that creditors were joined in the suit, but that is not wholly convincing particularly when it is admitted that Tarak was insisting on writing and regis tration. It is evident that he, at any rate, was not prepared to leave matters as they were and trust to the good faith of his brothers. Now we know that Tarak was in Calcutta about three months after the date of the alleged agreement. We also know that Kedar was most anxious to have such an agreement, for he tells us so. He tells us further that there was before them a rough draft of the terms. That document was produced in Court. But the draft was neither signed nor initialled. The only inference I can draw from these facts is that Tarak either refused to agree or had not made up his mind. The figures put forward by the defendants were contested on behalf of the plaintiff and we were given an alternative set of figures which in turn were contested by the other side, but they were enough to show that the matter is not as straightforward or as simple as the defendants would have us believe. Therefore, Tarak 's inaction during the three months and the omission of either side to initial the draft point clearly, at the lowest, to hesitancy on Tarak 's part. It may be he wanted his lawyers to examine his position or it may be he refused to have anything to do with it. 191 It is just possible that there were negotiations, but on those broad facts I am not prepared to believe the witness when he tells us, or rather suggests, that the parties reached finality. It would in any event be dangerous to believe a witness in circumstances like this. But when the defendants deliberately withheld from the Court that assist ance which is its due I can only conclude that their case was too shaky to stand further proving. On these broad grounds alone I would hold that the agreement is not proved. Much was made in argument about the rule regarding the weight to be given to the estimate of the judge who saw and heard a witness. I do not doubt the soundness of the rule but it can be pushed too far as their Lordships of the Judicial Committee pointed out in Virappa vs Periakaruppan(1). In the present case, the learned Judge who tried the case believed Kedar not because of his demea nour but because the learned Judge considered that his story was inherently probable. That, however, is a matter which the learned appellate Judges were in as good a position to appreciate as the learned trial Judge. If probability is to be the test, then the conduct of Tarak suggests that it is very improbable that he could have agreed. That leaves at large the nature of the relief to which the plaintiff is entitled. In the view I take, there being no contract to the contrary, the plaintiff 's only remedy is under section 92 of the Transfer of Property Act read with section 82. The question is, has his suit been so framed ? The plaintiff has claimed separate personal reliefs against the defendants. As there is no personal covenant as between the mortgagors or any "contract to the contrary", that relief ' cannot be granted. The plaintiff has also asked for a declaration of charge and for a decree under Order XXXIV, Civil Procedure Code. The declaration of charge standing by itself is superfluous although Order XXXIV, rule 2 (1) does require that the decree in a mortgage suit shall (1) A.I.R. 1945 P.C. 35 at 37. 192 "declare the amount so due" at the date of the decree. But reading the two reliefs together, I am of opinion that though the claim is inartistically worded the plaintiff has in substance asked for a mortgage decree up to a limit of Rs. 40,253 11 10 with interest against each defendant. No other kind of decree could be given under Order XXXIV. Therefore, though he has not used the word "subrogation" he has asked in substance for the relief to which a subrogee would be entitled under the Transfer of Property Act. I would be slow to throw out a claim on a mere techni cality of pleading when the substance of the thing is there and no prejudice is caused to the other side, however clum sily or inartistically the plaint may be worded. In any event, it is always open to a court to give a plaintiff such general or other relief as it deems just to the same extent as if it had been asked for, provided that occasions no prejudice to the other side beyond what can be compensated for in costs. In the circumstances, in the absence of agreement be tween the parties as to the figures, I would remand this case to the High Court for (1) an enquiry regarding the sum paid by the plaintiff 's father for satisfaction of the mortgage dated the 12th June, 1936, (2) for the interest due on that sum at the contract rate in the mortgage from the date of payment to the date of decree, (a) lot the values of the various properties mortgaged at the date of the mort gage. When the figures are ascertained, I would direct that the liability of each defendant be ascertained separately in the manner prescribed by section 82, Transfer of Property Act. the event of this liability exceeding Rs. 40,253 11 10 with interest against either defendant, I would direct that his liability be reduced to Rs. 40,253 11 10 plus interest. When these figures are ascertained, I would direct that a mortgage decree for sale be drawn up in the usual way affording either defendant the right to redeem the whole of the balance of the property 193 (excluding the plaintiff 's) for the aggregate sum due as above and, in default of payment, limiting the liabilities of each item of property to the sum rateably due on it under section 82. On the question of costs. The plaintiff repudiated section 82 in the course of the arguments before us and rested his case on section 43 of the Contract Act, nor did he clearly and unmistakably plead a case of subrogation in his plaint even in the alternative. The defendants, on the other hand, set up a case which has failed on the facts. I would, therefore, direct each side to bear its own costs in this appeal. As regards the costs incurred in the Courts below and any costs which may be necessitated by a further enquiry, they will be determined according to the final result of the litigation and with due regard to all matters bearing on the question of costs. FAZL ALI J. I agree. Case remanded.

The right to contribution as between co mortgagors is governed by sections 82 and 92 of the Transfer of Property Act and not by section 43 of the Indian Contract Act, inasmuch as section 43 of the Contract Act deals with contracts generally, while sections 82 and 92 of the Transfer of Property Act specifically deal with the right of contribution between co mortgagors. It is an established principle that when there is a general law, and a special dealing with a particular matter, the special excludes the general. Consequently, in the absence a contract to the contrary, co mortgagors are bound to con tribute proportionately to the value of the shares or parts of the mortgaged property owned by them and not in propor tion to the extent of the benefits derived by each of them. As sections 82 and 92 of the Transfer. of Property Act prescribe the conditions in which contribution is payable in India when there is a mortgage, it is not proper to introduce into the matter extrinisic principles based on equitable consid erations.

ivil Appeal No. 2966 of 1979. From the Judgment and Order dated 31.12. 1977 of the High Court of Himachal Pradesh in R.F.A. No. 7 of 1970. F.S. Nariman, V.A. Bobde, S.D. Mudaliar and C.K. Rat naparkhi for the Appellant. K.G. Bhagat, Naresh K. Sharma for the Respondents. 473 The Judgment of the Court was delivered by AHMADI, J. This appeal by special leave is directed against the judgment of the Division Bench of the High Court of Himachal Pradesh in Regular First Appeal No. 7 of 1970 arising out of Suit NO. 11 of 1987. The appellant original plaintiff is the second son of late Raja Padam Singh, the ex ruler of Bushahr State. He filed a suit on 18th November, 1964 principally against the Union of India and the Govern ment of the Union Territory of Himachal Pradesh for a decla ration of his proprietary rights in about 1720 acres of forest land situate in Khatas Nos. 1 & 2, Khataunis Nos.1 to 25 comprising 106 plots, both measured and unmeasured, bearing Khasra Nos. 1, 2, 6, 23, 30, 34, 44, 108,218,222,309,341,409,479,606,433,241,732/280, 736/394 and 728/402 of Chak Addu, tehsil Rampur, in the present district of Mahasu in Himachal Pradesh. He traced his title to the said lands to a Patta executed by his father on 14th Maghar 1999, Bikrami, i.e. 28th November 1942 A.D., and to the Order No. 5158 of even date directing corresponding mutation changes. In the said suit Choudhary Gopal Singh & Co., a forest contractor, was added as proforma defendant No. 3 but no relief was claimed against the said party. The said suit was filed on 18th November, 1964 in the Court of the Senior Sub Judge, Mahasu, but on the upward revision of the suit valuation for the purposes of court fees and jurisdiction the plaint was presented the High Court of Delhi, Himachal Bench, Shimla, and was re numbered as Suit No. 11 of 1967. The said suit was tried on the original side of the High Court by Jagjit Singh, J. who by his judgment and order dated 6th April, 1970 substantially decreed the suit, in that, he upheld the appellant plaintiff 's claim of owner ship in respect of Khatas Nos. 1 & 2, Khataunis Nos. 1 to 25 comprising 106 plots bearing khasra Nos. 1, 2, 6, 23, 30, 34, 44, 108, 2 18,222,309, 341,409,606, 4 and 33 situate in Chak Addu without prejudice to the application, if any, of Section 27 of the Himachal Pradesh Abolition of Big Landed Estates and Land Reforms Act, 1953. The contesting defend ants Nos. 1 and 2 preferred an appeal, being Regular First Appeal No. 7 of 1970, before the Division Bench of the High Court which came to be allowed on 31st December, 1977. The Division Bench came to the conclusion that the grant made by the erstwhile ruler was in respect of revenue yielding lands only admeasuring about 263.4 bighas and not in respect of the forest lands. It, however, took the view that after the execution of the lease deed dated 25th September, 1942, Exh.D 1, in favour of the Government of Punjab, the Raja had no subsisting right in the forest lands in question which he could transfer by way of a grant. In that view of the matter the appeal was allowed and the suit of the 474 plaintiff was dismissed in toto with costs throughout. Feeling aggrieved by the said judgment and decree, the original plaintiff has preferred this appeal by special leave under Article 136 of the Constitution. For the sake of convenience we will refer to the parties by their original position and description in the suit. We now proceed to set out the relevant facts. The Raja of Rampur Bushahr had sought the aid of the British Government in the management of his forests with a view to preserving, conserving and protecting the same from large scale illicit and indiscriminate cutting of trees. Pursuant to this request an agreement dated 20th June, 1864 was executed between the said Raja and the British Govern ment whereunder a fixed royalty was agreed to be paid to the former. By a subsequent agreement dated 1st August, 1871, the Raja granted his rights in waif and windfall timber to the British Government in consideration of certain payments agreed upon under the said agreement. The terms of both these agreements were revised in 1877 whereby the British Government agreed to pay a fixed annual sum to the Raja on a fifty years ' lease renewable at the will of the British Government. This arrangement was further revised in 1929 w.e.f. 1st November, 1928 for a period of twenty five years on agreed terms as to payments, etc. During the subsistence of the said agreement, the parties executed yet another agreement of lease dated 25th September, 1942, Exh. D 1, for a term of fifty years w.e.f. 1st April, 1941 superseding all previous agreements. Under clause (II) thereof, the term 'forest ' was defined to mean and include (a) demarcated forests; (b) forests reserved for the use of the Raja; and (c) undemarcated forests. Demarcated forests were those which were defined and stated as demarcated forests in the forest settlements of Bushahr State whereas undemarcated forests included (a) all tracts of land bearing tree growth or from which the trees were felled and which paid no land revenue as cultivated land to the Bushahr State; and (b) such other tracts of land, cultivated or uncultivated, as with the previous sanction of the Raja were from time to time included in the existing undemarcated forests or were declared to be undemarcated forests. By clause (III) of the said document, the Raja granted to the Punjab Government 'the entire and sole control of the whole of the forests of Bushahr excepting those reserved for the use of the Raja '. The Raja was to receive an annual payment of Rs. 1 lakh to be paid in two equal half yearly installments of Rs.50,000 on 30th April and 3 1st of October of each year. In addition to the said amount of Rs. 1 lakh he was to receive payment of the whole net surplus on the working of the forests included in the lease. Thus, according to clause (III) of the lease 475 agreement the Raja granted to the Punjab Government the entire and sole control of the forests of Bushahr, excepting those reserved for his use under clause (II) thereof. Under Section 1 of the Indian Independence Act, 1947, as from 15th August, 1947, two independent Dominions of India and Pakistan came to be set up. By virtue of section 4 the Province of the Punjab as constituted under the Government of India Act, 1935, ceased to exist and the same was recon stituted into two new Provinces of West Punjab and East Punjab. In section 7(1) were set out the consequences of the setting up of the two Dominions, Paragraph (b) whereof said that 'the suzerainty of His Majesty over the Indian States lapses, and with it, all treaties and agreements in force at the date of passing of this Act between His Majesty and the rulers of Indian States '. The plaintiff 's father Raja Padam Singh having died in April 1947, his eider son Tikka Vir Bhadra Singh born to his first wife Shanta Devi succeeded to the Gaddi under the rule of primogeniture but since he was a minor a council for the administration of Bushahr State was set up to mind the affairs of the State. On 15th April, 1948 an agreement of merger was signed whereby the Raja of Bu shahr ceded to the Dominion of India 'full and exclusive authority, jurisdiction and powers for and in relation to the governance of the State '. A centrally administered unit of Himachal Pradesh came into being on that day. The agree ment of lease dated 25th September, 1942 was formally termi nated by mutual agreement between the East Punjab Government and the Himachal Pradesh Administration on 1st April, 1949. While the forests of Bushahr were under the control and management of the Government of Punjab, Raja Padam Singh, the plaintiff 's father, executed a document on 14th Maghar 1999. Bikrami (i.e. 28th November, 1942) whereby he bestowed upon the plaintiff and his mother Rani Sahiba Katochi land admeasuring about 1720 acres. This original document called the Patta was admittedly lost during the minority of the plaintiff, vide statement of counsel for defendants Nos. 1 and 2 dated 29th May, 1969. However, the factum of the grant cannot be disputed as it has been referred to in the subse quent two grants executed by the plaintiff 's father on 29th Phagun 1999, Bikrami (i.e. 11th March, 1943 Exh. P 2) and 24th Maghar 2003, Bikrami (i.e. 10th December, 1946 Exh. These two subsequent grants Exh. P 1 and Exh. P 2 have been proved through the evidence of the scribe ' PW 1 Thakur Chet Ram. By the execution of the third grant dated 24th Maghar 2003, Bikrami, the half share granted to the Rani Sahiba Katochi under the first grant of 14th Maghar 1999, 476 Bikrami, was transferred to the plaintiff with the Rani Sahiba 's consent. Thus, the plaintiff became the sole gran tee of the entire area of 1720 acres but as he was a minor his interest was looked after initially by his father who expired in April 1947 and thereafter by his mother Rani Sahiba Katochi as his natural guardian. After the execution of the first grant of patta the plaintiff 's father made an Order No. 5158 of even date directing his revenue officers to effect consequential changes in the mutation. P 6 is a copy of the mutation entry which contains the following endorsement: "According to Shri Sarkar 's order No. 5158 dated 14.7.99 (equivalent to 28th November, 1942), the mutation, granting permanent ownership, without condition, of khata khatauni Nos. 1/1 to 20 and 2/21 to 25, plots 106, measuring 263.4 (219.7 plus 43.17) and part of uncultivated Jagir the reve nue and swai of which has been remitted is sanctioned in favour of Rani Sahiba Katochi and Rajkumar Rajinder Singh Sahib in equal shares in its present form. " The mutation entry Exh. P 6 does not mention the khasra numbers of the 106 plots. Khata khatauni No. 1/1 to 20 comprise 82 plots showing an area admeasuring 219.7 bighas as cultivated and 200.8 bighas as uncultivated whereas khata khatauni No. 2/21 to 25 comprise 24 plots showing an area admeasuring 5.6 bighas as cultivated and 38.11 bighas as uncultivated. The mutation entry, besides mentioning the area of 263.4 bighas, also speaks of 'part of uncultivated Jagir the revenue and swai of which has been remitted '. Even according to the Division Bench of the High Court it is not in dispute that the measurement of 106 plots is much more than 263.4 bighas. This stands corroborated by the note of Mr. Raina, the then Conservator of Forests, Shimla Circle dated 24th July, 1960 which discloses that the disputed plots over which the plaintiff has made a claim admeasure about 1819 acres. By the second grant of 29th Phagun 1999, Bikrami, the plaintiff 's father granted certain additional land, namely, Basa Sharotkhala Pargana Bhatoligarh, jointly to the plaintiff and his mother Rani Sahiba Katochi. This grant refers to the first grant of 14th Maghar 1999, Bikra mi. The third grant of 24th Maghar 2003, Bikrami, was exe cuted by the plaintiff 's father with a view to making the plaintiff the sole beneficiary under the first two grants by deleting the name of Rani Sahiba Katochi as a joint grantee with her consent. There is no dispute that under the afore said three grants taken together the properties mentioned therein were bestowed upon the plaintiff exclusively and the Rani Sahiba Katochi had no share therein, nor did she, at any 477 time, make a claim thereto. After the execution of the third grant an order No. 258 dated 3rd December, 1946, Exh. P 14, was made by the plaintiff 's father directing that all the lands and 'bases ' granted under the Patta of 24th Maghar 2003, Bikrami, exclusively to the plaintiff should be shown in his sole name in the records by deleting the name of Rani Sahiba Katochi therefrom. On the death of the plaintiffs father in April 1947, the Political Agent, Punjab Hill States, Shimla, wrote a letter Exh. P 50 dated 9th August, 1947 expressing dissatisfaction with the non implementation of the Patta and directed speedy implementation thereof. In paragraph 3 of the said letter it was stated as under: "There is only one point for decision and that is the valid ity of the patta dated 19th December, 1946 granted by the late Raja Padam Singh. The Committee have not questioned this and I, therefore, take it to be the true will of the late ruler. The provision of the Patta are quite clear and reasonable, so 1 order the division of the private property, both movable and immovable, in accordance with its terms, that is to say the possession of the immovable property of the late Ruler specified in the Patta shall at once be mutuated in favour of Rajkumar Rajinder Singh and given in trust to Rani Sahiba katochi on behalf of her minor son . . ". The grant was ultimately given effect to be the mutation entry No.2299 dated 17/18 12 2003, Bikrami, Exh. Unfortunately, the plaintiff 's mother who acted as his guardian after the death of her husband in April 1947 also passed away shortly thereafter on 22nd July, 1949 necessi tating the Court of Wards to step in since the plaintiff was still a minor. While the plaintiff 's estate was under the Superintendence of the Court of Wards a list of his Jagirs was prepared. This list Exh. P 18, which is in respect of tehsil Ramput, describes the disputed khasra Nos. 341, 108,222, 34, 479,606 and 4 as unmeasured and forest lands. On the plaintiff attaining majority his estate was released w.e.f. 1st April, 1956 from the Superintendence of the Court of Wards under the Financial Commissioner 's notification dated 24th March, 1956. Owing to the existence of certain pillars of the forest department within the areas belonging to the plaintiff, the plaintiff made a representation Exh. P 25 for the removal of the said pillars from his lands. As a result of this representation, joint demarcation reports dated 24th June 1958, Exh. P 5, and 9th December, 1958, Exh. P 8, were made which disclosed that the dispute related to the boundary in compartment 8 b only but no final decision could be taken 478 as some difference of opinion persisted between the officers of the forest department in this behalf. The plaintiff thereafter made a further representation dated 11th August, 1959, Exh. D 2, claiming compensation for the trees cut by the forest department during his minority when the estate was under the Superintendence of the Court of Wards. As a sequel to this representation Mr. Raina, the Conservator of Forests, wrote a letter dated 27th May, 1960 marked secret, Exh. D 3/4, wherin he stated that the first class forest compartments 10A (Part, 10B (Part), 9A, 9B, 9C and 8C were the property of the forest department and the question of demarcation of these forests did not arise. He further pointed out that if the possession of these compartments is transferred to the plaintiff the department will have to undergo a loss of Rs. 18.75 lakhs. Lastly, he warned that if the plaintiff 's claim is accepted numerous such claims will be made by the villagers because of similar entries in the revenue records. He thought that this was a test case. He followed this up by his note dated 24th July, 1960, Exh. D 3/6, wherein he reiterated that except for 263.4 bighas of revenue yielding land the claim of the plaintiff in respect of the remaining 1719 acres was fantastic. He strongly urged that the plaintiff 's claim should be rejected outright and he and his contractor, defendant No. 3, should not be al lowed to lift the timber of the trees which he was permitted to cut from khasra Nos. 341,606, 222 and 34 under the letter No. Ft/43 124/VI dated 29th February, 1959. Thereafter the Divisional Forest Officer by his letter No. C II 37/810 dated 25th May, 1960 informed the plaintiff and defendant No. 3 that the timber felled in compartment 9C should not be removed and no further felling of trees should take place in compartments 8C, 9A, 9B and 10A (Part) and lOB (Part) in khasra No. 341. By a subsequent letter No. CII 37/1181 dated 2nd August, 1960 the plaintiff was informed that the trees felled in compartments 9B and 9C were Government property and could be removed on payment of Rs.3,05,811.70. An amount of Rs.3,36,000 was later deposited pending finalisation of the dispute. Certain statutory developments which took place in the meantime may now be noticed. On 25th February, 1952 the Government of Himachal Pradesh issued a Notification under Section 29 of the declaring that the provisions of Chapter IV of the said enactment shall apply to all forest lands and waste lands in Himachal Pradesh which are the property of the Government or over which the Government has proprietor rights or to the whole or any part of the produce of which the Government is entitled. This enactment deals with (i) Reserved Forests, (ii) Village Forests and (iii) Protected 479 Forests. Chapter II comprising Sections 3 to 27 deals with Reserved Forests, Chapter III which consists of a single section 28 refers to Village Forests and Chapter IV compris ing Sections 29 to 34 conncerns Protected Forests. Section 29(1) empowers the State Government to apply the provisions of Chapter IV to any forest land or waste land which is not included in the Reserved Forests but which is the property of the Government, or over which the Government has proprie tory rights, or to the whole or any part of the forest produce of which the Government is entitled. According to sub section (2) such forest land and/or waste land comprised in any such notification shall be called a 'protected for est '. Section 32 empowers the State Government to make rules to regulate the matters catalogued in clauses (a) to (1) thereof in respect of protected forests, which, inter alia, include the cutting, sawing, conversion and removal of trees and timber and collection, manufacture and removal of forest produce from protected forests; the granting of licences to persons felling or removing trees or timber or other forest produce from such forest for the purposes of trade; the payments, if any, to be made by such licencees in respect of such tree, timber or forest produce, etc. Section 33 pre scribes the penalty for the contravention of the rules. After the issuance of the Notification Exh. DW 1/1 under Section 29, the State Government framed the rules under Section 32, Exh. DW 1/2, of even date. Under these rules 'First Class Protected Forests ' mean and include those forests which are defined and stated as demarcated forests in the Forests Settlement of Bushahr State viz., Forest Settlement Report of Sutlej Valley and Forest Settlement Report of Rupi, Pabar and Giri Valleys prepared in 1921 and 1911, respectively. 'Second Class Protected Forests ' mean the undemarcated forests or areas other than the demarcated forests and include all tracts of land bearing tree growth or from which the trees have been felled which pay no land revenue as cultivated land. The Himachal Pradesh Private Forests Act, 1954, (Act No. VI of 1955) came into force from 28th June, 1956. Section 2 thereof in terms states that the Act shall not apply to any land which is a reserved or protected forest under the . Section 4 empowers the State Gov ernment to prohibit by notification the cutting, felling, gridling, lopping, burning, stripping off the bark or leaves or otherwise damaging any tree or counterfeiting or defacing marks on trees or timber in such private forests as may be specified. Under Section 5, after the section 4 notification is issued, the Forest Officer is required within a period of one year from the date of publication of such notification, to demarcate the limit of such forest in accordance 480 with the revenue records and erect such number of boundary pillars at such points of the line of demarcation as may be necessary at Government expense. Once the notification is issued under Section 4, Section 6 restrains the landlord and all other persons from cutting, collecting, or removing trees, timber or other produce in or from the notified forests in contravention of the provisions made in or under the Act. Section 11, however, authorises a Forest Officer on the application of the landlord or owner to grant a licence for the felling of trees for such purposes and with such conditions as he may deem proper. Sub section (3) of that section permits the owner to exercise the option of selling the trees either through the Forest Department or direct to any contractor. In the latter event the owner must pay 15% fees on the price of the trees calculated in accordance with the prescribed principles. Section 16 makes a contract entered into by the owner with any person conferring on such person the right to cut, collect or remove trees, timber or fuel from the private forests void unless the owner has first obtained a licence in this behalf under Section 11. By notification dated 10th June, 1959, Exh. P 21 published in the Himachal Pradesh Government Gazette dated 25th June, 1959, the plaintiff 's forests in Khasra Numbers 1, 2, 3,218, 606, 149, 263 and 166 situate in Village Addu were declared 'private forests ' under Section 4 of the said statute. By a similar notification dated 17th September, 1959, Exh. P 22, published in the Himachal Pradesh Government Gazette dated 26th September, 1959, Khasra Numbers 34, 309, 108, 479, 307, 207 and 3 17 situate in Village Addu were also notified as private forests of the plaintiff under the same provision. The expression 'Private Forests ' as defined by Section 3(13) of the Act means a forest which is not the property of the Government or over which the State has no proprietary fights or to the whole or any part of the forest produce of which the State is not entitled. Subsequently, by Corrigendum Exh. P 29 dated 28th July, 1960, the State Government deleted Khasra Numbers 1, 2, 3, 2 18, 6, 44, 606, 149, 263 and '166 of Village Addu from the notification of 10th June, 1959 and Khasra Numbers 34, 309, 108,479,307,207 and 370 of Village Addu from the notification dated 17th September, 1959 on the ground that they were erroneously notified as they in fact belonged to the Himachal Pradesh Administration. After the said enactment came into force w.e.f. 28th June, 1956 and before the notifications under Section 4 thereof were issued, the plaintiff had by his application dated 21st May, 1957 applied for permission, presumably under Section 11 of the Act, to fell trees from Khasra Numbers 1, 222 & 606 of Village Addu. The said permission 481 was granted by Exh. P 20 and the plaintiff also paid the fee as demanded by Exh. P 23 dated 23rd August, 1957. By another application dated 16th February, 1959 the plaintiff sought permission to sell trees from khasra Numbers 34, 222, 34 1, 606 of Khewat No. 1, Khatauni No. 2 which was granted by the Chief Conservator of Forests by his letter Exh. P 28 dated 19th February, 1959. By the said letter the plaintiff was informed that the Divisional Forest Officer had been in structed to mark the trees in the said areas silviculturally and to allow him to sell and remove the same through his contractor (defendant No. 3). However, the attitude of the Government underwent a change after Mr. Raina 's secret letter of 27th May, 1960 and his note dated 24th July, 1960. The State Government issued a corrigendum dated 28th July, 1960 amending the earlier notifications issued under Section 4; restrained the plaintiff and his agent defendant No. 3, from cutting and lifting the trees from the forest area and compelled deposit of Rs.3,36,000 for removing the trees and was also required to execute a bond. The plaintiff, there fore, filed the suit which has given rise to this appeal to assert his rights. The learned Trial Judge on a close scrutiny of the oral and documentary evidence placed on record came to the con clusion that (i) the plaintiff 's father, who in internal matters had sovereign powers, had bestowed the lands in dispute as a perpetual and unconditional grant on the plain tiff and the mere fact that in the mutation entry the area was shown to be 263.4 bighas did not imply that the grant was limited to that much land only. He held that (ii) in the State of Bushahr only cultivated land was generally measured and forest lands remained unmeasured and, therefore, the area of only revenue yielding cultivated land was mentioned in the mutation entry but that did not mean that the grant was confined to that area only. He also held that the subse quent grant of 25.10.2003 Bikrami was executed by the plain tiff 's father with the concurrence of Rani Saheba Katochi, with a view to conferring exclusive proprietary rights in the entire grant on the plaintiff. Further according to the learned Trial Judge, the evidence, considered as a whole, fully established that (iii) the grant was not repudiated but was given effect to by the Political Agent, Shimla, as well as by the revenue authorities of Bushahr State and was recognised by the Dominion of India at the time of the State 's merger. He found that in the statement of the Zamin dars of Village Addu, Exh. P 26, it was specifically admit ted that the forest comprised Khasra Nos. 34, 141, 222 and 606 Khewat No. 1, Khatauni No. 2 and was 'owned ' and was 'in possession ' of the plaintiff. (iv) Assuming that the lands in dispute formed part of forests leased to the Government of Punjab, 482 the learned Judge held that the Raja was not precluded from making the grant and the grants made in favour of the plain tiff were perfectly legal and valid. After the lease was terminated by mutual consent of the Governments of Himachal Pradesh and East Punjab, the Himachal Pradesh Administration treated the plaintiff as the owner and permitted him various acts as owner and person in possession. Notifications were issued under Section 4 of the Himachal Pradesh Private Forest Act, 1954 declaring the disputed lands as private forests. He held that the notification issued under Section 29 of the had no application. According to him, except for an area of 11 biswas occupied by roads of the Forest Department, the plaintiff was in possession of the remaining forest lands. The learned Trial Judge, there fore, held that the suit was neither barred by limitation nor on account of Section 34 of . The other technical objections to the maintainability of the suit were spurned and the learned Trial Judge decreed the suit as stated earlier On appeal the Division Bench of the High Court came to the conclusion that when the plaintiff 's father executed the first grant in favour of the plaintiff he was aware that he had renewed the lease in respect of the forest lands for a period of fifty years and, therefore, he could not have intended to make an absolute grant in respect of the forest lands covered under the lease to the plaintiff. According to the Division Bench after the execution of the agreement of lease dated 25th September, 1942, (v) the plaintiff 's father had no surviving or subsisting right in the lands covered under the lease and, therefore, the grant in respect of the forest lands was of no consequence and did not confer any right, title or interest in the plaintiff. At the most the grant could take effect in respect of revenue yielding cultivated land admeasuring 263.4 bighas. In support of this finding the Division Bench points out (1) that the grant Exh. P 1 dated 10th December, 1946 refers to the lands by Basa and not Khasra which reveals that reference is only to revenue yielding area in the occupation of tenants; (2) that clause 2 of Exh. P 2 shows that the intention of the grantor was to secure an annual income of Rs.9,000 for his son which could only be from the revenue yielding lands as the forest lands were already placed at the disposal of the Government of Punjab and (3) that the recital in Exh. P 2 regarding handing over of the Basajat could be in respect of revenue yielding area only as the forests were already in the pos session of the Punjab Government. The 'Division Bench also held that the notification under Section 29 of the Indian Forests Act was validly issued and so long as it held the field, no notification could be issued under Section 4 of the Himachal Pradesh Private Forest Act, 1954 and 483 the same were, therefore, rightly corrected by deleting the Khasra Numbers claimed by the plaintiff from the notified forest area. It, therefore, held that the said two notifica tions issued under Section 1 had no efficacy in law and the permissions granted under Section 11 of the said law can be of no avail to the plaintiff. As regards the plaintiff 's contention based on the surrender of the lease in 1949, the Division Bench concluded that the exchange of letters Exh. DW 1/3A dated 25th April, 1949 by Himachal Pradesh Govern ment and Exh. DW 1/ 3B dated 5/9th May, 1949 by the East Punjab Government revealed that an arrangement was worked out whereunder the East Punjab Government transferred the management and administration of the disputed forests to the Himachal Pradsh Government on certain terms and conditions and there was no completed surrender of the lease. Adopting this approach, the Division Bench reversed the findings recorded by the learned Trial Judge and dismissed the plain tiff 's suit in toto with costs throughout. It is against the said Judgment and decree that the plaintiff has moved this Court. From the above resume of facts and findings recorded by The Courts below, the questions which arise for our determi nation and on which counsel for the rival sides addressed us may be formulated as under: 1. Whether, by the execution of the Agreements of Lease from time to time beginning with the Agreement of 20th June, 1864 and ending with the Agreement of 25th September, 1942, the erstwhile Rulers of Bushahr State, including the plain tiff 's father, had been divested of their rights, title and interests in the forest lands leased thereunder? 2. If no, whether the plaintiff 's father was competent to make grants in respect of such forest lands under the Pattas of (i) 14 Maghar 1999 Bikrami (i.e. 28th November, 1942): (ii) 29th Phagun 1999 Bikrami (i.e. 11th March, 1943): and (iii) 24th Maghar 2003 Bikrami (i.e. 10th December, 1946)? 3. If yes, was the grant confined to the revenue yielding lands admeasuring about 263.4 bighas only or extended to the other unmeasured forest lands also as claimed by the plain tiff? 484 4. Was the State Government competent to issue the Notifica tion under Section 29 of the ? If yes, what is its effect on the plaintiff 's claim in the suit? and 5. Was the State Government competent to issue Notifications under Section 4 of the Himachal Pradesh Private Forest Act, 1954? If yes, was the State Government justified in issuing the subsequent Corrigendum of 28th July, 1960? What is the effect of these statutory developments on the plaintiff 's claim? In order to appreciate the circumstances in which the erstwhile Ruler of Bushahr State entered into an agreement with the British Government in 1864, it would be advanta geous to notice a few facts mentioned in H.M. Glover 's Forest Settlement Report of 11th February, 1921. In Vol. 1, Chapter II of this Report which concerns Bushahr State, the history of Bushahr forests prior to 1850 is set out. It reveals that at that time large matured trees were plenti ful. However, there was large scale destruction of these trees due to frequent fires, shifting of cultivation and felling of trees by traders. The Report mentions: "Every forest cleared by traders was subject to frequent fires either caused by carelessness or by villagers who fired the debris and what was left of the standing crops in order to clear the ground for cultivation; there can be no question that if the Government had not assumed control, the forest would have practically disappeared from all the more accessible slopes. " It further reveals that the Raja found it difficult to deal with the traders who indulged in destroying the forests by indiscriminate felling of trees and was anxious to protect them. With this in view he eventually concluded an agreement of lease in 1864 with the British Government whereunder the latter agreed to protect and conserve the forests and pay a fixed royalty for each tree felled. In 1877 the lease was revised, the British Government agreeing to pay a fixed annual lumpsum. The lease was renewed in 1928 on revised terms as to payment for a further period of 25 years but before the expiry of that period another agreement of lease Exh. D 1 was concluded between the Raja and the Government of Punjab on 25th September, 1942. Clause III of the docu ment recites as under: ' 485 "III. In consideration of the following payments, the Raja hereby grants to the Punjab Government the entire and sole control of the whole of the forests of Bushahr excepting those reserved for the use of the Raja as defined in Clause II and subject to the definitions and rules prescribed in the Schedule and Appendices attached to this agreement" It becomes clear from the aforesaid clause in the lease deed that the Raja granted 'the entire and sole control ' of the whole forest of Bushahr to the Punjab Government excepting the fights specifically reserved unto him. This entire and sole control was granted to enable the Punjab Government 'to make more definite provisions for the conservancy of the forests '. Clause IX of the agreement makes this clear when it says that the whole cost of conserving the forests in cluded in the lease together will all costs of felling and transporting timber for use of the Punjab Government and of maintaining the necessary establishment in such forests shall be borne by the Punjab Government unless otherwise provided for in the lease. From this clause also it can be seen that the emphasis was on the need to conserve the forests. The Rules framed in the Schedule to the lease reinforce this view. Under paragraph 1 of the Schedule (a) breaking up land for cultivation; (b) setting fire to grass tracts in the vicinity of forest or negligently permitting the fire to extend to forests; (c) setting fire to grass, trees, bushwood or stumps; (d) cutting out slabs, torches, etc., from the steam of standing trees, barking and tapping for resin, or otherwise injuring trees; (e) felling or lopping trees; (f) selling timber; and (g) removing dead leaves and surface soil, is prohibited unless expressly permitted by the Divisional Forest Officer. Even the Raja is not permitted to fell trees and/or remove converted timber from the leased area excepting the specified quantity re quired for State purposes, vide paragraph 5 of the Schedule. It, therefore, seems clear to us that the paramount object of the lease was to conserve the forests of Bushahr State. But, by concluding the lease agreement with the Punjab Government, the erstwhile Ruler did not convey all his fights, title and interests in the leased forest lands to that Government. All that he did was to transfer the control and management of the forests to the Punjab Government with a view to preserving and conserving the forests. He retained his proprietary interest in the forest lands, subject of course to the limitations concerning the management of the leased area and the fight to the usufruct therefrom. Had it been the intention of the Raja to divest himself of all his interests in the forests lands there was no need to provide the duration of the lease on the 486 expiry whereof (unless the renewal clause was invoked) the Raja would have a right of re entry. The lease also provided that in addition to the two half yearly installments of Rs.50,000 each, the Raja was to receive payment of the "Whole net surplus on the working of the forests included in the lease". This is also consistent only with the position that the Raja retained his proprietory interests in the forest lands. We, therefore, find it difficult to agree with the Division Bench that by concluding the agreements of lease from time to time the former Rulers of Bushahr State including the plaintiff 's father had divested themselves of all their rights in the leased forests. We are of the opin ion that the plaintiff 's father had a surviving and subsist ing right in the forest lands which were the subject matter of the lease dated 25th September, 1942 and was competent to grant the same to the plaintiff or anyone else, albeit subject to the terms of the lease. The first patta was executed by the plaintiff 's father on 14th Maghar 1999 Bikrami whereby he bestowed certain lands jointly on the plaintiff and his mother. The original patta is admittedly not traced. The plaintiff 's father had by his order No. 5158 of even date directed corresponding mutation entries to be made in the relevant records. The endorsement found in the copy of the mutation entry Exh. P 6 extracted earlier bears testimony to this fact. This entry shows that the Raja had granted permanent ownership, without condition, of Khata Khatauni Nos. 1/1 to 20 and 2/21 to 25, comprising 106 plots, admeasuring 263.4 bighas and 'part of uncultivated Jagir ' the revenue and swai of which was remit ted. Therefore, the doubt regarding the making of the grant of 14th Maghar 1999 Bikrami stands repelled. The existence of this grant is further fortified by the mention thereof in the subsequent two grants dated 29th Phagun 1999 Bikrami and 24th Maghar 2003 Bikrami. There can, therefore, be no doubt regarding the execution of the patta of 14th Maghar 1999 Bikrami. The next question is regarding the identity of land granted to the plaintiff under the said grants. The entry Exh. P 6 mentions the Khata Khatauni numbers and the total number of the plots but does not mention the khasra numbers. Secondly, its area is stated to be 263.4 bighas and 'part of uncultivated Jagir '. The fact that these lands are situated in Chak Addu is not disputed Says Glover 's Report: "For administrative purposes the village and its outlying hamlets have been formed into a 'Chak ', which forms the unit of the land revenue assessment. " Since the patta in respect of the first grant is admittedly not 487 available, we have to look to evidence aliunde the grant of identify the property settled on the plaintiff. We have already referred to the Raja 's order No. 5158 on the basis whereof the entry Exh. P 6 was made. The plaintiffs witness PW7 Thakur Sen Negi has deposed that in Khewat 2, Khatauni 21, Khasra Nos. 6, 34, 101, 222, 341, 479 and 4 are unmeas ured. P 15, P 18, P 33, P 38 and D 4, which are en tries from the Jamabandi also show that Khasra Nos. 6, 34, 108, 222, 341, 479, 606 and 4 of khatauni No. 21 are unmeas ured 'Banjar Kadeem '. This expression according to Glover 's report means "land, recorded as the property of the Zamin dar, that has lain waste since the 1889 settlement and pays on land revenue until recultivated. When included in 'Chaks ' in demarcated forests it has almost invariably been acquired or exchanged. " The Division Bench has, after an elaborate examination of the oral as well as the documentary evidence, particularly Exhs. P 15, P 17, P 18, P 33, P 34, P 36 and P 38, and the notification Exh. P 22 declaring certain areas as private forests, come to the conclusion that land de scribed as Banjar Kadeem could include forest lands, thereby repelling the submission made by the plaintiff 's counsel to the contrary. We cannot, therefore, countenance the submis sion made by the learned counsel for the contesting defend ants that the expression Banjar Kadeem does not include forests. If it were so, the whole controversy based on the submission that the Raja was divested of his rights in respect of the forest lands covered by the agreement of lease and was not competent to make a grant thereof would have ended in favour of the plaintiff. We, however, do not consider it necessary to examine the correctness or other wise of this finding of the Division Bench, since we propose to proceed on the assumption that the disputed lands form part of the leased area. But the question still survives whether in addition to the cultivated lands measuring about 263.4 Bighas the plain tiffs father had made a grant in favour of the plaintiff in respect of the disputed forest lands. We may now examine if the subsequent two grants throw any light on this point. The second grant Exh. P 2 was executed on 29th Phagun 1999 Bikrami. In this document the Jagir granted to the plaintiff under the first Patta has been described as comprising several 'Basas '. By the second grant one more Basa Sharotk hola pargana Bhatoligarh was granted in perpetuity. The land revenue and other cesses in respect of these basas were remitted for ever. The annual income of the Jagir thus grant ed was Rs.9,000 and in addition thereto the State agreed to pay Rs.9,000 in cash as Jagir money, besides agreeing to bear the expense of the plaintiff 's education and marriage. The third document Exh. P 1 was executed on 24th Maghar 2003 Bikrami 488 This document also describes the grant made under the first Patta by different Basas. It further recites that 'the possession of Basa granted to you has already been given and entries have already been made in your favour and you will realise the income from this Jagir . . '. The argument that as the actual possession of the forests was with the Punjab Government the same could not have been transferred to the plaintiff overlooks the fact in such cases symbolic and dejure possession is transferred to make the grant complete. Therefore, the above recital in the document is consistent with the grant. It is, therefore, clear that certain Basas situate in Basajats were given to the plain tiff as his Jagir. The dispute in the present case mainly concerns a few Khasra numbers of Basa Kotadhar Ghori Samat Pargana Baghi Mastgarh comprising 106 plots. What then is a Basa? In paragraph 41 of the Assessment Report of Rohru Tehsil of Bushahr State, Exh. D 7, prepared by Mr. Emerson, Manager of Bushahr State, it is stated as under: "The State lands in which the Raja enjoys both superior and inferior rights of ownership are of several descriptions: Firstly, there are the Crown estates or Basas, comprising of some of the most fertile area which former Rulers reserved for their own enjoyment or for the support of their rela tives and dependents. These were formerly cultivated by bethus, under the supervision of a number of officials who were supposed either to remit the produce to the Headquar ters or to arrange for its loan on extravagant rates of interests to zamindars At present they are leased to con tractors for fixed periods on cash or grain rents, the former predominating. " According to PW 11 S.R. Jhingta, the power of attorney of the plaintiff, basa land included cultivated forests and grazing lands. PW3 Roop Singh Negi described basa lands as Banjar lands, arable lands, cultivated lands and forest lands. PW 10 Sagar Singh produced pattas to show that two basas containing forests were granted by the Raja to his father. The Division Bench refused to place reliance on the oral testimony of the aforesaid witnesses in view of the aforequoted authoritative definition. But this definition is not exhaustive and does not specifically rule out the inclu sion of forest lands. If by the grant the Raja intended to grant only the revenue yielding area of 263.4 bighas there was no need to mention 'and part of the uncultivated Jagir ' in 489 Exh. It is an admitted fact that the total area of the basa comprising 106 plots is much more than 263.4 bighas. That means that it includes besides the cultivated area of 263.4 bighas certain unmeasured area also. The revenue of the cultivated area of 263.4 bighas is a paltry Rs.58 8 3. It is not shown that the total revenue of cultivated lands in all the basas constituting the grant works out to Rs.9,000 per year. Besides, if the grant is confined to 263:4 bighas only, the words 'and part of the cultivated Jagir ' are rendered redundant. Next the concerned Khasra numbers have been described as Banzar Kadeem which includes forests as held by the Division Bench. All the entries namely Exh. P 15, P 33, P 36 and P 38 describe the con cerned Khasra numbers as unmeasured. If the 106 plots in Exh. P 6 admeasure more than 263.4 bighas, it follows that they also include unmeasured lands referred to as 'part of the uncultivated Jagir '. Reference to uncultivated Jagir implies existence of land other than cultivated revenue yielding land which may include forests. According to Punjab Settlement Manual (Fourth Edition) uncultivated land is classified as Banzar Jagir, Banzar Kadeem and Gair Mumkeen. The Division Bench points out that the definition in the Manual is not to be rigidly construed and would include forest lands which may not be cultivated but may have the potential for cultivation, if forests are removed. In other words lands covered by forests may be highly fertile and may be reserved by the Ruler for his own use or for the use of his relatives and dependents. This supports the statement of PW11 S.R. Jhingta that in Tehsil Rampur forests and grass lands were entered as Banzar Kadeem. This discussion leads us to the conclusion that a Chak comprises Basas, a Basa comprises both cultivated and uncultivated lands, unculti vated land includes Banzar Kadeem which in turn includes unmeasured forests. The recent revenue Settlement of 1979 80 shows that the disputed Khasra Numbers 34, 222, 34 1 and 606 comprise of 422 plots admeasuring 789 84 85 Hectares out of which 711 2750 Hectares form part of the forests. It is pertinent to note that the same is shown in the ownership of the plaintiff. The relevant revenue records of the Bushahr State right from 1915 16 show the disputed Khasra Numbers as unmeasured. The list of the plaintiffs Jagir prepared by the revenue authorities after the death of his mother also describes the said Khasra numbers as unmeasured forests. It is also neces sary to remember that the plaintiff was denied the ownership of Khasra Numbers 241, 732/280, 736/394 and 728/402 admeas uring about 11 biswas as they formed part of the forest road. These four plots though measured did not yield reve nue. If the Raja desired to grant only revenue yielding lands to the plaintiff he would 490 not have included these four numbers in the grant. There is, therefore, intrinsic evidence to show that the grant was not limited to only the revenue yielding area of 263.4 bighas. The subsequent conduct of the parties, as we shall presently show, also lends support to this view. On the plaintiff attaining majority his estate was released from the Superintendence of the Court of Wards w.e.f. 1st April, 1956. The list in respect of his movable and immovable properties was prepared before the properties were handed over to the plaintiff. This list dated 31st January, 1956 shows the total landed estate comprised of 1864 acres. In 1958 59 the plaintiff had planted 3000 Deod har and Kail trees which was highly appreciated by the Deputy Commissioner, Vide Exh. Some land was acquired by the State Government for its P.W.D. and the plaintiff was paid Rs. 11,000 as compensation. The plaintiff had also made applications for permission to fell trees from the disputed khasras which were granted, vide Exhs. P 20, P 23 and P 28. Indisputably trees had been felled pursuant to the permis sion so granted. Next Exhs. P 41 and P 42 show that the plaintiff sold some part of khasra No. 341 on 16th April, 1960 and 25th June, 1960 to third parties and corresponding changes in mutation were made. He had also donated some land from the same khasra for a school. These are acts of owner ship which have not been repudiated. The disputed Khasra numbers were also the subject matter of two notifications issued under section 4 of the Himachal Pradesh Private Forest Act, 1954, whereby they were notified as 'private forests '. All this conduct on the part of the defendants 1 and 2 goes to show that they treated the disputed Khasra Numbers as the Jagir of the plaintiff. It was only in 1960 after Mr. Raina 's secret letter and his subsequent note that the defendants disputed the plaintiff 's ownership in the said Khasra numbers and issued the corrigendum Exh. P 29 withdrawing the aforesaid two notifications as it was rea lised that it would result in a substantial loss of Rs. 18.75 lakhs. Till the doubt was raised by Mr. Raina, the State Government throughout treated the disputed Khasra numbers as forming part of the plaintiff 's Jagir. this conduct evidence lends support to the view that the disputed Khasra numbers were bestowed on the plaintiff under the first Jagir of 14th Maghar 1999 Bikrami. Counsel for the defendants, however, contended that it was not open to the Court in view of the prohibition con tained in Section 92 of the Evidence Act to take into ac count the subsequent facts and circumstances to determine the extent of the grant under the Patta of 14th Maghar 1999 Bikrami. He submitted that where a claim is based on a written document, the terms of the document must be inter preted 491 without the aid of extrinsic evidence. It is true that ordinarily the intention of the parties to a document must be gathered from the language in which the relevant terms and conditions are couched and no oral evidence can be permitted with a view to varying or contradicting the terms of the document. To put it differently, if the terms of the document are clear and unambiguous, extrinsic evidence to ascertain the true intention of the parties is inadmissible because Section 92 mandates that in such a case the inten tion must be gathered from the language employed in the document. But if the language employed is ambiguous and admits of a variety of meanings, it is settled law that the 6th proviso to the section can be invoked ;which permits tendering of extrinsic evidence as to acts, conduct and surrounding circumstances to enable the Court to ascertain the real intention of the parties. In such a case such oral evidence may guide the Court in unraveling the true reten tion of the parties. The object of admissibility of such evidence in such circumstances under the 6th proviso is to assist the Court to get to the real intention of the parties and thereby overcome the difficulty caused by the ambiguity. In such a case the subsequent conduct of the parties fur nishes evidence to clear the blurred area and to ascertain the true intention of the author of the document. If any authority is needed in support of this proposition reference may be made to the case to Abdulla Ahmed vs Animendra Kissen Mitter, ; At page 46 we find the following passage: "The evidence of conduct of the parties in this situation as to how they understood the words to mean can be considered in determining the true effect of the contract made between the parties. Extrinsic evidence to determine the effect of an instrument is permissible where there remains a doubt as to its true meaning. Evidence of the acts done under it is a guide to the intention of the parties in such a case and particularly when acts are done shortly after the date of instrument (Vide para 343 of Hailsham Edn. of Halsbury, Vol. 10, p. 274)". In the present case the Patta of 14 Maghar 1999 Bikrami is admittedly lost. Reliance was, therefore, placed on Exh. P 6 which incorporates the order No. 5158 of even date. The entry in Exh. P 6 mentions the Khata Khatauni of the 106 plots granted to the plaintiff and the area thereof is shown to be 263.4 bighas and part of the uncultivated jagir Since a doubt arose whether the disputed Khasra numbers formed part of the uncultivated Jagir referred to in Exh .P 6, the parties led oral as well as documentary evidence with a view to enabling the Court to 492 ascertain the extent of the Jajir granted to the plaintiff. Since the words 'part of the uncultivated Jagir ' were ambi gous extrinsic evidence aliunde the grant became necessary to explain the coverage of those words. We, therefore, do not see any merit in the objection. We may now consider the effect of the notification issued under section 29 of the . Sub section (1) of section 29 permits the State Government to issue a notification declaring the application of the provisions of Chapter IV to any forest land which is not included in a reserved forest but which is the property of Government, or over which the Government has proprietary rights, or to the whole or any part of the forest produce of which the Government is 'entitled '. The forest land com prised in any such notification is called a 'protected forest '. Sub section (3) of section 29 reads as under: "No such notification shall be made unless the nature and extent of the fights of Government and of private persons in or over the forest land or waste land comprised therein have been inquired into and recorded at a survey or settlement, or in such manner as the State Government thinks sufficient. Every such record shall be presumed to be correct until the contrary is proved. " The proviso to that sub section, however, permits the State Government to issue a notification before completion of such inquiry and record in the event of urgency. The Division Bench was, therefore, not fight in presuming that an inquiry of the type contemplated by subsection (3) of Section 29 must have preceded the notification. The possibility of the application of the urgency clause cannot be ruled out. The inquiry is contemplated to determine the nature and extent of the rights of the Government and of private persons in or over the forest land. Based on the findings of the inquiry the record is to be prepared. The learned Trial Judge has observed that 'after the grant no right of the Government in the land in suit was recorded in the Forest Settlement or land revenue settlement or the land revenue records '. Under sub section (3) such a record shall be presumed to be cor rect until the contrary is proved. The presumption, there fore, attaches to the record prepared in pursuance of the inquiry. In the present case, no such record evidencing the fight of the Government in the forest land or forest produce is shown to have been made. Therefore, the question, of presumption of correctness of record never arose and the plaintiff was not obliged to dislodge the same. The evidence on the contrary shows that the disputed lands were entered in the revenue records as the 493 private property of the plaintiff. That should be so because where the land in question forms part of a permanently settled grant, it is ordinarily the private property of the grantee. That is why by the subsequent notifications issued under section 4 of the Himachal Pradesh Private Forest Act, 1954, the disputed forests were notified as private forests of the plaintiff. The plaintiff, therefore, sought permis sion, presumably under section 11 of the said Act, for cutting and felling trees situate in his private forests. If the notification issued under section 29 held the field, the State Government could not have issued the subsequent noti fications under section 4 of the State Act, in view of section 2(b) thereof which in terms states that 'this Act shall not apply to any land which is a reserved or protected forest under the '. But before the State Government can invoke section 29(1), it must be shown that the requirements of that provision are satisfied. From the various documents placed on record it is quite clear that the disputed forests did not belong to the Government nor did the Government have any proprietary rights thereon. But the Division Bench has held that the Government was entitled to the whole or part of the forest produce under the agreement of lease dated 25th September, 1942. The agreement of lease merely permitted the Government to manage the forests as the Raja found it difficult to prevent the indiscriminate cutting and felling of trees. To preserve and conserve his forests, the Raja sought the aid of the British Government from time to time. Under the last agreement of lease, the Raja granted the sole control of the forests to the Punjab Government without transferring or conveying his proprietary interests therein. The Punjab Government was liable to account for the usufruct as the Raja was entitled to the whole net surplus determined triennially after de ducting from the total revenue from the forests the total expenditure incurred by the Punjab Government over the same period. Therefore, the Government was not 'entitled ' to the whole or any part of the produce in its own right dehors the lease. The word 'entitled ' in the context must take colour from the preceding words and must be understood to mean that the Government must have an independent claim or right to the forest produce and not merely a right to collect and deal with the same subject to an obligation to account for the same to the owner. The word 'entitled ' is used in the sense of the Government having a right or claim to the usufruct in its own right and not as the agent of another. After we attained independence, the erstwhile ruler of Bushahr State ceded to the Dominion of India whereupon the properties belonging to the State as distinguished from private property devolved on the 494 Himachal Pradesh Administration. As discussed earlier, the record shows the disputed khasra numbers as the private property of the plaintiff. The plaintiff exercised proprie tary rights thereon till 1960 when doubts were raised by Raina, who feared that if the plaintiffs claim is conceded the State will have to suffer a loss of Rs. 18.75 lakhs approximately. Since the Raja exercised supreme fights in internal matters he was entitled to make a grant in respect of property over which he exercised ownership fights as a ruler. Therefore, once the disputed property was granted to the plaintiff, the latter became the owner thereof. The suzerainty of the British Crown over the Indian States lapsed as from the appointed day, i.e. 15th August, 1947, by virtue of section 7(1)(b) of the Indian Independence Act, 1947, and with it lapsed (i) all agreements in force between His Majesty and the rulers of Indian States and (ii) all obligations of His Majesty towards the Indian States. After the merger of the Bushahr State, a separate administrative unit was constituted by the Central Government for Himachal Pradesh. It appears from the letter Exh. DW 1/3A dated 25th April, 1949 that the lease agreement was mutually terminated and the management of the forests was taken over by Himachal Pradesh Administration from the East Punjab Government w.e.f. 1st April, 1949 on the stated terms. The said terms were accepted by the East Punjab government by the Chief Secretary 's letter dated 5/9th May, 1949, Exh. D 1/3B. At the date of merger the forests belonging to the State of Bushahr devolved on the Himachal Pradesh Administration except the private forests. The need to continue the lease for a few private forests was perhaps not felt. On the termination of the lease the private property reverted to the owners. However, so far as the plaintiffs forests were concerned they continued under the State 's management since he was a minor. But on that account the State was not 'ent itled ' to the forests produce from such private forests. Therefore, the notification issued under section 29 could have no application to such private forests. The State Government was, therefore, competent to issue the two noti fications under section 4 of the Himachal Pradesh Private Forest Act, 1954, and it was not justified in annulling them on the erroneous premise that the said lands belonged to the State Government. The Division Bench, therefore, ought not to have reversed the trial court on this point. In the result this appeal must succeed. We allow the appeal and set aside the judgment and decree of the Division Bench of the High Court. We would have been inclined to restore the decree of the Trial Court but counsel for the appellant plaintiff made a statement at the bar that in view of the provisions of the Himachal Pradesh Ceiling on 495 . Land Holdings Act, 1972, the question of granting such a declaration does not survive. He, however, submitted that the State Government should be directed to refund the amount of Rs.3,36 lakhs with interest which was deposited by defendant No. 3 in the Treasury under an agreement dated 19th August, 1961, entered into with the President of India through the Secretary, Forest Department. Clause (VI) thereof provides that in the event the appellant plaintiff succeeds in establishing his title to the trees in question, the said amount would be refunded subject to a deduction of 15% towards royalty. However, defendant No. 3 filed a suit against the appellant for the recovery of the said amount which suit ended in a compromise decree whereunder the appellant plaintiff paid the 3rd defendant Rs.2.51 lakhs in full and final satisfac tion of his claim reserving unto him the right to recover the deposited amount from the State Bank. We, therefore, told that the plaintiff appellant is entitled to the refund of Rs.3.36 lakhs with interest at 9% per annum subject to deduction of royalty calculated at 15% The appellant plaintiff has also claimed refund of Rs.4.60 lakhs with interest lying in fixed deposits with the State Bank of India, Shimla in the name of the Registrar of the High Court. The Division Bench of the High Court by its order dated 14th December, 1970 directed that the trees included in the Local Commissioner 's report dated 7th Decem ber, 1980 be sold by public auction and the sale proceeds be deposited in the State Bank of India, Shimla till the dis posal of the appeal. Accordingly, the sale proceeds were deposited out of which the appellant plaintiff was permitted to withdraw a sum of Rs.2.60 lakhs after furnishing surety. The balance of Rs.4.60 lakhs is lying in fixed deposits and the appellant plaintiff is entitled to the refund thereof. We, therefore, direct that the said amount together with interest accrued thereon shall be refunded to the appellant plaintiff The appellant plaintiff also made a claim in respect of the value of the trees cut and sold by the Forest Department during the year 1951 52 when the appellant was a minor. The estimated value of these trees is stated to be Rs. 1.50 lakhs. However, no claim was made in respect thereof in the suit filed by the appellant plaintiff which has given rise to this appeal. If the appellant plaintiff was entitled to the said amount he ought to have claimed the same in the suit filed in 1964. We, therefore, do not entertain this claim. 496 The appellant plaintiff has also claimed a refund with interest of the market value of trees totalling 10,505 cut and sold by the Forest Department during the period from 1980 to 1985 notwithstanding the order of this Court dated 17th October, 1979. However, in view of the fact that Hima chal Pradesh Ceiling on Land Holdings Act, 1972 has since intervened we do not entertain this claim in the present proceedings. The refusal to entertain this claim will not debar the plaintiff from seeking any relief that is avail able to him under the 1972 Act. In the ultimate, we direct the State Government to refund Rs.3.36 lakhs with interest at 9% per annum thereon to the appellantplaintiff after deducting royalty at 15%. We also direct refund of the amount of Rs.4.60 lakhs with interest accrued thereon lying in fixed deposits in the State Bank of India, Shimla under the High Court 's order dated 14th December, 1972. We grant three months time to comply with above directions. The appeal is allowed accord ingly but we make no order as to costs. In view of the above, the CMP will also stand disposed of accordingly. R.S.S. Appeal allowed.

The plaintiff/appellant is the second son of late Raja Padam Singh, the ex ruler of Bushahr State in Himachal Pradesh. The erstwhile Ruler of Bushahr had sought the aid of the British Government in the management of his forests with a view to preserving, conserving and protecting the same from large scale illicit and indiscriminate cutting of trees. Pursuant to this request, an agreement of lease dated 20th June, 1864 was executed between the said Raja and the British Government. The terms of this agreement were revised in 1877 and again 1928. Before the expiry of its extended term, another agreement of lease was executed between Raja Padam Singh and the Government of Punjab on 25th September, 1942 superseding all previous agreements. By clause (III) of this agreement the Raja granted to the Punjab Government the entire and sole control of the forests of Bushahr excepting those reserved for his use under clause (II) thereof. The Raja was to receive in lieu thereof an annual payment of Rs.1 lakh, and further payment of the whole net surplus on the working of the forests included in the lease. Raja Padam Singh executed a document on 28th November, 1942 whereby be bestowed upon the plaintiff and his mother land admeasuring about 1720 acres, both measured and unmeas ured. The original document, called the Patta, was admitted ly lost during the minority of the appellant. The patta had, however, been referred to in the subsequent two grants executed by the Raja on 11th March 1943 and lOth December 1946. After the execution of the first grant or patta the 470 plaintiff 's father had made an Order No. 5158 directing corresponding mutation changes. The mutation entry, besides mentioning the area of 263.4 bighas, also speaks of 'part of uncultivated 'Jagir '. Subsequently, in September, 1959, the plaintiff 's forests were notified as 'private Forests ' under section 4 of the Himachal Pradesh Private Forests Act, 1954. But in July, 1960 the State Government annulled the notifi cations on the ground that they were erroneously issued and that the lands in fact belonged to the Himachal Pradesh Administration. The plaintiff filed a suit on 18th November, 1964 for a declaration his proprietary rights in about 1720 acres of forest land, both measured and unmeasured. The learned Single Judge substantially decreed the suit. The learned single Judge held that (i) the plaintiff 's father, who in internal matters had sovereign powers, had bestowed the lands in dispute as a perpetual and uncondi tional grant on the plaintiff; (ii) the mere fact that in the mutation entry the areas was shown to be 263.4 bighas did not imply that the grant was limited to that much land only; (iii) in the State of Bushahr only cultivated land was generally measured and forest lands remained unmeasured, and, therefore, the area of only revenue yielding cultivated land was mentioned in the mutation entry; (iv) the evidence, considered as a whole, fully established that the grant was not rependiated but was given effect to by the Political Agent, Simla, as well as by the revenue authorities of Bushahr State and was also recognised by the Dominion of India at the time of the State 's merger; (v) even assuming that the lands in dispute formed part of forests leased to the Government of Punjab, the Raja was not precluded from making the grant and the grants made in favour of the plain tiff were perfectly legal and valid; (vi) after the lease was terminated on 11th April, 1949, the Himachal Pradesh Administration treated the plaintiff as the owner and per mitted him various acts as owner and person in possession; (vii) notifications were issued under Section 4 of the Himachal Pradesh Act, 1954 declaring the disputed land as private forests; and (viii) the notification issued under section 29 of the had no application to such lands. The Division Bench, allowing the State appeal, inter alia took the view that after the execution of the lease deed dated 25th September, 1942 in favour of the Government of Punjab, the Raja had no surviving or subsisting right in the forest lands in question which he could transfer by way of a grant; at the most the grant made by the erstwhile ruler could take effect in respect of revenue yielding lands only, admeasuring 471 about 263.5 bighas, and not in respect of the forest lands; and that the notification under section 29 of the was validly issued and so long as it held the field, no notification could be issued under section 4 of the Himachal Pradesh Private Forests Act, 1954. Allowing the appeal, this Court, HELD: (1) The plaintiff 's father had a surviving and subsisting right in the forest lands which the subject matter of the lease dated 25th September, 1942 and was competent to grant the same to the plaintiff or anyone else, albeit subject to the terms of the lease. [486C] (2) The paramount object of the lease was to conserve the forests of Bushahr State. By concluding the lease agree ment with the Punjab Government, the Raja did not convey all his rights, title and interest in the leased forest lands to the Government. All that he did was to transfer the control and management of the forests to the Punjab Government with a view to preserving and conserving the forests. He however retained his proprietary interest in the forest lands. Had it been the intention of the Raja to divest himself of all his interests in the forest lands, there was no need to provide the duration of the lease on the expiry whereof (unless the renewal clause was invoked) the Raja would have a right of re entry. [485G H; 486A] (3) The lease provided that in addition to the two half yearly installments of Rs.50,000 each, the Raja was to receive payment of "whole net surplus" on the working of the forests included in the lease. This was consistent only with the position that the Raja retained his proprietary inter ests in the forest lands. [486A B] (4) If the terms of the document are clear and unambigu ous, extrinsic evidence to ascertain the true intention of the parties is inadmissible because section 92 of the Evi dence Act mandates that in such a case the intention must be gathered from the language employed in the document. But if the language employed is ambiguous and admits of a variety of meanings, it is settled law that the 6th proviso to the section can be invoked which permits tendering of extrinsic evidence as to acts, conduct and surrounding circumstances to enable the Court to ascertain the real intention of the parties. [491B C] In such a case the subsequent conduct of the parties furnished evidence to clear the blurred area and to ascer tain the true intention of the author of the document. [491D] 472 Abdulla Ahmed vs Animendra Kissen Mitter, ; , referred to. Since the words 'part of the uncultivated Jagir ' were ambiguous, extrinsic evidence allunde the grant became necessary to explain the coverage of those words. [492A] (6) There is intrinsic evidence to show that the grant was not limited to only the revenue yielding area of 263.4 bighas. If by the grant the Raja intended to grant only the revenue yielding area of 263.4 bighas, there was no need to mention 'and part of uncultivated Jagir ' and these words would be rendered redundant. The subsequent conduct of the parties lends support to this view. [488H; 489A] (7) From the various documents placed on record it is quite clear that the disputed forests did not belong to the Government nor did the Government have any proprietary rights therein. The Government was also not 'entitled ' to the whole or any part of the produce in its own right dehors the lease. [493C] (8) The word 'entitled ' in the context of section 29 of the must take colour from the preceding words and must be understood to mean that the Government must have an independent claim or right to collect and deal with the same subject to an obligation to account for the same to the owner. On that account the State was not 'enti tled ' to the forests produce from such private lands. There fore, the notification issued under section 29 could have uo application to such private forests. The State Government was, therefore, competent to issue the two notifications under section 4 of the Himachal Pradesh Private Forest Act, 1954 and it was not justified in annulling them on the erroneous premise that the said lands belonged to the State Government. [493F; 494F G]

Appeal No. 200 of 1960. Appeal from the Judgment and Order dated the 19th March, 1959, of the Mysore High Court, Bangalore, in Writ Petition No. 263 of 1957. K.Srinivasan and R. Gopalakrishnan, for the appellant. A. N. Kirpal and D. Gupta, for the respondent. December 5. The Judgment of the Court was delivered by SHAH, J. This appeal with certificate of fitness granted by the High Court of Judicature of Mysore is from an order rejecting the petition of the appellant for a writ to quash a notice of reassessment under section 34 of the Indian Income Tax Act. The appellants are a Hindu Undivided Family carrying on business in groundnuts and other commodities at Goribidnur, Kolar District, in the territory which formed part of the former State of Mysore. The Mysore Income Tax Act was repealed and the Indian ' Income Tax Act was brought into force in the Part B State of Mysore as from April 1, 1950. The appellants had adopted as their year of; account July 1 to June 30 of the succeeding year and they were assessed under the Mysore Income Tax Act on that footing for the year of assessment 1949 50 corresponding to the year of account July 1, 1948,to June 30, 1949. After the Indian Income Tax Act was applied to the State of Mysore on December 26, 1950, notice under section 22(2) of the Indian Income Tax Act was served upon the appellants requiring them to submit their 913 return of income for the assessment year 1950 51. On September 8, 1952, the appellants submitted their return stating that for the year ending June 30, 1949, corresponding to the assessment year 1949 50, they were assessed under the Mysore Income Tax Act, that their income for the year ending June 30, 1950, was assessable under the Indian Income Tax Act in the assessment year 1951 52 and that they had no assessable income for the assessment year 1950 51. The Income Tax Officer passed on that return an order "no proceeding" and closed the assessment. For the assessment year 1951 52, the appellants submitted their return of income. In the books of account produced by the appellants an opening cash credit balance of Rs. 1,87,000 odd on July 1, 1949, was disclosed. The Income Tax Officer called upon the appellants to produce their books of account of previous years, but the books were not produced on the plea that the same were lost. In assessing the income of the appellants for the year of account 1949 50, the Income Tax Officer held that Rs. 1,37,000 out of the opening balance in the books of account dated July 1, 1949, represented income from an undisclosed source. In appeal, the Appellate Assistant Commissioner observed that the appellants not having exercised their option under section 2(ii) of the Indian Income Tax Act, and in the absence "of any system of accounting adopted" by them, the only course open to the Income Tax Officer was to take the financial year ending March 31, 1950, as the previous year for the income from an undisclosed source, and directed the Income Tax Officer to consider this credit in the assessment for the year 1950 51 after giving opportunity to the appellants to explain the nature and source thereof. Before the appeal was disposed of by the Appellate Assistant Commissioner, the appellants had submitted a fresh return for the assessment year 195051 purporting to do so under section 22(3) of the Indian Income Tax Act. Pursuant to the direction of the Appellate Assistant Commissioner, the Income Tax Officer issued a notice of reassessment under section 34 of the Income Tax Act and served it on October 15, 1957, 914 calling upon the appellants to submit a fresh return. The appellants thereupon submitted a petition under article 226 of the Constitution to the High Court of Mysore praying for an order declaring that the notice under section 34 was without jurisdiction and for quashing the notice and proceeding consequent thereon. This petition was dismissed by the High Court, but the High Court, on the application of the appellants, certified that the appeal was a fit one for appeal to this court. Section 34(1) of the Indian Income Tax Act at the relevant time in so far as it is material provided: "(1) If (a). the Income Tax Officer has reason to believe that by reason of the omission or failure on the part of the assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable to incometax have escaped assessment for that year, or (b). notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income Tax Officer has in consequence of information in his possession reason to believe that income, profits or gains chargeable to income tax have escaped assessment for any year, he may in cases falling under el. (a) at any time within eight years and in cases falling cl. (b) within four years of the end of that year, serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub section (2) of section 22 and may proceed to assess or reassess such income, profits or gains; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub section. " In the course of the assessment proceedings for 1951 52, the appellants produced their books of account containing an entry dated July 1, 1949, showing an opening cash balance of Rs. 1,87,000 odd which was not satisfactorily explained. Though called upon, they did not produce their books of account for the earlier year. The appellants had failed to disclose in their return for the assessment year 1950 51 any 915 income. In the circumstances, the Income Tax Officer had reason to believe that by reason of failure on the part of the appellants to disclose fully and truly all ' material facts necessary for assessment for that year, income chargeable to tax had escaped assessment. The Income Tax Officer had therefore jurisdiction to issue the notice for reassessment. The submission that the previous return submitted on September 8, 1952, "had not been disposed of" and until the assessment pursuant to that return was made, no notice under section 34(1) for reassessment could be issued, has in our judgment no substance. The Income Tax Officer had disposed of the assessment proceeding accepting the submission made by the appellants that they had no income for the assessment year 1950 51. Under section 23(1) of the Indian Income Tax Act, it is open to the Income Tax Officer, if he is satisfied that the return made by an assessee under section 22 is correct, to assess the income and to determine the sum payable by the assessee on the basis of the return without requiring the presence of the assessee or production by him of any evidence. The appellants had in their return dated September 8, 1952, submitted that they had no assessable income for the year in question and on this return, the Income Tax Officer had passed the order "no, proceeding". Such an order in the circumstances of the case meant that the Income Tax Officer accepted the return and assessed the income as "nil". If thereafter, the Income Tax Officer had reason to believe that the appellants had failed to disclose fully and truly all material facts necessary for assessment for that year, it was open to him to issue a notice for reassessment. Under section 22, sub section (3), an assessee may submit a revised return if after he has furnished the return under sub section (2) he discovers any omission or wrong statement therein. But such a revised return can only be filed "at any time before the assessment is made" and not thereafter. The return dated February 26, 1957, was submitted after the assessment was made pursuant to the earlier return and it could not be entertained. Nor could the lodging of such a return 916 debar the Income Tax Officer from commencing a proceeding for reassessment of the appellant under section 34(1) of the Indian Income Tax Act. There is also no substance in the contention that for the assessment year 1950 51 the assessee could be assessed under the Mysore Income Tax Act and not under the Indian Income Tax Act. By the Finance Act XXV of 1950 section 13, cl. (1), it was provided in so far as it is material that: "If immediately before the 1st day of April, 1950, there is in force in any Part B State. any law relating to income tax or super tax or tax on profits of business, that law shall cease to have effect except for the purposes of the levy, assessment and collection of income tax and super tax in respect of any period not included in the previous year for the purposes of assessment under the Indian Income Tax Act, 1922 (XI of 1922), for the year ending on the 31st day of March, 1951, or for any subsequent year. " By virtue of section 13(1), the Mysore Income Tax Act ceased to be in operation as from April 1, 1950, except for the purposes of levy, assessment and collection of income tax and super tax in respect of any period which was not included in the previous year for the purposes of assessment under the Indian Income Tax Act for the assessment year 1950 51. The appellants had been assessed for the period July 1, 1948, to June 30, 1949, under the Mysore Income Tax Act. It is manifest that for any account year which was the previous year in relation to the assessment year 195051, the appellants were liable to be assessed under the Indian Income Tax Act and not under the repealed Act. The year of account July 1, 1949, to June 30, 1950, was not a period prior to such previous year and therefore liability to pay tax in respect of that period could be assessed not under the Mysore Income Tax Act, but under the Indian Income Tax Act. It was urged that this interpretation of section 13 may, when the account year of an assessee does not coincide with the financial year lead to double taxation of the income for the account year ending between April 1, 1949, 917 and March 31, 1950. But in order to avoid the contingency envisaged by the appellants, the Central Government has, in exercise of its power under section 60A of the Indian Income Tax Act, issued the Part B States (Taxation Concessions) Order, 1950, which by cl. 5(1) provides amongst other things, that the income, profits and gains of any previous year ending after the 31st day of March, 1949, which is a previous year for the State assessment year 1949 50 shall be assessed under the Act (Indian Income Tax Act, 1922) for the year ending on the 31st March, 1951, if and only if such income, profits and gains have not, before the appointed day, been assessed under the State law. If, in respect of the previous year for the purposes of the assessment year ending 31st March, 1951, the appellants had been assessed by any State Government under a law relating to income tax in force in the State, the Indian Income Tax authorities would be in competent to assess income for that year; but in default of such assessment income of the appellants for that year was assessable under the Indian Income Tax Act. The notice under section 34 was also not issued after the expiry of the period prescribed in that behalf. The notice was issued by the Income Tax Officer because he had reason to believe that by reason of failure on the part of the appellants to disclose fully and truly all material facts necessary for the assessment for the the year 1950 51, income had escaped assessment. Such a notice fell manifestly within section 34(1)(a) and could be issued within eight years, from the end of the year of assessment. The impugned notice under section 34 for reassessment of the income of the appellants for the year 1950 51 was, in our judgment, properly issued and the High Court was right in dismissing the petition for a writ to quash the notice. The appeal fails and is dismissed with costs.

The appellants, a Hindu undivided family, carrying on business in the former State of Mysore, were assessed under the Mysore Income tax Act for the year of assessment 1949 50 corresponding to the year of account July 1, 1948, to June 30, 1949. The Indian Income tax Act came into force in that area in April 1, 1950, and on December 26, 1950, notice under section 22(2) of that Act was served upon the appellants to submit their return for the assessment year 1950 51. On September 8, 1952, the appellants submitted their return stating that they had no assessable income for that year. The Income Tax Officer passed on that return an order, "no proceeding", and closed the assessment. When the appellants submitted their return for the next assessment year, their books of account disclosed an opening cash credit balance of Rs. 1,87,000 and odd on July 1. 1949. They failed to produce the books of account of the previous years, and the Income tax Officer held that Rs. 1,37,000 out of the said opening balance represented income from an undisclosed source. The appellants submitted a fresh return for the assessment year 1950 51 purporting to do so under section 22(3) of the Indian Incometax Act. Pursuant to the direction of the Appellate Assistant Commissioner, the Income Tax Officer on October 15, 1957, served on the appellants a notice under section 34 of the Act and thereupon the appellants moved the High Court under article 226 for an order quashing the said notice and the proceeding as without jurisdiction. The High Court dismissed the petition. Held, that it was not correct to say that the issue of the notice for reassessment was without jurisdiction as the assessment was yet pending. Under section 23(1) of the Indian Income tax Act, it is open to the Income tax Officer, if he is satisfied as to correctness of the return filed by the assessee, to assess the income and determine the sum payable on the basis of the return without requiring the assessee either to be present or to Produce evidence. The order 'no proceeding recorded on the. return must, therefore, mean that the Income Tax Officer bad accepted the previous return and assessed the income as nil. A revised return under section 22(3) filed by the assessee may be 912 entertained only before the order of assessment and not thereafter. Lodging of such a return after the assessment is no bar to reassessment under section 34(1) of the Act. It could not be said, having regard to the provisions of section 13(1) of the Finance Act (XXV of 1950) and cl. 5(1) of Part. B States (Taxation Concessions) Order 1950, issued by the Central Government under section 60A of the Indian Income tax Act, that for the assessment year 1950 51 the appellants were assessable under the Mysore Income tax Act and not under the Indian Income tax Act.

Appeal No. 96 of 1957. Appeal by special leave from the judgment and order dated December 17, 1956, of the Punjab High Court (Circuit Bench) at Delhi in Civil Misc. No. 896 D of 1956, arising out of the judgment and order dated November 1, 1956, of the Court of Commercial Subordinate Judge, Delhi in Suit No. 264 of 1956 under Order XXXVII, C.P.C. ]A. V. Vishwanatha Sastri 'and Naunit Lal, for the appellant. Bakhshi Gurcharan Singh and Sardar Singh, for the respondent. February 5. The following Judgment of the Court was delivered by BOSE J. The defendants, Santosh Kumar and the Northern General Agencies, were granted special leave to appeal. The plaintiff filed the suit out of which the 1213 appeal arises on the basis of a cheque for Rs. 60,000 drawn by the defendants in favour of the plaintiff and which, on presentation to the Bank, was dishonoured. The suit was filed in the Court of the Commercial Subordinate Judge, Delhi, under 0. XXXVII of the Code of Civil Procedure. The defendants applied for leave to defend the suit under r. 3 of that Order. The learned trial Judge held that " the defence raised by the defendants raises a triable issue," but he went on to hold that the defendants " have not placed anything on the file to show that the defence was a bona fide one." Accordingly, he permitted the defendants to appear and defend the suit on the condition of their giving security to the extent of the suit amount and the costs of the suit. " The defendants applied for a review but failed. They then applied under article 227 of the Constitution to the Delhi Circuit Bench of the Punjab High Court and failed again. As a result, they applied here under article 136 and were granted special leave. At first blush, 0. XXXVII, r. 2(2), appears drastically to curtail a litigant 's normal rights in a Court of justice, namely to appear and defend himself as of right, if and when sued, because it says that when a suit is instituted on a bill of exchange, hundi or a promissory note under the provisions of sub rule (1) ". . the defendant shall not appear or defend the suit unless he obtains leave from a judge as hereinafter provided so to appear and defend." But the rigour of that is softened by r. 3(1) which makes it obligatory on the Court to grant leave when the conditions set out there are fulfilled. Clause (1) runs " The Court shall, upon application by the defendant, give leave to appear and to defend the suit, upon affidavits which disclose such facts as would make it incumbent on the holder to prove consideration, or such other facts as the Court may deem sufficient to support the application. " 1214 But no sooner is the wide discretion given to the Court in r. 2(2) narrowed down by r. 3(1) than it is again enlarged in another direction by r. 3(2) which says that " Leave to defend may be given unconditionally or subject to such terms as to payment into Court, giving security, framing and recording issues or otherwise as the Court thinks fit. " The learned counsel for the plaintiff argues that the discretion so conferred by r. 3(2) is unfettered and that as the discretion has been exercised by the learned trial Judge, no appeal can lie against it unless there is a " grave miscarriage of justice or flagrant violation of law" and he quotes D. N. Banerji vs P.R. Mukherjee (1) and Waryam Singh vs Amarnath (2). Now what we are examining here are laws of procedure. The spirit in which questions about procedure are to be approached and the manner in which rules relating to them are to be interpreted are laid down in Sangrayn Singh vs Election Tribunal, Kotah, Bhurey Lal Baya (1). " Now a code of procedure must be regarded as such. It is procedure, something designed to facilitate justice and further its ends; not a penal enactment for punishment and penalties; not a, thing designed to trip people up. Too technical a construction of sections that leaves no room for reasonable elasticity of interpretation should therefore be guarded against (provided always that justice is done to both sides) lest the very means designed for the furtherance of justice be used to frustrate it. Next, there must be ever present to the mind the fact that our laws of procedure are grounded on a principle of natural justice which requires that men should not be condemned unheard, that decisions should not be reached behind their backs, that proceedings that affect their lives and property should not continue in their absence and that they should not be precluded from participating in them. Of course, there must be exceptions and where they are clearly defined (1) ; , 305. (2) ; (3)[1955] 2 S.C.R. 1, 8 9. 1215 they must be given effect to. But taken by and large, and subject to that proviso, our laws of procedure should be construed, wherever that is reasonably possible, in the light of that principle. " Applied to the present case, these observations mean that though the Court is given a discretion it must be exercised along judicial lines, and that in turn means, in consonance with the principles of natural justice that form the foundations of our laws. Those principles, so far as they touch the present matter, are well known and have been laid down and followed in numerous cases. The decision most frequently referred to is a decision of the House of Lords in England where a similar rule prevails. It is Jacobs vs Booth 's Distillery Company (1). Judgment was delivered in 1901. Their Lordships said that whenever the deferce raises a " triable issue", leave must be given, and later cases say that when that is the case it must be given unconditionally, otherwise the leave may be illusory. See, for example, Powszechny Bank Zwiazkowy W. Polsce vs Paros (2), in England and Sundaram Chettiar vs Valli Ammal (3) in India. Among other cases that adopt the " triable issue " test are Kiranmoyee Dassi vs J. Chatterjee and Gopala Rao vs Subba Rao (5). The learned counsel for the plaintiff respondent relied on Gopala Rao vs Subba Rao (5), Manohar Lal vs Nanhe Mal (6), and Shib Karan Das vs Mohammed Sadiq (7). All that we need say about them is that if the Court is of opinion that the defence is not bona fide, then it can impose conditions and is not tied down to refusing leave to defend. We agree with Varadachariar J. in the Madras case that the Court has this third course open to it in a suitable case. But it cannot reach the conclusion that the defence is not bona fide arbitrarily. It is as much bound by judicial rules and judicial procedure in reaching a conclusion of this kind as in any other matter. It is unnecessary (1) (2) (3) (1935) 1 (4) (5) A.I.R. (1936) Mad.246. (6) A.I.R. 1938 Lah. (7) A.I.R. 1936 Lah. 12l6 no examine the facts of those cases because they are not in appeal before us. We are only concerned with the principle. It is always undesirable, and indeed impossible, to lay down hard and fast rules in matters that affect discretion. But it is necessary to understand the reason for a special procedure of this kind in order that the discretion may be properly exercised. The object is explained in Kesavan vs South Indian Bank Ltd. (1), and is examined in greater detail in Sundaram Chettiar vs Valli Ammal (supra), to which we have just referred. Taken by and large, the object is to see that the defendant does not unnecessarily prolong the litigation and prevent the plaintiff from obtaining an early decree by raising untenable and frivolous defences in a class of cases where speedy decisions are desirable in the interests of trade and commerce. In general, therefore, the test is to see whether the defence raises a real issue and not a sham one, in the sense that, if the facts alleged by the defendant are established, there would be a good, or even a plausible, defence on those facts. Now, what is the position here? The defendants admitted execution of the cheque but pleaded that it was only given as collateral security for the price of goods which the plaintiff supplied to the defendants. They said that those goods were paid for by cash payments made from time to time and by other cheques and that therefore the cheque in suit had served its end and should now be returned. They set out the exact dates on which, according to them, the payments had been made and gave the numbers of the cheques. This at once raised an issue of fact, the truth and good faith of which could only be tested by going into the evidence and, as we have pointed out, the learned trial Judge held that this defence did raise a triable issue. But he held that it was not enough for the defendants to back up their assertions with an affidavit; they should also have produced writings and documents which they said were in their possession (1) I.L.R. 1217 and which they asserted would prove that the cheques and payments referred to in their defence were given in payment of the cheque in suit; and he said " In the absence of those documents, the defence of the defendants seems to be vague consisting of indefinite assertions. . . . This is a surprising conclusion. The facts given in the affidavit are clear and precise, the defence could hardly have been clearer. We find it difficult to see how a defence that, on the face of it, is clear becomes vague simply because the evidence by which it is to be proved is not brought on file at the time the defence is put in. The learned Judge has failed to see that the stage of proof can only come after the defendant has been allowed to enter an appearance and defend the suit, and that the nature of the defence has to be determined at the time when the affidavit is put in. At that stage all that the Court has to determine is whether " if the facts alleged by the defendant are duly proved " they will afford a good, or even a plausible, answer to the plaintiff 's claim. Once the Court is satisfied about that, leave cannot be withheld and no question about imposing conditions can arise; and once leave is granted, the normal procedure of a suit, so far as evidence and proof go, obtains. The learned High Court Judge is also in error in thinking that even when the defence is a good and valid one, conditions can be imposed. As we have explained, the power to impose conditions is only there to ensure that there will be a speedy trial. If there is reason to believe that the defendant is trying to prolong the litigation and evade a speedy trial, then conditions can be imposed. But that conclusion cannot be reached simply because the defendant does not adduce his evidence even before he is told that he may defend the action. We do not wish to throw doubt on those decisions which decide that ordinarily an appeal will not be entertained against an exercise of discretion that has been exercised along sound judicial lines. But if the 1218 discretion is exercised arbitrarily, or is based on a mis understanding of the principles that govern its exercise, then interference is called for if there has been a resultant failure of justice. As we have said, the only ground given for concluding that the defence is not bona flde is that the defendant did not prove his assertions before he was allowed to put in his defence ; and there is an obvious failure of justice if judgment is entered against a man who, if he is allowed to prove his case, cannot but succeed. Accordingly, interference is called for here. The appeal is allowed. We set aside the orders of the High Court and the learned trial Judge and remand the case to the first Court for trial of the issues raised by the defendants. The costs of the appellants in this Court will be paid by the respondent who has failed here. Appeal allowed.

The respondent filed a suit against the appellant under 0. xxxvII of the Code of Civil Procedure on the basis of a cheque for Rs. 60,000 drawn by the appellant in favour of the respondent which, on presentation to the Bank, had been dishonoured. The appellant applied under r. 3 Of 0. XXXVII for leave to appear and defend the suit on the ground that the cheque had been given only as a collateral security for the price of goods supplied, that the goods had been paid for by cash payments and by other cheques and that therefore the cheque in question had served its I54 1212 end and was without consideration. The Court held that the defence raised a triable issue but that the defence was vague and was not bona fide as the appellant had produced no evidence to prove his assertions and consequently granted leave to defend the suit on the condition of the appellant giving security for the suit amount and the costs of the suit : Held, that the imposition of the condition was illegal and the appellant was entitled to defend the suit without giving the security. The object of the special procedure under 0. XXXVII of the Code is to see that a defendant does not unnecessarily prolong the litigation by raising untenable and frivolous defences. The test is to see whether the defence raises a real issue and not a sham one, in the sense that, if the facts alleged by the defendant are established, there would be a good, or even a plausible, defence on those facts. If the Court is satisfied about that, leave must be given and given unconditionally. Held, further, that the Court was wrong in imposing the condition about giving security on the ground that for want of production of documentary evidence the defence was vague and not bona fide as the stage of proof can only arise after leave to appeal and defend has been granted. Though the Court is given a discretion about imposing conditions it must be exercised judicially and in consonance with principles of natural justice. If the discretion is exercised arbitrarily, or is based on a misunderstanding of the principles that govern 'its exercise, then interference is called for if there has been a resultant failure of justice.

Civil Appeal No. 824 of 1968. Appeal by Special Leave from the Judgment and order dated the 23 8 1967 of the Allahabad High Court in Civil Misc. (Review) application No. 32 of 1966 (in S.A. 4357/65). J. P. Goyal for the Appellant. V. section Desai and V. N. Ganpule for Respondent No. 1. The Judgment of the Court was delivered by SARKARIA, J. The following pedigree table illustrates the relationship of the parties: Hira Lal=Smt. Naraini Devi (plaintiff). (died in 1925). Kapoor Chand Nemi Chand Chandra Bhan (died in 1954) (Judgment debtor) (died in 1930) =Smt. Ramo Devi, (extinct) (Respondent 1) Decree holder. 5 L390 SCI/76 56 Smt. Ramo Devi, widow of Kapur Chand (shown in the above pedigree table) obtained a money decree against her husband 's brother Nemi Chand. In execution of her decree she got attached one half share in the double storeyed House No. 4416, situated at Agra representing it to be of the judgment debtor. Naraini Devi, widow of Hira Lal, filed an objection petition under 0.21, r. 58, Code of Civil Procedure against that attachment claiming the house to be her property. That objection was dismissed by the executing court on the 16th July, 1962. Thereafter, she filed a suit under 0.21, r. 63, Code 11 of Civil Procedure to establish her claim. The suit was decreed by the trial court. On appeal, the District Judge reversed the judgment t and dismissed the suit. Naraini Devi 's second appeal was summarily dismissed by the High Court. She filed a review petition which was rejected by the High Court on August 23, 1967. Hence, this appeal by special leave. i It is common ground between the parties that under a registered J award dated January 4, 1946, the plaintiff Smt. Naraini Devi was given a life interest in the house in dispute. The appellant 's contention is that her limited interest in the house was enlarged into that of a full owner by the operation of sub section (1) of section 14 of the Hindu Succession Act. As against this, the respondents maintain that her case falls under sub section (2) of section 14. The question thus turns on a construction of the award exhibit 2. We have examined an English rendering of this document filed by the appellant, the correctness of which is not disputed` by the respondent. This award states in clear, unmistakable terms that she, Naraini Devi would be entitled to the rent of this house in lieu of maintenance for her life time, and after her death, her sons, Kapoor Chand and Nemi Chand will be owners of half share each of this house. This award further partitions this house between Kapoor Chand and Nemi Chand and allots specific portions thereof to the two brothers. A part of this house was in the occupation of a tenant at Rs. 32/ per month. Naraini Devi was given a right to get that rent. A part of it was in the personal occupation of Kapoor Chand. The award protects and assures his right of remaining in possession of the same. A reading of this document as a whole, leaves little doubt that the only interest, in this house created in favour of the widow was that she would be entitled to its rent and no more for her life time. Thus the award confers on her only a restricted estate in the house within the meaning of sub section (2) of section 14 which says: "Nothing contained in sub section (1) shall apply to any property acquired by way of gift or under a will or any other instrument or under a decree or order of a civil court or under an award where the terms of the gift, will or other instrument or the decree, order or award prescribe a restrict ed estate in such property." Mr. Goyal however, submits that her case would fall within this Court 's ruling in Badri Prasad vs Smt. Kanan Devi(1) according to (1) ; 57 which, if the widow has a pre existing right in the property, then the A case will fall under sub section (1), and sub section (2) which is in the nature of a proviso to sub section (1) of section 14 will not be attracted. The rule in Badri Prasad 's case (supra) is not applicable here. Ill that case the widow had acquired a share in the property by virtue of the Hindu Women 's Right to Property Act, 1937, on the death of her husband, which took place after the coming into operation of that Act. In the present case, Smt. Naraini Devi 's husband died in 1925. In the presence of her sons, the widow did not get any share or interest in the house left by her husband under the Hindu Law as then applicable. In short, she had no pre existing right or interest in the house in question. It was the award dated January 4, 1946, that created a restricted estate for her in the house in question. Her case thus falls; squarely within the ambit of sub section (2) of section 14 of the Hindu Succession Act. Her interest therefore, came to an end on her death which took place during the pendency of these proceedings. For reasons aforesaid the appeal fails and is dismissed with no order as to costs.

'N ' a widow of 'H ', who, under the Hindu law then applicable and in the presence of her three sons did not get any share or interest in the house left by her late husband and therefore got a life interest by virtue of a registered award filed 3 suit under order 21 Rule 63 C.P.C. to establish her claim to the property that had been attached in execution of the decree against her second son obtained by her eldest daughter in law. 'N 's suit was decreed by the trial Court. The first appellate court reversed that decree. The second appeal and he review in the High Court failed. On appeal by special leave, rejecting the contention that "the appellants limited interest was enlarged into that of a full owner by the operation of sub sec. (I) of Section 14 of the Hindu Succession Act, the Court ^ HELD: (I) A reading of the award as a whole, leaves little doubt, that the only interest in the house created in favour of the widow was that she would be entitled to its rent, and no more for her life time. [56 F] (2) In the present case, the appellant did not get any share or interest in the house left by her husband under the Hindu Law as then applicable. She had no pre existing right or interest in the property. [57 B] (3) The award created a restricted estate for her in the house, and [57 B] (4) The ease fell squarely within the ambit of sub section (2) of section 14 of the Hindu Succession Act and her interest came to an end on her death. [57 C] Badri Prasad vs Smt. Kanan Devi ; , not applicable.

Appeals Nos. 926 and 927 of 1965. Appeals from the judgment and decree dated November 25, 1962 of the Madhya Pradesh High Court (Indore Bench) at Indore, in First Appeals Nos. 19 and 23 of 1957 respectively. 166 section V. Gupte, Solicitor General, Rameshwar Nath, section N. Andley, P. L. Vohra and Mahinder Narain, for the appellant. section P. Sinha, Ganapat Rai, E. C. Agarwala and P. C. Agarwala, for the respondent. The Judgment of the Court was delivered by Ramaswami, J. These appeals are brought by certificate on behalf of the defendant from the judgment of the High Court of Madhya Pradesh, Indore Bench, dated November 20, 1962 in First Appeals Nos. 19 and 23 of 1957. The plaintiffs, Rup Chand and Hukam Chand instituted Civil Suit No. 8 of section 1999 in the Court of District Judge, Ujjain, against the defendant Vithal Das and three others, for partition of houses and for rendition of accounts. Two of the defendants, Bheronlal and Indermal died in the course of the suit and the suit was continued against Vithal Das. The plaintiffs alleged that the immovable property constituting Blocks Nos. 206 and 207 in Freeganj, Ujjain was purchased with the capital of the partnership firm in which the plaintiffs and the defendant were, at one time, partners and by two documents dated July 2, 1937 and July 16, 1937, the properties continued to remain in the ownership of the partnership firm, though the firm had been dissolved in the year 1937. The plaintiffs claimed that the properties were managed by the defendant on behalf of the plaintiffs and the defendant realised rents from the tenants on their behalf and plaintiffs were, therefore entitled to receive half the amount realised as rent and the defendant was liable to render accounts thereof. The plaintiffs also claimed parti tion of the joint properties, or in the alternative, the sale of the property by auction and after deducting the cost of auction, half of the sale proceeds. The defendant contested the suit on the ground that at the time of the execution of the document dated July 2, 1937 there were only three blocks in partnership which were at that time open land. The defendant claimed that Block 'No. 206 and the building constructed thereon was not a partnership property. It was further alleged that the defendant had invested Rs. 10.000 in the three blocks of land which were held in partnership for constructing a building. The trial court accepted the plaintiffs ' case and granted a decree for partition of the blocks and for an account of income realised in respect of the property situated on block No. 207. As regards block No. 206 and the property standing thereon the trial court directed the defendant either to remove the construction or accept his share of money spent by the defendant over it and created a charge over the property in respect of the amount so held payable. Both the parties preferred appeals in the High Court of Madhya Pradesh against the judgment of the trial court which partially allowed the appeals and remanded the case to the trial Court. The High Court held that the plaintiffs were entitled to claim half share in both the properties built on blocks Nos, 206 and 207 and the defendant was liable to account 167 for the income of the properties on block No. 207 from the date of dissolution i.e., from July 2, 1937 and of block No. 206 from the year 1939. The High Court also held that the plaintiffs were liable to pay half the costs spent by the defendant in constructing the building on block No. 206. After the order of remand the trial Court appointed a Commissioner for examining accounts of rent realised by the defendant. After considering the report of the Commissioner, the trial Court determined the total amount of rent of both the blocks Nos. 206 and 207 at Rs. 41,829/3/7 and the half share of the plaintiffs was determined at Rs. 20,914/4/9. The trial Court also awarded interest to the plaintiffs on the half share of the income to the extent of Rs. 6,676/7/3 calculated upto April 11, 1957. The total amount thus due to the plaintiffs was determined at Rs. 27,591 /1/ . Out of this amount the trial court allowed sum of Rs. 9,755/7/3 on account of the half costs of ' construction and interest thereon and expenses incurred for house tax, water tax, legal expenses and repairs. The net amount thus awarded to the plaintiffs was Rs. 17,670/9/9. As regards the partition of blocks Nos. 206 and 207, the trial court held that in view of the method of construction of the blocks it was not possible to make partition in equal shares and therefore the trial court directed that the two blocks should be auctioned in separate lots and the parties should be at liberty to bid at the auction and the parties would have equal rights to the amount of the auction. Aggrieved by the judgment of the trial court both the parties preferred appeals to the High Court of Madhya pradesh, namely, First Appeals Nors. 19 and 23 of 1957. The defendant 's appeal was registered as Civil First Appeal No. 19 of 1957 and the plaintiffs ' appeal was registered as Civil First Appeal No. 23 of 1957. Both, the appeals were heard and disposed of by a common judgment by the High Court which modified the trial court 's finding, as to the income of blocks 206 and 207 to the extent of Rs. 803/ '5/3 by reducing the income of the two blocks by that figure. 'The total income was thus reduced from Rs. 41,829/3/7 to Rs. 41 015,/14/4 with the corresponding,reduction in the amount of interest. The High Court affirm the finding of the trial court that tile defendant was liable to pity interest on the half share of the rental income on the ground that the relationship between the parties was in the nature of a truest under section 90 of the Trusts Act (Act 11 of 1882). The plaintiffs ' appeal No. 23 of 1957 was allowed to the extent of Rs. 4,942/9/after adjustment, the plaintiffs ' claim was decreed for Rs. 22,103/ . The first question for consideration in these appeals is whether the High Court was right in granted interest to the plaintiffs on their share of rental income to the extent of Rs. 6,676 / 7 / 3 for the period prior to the institution of the suit. It was argued by the Solicitor Geiieral on behalf of the appellant that the High Court was in error in appellant that the relationship between the prince was governed by section 90 of the Trusts Act and the plaintiffs were therefore entitled to interest on their share of rent under the provi LIS5SCI 13 168 sions of section 23 of that Act. In our opinion, the contention put forward by the Solicitor General is well founded and must be accepted as correct. It is well established that interest may be awarded for the period prior to the date of the institution of the suit if there is an agreement for the payment of interest at fixed rate or if interest is payable by the usage of trade having the force of law, or under the provisions of any substantive law as for instance section 80 of Negotiable Instruments Act or section 23 of the Trusts Act. It is admitted in the present case that the two agreements between the parties dated July 2, 1937 and July 16, 1937 did not provide for payment of interest on the rental realised by the defendant on the joint properties. Nor is interest payable by virtue of any provision of the law governing the case. Under the Interest Act, 1839, the Court may allow interest to the plaintiff if the amount claimed is a sum certain which is payable at a certain time by virtue of a written instrument. But it is conceded that the position in the present case is different. It was suggested by Mr. section P. Sinha on behalf of the respondents that interest may be awarded under the Interest Act which contains a provision that "interest shall be payable in all cases in which it is now payable by law". But this provision only applies to cases in which the Court of Equity exercises jurisdiction to allow interest. The legal position has been explained by the Judicial Committee in Bengal Nagpur Rly. Co. Ltd. vs Ruttanji Ramji(1) at p. 72 as follows: "As observed by Lord Tomlin in Maine and New Brunswick Electrical Power Co. vs Hart, , at p. 640; (AIR 1939 PC 185 at p. 188), 'In order to invoke a rule of equity It is necessary in the first instance to establish the existence of a state of circumstances which attracts the equitable jurisdiction, as, for example, the non performance of a contract of which equity can give specific performance '. " The decision of the Judicial Committee in Bengal Nagpur Rly. Co. Ltd. vs Ruttanji Ramji(1) was relied upon by this Court in Thawardas Pherumal vs Union of India(1) in rejecting a claim for interest. In that case, a contractor entered into a contract with the Dominion of India for the supply of bricks. A clause in the contract required all disputes arising out of or relating to the contract to be referred to arbitration. The dispute having arisen, the matter was referred to arbitration and the arbitrator gave an award in the contractor 's favour. The Union of India which has succeeded to the rights and obligations of the Dominion, contested the award on various grounds one of which was the liability to pay interest on the amount awarded. It was held by this Court that the interest awarded to the contractor could not, in law, be awarded and the arbitrator is not a Court within the meaning of the Interest Act, 1839 and. in any event, interest could only be awarded if there was (1) 65 I.A. 66. (2) 169 a debt or a sum certain payable at a certain time or otherwise by virtue of some written contract and there must have been a demand in writing stating that interest will be demanded from the date of the demand. The same view has been expressed by this Court in two later cases Union of India vs Rallia Ram(1) and Union of India vs Watkins Mayor and Co.(2). It was, however, pointed out for the respondents that the defendant was in possession of the entire properties as co owner after the dissolution of the partnership by the document dated July 16, 1937. It was argued that the defendant was realising rents of all the properties and he was in the position of a constructive trustee under section 95 of the Trust Act and was liable therefore to pay interest on the plaintiffs ' share of rent under section 23 read with section 95 of the Act. We do not consider there is any justification for this argument. Section 90 of the Act states: "Where a tenant for life, co owner, mortgagee or other qualified owner of any property, by availing himself of his position as such, gains an advantage in derogation of the rights of the other persons interested in the property, or where any such owner, as representing all persons interested in such property, gains any advantage, he must hold, for the benefit of all persons so interested, the advantage so gained, but subject to payment by such persons of their due shares of the expenses properly incurred, and to an indemnity by the same persons against liabilities properly contracted, in gaining such advantage." Section 95 provides as follows: " The person holding property in accordance with any of the preceding sections of this Chapter must, so far as may be, perform the same duties and is subject, so far as may be, to the same liabilities and disabilities, as if he were a trustee of the property for the person for whose benefit he holds it: Provided that (a) where he rightfully cultivates the property or employs it in trade or business, he is entitled to reasonable remuneration for his trouble, skill and loss of time in such cultivation or employment , and (b) where he holds the property by virtue of a contract with a person for whose benefit he holds it, or with any one through whom such person claims, he may, without the permission of the Court, buy or become lessee or mortgagee of the property or any part there of. " Section 23 reads as follows: "Where the trustee commits a breach of trust, he is liable to make good the loss which the trust property or the beneficiary has thereby sustained, unless the beneficiary has by (1) A.I.R. 1963 S.C. 1636. (2) A.I.R. 1966 S.C. 275. 170 fraud induced the trustee to commit the breach, or the beneficiary, being competent to contract, has himself, without coercion or undue influence having been brought to bear on him, concurred in the breach, or subsequently acquiesced therein, with full knowledge of the facts of the case and of his rights as against the trustee. A trustee committing a breach of trust is not liable to pay interest except in the following cases: (a) where he has actually received interest; (b) where the breach consists in unreasonable delay in paying trust money to the beneficiary; (c) where the trustee ought to have received interest, but has not done so; (d) where he may be fairly presumed to have received interest. He is liable, in case (a), to account for the interest actually received, and, in cases (b), (c) and (d) to account for simple interest at the rate of six per cent. per annum, unless the Court otherwise directs. . . " We do not agree with the contention of the respondents that section 90 of the Trusts Act applies to this case. A co owner in possession of all the joint properties does not become a trustee by the mere fact of his collection of the full amount of rent from the tenants. If the co owner is to be clothed with the status of a trustee it must be shown that he has gained some advantage in derogation of the other co owners interested in the property and that he gained such an advantage by availing himself of his position as co owner. In the present case, there is no allegation made by the plaintiffs that the defendant has gained any advantage in derogation of the rights of the plaintiffs, nor is there any finding of the lower courts that the defendant gained any advantage by availing himself of his position as co owner. We shall, however, assume in favour of the respondents that the defendant is in the position of a constructive trustee in view of the provisions of section 90 of the Trusts Act. Even upon that assumption we are of opinion that the defendant is not liable to pay interest to the plaintiffs for their share of the rent of the properties. The reason is that the trustee is liable to pay interest only if he commits a breach of trust under section 23 of the Trusts Act. There is also the restriction contained in section 23 of the Trusts Act, namely, that a trustee committing a breach of trust is not liable to. pay interest except in the cases mentioned in that section. It was argued by Mr. section P. Sinha for the respondents that the defendant was liable to pay interest under section 23(b) of the Trusts Act because there was unreasonable delay in paying the trust money to the beneficiary. We are unable to accept this argument as correct. In 171 our opinion, section 23(b) contemplates cases where there is an obligation on the part of the trustee to pay the trust money to the beneficiary at fixed intervals or on demand. In our opinion, there is no question of breach of trust on the part of the, defendant in the present case and the provisions of section 23(b) of the Trusts Act are not attracted. The view that we have expressed is borne out by several authorities. In Blogg vs Johnson(1), Lord Chelmsford, L.C. stated that "the Court will not charge an executor who has been guilty of delay in accounting, with interest on arrears of income unpaid by him". In that, case, X was entitled to a life income from the estate of her husband, and died in 1861. A bill was filed by her executor, in 1862, against the executor of her husband 's will, who had been his partner in business, for an account of income due to her estate; in 1863 accounts were directed. In 1866 a certificate was made, finding that a large sum was due from the husband 's executor. It was held by Lord Chelmsford, L.C. that he was not chargeable with interest before the date of the certificate. Again, in Silkstone and Haigh Moor Coal Co. vs Edey(2), it was held by the Chancery Court that upon the setting aside of a sale by a trustee of trust property to himself, and the reconveyable of the property to the beneficiaries, it is not the practice of the Court to charge the trustee with interest on the rents and profits received by him since the date of the sale. Interest was, however, charged on arrears in some cases as in Malland vs Gray(1) and Guildrey vs Stevens(1), but these cases fall within the range of another principle of equity that where an executor or a trustee unnecessarily detains money in his hand which he ought either to have invested or to have paid over to the person entitled to it, he will have to pay interest for it. As Lord Chelmsford, L.C. observed in Blogg vs Johnson(1) at p. 228: "Where money is thus improperly retained, it appears to me to be immaterial how the sum has arisen, whether from a legacy, or a distributive share, or a residue, or the arrears of income. In the latter case, the claim for interest is not made on account of the arrears, but for the improper keeping back or a sum of money, from whatever source derived, which the executor or trustee ought to have paid over. " We have already given reasons for holding that the provisions of section 23(b) of the Trusts Act do not apply to the present case and the plaintiffs are not entitled to claim any interest on arrears of rent and the High Court has fallen into an error in granting such interest. The next contention raised on behalf of the appellant is that the Commissioner examined the accounts and submitted his report from July 2, 1937 to December 31, 1954 and the High Court was not justified in granting a decree to the plaintiffs for the subsequent (1) 1867 2 Ch. A. 225. (3) E.R. 744. (2) (4) 172 period from January 1, 1955 to April 11, 1957 on the basis of the figures found from the Commissioner 's report. It was argued that the High Court had no basis for assuming that the same rental income was received by the defendant for the period from January 1, 1955 to April 11, 1957 as for the prior period. In our opinion, there is great force in this argument and we should, in the normal course, remand the case to the High Court for a finding as to the accounts of the subsequent period. Mr. Sinha, however, pointed out that the litigation commenced in 1942 and has already been pro tracted too ]on . We do not, therefore, wish to remand the case to the High Court for further inquiry. Having examined the evidence on the record of this case, we consider that, in the circumstances, a sum of Rs. 2,400/ (instead of Rs. 3,100/ ) for the period from January 1, 1955 to April 11, 1957 should be granted to the plaintiffs as their share of profits. We direct that the interest may be granted to the plaintiffs at the rate of 6 per cent p.a. from November 20, 1962 which is the date of the final decree on the amount found due to the plaintiffs. Two other points were raised by the Solicitor General in the course of argument. It was pointed out, in the first place, that First Appeal No. 23 of 1957 filed by the plaintiffs in the High Court was barred by limitation and the High Court should have dismissed the appeal on that ground. It was argued that the trial courts judgment was delivered on April 11, 1957 and the appeal to the High Court was filed on July 22, 1957. A certified copy of the judgment was delivered to the plaintiffs on May 4, 1957 but the endorsement on the certified copy with regard to the date was fraudulently made. An application was made by the defendant to the High Court on November 20, 1961 drawing the attention of the High Court with regard to the endorsement on the certified copy of the judgment. There is, however, no reference in the judgment of the High Court on the question of limitation and it should, therefore, be taken that the point was not pressed on behalf of the defendant at the time of the hearing of the appeal by the High Court. It is, therefore, not possible for us to entertain the argument of the appellant at the present stage, in the absence of any finding of the High Court. The other objection put forward by the Solidtor General is that the High Court has not taken into account vacancies in the computation of the rental income due to the plaintiffs. It was said that the High Court was wrong in holding that the defendant was liable as a trustee for the rents he ought to have realised even though there was no letting of the building. The Solicitor General may be right in his argument that the defendant cannot be held liable as a constructive trustee for the rent he has not realised from the tenants and for the premises which were not let out to tenants and which had been lying vacant, but the ground upon which the High Court has made the defendant liable is different. The High Court has taken the view that the defendant has 173 not kept proper accounts of the income of the rents realised from the shops. In the absence of proper accounts it is not possible to accept the case of the defendant regarding the vacancies. In our opinion, the finding of the High Court on this point is not vitiated by any error of law and the argument of the Solicitor General must be rejected on this aspect of the case. For the reasons already expressed, we hold that these appeals should be partly allowed with proportionate costs and the decree of the High Court dated November 20, 1962 should be modified to the extent indicated in this judgment. Appeals allowed in part.

The plaintiffs instituted a suit for partition of immovable property constituting two blocks and for rendition of accounts. They claimed that the property was purchased with the capital of the partnership firm in which the plaintiffs and the defendant were Partners and that by two documents dated July 2, 1937 and July 16, 1937, the properties continued to remain in the ownership of the partnership firm, though the firm was dissolved in 1937. The defendant contested the suit on various grounds and also alleged that he had invested Rs. 10,000/ for constructing a building on the land in one of the blocks. The trial Court granted the plaintiffs a decree for most of the reliefs sought. The High Court, in appeal, held that the plaintiffs were entitled to claim half share in the properties and that the defendant was liable to account for the income from the date of dissolution i.e. July 2, 1937 in the case of one block and from 1939 in the case of the other block and furthermore that the plaintiffs were liable to pay half the amount spent by the defendant in constructing the building on one of the blocks. Upon a remand of the case to the trial Court a Commissioner was appointed to examine the accounts of rent realized by the defendant and on the basis of his report, the trial court granted the plaintiffs a decree for the amount payable to them as their half share, together with interest upto April 1957 and after deducting the plaintiffs ' share of the expenditure incurred by the defendant on the building. In further appeals to the High Court by both the parties the decision of the trial court was substantially confirmed. In the appeal to this Court by the defendant, it was contended, inter alia, on his behalf that the trial court and the High Court had erroneously decided that the defendant was liable to pay interest for the period prior to the institution of the suit on the half share of the rental income on the ground that the relationship between the par ties was in the nature of a trust under Section 90 of the Trusts Act, 1882. On the other hand the contentions for the respondents were that interest prior to the date of institution of the suit could be paid to them under the Interest Act, 1839: that the defendant was in possession of the entire properties as as Owner after the dissolution of the partnership by the document dated July 16, 1937 and that as he 165 was realizing rents of the properties, he was in the position. of a constructive trustee under section 95 of the Trusts Act and was liable therefore to pay interest on the plaintiffs ' share of rent under section 23 read with section 95 of the Act; and that he was in any event liable to pay interest under section 23(b) of the Trusts Act because there was unreason able delay in paying the trust money to the beneficiary. HELD: Interest was only payable to the plaintiffs at the rate of 6% per annum from the date of the final decree on the amount found due to the plaintiffs. It is well established that interest may be awarded for the period prior to the date of the institution of the suit if there is an agreement for the payment of interest at fixed rate or if interest is payable by the usage of trade having the force of law, or under the provisions of any substantive law as for instance under section 80 of Negotiable Instruments Act or section 23 of the Trusts Act. It was admitted in the present case that the two agreements between the parties dated July 2,1937 and July 16,1937 did not provide for payment of interest on the rental reilised by the, defendant on the joint properties. Nor was interest payable under any provision of law governing the case. Under the Interest Act, 1839, the court may allow interest if the amount claimed is a sum certain which is payable at a certain time by virtue of a written instrument but it was conceded that was not the position in the present case. The provision in section 1 of the Interest Act that "interest shall be payable in all cases in which it is now payable by law," applied only to cases in which the Court of Equity exercised jurisdiction to allow interest. [168 B D]. Bengal Nagpur Railway Co. Ltd. vs Ruttanji Ramji 65 I.A. 66, Thawardas Pharumal vs Union of India, Union of India vs Rallia Ram, ; and Union of India vs Watkins Mayor & Co. A.I.R. 1966 section C. 275, referred to. There was no force in the contention that section 90 of the Trusts Act applied to this case. A co owner in possession of all the joint properties does not become a trustee by the mere fact of his collection of the full amount of rent from the tenants. If the co owner is to be clothed with the status of a trustee, itmust be shown that he has gained some advance in derogation ofthe other co owners interested in the property and that he gained such advantage by availing himself of his position as co owner. In the present case, there was no allegation or finding by the trial court that the defendant had gained any such advantage. [17O E] Even assuming that the defendant was in the position of a constructive trustee, he would be liable to pay interest under section 23 only if he committed a breach of trust and in the present case there was no question of any such breach on his part. Furthermore, he was not liable to pay interest under section 23(b) as that provision contemplates cases where there is an obligation on the part of the trustee to pay the trust money to the beneficiary at fixed intervals or on demand. [170 F]. Blogg vs Johnson., [1867] 2 Ch. A 225, Silkstone and Haigh Moor Coal Co. vs Edey, ; Malland V. Gray and Guildrey vs Stevens , referred to.

Civil Appeal No. 966 of 1976. (Appeal by special leave from the judgment and order dated the 6th February, 1976 of the Delhi High Court in S.A.O. No. 148 of 1975) Vinoo Bhagat for the Appellant. G. D. Gupta for the Respondent (Not Present) The Order of the Court was delivered by KOSHAL, J. The short point arising for determination in this appeal concerns the validity of a notice served by the landlady appellant on the tenant respondent and purporting to be one issued in accordance with the provisions contained in clause (a) of sub section (1) of section 14 of the Delhi Rent Control Act (hereinafter called the Act), and we may at the very outset reproduce the relevant provisions of that section: "14(1) Notwithstanding anything to the contrary contained in any other law or contract, no order or decree for the recovery of possession of any premises shall be made by any court or Controller in favour of the landlord against a tenant: Provided that the Controller may, on an application made to him in the prescribed manner, make an order for the recovery of possession of the premises on one or more of the following grounds only, namely: (a) that the tenant has neither paid nor tendered the whole of the arrears of the rent legally recoverable from him within two months of the date on which a notice of demand for the arrears of rent has been served on him by the landlord in the manner provided in section 106 of the ; 14(2) No order for the recovery of possession of any premises shall be made on the ground specified in clause 45 (a) of the proviso to sub section (1), if the tenant makes payment or deposit as required by section 15: Provided that no tenant shall be entitled to the benefit under this sub section, if having obtained such benefit once in respect of any premises, he again makes a default in the payment of rent of those premises for three consecutive months. The tenant respondent has remained absent and unrepresented at the hearing and we have had the advantage of being addressed by Mr. Vinoo Bhagat, learned counsel for the appellant only. It was not disputed before the High Court that in an earlier proceeding the tenant had taken advantage of the provisions contained in sub section (2) of section 14 of the Act, that he committed another default in the payment of rent which covered the period from 1.6.1973 to 30.11.1973 and that it was then that a notice dated 14.12.1973 was served on him. The notice stated: "Your contractual tenancy in respect of House No. A 54 (double storey) Kalkaji, New Delhi 19 had already been terminated whereafter you are a statutory tenant liable to pay damages for use and occupation at the rate of Rs. 15/ (Rupees fifteen per month) to me. That you have not paid the said damages after May, 1973. In case you do not clear the arrears upto date within two months from the date of this notice, I shall be compelled to issue instructions to my legal adviser to file an application for your eviction . . " No attempt to pay the rent was made inspite of the notice till the end of February, 1974. Although thereafter rent was remitted to the landlady through money orders but she refused to accept the same and made an application to the Controller for eviction of the tenant on the sole ground of a second default in the payment of rent. Both the Controller and the Tribunal in the appeal held that the notice was a valid one and that the expression "damages for use and occupation" contained therein meant nothing more or less than rent. In a second appeal, a learned Single Judge differed from the Courts below and was of the opinion that the word 'rent ' and the said expression could not be taken to be 46 synonymous and that there was no demand of rent in the notice in question which did not, therefore, satisfy the requirements of the provisions contained in clause (a) above extracted. It is the judgment of the learned Single Judge which is assailed in the present appeal. After hearing Mr. Vinoo Bhagat, learned counsel for the appellant, we are of the opinion that the learned Single Judge has taken an unnecessarily hypertechnical view of the contents of the notice. It is significant that the notice specifically stated that on account of the termination of the tenancy by an earlier notice the tenant had become what is popularly known as a statutory tenant and it was in this context that a claim was made for damages for use and occupation at a rate equivalent to the agreed rent. We are of the opinion that in the circumstances of the case the demand so made could not be construed as anything but a demand for rent. Consequently the notice must be held to satisfy the requirements of clause (a) of sub section (1) of Section 14 of the Act. For the reasons stated above, we accept the appeal, set aside the impugned judgment and restore the orders of the Controller and the Tribunal. The case is remitted for further proceedings to the Controller who shall dispose of it within three months from the receipt of records from this Court. No costs. P.B.R. Appeal allowed.

When a tenant has neither paid nor tendered the whole of the arrears of rent legally recoverable from him within two months of the date on which the notice of demand for the arrears of rent has been served on him by the landlord proviso (a) to section 14(1) empowers the Controller to make an order for the recovery of possession of the premises. The proviso to section 14(2) states that no tenant shall be entitled to the benefit under the sub section if having obtained such benefit once in respect of any premises he again makes a default in the payment of rent of those premises for three consecutive months. On 14th December, 1973, the land lady appellant issued a notice to the tenant stating that he had not paid the damages after May 1973 and called upon him to pay the arrears within two months from the date of notice. The tenant remitted the rent to the land lady by money order towards the end of February 1974 but she refused to accept the same. On the land lady 's application the Controller, and the Tribunal in appeal, held that the notice was valid and that the expression "damages for the use and occupation" meant nothing more nor less than rent. But the High Court on appeal held that the term "rent" and "damages for use and occupation" could not be taken to be synonymous terms and that the notice issued by the land lady did not satisfy the requirements of clause (a) of the proviso to section 14(1) of the Act in that it did not demand rent from the tenant. Allowing the appeal and remitting the case to the Court below ^ HELD: The notice issued by the land lady satisfies the requirements of clause (a) of the proviso to section 14(1). [46 D] The High Court has taken an unnecessarily hypertechnical view of the contents of the notice which specifically stated that on account of the termination of the tenancy by an earlier notice the tenant had become a statutory tenant and it was in this context that a claim was made for damages for use and occupation at a rate equivalent to the agreed rent. The demand so made could not be construed as anything but a demand for rent. [46 B C] 44

vil Appeal No. 310 of 1954. Appeal by special leave from the judgment and order dated March 22, 1956, of the Labour Appellate Tribunal of India, Calcutta in Appeal No. Cal. 183 of 1955. N.C. Chatterjee, section N. Mukherjee and B. N. Ghosh for the appellant. Sukumr Ghosh, for the respondent. May 21. The Judgment of the Court was delivered by WANCHOO J. This appeal by special leave against the decision of the Labour Appellate Tribunal of India is limited to the question whether an order of reinstatement can be made on an application under section 33 A of 60 474 the (hereinafter called the Act). The brief facts necessary for the decision of this question are these. The appellant is a Jute Mill. There was a dispute pending before an Industrial Tribunal between a number of jute mills in West Bengal and their employees, and the appellant was a party to that dispute. During the pendency of that dispute, the appellant laid off the respondent who was an employee in the ration shop maintained by the appellant from July 19, 1954, as rationing of food stuff came to an end from July 10, 1954. The reason for the lay off was that the ration shop was closed following the end of rationing. This resulted in the staff in that shop becoming surplus. Consequently, nine persons were selected for retrenchment on the principle of " last come first go", and the respondent was one of them. The appellant also applied under section 33 of the Act to the Industrial Tribunal for permission to retrench the respondent along with others. Shortly before the application under section 33, the respondent had applied under section 33 A of the Act and. his case was that there was no reason to make Any retrenchment on account of the closure of the ration shop and that he was at any rate longer in service than others who had been retained and therefore the principle of " last come first go " had not been followed. It was also said that the respondent had been laid off as he was an active worker of the union and as such was not in the good books of the appellant. It was, therefore, prayed that the respondent should be allowed full wages and amenities since the so called lay off, which was nothing more nor less than retrenchment and that he should be reinstated. The Industrial Tribunal came to the conclusion that the lay off was justified because of the closure of the ration shop and gave permission to the appellant to retrench the respondent on the principle of " last come first go ". The respondent appealed to the Labour Appellate Tribunal. He did not urge there that there was no necessity for retrenchment at all. What was urged there was that the Industrial Tribunal was wrong in holding that the principle of " last come first 475 go" had been followed in this case. The Appellate Tribunal came to the conclusion that the respondent had been in service much longer than others who had been retained and therefore the principle of " last come first go " had been violated. In consequence, the appeal was allowed and the permission to retrench the respondent was refused. The Appellate Tribunal also ordered that the respondent, should be reinstated in service without any break in the continuity of service and the order of the appellant in laying him off and discharging him in effect from July 19, 1954 was set aside. Thereupon the appellant came to this Court and was granted special leave on the limited question set out above. In our opinion, the answer to the limited question on which the special leave has been granted can only be one in view of the language of section 33 A. That section lays down that " where an employer contravenes the provision is of section 33 during the pendency of proceedings before a tribunal, any employee aggrieved by such contravention, may make a complaint in writing to the tribunal and on receipt of such complaint the tribunal shall adjudicate upon the complaint as if it were a dispute referred to or pending before it, in accordance with the provisions of the Act and shall submit its award to the appropriate government and the provisions of this Act shall apply accordingly. " It is thus clear that a complaint under section 33 A of the Act is as good as a reference under section 10 of the Act and the tribunal has all the powers to deal with it as it would have in dealing with a reference under section 10. It follows, therefore, that the tribunal has the power to make such order as to relief as may be appropriate in the case and as it can make if a dispute is referred to it relating to the dismissal or discharge of a workman. In such a dispute it is open to the tribunal in proper cases to order reinstatement. Therefore a complaint under section 33 A being in the nature of a dispute referred to a tribunal under section 10 of the Act, it is certainly within its power to order reinstatement on such complaint, if the complaint is that the employee has been dismissed or discharged in breach of section 33. 476 Learned counsel for the appellant wanted to argue that this was not a case of discharge or dismissal but of lay off. We did not permit him to raise this argument because the special leave was limited only to the question set out above. The answer to that question has already been indicated above and on that answer the appeal must fail. We therefore dismiss the appeal, but in the circumstances we make no order as to costs of this Court. Appeal dismissed.

The respondent made an application under section 33A of the , which, inter alia, stated that there was no reason for retrenchment on account of the closure of a ration shop, and that at any rate he was longer in service than others who had been retained, and, therefore, the principle of " last come, first go " had been violated. The Tribunal dismissed the application whereupon the respondent appealed to the Appellate Tribunal which allowed the appeal and refused permission to retrench. The Appellant Company was granted special leave to appeal only on the limited question as to whether an order of re instatement can be made on an application under section 33A of the Act. Held, that the complaint under section 33A of the , is as good as a reference under section 10 of the Act and the Tribunal has all the powers to deal with it as it would have in dealing with a reference under section 10 of the Act and it is open to the Tribunal in proper case to order reinstatement.

Civil Appeal No. 923 , 1966. Appeal by special leave from the Award dated May 29, 196 of the Industrial Tribunal, Andhra Pradesh in I.D. No. 12 1964. M.K. Ramamurthi, Shyamala Pappu and Vineet Kumar, f the appellants. K. Srinivasamurthy, Naunit Lal and B.P. Singh, for the re. pondents. The Judgment of the Court was delivered by Vaidialingam, J. The workmen of Shri Bajrang Jute Mil Ltd., in this appeal by special leave, attack the correctness of th award dated May 29, 1965 of the Industrial Tribunal, Andhr Pradesh, Hyderabad, in I.D. No. 12 of 1964, by which it hel that the demand of the workmen for implementation of the re commendations of the Central Wage Board for Jute Industr (hereinafter referred to as the Wage Board), was not justified. In view of the fact that the respondent management decline to accede to the demand of the appellants to pay wages in accordance with the recommendations of the Wage Board, the Stat of Andhra Pradesh, by its order dated March 21, 1964, referres for adjudication to the Industrial Tribunal, Hyderabad, th following question: "Whether the demand of the workmen in Sri Bajrang Jute Mills, Limited, Guntur, for implementation of the recommendations of the Central Wage Board for Jute Industry is justified, and if so, to what extent?" The Wage Board was constituted by the Central Government for determining, among other matters, a wage structure, based on the principles of fair wages payable in the jute industry. The Wage Board consisted of a Chairnan, two independent Members, two Members representing the employers and two Members representing the workers. It may be noted that the Members 595 representing the industry and labour were not chosen by the representative bodies of the industry or the labour but were appointed by Government. In fact, neither the industry nor the labour had any voice in the choice by the Government of any of the members of the Wage Board. The Wage Board submitted its report to the Government, making recommendations about the wage structure and laying down principles for awarding bonus for the year 1962 63 and the subsequent years. It appears from the Wage Board 's report that, at the very outset, the Wage Board selected 20 mills from West Bengal and 9 reporting mills from outside West Bengal which it considered to form a representative cross section of the industry for a detailed study. The Wage Board took into account the financial position of the said mills and also collected other data and information not only from the mills concerned but also from other quarters. The Wage Board took into account the growth of paid up capital, gross block depreciation, profits made and dividends paid by the mills and other allied matters and came to the conclusion that the industry 's position was satisfactory and its future was bright. The Wage Board was not required to fix a wage structure on the peculiar financial position of any particular unit, al though it was bound to take a fair cross section of the industry represented by units reflecting the general conditions prevailing in the industry as a whole. The Wage Board also considered the principles for determination of bonus and recommended payment of bonus for the year 1963 on the basis of the basic wages drawn by the worker for the year 1962. It also recommended that for future years the bonus was to be paid according to the wages drawn in the preceding year. It further recommended certain rules for determination of the quantum of bonus. According to the appellants, the respondent was bound to implement the recommendations of the Wage Board in all respects and its refusal to do so was illegal and unjustified. The respondent pleaded that the recommendations of the Wage Board could not be implemented as the Mill had no financial capacity to bear the burden of the wage scales recommended by the Wage Board. The respondent made an attempt to implement the Wage Board 's recommendations to some extent at least, provided the labour agreed for revision of work loads, but the labour was not willing for such revision. It was further stated that the respondent company, though started in 1907, had been running at a loss for a number of years and its loom strength was only 120. The mill was located at Guntur, which is not a jutegrowing area, and in consequence almost all raw materials had to be brought from Vijayanagaram, in Visakhapatnam District, and from Calcutta. As the raw materials and other products had to be brought from outside, it involved the mill in considerable 596 expense due to freight charges etc. The products manufactured in the mill were only cement bags and twine and cement companies were its only customers. The company had furnished replies to the questionnaire issued by the Wage Board and had made it clear that the wages paid by it were reasonable and it could not bear any additional burden in that regard. Even the interim relief, recommended by the Wage Board, was implemented with considerable difficulty though it involved the company in an additional revenue expenditure of Rs. 1,53,000 a year. The Wage Board 's recommendations fixed the wage scales, dearness allowance etc., for all the employees working in all the jute mills situated in the country, irrespective of the financial position of individual mills. If the recommendations of the Wage Board were to be implemented, the company would be put to further expenditure of Rs. 2,75,385.60 in the first year, Rs. 3.25 lakhs in the second year and Rs. 3.75 lakhs in the third year in addition to the existing wage bill which the company had to meet. The company has been making only negligible profits and it could not pay any dividend on its equity shares for nearly 7 years. Its reserves also have been dwindling. The financial position of the company, therefore, is such that it is impossible for it to bear the burden of the additional wage structure, dearness allowance etc. , as recommended by the Wage Board. The company further pleaded that the Wage Board committed a serious mistake when it compared the financial position of the respondent along with two other large mills in the Andhra area viz., Nellimarla and Chitavalasa Jute Mills. Further the wage scales fixed by the Wage Board are on the basis of the position occupied by big jute mills in West Bengal, having upto 2,561 looms and 13,580 spindles. The Wage Board did not attempt to make any distinction between small and uneconomic mills and large mills, nor was any classification made in that manner. Regarding payment of bonus, the company pleaded that this was covered by a settlement and the workmen were not entitled to the same in view of the financial position of the company and as there was no available surplus. The wage structure, dearness allowances etc., fixed by the Wage Board were not in accordance with the principles laid down by this Court in several decisions. According to the decisions of this Court, no fair wage can be fixed unless the unit in question has the financial capacity to meet the additional burden; and, in fixing the wage scale and dearness allowance, the principle of industry cum region had to be applied. Small and struggling units should not be compared with large, flourishing concerns. The extent of business carried on by them, the labour force, the capital invested, quantum of reserves, dividends declared and profits made, have all to be taken into account to see whether the units could be compared for wage fixation. 597 All these circumstances have not been given due weight and consideration by the Wage Board. The respondent mill has only 120 looms and it has been compared with not only the very big mills in West Bengal but also with the Nellimarla and Chittavalasa Jute Mills which have 500 and 316 looms respectively. No classification was made by the Wage Board of the various jute mills as large, medium and small units; and in prescribing uniform scales for all types of units no distinction has been made between economic and uneconomic units. Small and struggling units have been treated in the same way as large and prosperous units. Finally, the respondents pleaded that in view of the circumstances indicated above, the Wage Board 's recommendations could not be implemented by it and the labour 's claims, on the basis of the Wage Board 's recommendations, were not justified. The Industrial Tribunal, in its award under attack, accepted the pleas taken by the management. While recognising the fact that the Wage Board 's recommendations were made, after collecting considerable data, the Tribunal was of the view that the Wage Board committed an error in comparing the respondent mill with other big mills, not only in Andhra Pradesh but also outside that State. The Tribunal was also of the view that the principles laid down by this Court that the fixation of wage scales should be on an industry cum region basis and that small units should not be compared with large and flourishing concerns, were not given due regard by the Wage Board. On the materials placed before it, the Tribunal accepted the claim of the respondent that it was a small concern considered from any point of view, viz., of looms, paid up capital, reserves, or the profits. In respect of the capacity to pay, the Tribunal was of the view that the Wage Board had not approached the question in the light of the principles laid down by this Court. The Tribunal came to the conclusion that the respondent, which is a fairly small unit, has not the financial capacity to adopt the wage structure fixed by the Wage Board. The Tribunal accepted the claim of the respondent regarding the additional financial burden it would have to bear, even according to the phased programme fixed by the Wage Board and has held that the financial position of the company is such that it cannot bear this burden. The TribUnal also came to the conclusion that as the Wage Board was devising a fair wage, the capacity of the particular industry to bear the additional burden which is one of the essential circumstances to be taken into consideration has not been taken into account. On the other hand, all jute mills, wherever situate, big or small, prosperous or struggling, economic or uneconomic, have all been treated alike and a uniform wage structure applicable to all mills has been fixed. There has been no attempt at classification of small and uneconomic mills for the purpose of finding out their financial capacity. The Tribunal finally came to the conclusion 598 that the demand of the workmen for implementation of the recommendations of the Wage Board was not justified. The same stand, taken before the Tribunal by the management and the workmen, as mentioned earlier, have been reiterated before us by Mr. M.K. Ramamurthy, learned counsel for the Union, attacking the award and Mr. K. Srinivasamurthy, learned counsel for the management, in support of the award. Before we refer to the circumstances under which the Wage Board was constituted, as well as the approach made by it in the fixation of wage scales and other matters, it is necessary to refer to the principles laid down by this Court in that regard and to examine whether the Wage Board has properly applied those principles. Mr. Ramamurthy, learned counsel for the appellant,, has accepted the position that there is an obligation on the Wage Board to follow correctly and apply the principles laid down by this Court in the matter of fixation of wages and dearness allowance. But his contention is that the Wage Board has, in its recommendations, followed those principles. In Express Newspapers (Private) Ltd. vs The Union of India(1) this Court has elaborately considered the concept of (i) living wage; (ii) fair wage; and (iii) minimum wage, as well as the machinery for fixation of wages, adopted in various countries. So it is not necessary to cover the ground over again. So far as fair wage is concerned, this Court has stated that while the lower limit must obviously be the minimum wage, the upper limit is equally said to be what may broadly be called the 'capacity of the industry to pay '. It has further been stated that the capacity of the industry to pay should be gauged on an industry cum region basis, after taking a fair cross section of that industry and that in a given case it may be even permissible to divide the industry into appropriate classes and then deal with the capacity of the industry to pay class wise. This Court further laid down the principles in that regard as follows, at p. 92: "The principles which emerge from the above discussion are: (1) that in the fixation of rates of wages which include within its compass the fixation of scales of wages also, the capacity of the industry to pay is one of the essential circumstances to be taken into consideration except in cases of bare subsistence or minimum wage where the employer is bound to pay the same irrespective of such capacity; (2) that the capacity of the industry to pay is to be considered on an industry cum region basis after taking a fair cross Section of the industry; and (1) 599 (3) that the proper measure for gauging the capacity of the industry to pay should take into account the elasticity of demand for the product, the possibility of tightening up the organisation so that the industry could pay higher wages without difficulty and the possibility of increase in the efficiency of the lowest paid workers resulting in increase in production considered in conjunction with the elasticity of demand for the product no doubt against the ultimate background that the burden of the increased rate should not be such as to drive the employer out of business. " The discussion on the question of capacity of an industry to pay is wound up at p. 191 with the following observations: "Industrial adjudication is familiar with the method which is usually adopted to determine the capacity of the employer to pay the burden sought to be imposed on him. If the industry is divided into different classes, it may not be necessary to consider the capacity of each individual unit to pay but it would certainly be necessary to consider the capacity of the respective classes to bear the burden imposed on them. A cross section of these respective classes may have to be taken for careful examination and all relevant factors may have to be borne in mind in deciding what b urden the class considered as a whole can bear. If possible, an attempt can also be made, and is often made, to project the burden of the wage structure into two or three succeeding years and determine how it affects the financial position of the employer. " In French Motor Car Co. Ltd. vs Workmen(1) this Court observed at p. 20: "It is now well settled that the principle of industry cum region has to be applied by an industrial court, when it proceeds to consider questions like wage structure, dearness allowance and similar conditions of service. In applying that principle industrial courts have to compare wage scales prevailing in similar concerns in the region with which it is dealing, and generally speaking similar concerns would be those in the same line of business as the concern with respect to which the dispute is under consideration. Further, even in the same line of business, it would not be proper to compare (for example) a small struggling concern with a large flourishing concern." [1963] Spp. 600 The principle that the basis of fixation of wages and dearness allowance is industry cum region was reiterated in Greaves Cotton & Co. vs Their Workmen(1). According to Mr. Ramamurthy, the learned counsel for the appellant, the principles laid down by the decisions, referred to above have been borne in mind by the Wage Board when it fixed the wage structure and dearness allowance. Learned counsel . also urged that when a wage structure was fixed for the industry as such, it is not necessary that the capacity of individual units should also be considered and that on the other hand it would be enough if a fair cross section of the industry was taken into account for this purpose as was done by the Wage Board in the present case. On the other hand, according to Mr. Srinivasamurthy, the learned counsel for the management, inasmuch as a fair wage was being fixed, the Wage Board was bound to apply the principle of industry cure region in fixing the wage structure and dearness allowance and the Wage Board has committed an error in not classfying the various units as large, medium and small units and prescribing different scales for different types of units. We shall now proceed to consider the circumstances under which the Wage Board was constituted, its composition and the approach made by it in fixing the wage structure and dearness allowance. In Chapter XXVII, paragraph 25, of the Second Five Year Plan of the Government of India, it is stated that statistics of industrial disputes show that wages and allied matters are the major source of friction between employers and workers and that an acceptable machinery for settling wage disputes will be one which gives the parties themselves a more responsible role in reaching decisions. It is further stated that an authority like a tripartite wage board, consisting of equal representatives of employers and workers and an independent chairman would probably ensure more acceptable decisions and that such wage boards shouId be constituted for individual industries in different areas. In pursuance of this recommendation,, the Government of India, by its Resolution No. WB 5(1)60, dated August 25, 1960, set up a Central Wage Board for Jute Industry. The Board consisted of a Chairman, two independent Members and two Members representing employers and two Members representing employees. The terms of reference of the Board were: "(a) to determine the categories of employees (manual, clerical, supervisory, etc) who should be (8) ; 601 brought within the scope of the proposed wage fixation; (b) to work out a wage structure based on the principles of fair wages as set forth in the report of the Committee on Fair Wages." In evolving a wage structure, the Board was also required to take into account the needs of the industry in a developing economy, the special features of the jute industry as an export industry, the requirements of social justice and the need for adjusting wage differentials in such a manner as to provide incentives to workers for advancing their skill '. The Wage Board was also required, within two months from the date of its starting work, to submit its recommendations regarding the demands of labour in respect of interim relief, pending its final report. The Wage Board recommended to the Central Government the grant of interim relief of Rs. 2.85 from October 1 to December 31, 1960 and Rs. 3.42 from January 1, 1961 in respect of all jute mills in India, excepting the Katihar Jute Mill in respect of which the interim relief at the rate of Rs. 3.42 was granted from September 1, 1961. The Central Government accepted this recommendation, by its Resolution No. WB 5(3)/61, dated January 25, 1961 and requested the jute mills to implement the same as soon as possible. There is no controversy that the respondent mill complied with this request though it involved the company in an additional expenditure of Rs. 1,53,000. This claim of the company has been accepted by the Industrial Tribunal. The Wage Board submitted to the Central Government, on September 4, 1963 its final recommendations dated August 31, 1963 and recommended that the new wage structure should be given effect to. from July 1, 1963. The Central Government, by its Resolution No. WB 5( 16)/63 dated September 27, 1963 accepted the report and made a request to the employers, the workers and the State Governments to implement the same expeditiously. The standardised basic wages of various categories of workers of jute mills for a month of 26 days or 208 hours are specified in Appendix XI of the Report; and there is no controversy that the basic wages of all categories of workers in the employ of the respondent jute mill is the same as the standardised basic wage contained in Appendix XI. But, there is a further recommendation that so far as the appellant jute mill and another jute mill, viz., Sri Krishna Jute Mill, were concerned,the wage increase was to be on a phased basis. We may refer now to the various aspects dealt with by the Wage Board in its report. Chapter III deals generally with the Industry. In para 3.5 it is stated that there is an overwhelming concentration of jute industry in West Bengal and only a sprink 602 ling of it is to be found elsewhere in India. It is also noted that the loomage at the time of the report in the whole of India stood at 72,916 looms. The reasons for the heavy concentration in West Bengal of jute mills are stated to be factors like abundant supply of raw material, proximity of coal fields in Ranigunge,navigability of the Hooghly and the availability of the required type of labour in the neighborhood. So far as jute mills at other places in India are concerned, in para 3.6 of the Report it is stated that small jute mills have come up in other States, including Andhra Pradesh, but the total loomage of all such mills outside West Bengal is only 3,242 looms, and the mills are distributed in various places. Appendix VII of the Report contains a statement showing the mills operating, number of looms and spindles in the whole of India. So far as West Bengal is concerned, the total number of looms is given as 65,383; in Andhra Pradesh as 1,072; in Bihar 1,059; Uttar Pradesh 891 and Madhya Pradesh 220. It will be noted from Appendix VII that in Andhra Pradesh there are two fairly big units, the Nellimarla and Chitavalsa having 316 and 500 looms respectively, whereas the respondent mill lias only 120 looms. We are particularly referring to this aspect because it is the grievance of the respondent that the Wage Board has compared it with the Nellimarla and Chitavalsa and other big units in West Bengal. A perusal of Appendix VII shows that there are several jute mills having more than 1,000 looms and some having more than 2,000 looms, in West Bengal. Chapter IV deals with the scope of enquiry. In para 4.1 it is stated that the Board 's recommendations will apply to all the jute mills then existing and also to those that might be started thereafter, and a list of all mills then in existence is given in Appendix VII. Chapter V deals with minimum wages in the jute industry. In para 5.4 the Wage Board takes note of the fact that the minimum wages in Nellimarla and Chitavalsa jute mills in Andhra Pradesh are found to be the highest in the jute industry. In para 5.26, the minimum wages in West Bengal jute mills from 1948 and as obtaining from January 1, 1961 has been referred to. Such minimum wages from January 1, 1961 including Rs. 3.42 granted as interim relief by the Wage Board and the dearness allowance, is stated to be Rs. 70.59, comprised of basic wages of Rs. 34.67 Rs. 3.42 (interim relief)+Rs. 32.50 (dearness allowance). Regarding the jute mills in Andhra Pradesh, it is stated in para 5.35 that Nellimarla and Chitavalsa jute mills were paying from January 1, 1961 the total emoluments of Rs. 81.21 per month to the 603 lowest category of workers for 208 working hours, inclusive :section 3.42 interim relief granted by the Wage Board. In para 5.38, it is stated that the respondent mill, from Janury 1, 1961, is paying total emoluments of Rs. 52.17 per month, comprised of Rs. 19.50 (basic)+Rs. 3.42 (interim relief)+ is. 29.25 (dearness allowance). The jute mills in Bihar State, s will be seen from para 5.43 were paying total monthly emolunents ranging from Rs. 69.98 to Rs. 70.59. Chapter VI deals with the industry 's capacity to pay. In para 6.1 it is stated that two matters which received the highest consideration in the course of the deliberations of the Wage Board were the needs of the workers and the capacity of the industry to pay those needs. It is further stated that the consequences of a fair wage upon the employer or the capacity of the industry to maintain production efficiently, have received the special attention of the Wage Board. In para 6.8, reference is nade to the Fair Wages Committee 's Report that in determining .he capacity of the industry to pay, it is wrong to take the capacity of a particular unit or the capacity of the entire industry in the country and that the practical method is to take a fair cross section of the jute industry. In this connection the Wage Board refers to the claims advanced by the workers and the industry. The workers appear to have suggested the names of mills which were well established and whose financial position was never in doubt, whereas the industry urged that the capacity of the weaker and marginal units should not be ignored as the wages that are to be fixed by the Wage Board should be such as could be paid without difficulty by all units of the industry. In para 6.9 it is stated that the Wage Board was of the view that the only proper and practical methods was to take a cross section of the industry which could be considered as fair in its view. Accordingly. twenty jute mills in West Bengal were selected by it as representing a fair cross section of the industry in that region. The Wage Board also decided to make a census survey of 9 reporting mills outside the West Bengal region. Accordingly it selected all the three in Andhra Pradesh, two in Bihar, three in Uttar Pradesh and one in Madhya Pradesh. A list of the jute mills in West Bengal and outside West Bengal region considered as forming a representative cross action of the jute mills is given in Annexure A to the Report. So far as Andhra Pradesh is concerned, all the three mills situate in the State have been taken into account, being Nellimarla, Chitavalsa and the respondent. The Wage Board then considers the capital formation, bonus issue. total paid up capital, reserves and surplus, percentage of dividend declared, profits made; but, under each of these heads, the Wage Board grouped together all the mills in West Bengal, Andhra Pradesh, Bihar, Uttar Pradesh and Madhya Pradesh. 604 In para 6.44, the Wage Board expresses the view that it would be possible for the industry to bear the extra burden arising from the new wage structure recommended by it without much difficulty and without affecting the economy of the industry adversely. In Chapter VII the Wage Board considers the principles by which the Tribunal and other wage fixing authorities were guided in fixation of wages in West Bengal and outside that State. In para 7.19 the Wage Board proceeds to state that it has to devise a fair wage structure. It refers to the report of the Committee on Fair Wages that with regard to a fair wage, the lower limit must obviously be the minimum wage and the upper limit is equally set by what may broadly be called the capacity of the industry to pay. In para 7.25 the Wage Board refers to the claim of the workers that the minimum wages at Calcutta, at prices prevailing in 1960 should be Rs. 125 and that the minimum wage at Kanpur, in Uttar Pradesh, should be Rs. 140 per month; while, on the other hand, the Indian Jute Mills Association appears to have pressed that the then existing wages in the jute industry for all categories of workers were fair. In para 7.34 the Wage Board refers to the fact that the wages in the jute industry had not kept pace with wages in cotton textile and engineering industries in West Bengal, as would be seen from the fact that in 1959, while in the jute industry the minimum wages had gone up by 46% over the 1946 wages, it had gone up in cotton textile and engineering industries by 69.71% and 77.50% respectively. It further notes the fact that the minimum wages in cotton textile mills in West Bengal on April 1, 1963 were Rs. 83.50 and in the engineering industry Rs. 82 per month. On the other hand, the wages in the jute industry on April 1, 1963 were Rs. 70.59. On this reasoning the Wage Board comes to the conclusion in para 7.35 that there was a prima facie case for increase in the wages of the jute workers. The Wage Board expresses the opinion that the concept of the paying capacity of the jute industry is not the same as it is generally understood in the case of other industries, in view of the fact that the jute industry is principally an export oriented industry, depending upon the fluctuating foreign markets. In para 7.40 the Wage Board states that in fixing the wage structure for the jute industry it has taken into consideration the prevailing wage structure in the cotton textile industry and the engineering industry in West Bengal. It has noted that in West Bengal, as on April 1, 1963, the minimum wage in the. cotton textile industry Was Rs. 84.10 per month and in engineering industry Rs. 82 per month. As in the opinion of the Wage Board there is a great similarity in the nature and condition of work between cotton textile industry and jute industry, in para 7.43 it 605 decides to devise a wage structure in the jute industry keeping in wages existing in the cotton textile industry in West Bengal. Regarding dearness allowance, the Wage Board in para 7.44 decides to introduce a system of variable. dearness allowance linked with the consumer price index. In para 7.45 the Wage Board refers to the special representations made by the jute mills outside West Bengal that in comparison with the mills in West Bengal they have to pay higher freight charges on coal, batching oil and that mill stores and electricity charges are higher for them, that their productivity is low and that most of them have no export trade. The Wage Board states that it has considered these problems and though there are these locational difficulties for individual jute mills, it has decided that the wage level in the jute industry should as far as possible be uniform throughout the country. The Wage Board further states that the wages in some of these jute mills were very low and in order to obviate their financial difficulties in consequence of the raising of wage level, it has decided that the wage level in these mills should be raised in a phased manner. Having decided that the wage level in the Jute Industry should be uniform throughout the country, the Wage Board, in para 7.52 decides that the total minimum wage in West Bengal should be fixed at Rs. 81 per month, consisting of(i) basic wage; (ii) Wage Board increment; and (iii) variable dearness allowance. The Wage Board further, in para 7.56, states that in addition to basic wages, all categories of workers should be paid an increase of Rs. 8.33 per month inclusive of interim relief of Rs. 3.42 already granted by it and accepted by the Central Government. This increment of Rs. 8.33 per month is desired to be shown as a separate item under the heading Wage Board increment ' in the case of all categories of workers and that increment should be treated as part of the basic wages for all purposes like bonus, provident fund, etc. In para 7.57 the Wage Board states that the dearness allowance of Rs. 32.50 that was being paid then should be considered as the dearness allowance fixed at the working class consumer price index number of 425, for Calcutta with base year 1939 as 100. It is further stated that the dearness allowance should be a variable one and the rate of increase or decrease should be at 0.20 nP. per point rise or fall in the average working class consumer price index number for Calcutta. The dearness allowance is also directed to be revised every six months in the months of February and August of each year. On the basis of these calculations, in para 7.58 the Wage Board fixes the total monthly minimum wage payable at Rs. 84 sup. 606 comprised of (a) Rs. 40.17 basic wage; (b) Rs. 8.33 Wage Board increment; and (c) Rs. 32.50 being variable dearness allowance. In para 7.59, the Wage Board states that the standardised basic wages of various categories of workers of a jute mill for a month of 26 days or 208 hours are enumerated in Appendix XI to the Report. When considering the wage structure for jute mills outside West Bengal, in para 7.65(a) the Wage Board states that the basic wages of all categories of workers in the jute mills mentioned by it, outside West Bengal, which includes the respondent mill, should be the same as those in jute mills in West Bengal mentioned in Appendix XI. Therefore, it is clear that the ,minimum basic wage fixed for the mills in West Bengal has been applied to all the mills outside West Bengal, including the respondent. But, so far as the respondent mill is concerned, the Wage Board, in the same paragraph, gives a direction that the Standardised basic wages mentioned in Appendix XI of the Report is to be adopted in a phased manner as follows: During the first 24 months Basic wages of all categories from the date on which the of workers should be 20 per recommendation of the Board cent lass than the standar will be effective dised wages shown in Appen dix XI During the next 12 months Basic wages of all categories should be 10 percent less than the standardised wages shown in Appendix XI During the next 12 months Basic wages of all categories should be 5 percent less than the standradised wages shown in Apendix XI Thereafter Basic wages of all categories of workers should be the same as stadardised wages shown in Appendix XI In paragraph 7.66 the Wage Board directs that all categories of workers in jute mills situated outside West Bengal should also be paid the Wage Board increment of Rs. 8.33 per month, inclusive of interim relief of Rs. 3.42 already granted. In para 7.67(c) it is stated that the rates of dearness allowance of all categories of workers in the respondent mill and in Sri Krishna Mill is fixed at Rs. 32.50 at the average working class consumer price index number of 560 for Eluru for the last six months in 1962 with base year 1935 36 as 100. It is further stated that the dearness allowance should be a variable dearness allowance and the rate of increase or decrease should be 0.20 nP per point of rise or fall in the average working class consumer price index number for Eluru and that it should be revised every six months in the months of February and August. Chapter VIII deals with bonus in jute industry and in para 8. 18 ,the Wage Board makes a recommendation that in the jute 607 industry the payment of bonus should be governed by the rules mentioned therein. Lastly, in para 10.8 of Chapter X, the Wage Board states that the new wage structure recommended by it should come into force from July 1, 1963; and it is provided in para 10.9 that the payment of wages at the new rates should start in any case not later than the week ending November 2, 1963. We have fairly exhaustively dealt with the various matters considered by the Wage Board in its Report. It is no doubt true that the Wage Board has gone elaborately in the matter of fixing of the wage structure in the jute industry. We have earlier referred to the various principles laid down by this Court which should govern the fixing of wages and dearness allowance. The Board itself states that it was fixing a fair wage for the industry. We have adverted to the fact that in the Express Newspapers Case(1) this Court has held that in the case of fixation of fair wage, the upper limit may broadly be stated to be the capacity of the industry to pay. It has been further laid down that the capacity of the industry to pay should be gauged on an industry cureregion basis, after taking 'a fair cross section of that industry and that, in a given case, it may be even permissible to divide the industry into appropriate classes and then deal with the capacity of the industry to pay class wise. As the Wage Board was fixing a fair wage for the entire jute industry it may not have been strictly necessary to consider the financial capacity of each individual unit. But, as pointed out in the Express Newspapers Case(1), the requirement of considering the capacity of each individual unit to pay may not become necessary if the industry is divided into different classes. Even if the industry is divided into different classes, it will still be necessary to consider the capacity of the respective classes to bear the burden imposed on them. For this purpose a cross section of these respective classes may have to be taken for careful consideration for deciding what burden the class considered as a whole can bear. The question is whether. the Wage Board has adopted these principles when it fixed the wage structure for the entire jute industry From the various matters dealt with by the Wage Board and the manner of approach made by it, as referred to above, we are satisfied that no attempt has been made by the Wage Board to divide the industry into classes. It is also clear that no cross section of such classes has been taken for investigation to decide what burden the units in each class can bear. The approach of the Wage Board to determine uniform wage scales for the entire industry must suffer from an inherent weakness. Conditions, such as easy access to raw materials, transport, nearness of market for disposal of the manufactured pro (1) 608 duct, availability of labour, the type of market whether within or outside the country for which the manufactured articles are intended and diverse other factors must vary from region to region. Likewise, economic conditions affecting the consumer prices must and do differ, as is well known, from region to region, depending largely upon whether a particular region is self sufficient or not in the elemental needs of its citizens and these in turn are bound to affect living standards. It would therefore be too artificial and unrealistic an approach to be oblivious of these differences and to attempt to group together all establishments and factories and devise common wage scales applicable to all of them disregarding the peculiar features of the industry in a particular region. Favourable conditions prevailing in one region would place industrial concerns there in a position better than those in other regions where such conditions do not occur. Similarly, in regions where consumer prices are lower, labour would be better off than in the rest of the regions where the living index is higher; yet, the wage scales would be the same in all the regions. Uniformity of wage scales, irrespective of differences in conditions would place both the employees and the employers in regions where such favourable conditions prevail in an unfairly advantageous position over the employees and employers in the other regions. Instead of attaining harmony there would as a result arise inevitably a feeling of discrimination. Though, as stated by this Court in Express Newspapers ' Case(1), it may not be possible or even necessary for a Wage Board to scrutinise all the establishments separately and it would be enough to take a representative cross section of the industry for assessment, the cross section to be a truly representative one and capable of giving a true picture of the conditions of both the industry and labour must be one from each region where establishments of the industry in question are situate. What the Wage Board, however, did was that instead of proceeding region wise and selecting a representative cross section from each region, it selected 20 mills from West Bengal and clubbed them with 9 reporting mills from the rest of the regions, viz., Bih 'ar, U.P., Madhya Pradesh and Andhra Pradesh where a few mills are scattered. The Board considered these 29 mills as representing a cross section of the industry. It is obvious that these mills so clubbed together could not truly reflect the economic and other conditions prevailing in the mills in different regions with their peculiar problems and differing conditions. That in our view was not a proper approach and was bound to result in injustice especially in view of the peculiar feature of the jute industry that it is predominently concentrated in West Bengal and is export oriented. Besides, the jute industry in the (1) 609 other regions suffers from a distinct disadvantage as the raw materials have to be transported from a distance at considerable cost. Taking the 20 mills from West Bengal and the 9 mills from outside as forming a representative cross section was manifestly incorrect as the West Bengal Mills cannot truly be said to be comparable units for the rest of the mills. Another difficulty in accepting the Wage Board 's recommendations arises from the fact that the Board equated the cotton textile industry in West Bengal with the jute industry there and finding the wage scales in the jute industry lower than those in the cotton textile industry the Board raised the scales in the jute industry so as to bring them to the level of the cotton textile industry. Having so done, the next step which the Wage Board took was to raise also the wage scales in mills outside West Bengal to bring them in line with the scales proposed by it for the mills in West Bengal. This process gave rise to two infirmities: (i) that the Board treated cotton textile concerns in West Bengal as comparable to those. in jute industry; and (ii) it treated the jute mills in West Bengal as comparable to those outside, although conditions in the different regions where they were situate were obviously different. This meant that the Board gave a go by to the well established principle of industry cum region consistently applied by Industrial Tribunals whenever wage scales had to be determined. Such a disharmony in the approach to the problem of determination of wage scales by a Wage Board on the one hand and an Industrial Tribunal on the other must inevitably occur because whereas the attempt of a Board would be to uniformise wage scales for the entire industry, though it is spread over different parts of the country where conditions can rarely be expected to be similar or the same, the concern of a Tribunal would principally be to determine equitably the wage scales of a single unit with which it is for the time being concerned. The difficulty would be all the more felt by such a Tribunal where it is faced with the dilemma whether or not it should follow the Board 's recommendations arrived at on principles different from (as in the present case) those consistently followed in industrial adjudication. One should have thought that this difficulty would have been realised before the recommendations of the Wage Board were accepted by Government. The difficulty referred to above arising from the difference in the functions of the two bodies could well have been obviated if the Wage Board instead of laying down uniform scales for the entire industry irrespective of where its several units were situate and of the different conditions prevailing in various areas. had considered the units in each area separately and determined the 610 wage scales for each such area by taking from that area a representative cross section of the industry where possible or where that was not possible by taking comparable units from other industries within that area, thus following the principle of industrycum region. It is true that in doing so uniformity of wagescales for the entire industry would not have been attained. But in a vast country like ours, where conditions differ often radically from region to region and even the index of living differs within a fairly wide range, such a target cannot always be just or equitable. If the wage scales had been determined by the Board in the manner aforesaid, even though the Board is not a statutory body and consequently its decisions are of a recommendatory character, it would be possible for industrial tribunals to give due weight to its recommendations as such recommendations would have been in conformity with the principle of industrycum region, a principle binding on the tribunals. It would be difficult in that event for any unit in the industry in that region 'to propound a grievance that its capacity to pay was not taken into account as the scales so framed would have been determined after taking into consideration scales prevailing in comparable units, whether in that industry or other industries in that region depending on whether in a particular area the accent was on the industry part or the region part of the principle of industrycum region. The Board, therefore, ought to have selected comparable units from each of the regions where the lute mills are situate and after their examination arrive at common wagescales for each of those regions instead 'of grouping together 20 mills from West Bengal and 9 mills from the other regions and treating them as constituting a cross section representing the industry. The position in which a Tribunal called upon to fix wage scales would be placed would not be an enviable one for it would find itself in an embarrassing situation where it had either to accept the wage scales fixed by the Board though they were fixed in contravention of the principle of industry cumregion, or discard them and proceed to fix them on its own on the principle of industry cum region, a principle which, as the industrial law stands today, it is bound to follow. We have already pointed out that the Wage Board has taken the view that the wage level in the entire jute industry should be uniform throughout the country. It has also stated that the wage structure for the jute industry in West Bengal has to be devised having regard to the pattern of wage structure existing in the cotton textile industry in that area. It is on this basis, and after a comparison of the wage structure prevailing in the cotton textile industry in that area, that the Wage Board has come to the conclusion that the minimum monthly emoluments of a worker in West Bengal .must be fixed at Rs. 81 taking in the basic wages, the Wage Board increment and the variable dearness allowance. 611 The standardised basic wages enumerated in Appendix XI has been made applicable to all the jute mills outside West Bengal also, including the respondent mill. We have already referred to the recommendation of the Wage Board in para 7.65 (c) that the respondent jute mill should adopt the standardised basic wages axed in Appendix XI, in a phased manner. Over and above that basic wage, the Wage Board has given an increase of Rs. 8.33 per month, as Wage Board increment and a variable dearness allowance of Rs. 32.50 per month. Though it had been pressed by the jute mills outside West Bengal, that they had to pay higher freight charges on coal, batching oil etc., and that mill stores and electricity charges were higher for them, the Wage Board insisted that the Wage level in the jute industry should be uniform throughout the country. The result of the Wage Board 's recommendations, if they are to be given affect to by the respondent mill, will be that as against the minimum monthly wage of Rs. 52.17 that was being paid by the respondent there is a very sharp rise in its wage bill. The claim of the respondent that the recurring expenditure for implementation of the recommendation of the Wage Board is over Rs. 3,75,000, and that it has not the financial capacity to bear this burden, has been accepted by the Industrial Tribunal and that finding has not been challenged before us by the appellant. The respondent mill, which has only 120 looms, has been compared with the two big mills in Andhra Pradesh, viz., Nellimarla and Chitavalsa, having 326 and 500 looms respectively, as also with very large mills in West Bengal, some of whose loom capacity is more than 2,000. That clearly shows that all mills, small as well as large, economic as well as uneconomic, have been clubbed together and treated alike by the Wage Board. In considering the capacity, the Wage Board has taken 20 jute mills in West Bengal as representing a fair cross section of the industry in that region and it has taken 9 reporting mills outside West Bengal for this purpose. Three mills selected in Andhra Pradesh were the Nellimarla, Chitavalsa and the respondent mills. We have already shown the large disparity that exists between the mills in West Bengal as also between the Nellimarla and Chitavalsa and the respondent mill. We have also referred to the decisions of this Court that to compare wage scales comparable establishments in the region would be taken into account and that a small, struggling concern should not be compared with a large, flourishing one. But this is exactly what has happened, when the Wage Board treated alike the respondent mill not only with Nellimarla and Chitavalsa jute mills but also with some of the very big and prosperous mills in West Bengal. The various aspects, dealt with above, establish that the essential prerequisite of deciding the wage structure. viz., to consider the capacity of the industry to pay on the principles laid down by 612 this Court, is absent in the recommendations of the wage Board and that introduces a fatal infirmity in its decision. The question of bonus does not arise for our consideration as the respondent has stated that the management has entered into a settlement with its workmen and that they will. be entitled for bonus only if the net profits exceed Rs. 75,000. It has further been stated that there is no available surplus to warrant the payment of bonus. These statements have not been controverted on behalf of the appellant. To conclude, the award of the Industrial Tribunal that the demand of the workmen for implementation of the recommendations of the Wage Board is not justified, is correct. The appeal fails and is dismissed. In the circumstances of the case, there will be no order as to costs. Y.P. Appeal dismissed.

The Central Wage Board was constituted for devising a wage structure, based on the principle of fair wages payable in the Jute industry. In determining the financial capacity of the industry the Board selected 20 mills from West Bengal and 9 mills from the rest of the region as representing a cross section of the Industry. The respondent, a fairly small mill in Andhra Pradesh. was considered 'as a comparable unit with two larger mills in the State as also with some of the very big and prosperous mills in West Bengal. The Management of the mill refused to accede to the demand of the workmen to pay wages in accordance with the recommendations of the Board fixing a uniform scale for the entire industry, on the plea that the mill had no financial capacity to bear the burden of the wage scale. The dispute was referred to the Industrial Tribunal. The Tribunal upheld the claim of the management. In appeal to this Court it was contended that the Wage Board recommendations did follow the principles laid down by this Court in the matter of fixation of wages and as such the Tribunal should have implemented its recommendations. HELD: Dismissing the appeal. The essential pre requisite of deciding the wage structure viz., consider the capacity of the industry to pay on the principles laid down by this Court was absent in the recommendation of the Wage Board. This Court has laid down that the capacity of the industry to pay should be gauged on an industry cum region basis after taking a fair cross section of the industry and that the cross section to be truly representative and capable of giving a true picture of the conditions of both industry and labour must be one from each region where establishments of the industry in question are situate. [608 E F] In the present case taking 20 mills from West Bengal and 9 mills from outside as forming a representative. cross section was manifestly incorrect as the West Bengal mills could not be said to be comparable units with the rest of the mills. These mills so clubbed together could not reflect the economic and other conditions prevailing in the mills in different regions with their peculiar problems and differing conditions. The Board ought to have considered the units in each area separately and determined the wage scales for each such area by taking from that area a representative cross section of the industry where possible or where that was not possible by taking comparable units from other industries within that area. [608 G H] Express Newspapers Ltd. vs Union of India, [1959] S.C.R. 12, French Motor Car Co. vs Workmen, [1963] Supp. 2 S.C.R. 16 and Greaves Cotton & Co. vs Workmen, [1964] 5 S.C.R. 362, followed. 594 If the wage scale had been determined by the Board in the mam aforesaid, even though the Board was not a statutory body and decisions were only of a recommendatory character, it would be possi for Industrial Tribunal to give due weight to its recommendations such recommendations would have been in conformity with the princil of industry cum region, a principle binding on the ' tribunals. [609 H] [The difficulty felt by the Tribunal faced with the dilemma whether not to follow the recommendations of the Wage Board arrived at principles different from those consistently followed in industrial adjucation should have been realised by the Government before accepti the recommendations of the Wage Board.] [609 F G]

minal Appeal No. 145 of 1965. Appeal by special leave from the judgment and order dated January 15, 1965 of the Mysore High Court in Cr. Revision Petition 299 of 1964. H. R. Gokhale and R. B. Datar, for the appellant. R. Gopalakrishnan, and S.P. Nayar, for the respondent. The Judgment of the Court was delivered by Bhargava, J. The appellant, K. M. Kanavi, was the President of the Municipal Borough of Gadag Betgeri from 11th January, 1960 to 15th March, 1963. He was removed from the President ship on 15th March, 1963 by an Order passed by the Government of Mysore for neglect of duty and incapacity under section 21(2) of the Bombay Municipal Boroughs Act, 1925 (No. XVIII of 1925) (hereinafter referred to as "the Act") which was applicable to Gadag Betgeri, even though it was situated in the State of Mysore, because it was earlier a part of the State of Bombay. On the next day, i.e., on 16th March, 1963, the Government passed an order superseding the Borough. The appellant filed two writ petitions challenging these two orders of his removal and supersession of the Borough. The order of supersession was quashed by the High Court of Mysore by its judgment dated 10th April 1963 in Writ Petition No. 492/1963 reported in The Presi dent, Gadag Betgeri Municipal Borough vs State of Mysore(1). Thereafter, elections were held for the office of the President, because the appellant had ceased to be the President under the order of removal. One Malashetti was elected as the President of the Borough on 22nd April, 1963. On 25th April, 1963, the new President asked the appellant to hand over all the papers, documents and property belonging to the Municipal Administration. On 2nd May, 1963, the appellant sent three keys and two files of papers by registered parcel to the new President. The new President returned it on the ground that those articles had not been delivered to him in person by the appellant and be considered it unsafe to take delivery of the registered parcel. When sending this parcel, the appellant wrote an accompanying letter in which he specifically stated that he was retaining certain papers as they were needed by him for his writ petition which was pending against his order of removal. Thereafter, on 20th June, 1963, the State Government made an order under sub section (2) of section 23A of the Act directing the appellant to hand over charge of all the papers (1) 823 And properties which were in his possession to the new President. He was also asked to hand over an iron cupboard with its keys and contents which were with him. This Government Order was served on the appellant on 9th July, 1963. The appellant did not comply with the Order and, consequently, on 21st September, 1963, the Government of Mysore sent an order to the Divisional Commissioner directing him to take necessary action under section 23A of the Act to prosecute the appellant, since he had defied the Government Orders and had refused to hand over charge of the papers and properties of the Borough to, the newly elected President. The Divisional Commissioner, in turn, wrote to the Deputy Commissioner on 5th October, 1963, requesting him to take immediate action under section 23A(3) of the Act to prosecute the appellant. The Deputy Commissioner then passed an order authorising the newly elected President of the Borough to be the formal complainant in respect of this prosecution which had been ordered by the Government and to file a criminal complaint against the appellant. This order was made by the Deputy Commissioner on 24th December, 1963. The new President, Malashetti, thereupon filed a complaint against the appellant for an offence punishable under section 23A(3) of the Act. The complaint itself is dated as 3rd January, 1964, but the judgment of the High Court mentions that the complaint was actually presented in Court on 8th January, 1964. Since these dates are not very material for decision of the point on the basis of which this appeal is being decided, we have not tried to ascertain the exact date of presentation of the complaint in court. On the basis of this complaint and the facts mentioned above, the appellant was convicted by a Magistrate for the offence under section 23A(3) of the Act and was sentenced to pay a fine of Rs. 501 , in default to suffer simple imprisonment for seven days. The appellant filed a revision against this order of conviction in the High Court of Mysore and challenged it on three grounds. One ground was that the complaint filed by the new President Malashetti was incompetent as it was not filed in accordance with the procedure laid down in the Act, so that the proceedings taken by the Magistrate were without jurisdiction. The second point was that, even if it be held that the complaint was validly filed the provisions of section 23A of the Act were not attracted, as the appellant could not be held to be a retiring President and an order under section 23A(2) can only be made against a retiring President. The third plea was taken that the complaint was barred by time. The High Court did not accept any of these three pleas and dismissed the revision. The appellant has, therefore, come up to this Court in appeal by special leave. In this case, the facts, which have been enumerated above, were not disputed even during the trial of the case, and the defence 8Sup CI/68 13 824 of the appellant was confined to the three grounds mentioned above which were urged in the revision before the High Court. To appreciate the first ground mentioned above, it is necessary to reproduce section 23A and sub section (1) of section 200 of the Act which are as follows : "23A. (1) On the election of a new President or Vice President, the retiring President or Vice President in whose place the new President or Vice President has been elected shall hand over charge of his office to such new President or Vice President, as the case may be. (2) If the retiring President or Vice President fails or refuses to hand over charge of his office as required under sub se ction (1) the State Government or any authority empowered by the State Government in this behalf may, by order in writing, direct the President or the Vice President, as the case may be, to forthwith hand overcharge of his office and all papers and property of the municipality, if any, in his possession as such President or Vice President, to the new President or Vice President. (3) If the retiring President or Vice President to whom a direction has been issued under sub section (2) does not comply with such direction, he shall, on conviction, be punished with simple imprisonment for a term which may extend to one month or with fine which may extend to Rs. 500 or with both. (1) The standing committee and, subject to the provisions of sub section (3) the Chief Officer may direct any prosecution for any public nuisance whatever and may order proceedings to be taken for the recovery of any penalties and for the punishment of any persons offending against the provisions of this Act or of any rule or by law thereunder and may order the expenses of such prosecutions or other proceedings to be paid out of the municipal fund : Provided that no prosecution for an offence under this Act or by laws framed thereunder shall be instituted except within six months next after the date of the commission of the offence or if such date is not known or the offence is a continuing one within six months next after the commission or discovery of such offence. " Sub section (1) of section 23A casts the duty on the retiring President to hand over charge of his office to the new President, when a_new President has been elected. It is obvious that, when handing over 825 charge, the retiring President must hand over to his successor all the papers and property belonging to the Borough. Sub section (2) of section 23A envisages a case where the retiring President fails or refuses to hand over charge of his office in that manner. This sub section empowers the State Government or any authority empowered by the State Government in this behalf to make an order in writing directing the retiring President to forthwith hand over charge of his office and all papers and property of the municipality to the new President. Sub section (3) of section 23A prescribes the punishment which can be awarded to a retiring President who is convicted for not complying with a direction issued under sub section It is clear that, in the present case, the appellant was not liable to conviction under section 23A(3) merely because he refused to hand over complete charge to Malashetti when the latter asked him to do so by his letter dated 25th April, 1963 or even by the subsequent reminder dated, 6th May, 1963. The failure of the appellant to hand over the property, however, led the State Government to make a direction under section 23A(2) on 20th June, 1963 and this Order of the Government was served on the appellant on 9th July, 1963. This Order was not complied with by the appellant according to the case of the prosecution. It was because of the failure of the appellant to comply with this Order that the complaint was filed by the new President under section 23A(3). The complaint was, therefore, clearly for initiating a proceeding for the punishment of the appellant who had offended against the provision under sub section (2) of section 23A of the Act. Under section 200(1) of the Act, direction for taking such proceedings could be made either by the standing committee or by the Chief Officer. Admittedly, Malashetty was not the Chief Officer, nor did he file the complaint under any direction made by the Standing Committee of the Borough. It is on this ground that the plea has been put forward on behalf of the appellant that the complaints against him was incompetent and no conviction could be validly recorded against him on its basis. The High Court rejected this plea on the ground that, in its opinion, section 200(1) of the Act is only an enabling section which gives the power to the Standing Committee and the Chief Officer to make directions for taking of proceedings of this nature and it cannot be held to be exhaustive of the authorities who could make directions for initiation of such proceedings. The High Court took notice of the fact that in the Act, there is no provision forbidding cognizance of an offence being taken except on a complaint made under a direction of the Standing Committee or the Chief Officer, and interpreted the expression "may direct" used in section 200(1) of the Act as indicating that it was an enabling section permitting the Standing Committee and the Chief Officer to make necessary directions. In these circumstances, the High Court con . 826 cluded that this provision could not be held as laying down that the Standing Committee and the Chief Officer were the exclusive authorities who could institute proceedings of the nature mentioned in that sub section. On this view, the High Court further proceeded to hold that a complaint could have been filed for an offence under the Act by even a private individual, so that the complaint filed by Malashetty, who was interested in his capacity as the newly elected President, was competent and valid. We are unable to accept the interpretation put by the High Court on section 200(1) of the Act. It is true that there is no specific provision in the Act laying down that cognizance of an offence under the Act is not to be taken except on a complaint filed in accordance with a direction made under section 200 (1 ), but the scheme of the Act and the purpose of this provision in section 200(1) makes it clear that the legislature intended that such proceedings should only be instituted in the manner laid down in that sub section. The word "may" was used only because the legislature could not have enacted a mandatory provision requiring the Standing Committee or the Chief Officer to make a direction for institution of proceedings in all cases. This word was intended to give a discretion to the Standing Committee or the Chief Officer to make directions for taking proceedings only when they considered it appropriate that such a direction should be made and to avoid compelling the Standing Committee or the Chief Officer to make such directions in all cases. The use of this word "may cannot be interpreted as laying down that, if a proceeding for punishment of any person for con travention of any of the provisions of the Act is to be instituted, it can be instituted in any manner without complying with the requirements of section 200(1) of the Act. If the interpretation put by the High Court on this provision is accepted, it would mean that this provision was totally unnecessary, because there would be no need to confer power on the standing committee or the Chief Officer to make such directions if such directions could be made or proceedings instituted at the instance of any private individual. We cannot accept the submission that this provision was made in the Act simply by way of abundant caution. In fact, if the provision had been made with such an object in view, there is no reason why the power should have been expressed to be conferred on the standing committee and the Chief Officer only and not on the President of the Municipality. We, consequently, hold that, if any proceeding for punishment of any person for contravention of any of the provisions of the Act is to be instituted, it must be instituted in the manner laid down in section 200(1) of the Act and in that manner ,only. This view of ours follows the principle laid down by this Court in Ballavdas Agarwalay. Shikri J. C.Chakravarty(1). In that case, (1) ; 827 the Court had to interpret a similar provision in section 537 of the Calcutta Municipal Act, 1923, under which it was laid down that the Commissioner may institute, defend or withdraw from legal proceedings under that Act or under any rule or bye law made thereunder. The Court held that, though the word used was "may". this provision must be read as requiring that the institution or withdrawal from legal proceedings under that Act must be by the Commissioners and no other authority. The decision was given on the basis that the scheme of the Act made it clear that section was intended to confer exclusive power on the Commissioners. The interpretation that it was a mere enabling section because of the use of the word "may" was rejected and it was hold that, if the other interpretation canvassed was accepted, the section would become clearly otiose. That principle clearly applies to the interpretation of section 200 (1) of the Act with which we are concerned. In Mangulal Chunilal vs Manilal Maganlal and Another(1), a similar interpretation was put on section 481 ( 1 ) of the Bombay Provincial Municipal Corporation Act, 1949, which also used the word "may" when laying down that the Commissioner may take or withdraw from proceedings against any person who is charged with any offence against this Act or. This Court referred to the decision in Ballavdas Agarwala(2) and said : "Similarly, here it seems to us that only the authorities mentioned in section 481, read with section 69, can launch proceedings against persons charged with offences under the Act or the rules, regulations or by laws made under it." In the case before us, reliance was placed on the other side on a decision of the Bombay High Court in The State vs Manilal Jethalal(3). That decision has already been disapproved by this Court in the case of Mangulal Chunilal(1), and need not detain us. On this view, it must be held that the complaint in the present case, which was instituted by Malashetty, the newly elected President, without any order or direction by the standing committee or by the Chief Officer was not competent as it did not comply with the requirements of section 200(1) of the Act. In this connection, a new point that was raised was that, whenever an Order under section 23A(2) of the Act is made and is disobeyed, only the State Government, which made the Order or the new President to whom the papers and property of the Borough have to be given under the direction made by the Government will have the knowledge that the retiring President has failed to (1) Criminal Appeal No. 59 of 1965 decided on 23 11 1967. (2) ; (3) 828 comply with the direction and has, thus, committed an offence punishable, under section 23A(2) of the Act and, consequently, it should be held that a complaint in respect of such an offence was not intended to be covered by the provisions of section 200(1) of the Act. On the language of section 200(1) of the Act, however, we must reject this contention, because it clearly lays down that the Standing Committee and the Chief Officer are the authorities who can order proceedings to be taken for the punishment of any person offending against the provisions of the Act, and the present prosecution of the appellant is clearly for an offence of failing to comply with a direction under section 23A(2) made punishable under section 23A(3) of the Act. It may, no doubt, appear anomalous that the prosecution of even a retiring President in such circumstances has to be ordered by the Chief Officer, who was his subordinate at least during the time when he was working as the President. It seems to us that this anomaly has arisen, because, when section 23A in its present form was introduced in the Act by the Bombay Act XL of 1950 and for the first time a retiring President was made liable to conviction for failing to comply with a direction made under sub section (2) of that section, the Legislature did not notice that section 200(1) of the Act would govern even such a proceeding. The legislature left section 200(1) of the Act untouched. That provision, as it stands at present, is clearly applicable even to a proceeding for punishment of a retiring President under section 23A(3) of the Act, so that the remedy may now lie in a suitable amendment of section 200(1) of the Act. The conviction of the appellant on the basis of the complaint filed by the new President Malashetty, in disregard of the provisions of section 200(1) of the Act, must, therefore, be held to be invalid and set aside. Since the appeal succeeds on this one ground, we do not con sider it necessary to discuss the other two grounds raised by the appellant for challenging his conviction. The appeal is allowed and the conviction and sentence of the appellant are set aside R.K.P.S. Appeal allowed.

Section 23A(3) of the Bombay Municipal Boroughs Act, 1925, makes it an offence if a retiring President to whom a direction has been issued by the State Government to hand over charge of his office does not comply with such direction and under section 200(1) the authorities who "may direct" ' any prosecution for punishment of any person offending against the provisions of the Act are the Standing Committee and the Chief Officer. The appellant who was removed from the office of President ship refused to obey the order of the State Government directing him to hand over charge to the newly elected President. He was prosecuted and convicted for an offence under section 23A(3), not on the direction of the Standing Committee or the Chief Officer as required by section 200(1) but on a complaint filed at the instance of the State Government by the newly elected President. The High Court, dismissing revision application against the order of conviction, took the view that section 200(1) was only an enabling provision and it could not be held to be exhaustive of the authorities who could make directions for initiation of such proceedings. In appeal to this Court, HELD: The conviction must be set aside. The Scheme of the Act and the purpose of section 200(1) make it clear that if any proceeding for punishment of any person for contravention of any of the provisions of the Act is to be instituted, it must be instituted in the manner laid down in section 200(1) of the Act and in that manner only. The word "may" was intended to give a discretion to the Standing Committee or the Chief Officer to make directions for taking proceedings only when they considered it appropriate that such a direction should be made and to avoid compelling the Standing Committee or the Chief Officer to make such directions in all cases. If the interpretation of the High Court were to be accepted it would mean that this provision was totally unnecessary, because, there would be no need to confer power on the Standing Committee or the Chief Officer to make such directions if such directions could be made or proceedings instituted at the instance of any private individual. [826 C D. F] Baliavdass Agarwala vs Shri J. C. Chakravarty, ; Mangulal Chunilal vs Manilal Maganlal and Another, Criminal Appeal No. 59 of 1965 decided on 23 11 1967, followed : The State vs Manilal Jethalal, , referred to. Section 200(1), as it stands at present, is clearly applicable even to a proceeding for punishment of a retiring President under section 23A(3) even though it might look anomalous that the prosecution in such 822 circumstances has to be ordered by the Chief Officer who was his subordinate at least during the time when he was working as the President. The remedy lies in suitable amendment of section 200(1). L828 E]

Civil Appeal No. 258 of 1958. Appeal by special leave from the Award dated August 17, 1957, of the Industrial Tribunal, Bombay, in Reference (IT) No. 15 of 1957. I.M. Nanavati, section N. Andley, J.B. Dadachanji and Rameshwar Nath, for the appellant. 907 B.K.B. Naidu and I. N. Shroff for respondent No. 1. I. N. Shroff for interveners Nos. 1 and 2. 1960, February 3. The Judgment of the Court was delivered by DAS GUPTA, J. The only point raised in this appeal by the employer, Petlad Turkey Red Dye Works Ltd., Petlad, against the award of an industrial Tribunal of a sum of Rs. 9,839 equivalent to one month 's basic wages is as regards the correctness of the disallowance, in the process of ascertaining the available surplus, of a claim of 4% interest on Rs. 2,27,000 standing in the depreciation fund said to .have been used as working capital. If this claim was allowed and the amount claimed deducted as a prior charge no surplus would remain so that the employees would not be entitled to any bonus. The Industrial Tribunal was of opinion that even if the depreciation reserve was utilized as working capital no return thereon was allowable for the purposes of deciding on the amount to be deducted as prior charges in applying the Full Bench Formula. In this view it was clearly wrong. Numerous decisions of this Court make it abundantly clear that any portion of the reserve actually utilized as working capital in the year under consideration should be treated as entitled to a reasonable rate of return and the amount thus ascertained deducted as a prior charge in ascertaining the available surplus. There is no reason whatsoever for making an exception in this respect as regards depreciation reserves. The question remains, however, whether this amount of Rs. 2,27,000 in the depreciation fund was actually used as working capital. The Tribunal did not think it necessary to consider this question, as in its view even if this entire amount has been utilised as working capital no return was allowable. If on the materials on the record it was possible to reach a conclusion that any reserve or any portion of it was used as working capital during the period under consideration we would have thought fit to calculate the amount allowable as return thereupon and deducted it from the amount ascertained as surplus 908 by the Industrial Tribunal. On an examination of the record, however, we cannot discover any such material. All that we have is that the employer Company in its written statement claimed interest on reserves as working capital at Rs. 32, 000 the rate of return being mentioned as 4%. It ",as not mentioned therein in so many words that the depreciation fund was part of the reserves employed as working capital. It is claimed however that such an averment was implicit in the claim of Rs. 32,000 as the amount allowable as return on reserves employed as working capital. Assuming that this is so it still remained the duty of the Company to prove that any portion of the depreciation fund was actually utilised as working capital. It was suggested before us that this averment by implication that the depreciation fund was also used as working capital was not challenged by the workers. This suggestion is obviously incorrect. We find that in Exhibit U/I a statement submitted on behalf of the workers containing calculations for the available surplus Rs. 3,000 was shown as the amount deductible on working capital at 2%. That is, a sum of Rs. 1,50,000 out of the reserves was stated to have been used as working capital. The employer 's statement in Exhibit C/3 dated July 12, 1957, shows a deduction of "Interest at 4% on Reserves employed as working capital Rs. 32,000". A similar claim is made in exhibit C/4, an alternative statement filed on behalf of the employer on July, 12,1957. The workmen also filed a statement showing calculations of bonus made by them on the same date i.e., July, 12, 1957. This is marked as exhibit U/3. According to this, return at the rate of 4% on working capital of Rs. 1,66,000 was allowable as deduction. Thus, according to workmen, the reserves used as working capital was stated to be Rs. 1,66,000 while according to the employer this amount was no less than 8 lakhs. It is quite clear therefore that the workmen had at no stage admitted either expressly or by implication the employer 's claim that any portion of the depreciation fund was utilized as working reserve. On behalf of the appellant it was strenuously contended, however, that the balance sheet of the 909 Company which was placed before the Industrial Tribunal will itself show that the entire sum of depreciation fund of Rs. 2,27,000 was used as working capital. The balance sheet does show a sum of Rs. 2,27,000 as the depreciation fund. Assuming for the purposes of the present case that this was the actual sum standing in the depreciation reserve the further question is whether the balance sheet proves that this sum was utilized as working capital. Assuming further for the purposes of this case that the analysis of the statement made in the balance sheet might indicate that this sum could not but have been utilised as working capital, it has to be remembered that no such conclusion is possible unless it is known as a fact that the statements made in the balancesheets under the different heads are correct statements. On that there is absolutely no evidence. All that the balance sheet, as submitted, shows is that certain statements were made. The mere fact that the statements were made can never be taken as proving that the statements were correct. That is a distinction which the courts of law have always been careful to make. Thus, if a person is to prove that he was ill on a particular date, the mere filing of a certificate of a medical man that he was ill on that date is not accepted as evidence to show that he was ill. The correctness of the statement made in the certificate has to be proved by an affidavit or oral testimony in court by the Doctor concerned or by some other evidence. There is no reason why an exception should be made in the case of balance sheets prepared by Companies for themselves. It has to be borne in mind that in many cases the Directors of the Companies may feel inclined to make incorrect statements in these balance sheets for ulterior purposes. While that is no reason to suspect every statement made in these balance sheets, the position is clear that we cannot presume the statements made therein to be always correct. The burden is on the party who asserts a statement to be correct to prove the same by relevant and acceptable evidence. The mere statement of the, balance sheet is of no assistance 910 to show therefore that any portion of the reserve was actually utilized as working capital. The question whether a balance sheet can be taken as proof of a claim of what portion of reserve has actually been used as working capital was very recently considered by us in Khandesh Spg. & Weaving Mill Co., Ltd. vs The Rashtriya Girni Kamgar Sangh. Jalgaon (Civil Appeal No. 257 of 1958). As was pointed out by Subba Rao, J. in that case the balancesheet of a Company is prepared by the Company 's own officers and when so much depends on the ascertainment of what portion of the reserve was utilized as working capital, the principles of equity and justice demand that an Industrial Court should insist upon a clear proof of the same and also give a real and adequate opportunity to the labour to canvass the correctness of the particulars furnished by the employer. In that case we also considered an observation in Indian Hume Pipe Company Ltd. vs Their Workmen (1) which was relied upon for an argument that the balance sheet was good evidence to prove that amounts were actually used as working capital. As was pointed out in Khandesh Spg. @ Weaving Mills Case (Supra) this observation was not intended to lay down the law that a balance sheet by itself was good evidence to prove any fact as regards the actual utilisation of reserves as working capital. The observation relied on was a sentence at page 362 : "Moreover, no objection was urged in this behalf, nor was any finding to the contrary recorded by the Tribunal. " If it had been intended to state as a matter of law that the balance sheet itself was good evidence to prove the fact of utilisation of a portion of the reserve as working, capital it would have been unnecessary to add such a sentence. This question as regards the sufficiency of the balance sheet itself to prove the fact of utilization of any reserve as working capital was also considered by us in Management of Trichinopoly Mills Ltd. vs National Cotton Textile Mills Workers Union (Civil Appeal No. 309 of 1957) and it was held that the balance sheet does not by itself prove any such fact and that the law requires that such an important (1) [1959] II L.L.J 357. 911 fact as the utilisation of a portion of the reserve as working capital has to be proved by the employer by evidence given on affidavit or otherwise and after giving an opportunity to the workmen to contest the correctness of such evidence by cross examination. We must therefore reject the contention urged on behalf of the employer appellant that the balancesheet that has been filed is sufficient to prove that Rs. 2,27,000 of the depreciation fund was actually used as working capital. There is, as we have already stated, no material on the record from which any conclusion can be reached as regards the utilisation of the whole or any portion of this sum lying in depreciation fund as working capital. The appellant 's counsel finally asked that the matter may be sent back to the Industrial Tribunal and an opportunity given to him to adduce proper evidence on this point. We do not see any circumstance that will justify us in making an order of remand in a case of this nature. The appeal is accordingly dismissed with costs. Appeal dismissed.

The Industrial Tribunal, in the process of ascertaining the available surplus, disallowed a claim of the appellant employer for interest on a certain sum of money standing in the depreciation fund and alleged to have been used as working capital. If this claim was allowed and the amount claimed deducted as a prior charge, the employees would not be entitled to any bonus as there would be no surplus. The Industrial Tribunal was of opinion that even if the depreciation reserve was utilised as working capital no return thereon was allowable in deciding what amount was to be deducted as prior charge. On appeal the appellant contended, inter alia, that the balance sheet of the employer company placed before the Industrial Tribunal itself showed that. ,the entire sum of depreciation fund was used as working capital. Held, that any portion of the reserve fund actually utilised as working capital in the year under consideration should be treated as entitled to a reasonable rate of return and the amount thus ascertained deducted as a prior charge in ascertaining the available surplus. The balance sheet did not by itself prove the fact of utilisation of any reserve as working capital and the law required that such an important fact as the utilisation of the reserve as working capital had to be proved by the employer by evidence on affidavit or otherwise after giving opportunity to the workmen to contest the correctness of such evidence by cross examination. Management of Trichinopoly Mills Ltd. vs National Cotton Textile Mills Workers Union, C.A. NO. 309 Of 1957, and Khandesh Spg. & Weaving Mills Co. Ltd. vs The Rashtriya Girni Kamgar Sangh, jalgaon, C.A. No. 257 Of 1958, followed. Indian Hume Pipe Co. Ltd. vs Their Workmen. (1959) 11 L.L.J. 357, explained.

vil Appeal No. 1862 (NT) of 1971. From the Judgment & Order dated 13.7.1970 of the High Court of Allahabad at Lucknow Bench in Writ Petition No. 849/70. Ms. Lira Goswami and D.N. Mishra for the Appellants. A.D. Singh, Mrs. Ashok K. Gupta, Raj Singh Rana, Mrs. section Dikshit and B .P. Maheshwari for the Respondents. The Judgment of the Court was delivered by BHAGWATI, CJ. This appeal by certificate raises a short question as to the constitutional validity of section 29 A of the U.P. Sales Tax Act, 1948. This section, which was introduced in the U.P. Sales Tax Act, 1948 by section 17 of the U.P. Taxation Laws (Amendment) Act, 1969, has been held to be constitutionally valid by a Division Bench of the Allahabad High Court on 13th July 1970. The appellants question the correctness of this view taken by the High Court. The appellants carry on business as dealers in coal and they are 88 registered as such under the U.P. Sales Tax Act, 1948. Prior to 1st October 1965, there was no sales tax levied on sale of coal and for the first time on 1st October 1965, coal became a taxable commodity under the U.P. Sales Tax Act, 1948. The appellants, proceeding on the footing that sales tax was payable by them on sale of coal from and after 1st October 1965, collected amounts by way of sales tax from the purchasers and submitted their returns for the assessment year 1965 66 after depositing a sum of Rs. 10,073.86 repre senting the amount of tax payable by them in accordance with their returns. It was, however, found as a result of the assessment order made by the Sales Tax Officer on 28th March 1970 that no sales tax was payable by the appellants on sales of coal under the U.P. Sales Tax Act, 1948. The appel lants thereupon claimed refund of the sum of Rs. 10,073.86 but the Sales Tax Officer rejected the claim made by the appellants on the ground that by reason of section 29 A, no refund was claimable by the appellants and the only persons entitled to claim refund were those from whom the appellants had collected the tax. This order made by the Sales Tax Officer was challenged by the appellants by filing a writ petition in the High Court of Allahabad and the principal ground on which the correctness of this order was challenged was that section 29 A was ultra vires as being outside the legislative competence of the State Legislature. The High Court negatived this challenge and upheld the constitutional validity of section 29 A and on this view, sustained the order made by the Sales Tax Officer. The appellants there upon preferred the present appeal after obtaining certifi cate of fitness from the High Court. It is necessary at this stage to set out the relevant provisions of the U.P. Sales Tax Act, 1948 as they stood at the material time. Subsection (4) of section 8 A made the following provision: "(4) Without prejudice to the provisions of clause (f) of section 14, the amount rea lised by any person as tax on sale of any goods, shall, notwithstanding anything con tained in any other provision of this Act, be deposited by him in a Government treasury within such period as may be prescribed, if the amount so realised exceeds the amount payable as tax in respect of that sale or if no tax is payable in respect thereof. " Sub section (5) was added in section 8 A by section 11 of the U.P. Taxation Laws (Amendment) Act, 1965 and it read as follows: 89 "(5) Where a dealer is found not liable to be assessed to tax by reason of his turnover being less than the amount specified in or under section 3, or sub section (1) or (2) of section 18, but has realised any tax as such in respect of such turnover, he shall, not withstanding anything contained in this Act, be liable to pay the same to the State Govern ment and shall deposit it into the treasury within 30 days of the date of the order by which he was found not so liable, unless it has already been so deposited." Since, having regard to the judgment of this Court, in R. Abdul Qader & Co. vs Sales Tax Officer, Hyderabad, ; it was doubtful whether sub sections (4) and (5) of section 8 A, standing by themselves, would fail within the legislative competence of the State Legislature. Section 29 A was inserted in the U.P. Sales Tax Act, 1948 by section 17 of the Taxation Laws (Amendment) Act 1969: Refund in Special Cases Notwithstanding anything contained in this Act or in any other law for the time being in force or in any judgment, decree or order of any court, where any amount is either deposited or paid by any dealer or other person under sub section (4) or sub section (5) of section 8 A, such amount or any part thereof shall on a claim being made in that behalf in such form and within such period as may be prescribed, be refunded to the person from whom such dealer or the person had actually realised such amount or part, and to no other person. " The question is whether this section, as it stood at the material time in the form in which it was introduced by section 17 of the U.P. Taxation Laws (Amendment) Act, 1969, was within the legislative competence of the State Legisla ture. The only entry under which section 29 A was sought to be brought was Entry 54 in List II of the Seventh Schedule to the Constitution. Clause (3) of Article 246 read with this entry empowers the State Legislature to make laws with respect to taxes on the sale or purchase of goods. It is now well settled that an entry in a Legislative List must be read in its widest amplitude and the legislature must be held to have power not only to legislate with respect to the subject matter of the entry but also to make ancillary or incidental provision in aid of the main topic of legisla tion. Can section 29 A be justified as exercise of an ancil lary or incidental power of legislation under Entry 547 Now, 90 this question is no longer res integra. It stands concluded by the decision of this Court in R.S. Joshi vs Ajit Mills, ; It is no doubt true that the decision of this Court in Ashoka Marketing Ltd. vs State of Bihar & Anr., ; does seem to indicate that a provi sion such as section 29 A would not be justifiable as an exercise of incidental or ancillary power. There also, the impugned legislative provision, namely, section 20 A of the Bihar Sales Tax Act was very similar to section 29 A and this Court held that it fell outside the legislative competence of the State Legislature. The Court in Ashoka Marketing Ltd, 's case (supra) did not follow the decision in Orient Paper Mills Ltd. vs State of Orissa & Ors. , ; where a similar provision was attacked on the same ground but the attack was repelled by the Court. If the decision in Ashoka Marketing Ltd. 's case (supra) were to be regarded as good law, lsection 29 A would have to be struck down as being outside the legislative competence of the State Legis lature. But this Court in R.S. Joshi 's case (supra) clearly and categorically disapproved of the decision in Ashoka Marketing Company 's case and reaffirmed the view taken in Orient Paper Mill 's case (supra). The Court held that the taking over of sums collected by dealers from the public under guise of tax solely with a view to return them to the buyers so deprived is necessarily incidental to 'tax on the sale and purchase of goods '. Such a provision is manifestly a consumer protection measure since "while suits against dealers to recover paltry sums by a large number of custom ers would lead to endless and expensive litigation, a sim pler process of returning those sums on application by the relevant purchasers would protect the common buyer while depriving the dealers of their unjust gains. " This Court in a subsequent decision in State of Orissa vs Orissa Cement Ltd. & Ors., also took the same view and pointed out that the decision in Ashoka Marketing Ltd. 's case (supra) was expressly dissented from by the decision in R.S. Joshi 's case (supra). The decision in R.S. Joshi 's case (supra) must, therefore, be regarded as laying down the correct law on the subject and if that be so. it is obvious that section 29 A must be held to fall within the legislative competence of the State Legislature and its constitutional validity must be upheld. The appeal must, therefore, be dismissed. but since it was filed at a time when the position in law was nebulous and had not been finally settled by the decision in R.S. Joshi 's case (supra) we would direct that there shall be no order as to costs. P.S.S. Appeal dismissed.

Section 29 A of the U.P. Sales Tax Act, 1948 inserted by section I7 of the U.P. Taxation Laws (Amendment) Act, 1969 pro vided for refund of the amount, realised by a dealer as tax on sale of goods and deposited under sub s.(4) or sub s.(5) of s.8 A of the Act, to the person from whom such dealer had actually realised the same, and to no other Coal became a taxable commodity under the U.P. Sales Tax Act for the first time on 1st October 1965. The appellants, who were registered as dealers in coal under the Act, on the assumption that sales tax was payable by them on sale of coal from and after 1st October 1965, corrected amounts by way of sales tax from the purchasers and submitted their returns for the assessment year 1965 66 after depositing a sum representing the amount of tax payable by them in ac cordance with their returns. The Sales Tax Officer, however, found that no sales tax was payable by the appellants on sale of coal under the Act. The appellants thereupon claimed refund of the amount deposited but the Sales Tax Officer rejected their claim under s.29 A of the Act. A Writ Petition challenging the correctness of that order and the constitutional vires of s.29 A was rejected by the High Court. Dismissing the appeal by certificate, the Court, HELD: Section 29 A of the U.P. Sales Tax Act, 1948 introduced by section I7 of the U.P. Taxation Laws (Amendment) Act, 1969 fails within the legislative competence of the State Legislature and is constitutionally valid. [9OF, 89F] Clause (3) of Art.246 of the Constitution read with Entry 54 in List H of the Seventh Schedule thereto empowers the State Legislature 87 to make laws with respect to taxes on the sale or purchase of goods. An Entry in a Legislative List must be read in its widest amplitude and the legislature must be held to have power not only to legislate with respect to the subject matter of the entry but also to make ancillary or incidental provision in aid of the main topic of legislation Taking over of sums collected by dealers from the public under guise of tax solely with a view to returning them to the buyers so deprived is necessarily incidental to tax on the sale and purchase of goods. The enactment of s.29 A can thus he said to be justified as exercise of an ancillary or incidental power of legislation under Entry 54. [89G, 90D, 89H] R.S. Joshi v; A}it Mills; , , followed. Ashoka Marketing Ltd. vs State of Bihar & Anr., ; , dissented from. R. Abdul Qader & Co. vs Sales Tax Officer, Hyderabad, ; , Orient Paper Mills Ltd., vs State of Orissa & Ors., ; and State of Orissa vs Orissa Cement Ltd. & Ors., , referred to.

Appeal No. 628 of 1961. Appeal from the judgment and order dated February 24, 1960, of the Kerala High Court in Tax Revision Case No. 22 of 1957. G. B. Pai, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellant. 609 V. P. Gopalan Nambiar, Advocate General, State of Kerala and Sardar Bahadur, for the respondent. A. V. Viswanatha Sastri, section N. Andley, Rameshwar Nath andP. L. Vohra, for the interveners. November30. The Judgement of the, Court was delivered by KAPUR, J. Thisappeal by certificate of the High Court of Keralaraises the question of the taxability of sales of tea under the Travancore Cochin General Sales Tax Act, hereinafter termed the Act, and the Rules made thereunder. The assessment period is 1952 53 and the turnover was of a sum of Rs.3,77,644/ on which a tax of Rs. 5900/11/ was levied. The appellant before us is the assessee company and the respondent is the Deputy Commissioner of ' Agricultural Income tax and Sales tax. Mr. A. V. Viswanatha Sastri on behalf of Outcherloney Valley Estates (1938) Ltd. has applied for intervention on the ground that in case of that company also the State or Kerala has, on similar fact;, levied sales tax on certain transaction that the High Court of Kerala has upheld the taxability of the transactions relying on the judgment which is under appeal in the present case, and that the intervener has obtained Special leave to appeal against that judgment and the records are under print. In view of these circumstances we have allowed that company to intervene in the present appeal. The assessment was made on March 30, 1955, under r. 33(1) of the Act on the ground that the sales of tea had escaped assessment. The appeal against 610 that order was unsuccessful and thereafter a further appeal was taken to the Sales tax Appellate Tribunal which by its order dated August 12, 1957, held that the ban under article 286(1)(a) of the Constitution on sales which are outside the State applied, in regard to the sales of 'full lots ' and therefore remanded the case to the Sales tax Officer. Against that order a revision was taken to the High Court which held that the decision of the Appellate Tribunal in regard to the applicability of article 286(1)(a) was erroneous and therefore the sales were subject to sales tax under the Act. It is against that judgment and order that the assessee company has come to this court on a certificate of the High Court. Put shortly, the nature and procedure of sales of teas was this; that the teas were stored in the godowns at Willingdon Island which was in the State of Travancore Cochin., samples of those teas etc., were taken to Fort Cochin which at the relevant time was in the State of Madras. There by the samples the teas were sold by public auction in lots, some were purchased in their entirety and others in parts and after the consideration money was paid at Fort Cochin delivery orders. were given to the buyers addressed to the godown keepers at Willingdon Island and actual delivery of tea was taken there. These teas were then sent out from Willingdon Island in Travancore Cochin for consumption either in other parts of India or were exported out of India. The taxability of the sales of teas in the manner above mentioned will depend upon whether the sales can be held to have taken place at Willingdon Island i.e. within the territory of Travancore Cochin State and were liable to the imposition of sales tax under the Act or they were what for convenience are called Ire outside sales" and therefore not subject to sales tax in the State of Travancore Cochin. The argument raised on behalf of the assessee company was that 611 these sales were effected at Fort Cochin which was outside the territory of Travancore Cochin and therefore were not liable to tax because of the ban imposed by article 286(1)(a) of the Constitution. That Aricle with the Explanation at the relevant time was as follows "article 286(1) 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 purpose 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 purpose of consumption in that State, notwith standing 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". Under the Sale of Goods Act in an auction sale the title in goods passes and the sale is complete as soon as the hammer falls. The relevant portion of section 64 of the Sale of Goods Act dealing with sale by auction reads as follows In the case of a sale by auction. (1) where goods are put up for sale in lots, each lot is prima 612 facie deemed to be the subject of the separate contract of sale; (2) the sale is complete when the auctioneer announces its completion by the fall of the hammer or in the customery manner; and until such announcement is made any bidder may retract his bid. " Specific goods in section 2 (14) of the Sale of Goods Act means goodsidentified and agreed upon at the time contract is made. Therefore on the fall of the hammer theoffer is accepted and if the goods are specified goods the title passes to the buyer. In the present case as soon as the hammer fell the title in the goods passed to the buyer as the goods were specific goods i.e. goods which were auctioned in full lots and this event took place at Fort Cochin which was in the State of Madras. But in the case of unascertained goods the title in the goods does not pass to the buyer unless and until the goods are ascertained. It was for this reason that a distinction was drawn by the Sales tax Appellate Tribunal between goods which were sold in full lots and those which were sold in portions. In regard to the former it was held that the title passed as soon as the hammer fell but not so in regard to the latter and therefore the sale of "full lots ' was held to have taken place outside the State of Travancore Cochin and of portions of lots inside that State. The case was consequently remanded to the Sales tax Officer for determining the amount of the tax. The High Court in revision held that the words in article 286 (1) (a) " 'outside the State" do not mean transfer of ownership, according to the Sale of Goods 613 Act but it was lex situs which determines the taxability of the transaction and the correct position is that the ownership in the goods is transferred according to the law of the place where the goods are situate. Therefore the sale in the present case was in the State of Travancore Cochin and there is nothing in the Explanation to article 286 (1) (a) which provides to the contrary. It has been found and it has not been disputed that the title to the goods in the present case passed at Fort Cochin. The purchase money was paid there and the purchaser obtained from the auctioneer delivery notes directing the godown keepers at Willingdon Island to deliver the goods and only the actual physical delivery of the goods took place at Willingdon Island. In these circumstances the question is whether the sale was "outside" 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) which has been set out above explains what a sale outside the State is. According to that Explanation a fiction is created as between two States, one where the goods are delivered for consumption in that State and the other where the title in the goods passes and the former is treated as the situs of the taxable event to the exclusion of the latter. Therefore where the Explanation applies the difficulty about 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. In somewhat similar circumstances this court in Indian Copper Corporation Ltd. vs State of Bihar (1) held by a majority decision that the opening words of Art: 286 (1) which speak of a sale or purchase taking place and the non obstante clause in (1) ; ,286, 614 the Explanation which refers to the general law relating to the sale of goods, indicated that it was the "passing of property within the State" that was intended to be fastened on, for the purpose of determining, whether the sale in question was "inside" or "outside" the State and therefore subject to the operation of the " 'Explanation", that State in which property passed would be the only State which would have the power to levy a tax on the sale. At page 286 it was observed: "The conclusion reached therefore is that where the property in the goods passed within a State as a direct result of the sale, the sale transaction is not outside the State for the purpose of article 286 (1) (a) unless the Explanation operates". The majority decision in Indian Copper Corporation Ltd. vs State of Bihar (1) concludes the point in favour of the appellant. On the facts of this case it was found by the Sales Tax Appellate Tribunal that in regard to the sales of tea in 'full lots ' the property passed at Fort Cochin and this view has not been challenged in this court. Therefore, on the majority decision in Indian Copper Corporation Ltd. vs State of Bihar (1) the only State which would have the power to levy a tax on such sales would be the State of Madras and so far as Travancore Cochin was concerned, the sale would be an outside sale. In the present case therefore the sale was an "outside sale" and cannot be said to be an "inside sale" qua Travancore Cochin because the title passed at Fort Cochin which is in the State of Madras. Apart. from that the money was paid there and the delivery order was also received there even though the actual physical delivery of goods was made at a Willingdon Island in the State of Tranvancore Cochin. The fiction created by the Explanation to, article 286 (1)(a) is inapplicable (1)[1961] 2 S.C.R. 276, 615 because there was no delivery as a direct result of sale for the purpose of consumption in any particular State. There then remains the question of goods which were exported out of India from Willingdon Island. In the case of those goods 'also it cannot be said that there was a sale inside the 'State of Travancore Cochin because the same considerations will apply to those sales as to the sales already discussed i.e. goods the title to which passed at Fort Cochin were delivered at Willingdon Island and were delivered for 'consumption in parts of India other than Travancore Cochin. In our view therefore the High Court was in error and the appeal should therefore be allowed and the judgment and order of the High Court of Kerala set aside. The appellant will have its costs in this court and in the High Court. Appeal allowed.

The sales of teas were by auction which was conducted in Fort Cochin in Madras State. The price was paid in Fort Cochin and delivery orders were also given there for goods which were at Willingdon Island in Travancore Cochin State. From Willingdon Islands the goods were sent for consumption to other States and to foreign countries. The State of Travancore Cochin sought to tax these transactions for sales tax. Held that the property in the goods passed when the contract was accepted on the fall of the hammer in Fort Cochin. Under article 286(1) it was the "passing of the property within the State" that was intended to be fastened on for the purpose of determining whether the sale was "inside" or "outside" the State. Subject to the operation of the "explanation" that State in which property passed would be the only State which would have the power levy the tax on the sale. But the explanation did not apply in the present case as there was no delivery as a direct result of the sale for consumption in any particular State. Indian Copper Corporation Ltd. vs State of Bihar, ; , followed.

Appeals Nos. 150 154 of 1967. Appeals from the judgment and order dated February 26, 1965 of the Madras High Court in Writ Petitions Nos. 1321, 1495, 1496 and 1553 of 1964. S.V. Gupta, Silicitor General, V. Ramaswamy and A. Rangam, for the appellant (in C.As. Nos. 150, 153 of 1967). K. N. Mudaliyar, Advocate General, Madras, V. Raniaswaln and A. V. Rangajn, for the appellant (in C.A. No. 154 of 1967). N.C. Chatterjee and R. Ganapathy Iyer, for the respondents (in C.As. 150, 151 and 154 of 1967). A. G. Pudissery, for the intervener. The Judgment of the Court was delivered by Wanchoo, C. J. These five appeals on certificates granted by the Madras High Court raise common questions of law and will be dealt with to ether. We shall give brief facts in one of the appeals (No. 150 of 1967) arising out of writ petition No. 1321 of 1964 in order to understand the questions that fall to be decided in the present appeals. On August 19, 1964, at about 5.00 p.m, the officers of the Commercial Tax Department (hereinafter referred to as the Department) raided the premises of Zenith Lamps and Electricals Ltd., (hereinafter referred to as the Company). It is said that the premises were searched and a Suit case was seized and forcibly removed by the officers who made the raid, in spite of the fact that they were informed that the box did not contain any papers or documents belonging to the Company and its contents consisted merely of personal effects of one of the Managing Directors, namely, Shri Ramkishan Srikishan. Jhaver. The raid and search were made by the authorities concerned on information that Shri Geonka, one of the Directors of the Company, had removed a box containing secret accounts relating to it. The main contention of the petitioner in support of his prayer that the articles seized should be returned to him was under three heads. It was first contended that on a proper construction of section 41 of the Madras General Sales Tax Act, No. 1. of 1959 (hereinafter 151 referred to as the Act), the officers of the Department had no authority to search the premises and seize either the account books or the goods found therein. Secondly, it was contended that if section 41(4) authorised seizure and confiscation of goods, it was beyond the legislative competence of the State Legislature, for it could not be covered by item 54 of list II of the Seventh Schedule to the Constitution relating to "taxes on the sale or purchase of goods. " Lastly, it was contended that if various provisions in s.41 were capable of being construed as authorising search and seizure. the provisions contained therein were unconstitutional in view of article 19(1) (f) and (g) of the Constitution. It is not necessary to refer to the facts in the other petitions which have resulted in the other appeals before this Court because in those cases also there was search and seizure by the officers of the Department and their action is being attacked on the same grounds. All the petitions were opposed on behalf of the State Government and its case was firstly. that s.41 authorised search and seizure; secondly, that the State Legislature was competent to enact s.41(4) under item 54 of list 11 of the Seventh Schedule to the Constitution; and thirdly, that the provisions in question did not offend article 19(1) (f) and (g) of the Constitution and were in any case protected by article 19(5) and (6). The High Court held that section 41(2) did not allow search being made thereunder, as it only provided for inspection, and that search was a different thing altogether from inspection. The High Court further held that if s.41 (2) provided for search it would be within the legislative competence of the State Legslature. The High Court took the view that the power of seizure and confiscation of goods contained in sub section (4) could not be said to be ancillary and incidental to the power to tax sale or purchase of goods and therefore this provision was beyond the legislative competence of the State Legislature. Finally, the High Court held that sub sections (2), (3) and (4) of ' section 41 were unconstitutional as they were unreasonable restrictions on the fundamental rights guaranteed under article 19(1) (f) and (g) of the Constitution. Besides the above. the High Court also found with respect to one of the petitions that the search warrant issued for the search of the residential house by the magistrate disclosed that the magistrate had not applied his mind at all to the necessity of the search of he residential house, for columns in the printed search warrant which should have been struck out were not so struck out. Further the gaps in the printed form which should have been filled in before the warrant was issued had not been filled in. From these two circumstances the High Court concluded that the search warrant for the residential house had been issued without the application of mind by the magistrate to the necessity of the search of the residential house. The High Court further found that s.41(4) was not complied with strictly before confiscation was ordered and no pro 152 per opportunity was given to the dealer to show that the goods seized and confiscated were not accounted for in his accounts. In the result therefore the High Court allowed all the petitions and directed that the documents, things and goods covered by the petitions should be returned to the petitioners along with photographs, negatives, translations and notes made by the Department from the accounts etc. The State of Madras then applied for and obtained certificates from the High Court to appeal to this Court and that is how the matter has come before us. The same three questions which were raised, before the High Court have been raised before us on behalf of the appellant. Before, however, we deal with them we would briefly refer to the provisions of the Act which are material for our purposes. Section 3 is the main charging section which provides that "every dealer whose total turnover for a year is not less than Rs. 10,000. . shall pay a tax for each year at the rate of 2 per cent of his taxable turnover. " The point at which tax has to be paid on single point taxable goods is indicated in the First Schedule to the Act and that will show that in a large majority of cases the tax has to be paid at the point of first sale in the State, though in some cases it has to be paid at the point of first purchase or of last purchase in the State. Section 4 is another charging section in respect of declared goods and the Second Schedule to the Act deals with the point at which tax has to be paid in respect of such goods. That Schedule also shows that in a majority of cases the tax had to be paid at the point of first sale in the State, though in some cases it has to be paid at the point of first purchase in the State or the last purchase in the State. Certain goods are exempt from the tax under the Act as provided in the Third Schedule and do not thus form part of the taxable turnover, though they will be a part of the turnover for purposes of calculating the total turnover per year. The Act provides for registration of firms and of dealers, for appointment of officers, for collection of tax, for the levy of penalty, and for appeals and revisions. It also casts a duty on dealers to maintain a true and correct account. Then comes section 41 with which we are particularly concerned. It is in these terms: "(1) Any officer empowered by the Government in this behalf may, for the purpose of this Act. require any dealer to produce before him the accounts, registers, records and other documents and tot furnish any other in formation relating to his business. (2)All accounts, registers, records and other documents maintained by a dealer in the course of his business. the goods in his possession and his offices, shops, godowns, vessels or vehicles shall be open to inspection at all reasonable times by such officer: Provided that no residential accommodation (not being a place of business cum residence) shall be entered 153 into and searched by such officer except on the authority of a search warrant issued by a Magistrate having jurisdiction over the area, and all searches under this sub section shall, so far as may be, be made in accordance with the provisions of the Code of Criminal Procedure. 1898 (Central Act V of 1898). (3)If any such officer has reason to suspect that any dealer is attempting to evade the payment of any tax, fee or other amount due from him under this Act he may, for reasons to be recorded in writing, seize such accounts. registers, records or other documents of the dealer as he may consider necessary, and shall give the dealer a receipt for the same. The accounts, registers, records and documents. so seized shall be retained by such officer only for so long as may be necessary for their examination and for any inquiry or proceeding under this Act. Provided that such accounts, registers and documents shall not be retained for more than thirty days at a time except with the permission of the next higher authority. (4)Any such officer shall have power to seize and confiscate any goods which are found in any office. shop, godown, vessel, vehicle, or any other place of business or any building or place of the dealer, but not accounted for by tile dealer in his accounts registers records and other documents maintained in the course of his business. Provided that before ordering the confiscation of goods under this Sub section the officer shall give the person affected an opportunity of being heard and make an inquiry in the prescribed manner: Provided further that the officer ordering the confiscation shall give the person affected option to pay in lieu of confiscation (a)in cases where the goods are taxable under this Act, in addition to the tax recoverable a sum of money not exceeding one thousand rupees or double the amount of tax recoverable, whichever is greater; and (b)in other cases. a sum of money not exceeding one thousand rupees. Explanation It shall be open to the Government to empower different classes of officers for the purpose of asking action under sub sections (1). (2) and (3)". 154 It will be seen from the above brief review of the provisions of the Act that it mainly deals with sales tax to be levied at the point of first sale in the State. though there is also provision for purchase tax in certain cases. It is in this background that we have to consider the construction of s.41 of the Act. So far as sub s(1) is concerned, there is no difficulty. It empowers any officer, empowered by the Government in this behalf, to require any dealer to produce before him the accounts registers, records and other documents and to furnish any other information relating to his business. It may be mentioned here that the Government has empowered all officers of the Department not lower in rank than the Assistant Commercial Tax Officer, all officers of the Revenue Department not lower in rank than an Inspector and all officers of the Police Department not lower in rank than a Sub Inspector. to act under s.41. sub sections (2) to (4). Presumably. so far as sub section (1) is concerned. only officers of the Department can act under the provision. However, there is no dispute with respect to that sub section as the power has to he exercised for the purpose of the Act i.e., with reference to assessment proceedings at all stages including recovery of tax and prosecution for offences. It is not disputed that the power under sub section (1) can only be exercised to require a dealer to produce accounts etc. relating to his business and not that of any body else. The main dispute centres round the interpretation of sub s.(2) of s.41. The contention on behalf of the respondents is that that provision did not authorise search of premises but merely provided for inspection thereof it all reasonable times by the empowered officer. We shall first deal with, the main part of sub section (2) to see what it provides without reference to the proviso. Clearly Sub s(2) provides for three things, namely (1) all accounts. registers, records and other documents maintained by a dealer in the course of his business ',,hall be open to inspection at all reasonable times, (ii) the goods in the possession of the dealer shall also be open to inspection, and (iii) the dealer 's offices, shops, godowns, vessels or vehicles shall also be open to inspection. There is no doubt that there are no specific words in sub section (2) giving power of search. But if we read the three powers conferred by sub s.(2) it should not be difficult to hold that search is included therein. In sub s.(1) the dealer is required to produce his accounts etc. and to furnish other information relating to his business and it is left to the dealer to produce what accounts he may say he has. The legislature was however cognizant of the fact that a dealer may not produce all accounts or furnish ill information even though required to do so, under sub s.(1). Therefore. sub s.(2) provides that ,ill accounts etc. of the dealer shall be open to inspection. It also provides that the dealer 's offices. shops, godowns, vessels or vehicles shall be open to inspection. It is true that generally speaking a power to inspect does not necessarily give power to search. But 155 where, as in this case, the power has been given to inspect not merely accounts, registers, records and other documents maintained by a dealer but also to inspect his offices, shops, godowns, vessels or vehicles, it follows that the empowered officer would have the right to enter the offices etc. for purposes of inspection. Naturally his inspection will be for purposes of the Act i.e., for the purpose of seeing that there is no evasion of tax. If therefore during his inspection of offices etc. the empowered officer finds any accounts, registers, records or other documents in the shop, those accounts etc. will also be open to inspection. Reading therefore these two provisions together, it is clear that the empowered officer has the right to; enter the offices etc. and to inspect them, and if on such inspection he finds accounts etc. he has also the power to inspect them. Lind to see if they relate to the business. These two powers taken together in our opinion mean that the em powered officer has the power to search the office etc. and inspect accounts etc found therein. Though therefore the word "search" has not been used in sub s.(2) these two powers of entering the offices etc. for inspection and of inspecting every kind of account maintained by a dealer with respect to his business together amount to giving the officer concerned the power to enter and search the offices etc. and if he finds any account in the offices, shops etc. to inspect them. Otherwise we can see no sense in the legislature giving power to the empowered officer to enter the offices etc. for the purpose of inspection as the officer concerned would only do so for the purpose of finding out all accounts etc. maintained by the dealer and if necessary to inspect them for the purposes of the Act. We cannot therefore agree with the High Court that there is no power of search whatsoever in sub s(2) because the subsection in terms does not provide for search. goods in the possession of the dealer. He has also the power to enter the dealer 's offices etc. for the purpose of such inspection, Combining these two powers together it follows on the same reasoning that the officer has the power to search for the goods also and to inspect them if found in the offices etc. of the dealer. We have therefore no hesitation in coming to the conclusion that the power of search is implicit in sub s.(2) with reference accounts etc. maintained by the dealer and the goods in the ')possession of the dealer. It also seems to us that this power in Sub section (2) is confined to offices, shops,godowns. vessels and vehicles of the dealer and does not go beyond them. It is urged on behalf of the appellant that as the officer is entitled to inspect all accounts etc. maintained by the dealer he can search for them even in the dealer 's residential premises. But we do not agree with this conten tion. for we have found the power of search by reading the power of inspection of offices etc. with the power of inspection of accounts etc. and the power of inspection of goods. Sub section (2) does not give any power of inspecting the residential, accommodation 156 of the dealer and therefore it cannot be read as giving the power of search of the residential house for purposes of the Act. But whether it is a case of business cum residence, the power of search will be there, for under sub s.(2) all offices, shops, godowns, vessels or vehicles of the dealer are open to inspection. Let us now see what light is thrown on the interpretation of sub s.(2) by the proviso and whether the interpretation we have put on the main part of sub s.(2) is supported by the proviso. The proviso lays down that (i) no purely residential accommodation shall be entered into and searched by such officer except on the authority of a search warrant issued by a Magistrate having jurisdiction over the area and (ii) that all searches under this sub section shall, so far as may be, be made in accordance with the provisions of the Code of Criminal Procedure, 1898. The latter part of the proviso clearly shows that the main part of sub s.(2) con templates searches, for it refers to all searches made under this sub section. If the reference in the second part of the proviso was confined only to searches made under the first part of the proviso, the words would have been "all searches under this proviso shall be made in accordance with the provisions of the Code of Criminal Procedure. " The proviso therefore bears out the construction that we have put on the main part of sub s.(2). But it is urged that a proviso carves out something which is already contained in the main provision and the main provision at any rate does not provide for search of a purely residential accommodation. Therefore the proviso is otiose. That is what the High Court also seems to have held. Generally speaking, it is true that the proviso is an exception to the main part of the section; but it is recognised that in exceptional cases a proviso may be a substantive provision itself. We may in this connection refer to Bhonda Urban District Council vs Taff Vale Railway Co.(1), where s.51 of the Act there under consideration was framed as a proviso to preceding sections. The Lord Chancellor however pointed out that "though s.51 was framed as a proviso upon preceding sections, but it is true that the latter half of it, though in form a proviso, is in substance a fresh enactment, adding to and not merely qualifying that which goes before. Again in Commissioner of Income Tax vs Nandlal Bhandari & Sons(2) it was observed that 'though ordinarily a proviso restricts rather than enlarges the meaning of the provisional to which it is appended, at times the legislature embodies a substantive provision in a proviso. The question whether a proviso is by way of an exception or a condition to the substantive provision, or whether it is in itself a substantive provision, must be determined on the substance of the proviso and not its form.". (1) L. R. (2) [1963]47 157 Finally in State of Rajasthan vs Leela Jain(1) the question arose whether the proviso in the Act under consideration there was a limiting provision to the main provision or was a substantive provision in itself. This Court observed that "so far as general principle of construction of a proviso is concerned, it has been broadly stated that the function of a proviso is to limit the main part of the section and carve out something which but for the proviso would have been within the operative part. " But it was further observed that the proviso in that particular case was really not a proviso in the accepted sense but an independent legislative provision by which to a remedy which was prohibited by the main part of the section, an alternative was provided. These three cases show that in exceptional circumstances a proviso may not be really a proviso in the accepted sense but may be a substantive provision itself. It seems to us that the proviso under consideration now is of this exceptional nature. As we have already held, there is no provision in the main part of the sub section for searching purely residential premises. Therefore when the proviso provides for such search it is providing for something in dependent of the main part of the sub section. Further the second part of the proviso which talks of searches made under this sub section shows that the power of inspection provided in the main part of the sub section is tantamount to a power of search. We have already come to that conclusion independent of the proviso. All that we need say here is that the proviso also shows that that interpretation is correct. We may add that we are not precluded from looking at the proviso in interpreting the main part of the sub section. We may in this connection refer to the following passage in Maxwell on Interpretation of Statutes, Eleventh Edition, at p.155 where it is observed "There is no rule that the first or enacting part is to, be construed without reference to the proviso. 'The proper course is to apply the broad general rule of construction, which is that a section or enactment must be 'construed as a whole, each portion throwing light, if need be, on the rest '. "The true principle undoubtedly is that the sound interpretation and meaning of the statute, on a view of the enacting clause, saving clause and proviso, taken and construed together is to prevail. " But as we have said already even without looking at the proviso, our conclusion is that the main part of sub s.(2) provides for searches and the proviso merely enforces that conclusion. We therefore cannot agree with the High Court that subsection(2) does not provide for search of the business premises of a dealer, in the shape of offices etc. (1) 158 Then we come to sub section(3). That provides for the seizure of accounts etc. , if the empowered officer has reason to suspect that any dealer is attempting to evade the payment of any tax. fee or other amount due from him under the Act. If he has such reason he may for reasons to be recorded in writing seize such accounts etc. Now if sub s.(2) gives power of search, sub s.(3) merely provides further power to seize the accounts etc. found on such search. We have already held that sub s.(2) gives the power of search and in that case sub s.(3) is merely complementary to sub s.(2) and gives the ,empowered officer the power to seize the accounts found in certain circumstances. If anything, sub s.(3) also bears out that sub s.(2) must include the power of search for a seizure under sub s.(3) is not possible unless there is a search. Reading therefore sub s (2), its proviso and sub s.(3) together we are of opinion that they provide for search and seizure without warrant except that if the place searched is a purely residential accomodation it cannot be searched without a search warrant from a Magistrate. It naturally follows that if it cannot be searched without a search warrant it is not open to the empowered officer to seize anything from a residential accommodation for he cannot enter and search it unless he has a warrant from a Magistrate to do so. The next question relates to the legislative competence of the State, legislature to enact sub s.(4). This subsection provides for seizure and confiscation of any goods found in any office etc. including purely residential accommodation after search if they are not accounted for in the accounts maintained in the course of the dealer 's business. The sub section thus completes the process which starts with sub section (1) and gives authority to the empowered officer to seize and confiscate goods of the nature indicated therein. The contention on behalf of the respondents is that the power of confiscation provided by sub s.(4) was not within the competence of the State Legislature under item 54, List II. of the Seventh Schedule relating to tax on sales and purchase of goods. On the other hand. the appellant justifies the power to seize and confiscate goods on the round that it is ancillary and incidental to the power to tax, for it is necessary to have such power in order to check evasion of tax and make it unprofitable. The High Court held that the Act was not a law on goods and that a provision for confiscation of goods found on search was neither incidental nor ancillary to the power to tax contained in item 54. List II of the Seventh Schedule. Now it has not been and cannot be disputed that the entries in the various Lists of the Seventh Schedule must be given the widest possible interpretation. It is also not in doubt that while making a law under any entry in the Schedule it is competent to the legislature to make all such incidental and ancillary provisions as may be necessary to effectuate the law; particularly it cannot be disputed that in the case of a taxing statute it is open to the legislature to enact provisions which 159 would check evasion of tax. It is under this power to check evasion that provision for search and seizure is made in many taxing statutes. It must therefore be held that the legislature has power to provide for search and seizure in connection with taxation laws in order that evasion may be checked. It is further urged on behalf of the appellant that confiscation of goods which are not entered in accounts is merely a provision of ancillary nature to check evasion of tax by making it unprofitable for dealers to secrete goods in which they are dealing. Reliance in this connec tion is placed on K. section Papantna and another vs Deputy Commercial Tax Officer, Guntakal,(1) where the Andhra Pradesh High Court upheld an analogous provision in the Andhra Pradesh General Sales Tax Act, (No. 6 of 1957). in s.28 (6). We do not propose in the present case to decide the general question whether a power to confiscate goods which are found on search and which are not entered in account books of the dealer is an ancillary power necessary for the purpose of stopping evasion of tax. Assuming that is so, we have still to see whether sub s.(4) of the Act can be upheld read along with the second proviso thereof. It may be added that there is no such provision as the second proviso in s.28 of the Andhra Pradesh General Sales Tax Act. We do not therefore propose to express any opinion as to the correctness of the above decision of the Andhra Pradesh High Court. Sub s(4) of s.41, before it was amended by the Madras General Sales Tax (Second Amendment) Act. from April 1, 1961, had only the first proviso with respect to giving an opportunity of being heard and making an enquiry in the matter before ordering confiscation. By the amendment of 1961, the second proviso was added. That provides that the officer ordering the confiscation shall give the person affected option to pay in lieu of confiscation. in cases where the goods are taxable under the Act. in addition to the tax recoverable, a sum of money not exceeding one thousand rupees or double the amount of tax recoverable. whichever is greater. This provision clearly requires the officer ordering confiscation to do two things(i) to order the person concerned to pay the tax recoverable. and (ii) to pay a sum of money not exceeding one thousand rupees or double the amount of tax recoverable. whichever is greater. We have already indicated that in a large majority of cases covered by the Act the tax is payable at the point of first sale in the State. But under cl.(a) of the second proviso the tax is ordered to be recovered even before the sale, in addition to the penalty not exceeding Rs. 1,000 or double the amount of tax recoverable whichever is greater. Therefore cl.(a) of the second proviso is clearly repugnant to the general scheme of the Act which in the majority of the cases provides for recovery of tax at the point of first sale in the State. In view of this repugnancy one or other of these two provisions must fall. Clearly it (1967) XIX S.T.C. 506. 160 is cl. (a) in the proviso which under the circumstances must fall, for we cannot hold that the entire Act must fall because of this inconsistency with respect to recovery of tax under cl.(a) of the ,second proviso even before the taxable event occurs in the large majority of cases which would be covered by the Act. We are ,therefore of opinion that cl.(a) of the second proviso being repugnant to the entire scheme of the Act, in so far as it provides for recovery of tax even before the first sale in the State which is the point of time in a large majority of cases for recovery of tax, must ,fall, on the ground of repugnancy. It is next urged that in any case the second provisio is severable and therefore only this proviso would fall and not the main part of sub s.(4). We are however of opinion that cl. (a) of second proviso is not severable. We have already indicated that originally the second proviso was not there in the Act. It was brought in by the amendment of 1961 and it compels the officer to give the 'Option, and thus compels recovery of tax even in those cases where the tax is recoverable only at the first point of sale in the State which naturally has not occurred in cases of goods seized 'from the dealer himself. Considering the fact that the legislature added this compulsory proviso later, it is clear that the legislature intended that the main part of the section and the second proviso should go together. It is difficult to hold therefore that after the introduction of the second proviso in 1961, the legislature could have intended that the main part of sub s.(4) should stand by itself. We are therefore of opinion that sub s.(4) with the two provisos must fall on this narrow ground. We therefore agree with the High Court and strike down sub s.(4) but for reasons different from those which commended themselves to the High Court. Then we come to the question whether sub ss.(2) and (3) of s.41 of the Act which have been struck down by the High Court on the ground that they are unreasonable restrictions on the right to hold property and to carry on trade have been correctly struck down. The main reason which impelled the High Court to strike ,down sub s.(2) was that there was no safeguard provided for search made thereunder. The High Court held that section 165 of the Code of Criminal Procedure did not apply to searches made under sub s(2). It also held that the State Government was given the power to empower any officer to make a search under sub s.(2) and this meant that even an officer of low status could be empowered. Consequently the High Court struck down sub s.(2) on the ground that it gave arbitrary power of search which could be made even by an officer of low status. It is true that search under this sub section can be made by any officer empowered by Government in this behalf, but we have no reason to think that Government will not empower officers of proper status to make searches. In this very case, we find that the Government empowered an Assistant Commercial Tax Officer, a Revenue Inspector and a Sub Inspector of Police to make searches. Considering the 161 large number of dealers who are covered by the Act, it cannot be said that these officers are of such low status that they cannot be depended upon to make a search with due care and caution. We cannot also forget that in a case of this kind the Government cannot find sufficient number of officers of what may be called high status to make searches, for dealers who may be covered by the Act may be legion throughout the State, and if such searches could only be made by high officers there would not be enough officers available to do so. The fact that the Act gives power to Government to, empower any officer is therefore no reason to strike. it down for, as we have said, the Government will see that officers of proper status are empowered. Nor do we think that an Assistant Commercial Tax Officer or an Inspector of Revenue Department or a Sub Inspector of Police Department is not an officer of proper status to make searches under this provision. We are also of opinion that though sub s.(2) itself provides no safeguards and might have been open to objection on that ground, there is a provision in the proviso to, sub s.(2) which lays down that all searches under this subsection shall, so far as may be. be made in accordance with the provisions of the Code of Criminal Procedure. Therefore, the provisions of the Code of Criminal Procedure, so far as may be, apply to all searches made under sub section It appears that in the High Court, the parties as well as the Court assumed that s.165 of the Code of Criminal Procedure would not apply to searches under sub s.(2) We cannot see any warrant for this assumption. The proviso clearly lays down that all searches made under this sub section, so far as may be, shall be made in accordance with the provisions of the Code of Criminal Procedure. Thus all provisions contained in the Code of Criminal Procedure relating to searches would be applicable to searches under sub s.(2), so far as may be. Some of these provisions are contained in Chapter VII but one such provision is contained in s.165. It is true that that section specifically refers to an officer in charge of a police station or a police officer making an investigation. But when the proviso applies the provisions of the Code of Criminal Procedure to all searches made under this sub section, as far as may be possible, we see no reason why s.165 should not apply, mutatis mutandis, to searches made under sub s.(2). We are therefore of opinion that safeguards provided in section 165 also apply to searches made under sub section These safeguards are (i) the em powered officer must have reasonable grounds for believing that anything necessary for the purpose of recovery of tax may be found in any place within his jurisdiction, (ii) he must be of the opinion that such thing cannot be otherwise got without undue delay, (iii) be must record in writing the grounds of his belief, and (iv) he must specify in such writing so far as possible the thing for which search is to be made. After he has done these things, he can make the search. These safeguards, which in our opinion 162 apply searches under sub s.(2) also clearly show that the power to search under sub section (2) is not arbitrary. In view of these safeguards and other safeguards provided in Chapter VII of the Code apply so far as may be to searsee no reason to hold that the restriction, if any, on the right to hold property and to carry on trade by the search provided in sub s.(2) is not a reasonable restriction keeping in view the object of the search, namely, prevention of evasion of tax. Next we come to sub s.(3), which as we have already stated, is complementary to sub s.(2). It provides in addition to the safeguards which have to be complied with when a search is made under sub s.(2), that the officer may seize accounts etc. if he has reason to suspect that any dealer is attempting to evade the payment of any tax etc. due from him under the Act. It also provides that he has to record his reasons in writing and we are of opinion that these reasons have to be recorded before the accounts are seize. It further provides that the dealer shall be given a receipt, and this means that the receipt must be given as and when the accounts etc. are seized. Finally it provides that these accounts etc. Shall be retained by such officer so long as may be necessary for their examination and for any enquiry or proceeding under the Act. These in our opinion are sufficient safeguards and the restrictions iS any, on the right to hold property and the right to carry on trade by sub s.(3) must therefore be held to, be a reasonable restriction. We may add that the proviso to sub s.(3) has fixed the period for which the officer seizing accounts can keep them, namely, ' @o days at a time, and if he wants to keep them for has to 'take the permission of the next additional safeguard entitling the dealer accounts after every 30 days, 'unless 'a higher officer has permitted the retention of accounts for a period longer than 30 days. We cannot therefore agree with the high High Court that sub sections (2) and (3) of section 41 of the Act are unreasonable restrictions on the right to hold property or carry on trade for reasons indicated. We are of opinion that they are reasonable restrictions which are protected by cls. (5) and (6) of article 19 of the Constitution. We now proceed to consider what order should be passed in the appeals in the view we have taken about the interpretation and validity of sub sections (2) and (3) of section 41 of the Act. We have already indicated that the High Court held that the warrant issued by the Magistrate for search of the residental accommodation was bad because it showed that the Magistrate had not applied his mind to the question of issuing it, inasmuch as there were portions which should have been struck out from the printed form and gaps which should have been filled in. But this was not done. 163 That conclusion of the High Court has xi(4 @re ,@n challenged before us. The High Court has further held 'that a r pr6kr and reasonable opportunity was not given to the persons concerned to show that the goods seized Were not prpperly accounted for in their account books, though this findili ' is not material now for 9 we have held that sub s.(4) falls in its entirety. It follows therefore that anything recovered from the search of the residential accom modation on the basis of this defective warrant must be returned. It also follows that anything confiscated must also be returned, as we have held that sub s.(4) must fall. As to the accounts etc. said tot have been seized, it appears to us that the safeguards provided under section 165 of the Code of Criminal procedure do not appear to have been followed when the search was made for the simple reason that everybody thought that provision was not applicable to a search under sub s.(2). Therefore, as the safeguards provided in section 165 of the Code of Criminal Procedure were not followed, anything recovered on a defective search of this kind must be returned. It follows therefor that the final order of the High Court allowing the writ petitions must stand, though we do not agree with the interpretation of the High Court that sub ss.(2) and (3) are unconstitutional on the ground of their being unreasonable restrictons on the right to hold property and to carry on trade. The appeals therefore fails and are hereby dismissed. In view of our decision on the main question of law, we order parties to bear their own costs in all the appeals.

On August 19, 1964, officers belonging to the Department of the appellant raided and searched the premises of a company and foreibly removed certain accounts and goods. The respondents challenged the department 's action by writ petitions filed in the High Court under article 226 of the Constitution praying that the articles seized should be returned. It was contended by the petitioners that on a proper construction of section 41 of the Madras General Sales Tax Act, No. 1 of 1959, the officers of the Department had no authority to search the premises and seize any account books or goods found there; that if section 41(4) authorised seizure and confiscation of goods, it was beyond the legislative competence of the State Legislature, for it was not covered by item 54 of List II of the Seventh Schedule to the Constitution relating to "taxes on the sale or purchase of goods"; and that if various provisions in section 41 were capable of being construed as authorising search and seizure, they were violative of article 19(1)(f) and (g) of the Constitution. The High Court allowed the Petitions holding, inter alia, that section 41 (2) did not permit a search being made and only provided for inspection; the power of seizure or confiscation in section 41(4) was beyond the legislative competence of the State Legislature; and that subsections (2), (3) and (4) of section 41 contained unreasonable res trictions and were violative of article 19(1) (f) and (g). The High Court also found with respect to one of the petitions that the search warrant had been issued without the application of Mind by the magistrate and was bad. On appeal to this Court; Held: dismissing the appeal, (i)Anything recovered during the search must be returned to the petitioners for the safeguards provided by section 165 of the Code of Criminal Procedure were not followed and in one case the finding of the High Court that the search warrant issued by the magistrate was bad on various grounds was not challenged; furthermore anything confiscated must also be returned as sub section (4) of section 41 must fall.[163 B D]. Clause (a) of the second proviso to sub section (4) gives power to the officer ordering confiscation to give the person affected an option to pay in lieu of confiscation, in cases where the goods are taxable under the Act, the tax recoverable and an additional amount and thus provides for recovery of tax even before the first sale in 149 the State which is the point of time in a large majority of cases for recovery of tax. As such it was repugnant to the entire scheme of the Act and sub section (4) must therefore be struck down. As Clause (a) compels the officer to give the option and thus compels recovery of tax before the first point of sale, which cannot have occurred in cases of goods seized from the dealer himself, it is clearly intended by the legislature to go together with the main part of the Section and is not therefore severable. [159F 16OD]. (ii) Although generally speaking the power to inspect does not give power to search, where, as in the case of section 41 (2) the power has been given to inspect not merely accounts registers, records, goods, etc., but also to inspect the offices, shops etc. , these two powers together amount to giving the concerned officer the power to enter and search the offices etc. and if he finds any accounts or goods in the offices, shops, etc., to respect them. The High Court was therefore wrong in holding that there was no power of search whatsoever under sub section (2). [154H 155E]. The proviso to sub section (2) in providing that all searches under "this sub section" shall be made in accordance with the provisions of the Code of Criminal Procedure, bears out the construction that the main part of sub section (2) contemplates searches. Similarly it is clear from sub section (3) which gives power to seize accounts etc., in certain circumstances, that sub section (2) must include the power of search for a seizure under sub section (3) is not possible unless there is a search. [156D E. 158B C]. The contention that as the main part of sub section (2) does not provide for search of a purely residential accommodation and therefore the proviso is otiose must be rejected. Although generally a provision is an exception to the main part of the section, it Is recognised that in exceptional cases, as in the present case, the provision may be a substantive provision itself. [156D F]. Bhonda Urban District Council vs Taff Vale Railway Co., L. R. Commissioner of Income tax vs Nandlal Bhandari & Sons , and State of Rajasthan vs Leela Jain. ; , referred to. (ii)Sub sections (2) and (3) of section 41 are not violative of article 19 as they are protected by clauses (5) and (6) of article 19 of the Constitution. [162F G]. The High Court had wrongly assumed that the provisions of the Criminal Procedure Code did not apply to a search under section 41(2). In view of the safeguards provided in section 165 Cr. P.C. and in Chapter VII of that Code, it cannot be said that the power to search provided in sub section (2) is not a reasonable restriction keeping in View the object of the search, namely, prevention of evasion of tax. [161EG]. The mere fact that the Act gives power to Government to em power any officer to conduct the search is no reason to strike down the provision for it cannot be assumed that Government will not empower officers of proper status to make searches. [160 H], To, exercise the power of seizure under sub section (3) the officer concerned has to record his reasons in writing, has to give a receipt for the accounts seized, and can only retain the items seized beyond a period of 30 days with the permission of the next higher officer. These are sufficient safeguards and the restriction, if any, on 150 the right to hold property and the right to carry on trade by sub section (3) must therefore be held to be a reasonable restriction. [162 D G]. While the court held that the Legislature has power to provide for search and seizure in connection with taxation law in order that evasion may be checked, it did not decide the general question whether a power to confiscate goods which are found on search and which are not entered in account books of the dealer is an ancillary power necessary for the purpose of stopping evasion of tax. [159C D]. K.S. Papanna and another vs Deputy Commercial Tax Officer, Gunkakal, (1967) XIX S.T.C. 506; referred to.

Appeal No. 311 of 1962. Appeal by special leave from the judgment and decree dated February 7,1960 of the Punjab High Court in Regular First Appeal No. 190 of 1953. Shiv Charan Singh and Janardan Sharma, for the appellants. Achhru Ram and Brijbans Kishore, for respondents Nos. 1 to 3. 901 1963. April 9. The judgment of the Court was delivered by SARKAR J. The appellants are the sons of Umed Singh, one of the respondents in this appeal. They filed a suit for a declaratory decree that the sale of certain lands by their father Umed Singh was void against them and the other reversionary heirs. The contesting respondents are the purchasers of the lands from the father. It is not. in dispute that the lands are ancestral and that the parties are jats of Jhajjar Tehsil in Rohtak District. The only question is as to the existence of a custom giving a jat, holding agricultural ancestral lands in Jhajjar Tehsil in District Rohtak in Punjab, free power to transfer them for consideration. The trial Court and the High Court of Punjab in first appeal, held that there was such customary power. Indeed, in view of the large number of decisions in which it has been consistently held that a sale or mortgage of ancestral land by a holder is not liable to be set aside at the instance of his sons or other reversionary heirs, unless the transaction was for immoral purposes, it is impossible to take any other view. We were referred to over a dozen cases and we are sure there are more. The earliest of these was decided in 1913 and the latest in 1956. Excepting in one case to which we shall later refer, nowhere has it been held that the transfer by way of a sale or mortgage of ancestral property by a holder is liable to be set aside at the instance of a son or a reversionary heir unless the transaction had been for immoral purposes. The present is not a case of that kind for though the appellants alleged that the sale was for immoral purposes it has been found that it Was not so. We may refer here to some of these cases : Telu vs Chuni (1), Giani vs Tek Chand (2), (1) (2) Lah. 111, 902 Behari vs Bhola (1), Abdul Rafi Khan vs Lahshmi Chand (2), Ram Datt vs Khushi Ram (3), Pahlad Singh vs Sukhdev Singh (4) Sohan lal vs Rati Ram (5) and Suraj Mal vs Birju (6). Learned counsel for the appellants contended that none of these cases dealt with the custom existing in Jhajjar Tehsil and, therefore, they could not be authorities on which the present case could be decided. We have first to observe that this statement is not correct for the case of Pahlad Singh vs Sukhdev Singh (4), dealt with the custom in Jhajjar Tehsil. That appears from the judgment of the District Judge in that case which is Exh. D. 5 in this case. Furthermore, we notice that many of the cases to which we have earlier referred treated the custom giving the holder unrestricted right to transfer ancestral property for consideration, as existing in the whole district of Rohtak : see for example, Telu vs Chuni (7) and Sheoji vs Fajar Ali Khan (8). It also appears from the Riwaj i am for Rohtak District recorded in Joseph 's Customary Law Manual, vol. XXIII p. 60, compiled at the settlement of 1909 that "the power of alienating for consideration is far wider than in the Punjab proper. " In view of all this we think that the Courts below were not in error in holding that the Jats of Jhajjar Tehsil in Rohtak District had unrestricted power to transfer land for consideration provided of course the transfer was not for immoral purposes. Learned counsel for the appellants then contended that most of the cases on which the respondents relied were cases of sonless holders and even if these cases were rightly decided, those which recognised unrestricted power in the case of a holder having a son were not justified by the Riwaj i am entries and should not be followed. (1)(1933) I.L.R. (2)(1935) I.L.R. 16 La h. 505. (3) A.I.R. (1935) Lah. (4) (5)Regular Second Appeal 136 of 1943 (Unreported) Pb. H.C. (6)Civil Regular Second Appeal No. 693 of 1952 (Unreported) Pb. H.C. (7) (8) 903 We are unable to accept this contention. We find nothing in the Riwaj i am entries which would show that the decisions were not justified. In Joseph 's Manual it is said that "a sonless proprietor has full power to alienate his, property by sale or mortgage even if there is no necessity". It is true that it has also been said there that "whether a proprietor with sons has the same power is a more doubtful case." In spite of this, however, the Courts have since 1913 consistently held that the power of a holder even where he has sons to alienate ancestral property for consideration is unrestricted. It is not now possible nor would it be right to upset the law settled by these decisions on the slender ground of the doubt expressed in Joseph 's Manual. In Tupper 's Statements of Customary law vol. 2, dealing with Rohtak District, it has been said at p. 178 that "it is quite common for people to sell or mortgage their land. In cases of sale, the right of pre emption is observed" : (paragraph 25). This statement makes no distinction between the case of a man with a son and one without a son. We find nothing in the records of custom to which our attention has been drawn to justify the view that the case of the holder of an ancestral property having a son is different in this regard from that of a holder without one. Furthermore, it would be strange if the existence of sons made any difference that the point was not noticed in any of the very large number of cases dealing with the custom. We think that there is a great deal to be said in favour of the contention of Mr. Achhru Ram that the restriction on the power to aliente where it exists is based on the agnatic theory and therefore, no distinction can be made between a sonless holder and a holder having a son: see Gujar vs Sham Das (1). We come now to the only case which takes a different view and on which the appellant naturally laid great stress, namely, Budal vs Kirpa Ram (1) 107 P. R. 1887. (2) 76 P. R. 1914. 904 That was a case of a sonless holder. It was held that among Jats in the Rohtak District there was no unlimited power in holders of ancestral property to alienate it. This case has however not been followed in any of the subsequent decisions and in most cases its authority has been discounted. That we think is enough to prevent us at this distance of time from reviving the view taken in that case. Furthermore, ' as was pointed out, this case does not refer to the earlier authorities, for example, Telu vs Chuni (1). The only authority to which it refers is Tupper 's Customary Manual, but the view expressed there was not accepted as sufficient authority because in the introduction Tupper said (p. 173), that Mr. Purser who gave him the paper from which he prepared his record "did not consider that it can be relied on in doubtful points". This is hardly any reason for there was nothing to show that the customary power was doubtful. It would thus appear that the decision in Budal vs Kripa Ram (2) was not a satisfactory one. In this view of the matter we think that the learned Subordinate judge and the High Court came to the correct conclusion that in Jhaiiar Tehsil a Jat holder had unrestricted power to alienate his ancestral land for a consideration. The appeal is dismissed with costs. (1) (2) 76 P. R. 1914.

A jat holding ancestral agricultural land in Jhajjar Tehsil of Rohtak district in Punjab has by custom a power to transfer 900 It for consideration. Such transfer is not liable to be set aside at the instance of his son or other reversionary heir unless the sale was for immoral purposes. The courts have consistently recognised such a power in a proprietor having sons in spite of the observation in Joseph 's Customary Law Manual that "whether proprietor with sons has the same power is a more doubtful case", and that power must now be recognised. There is a great deal to be said in favour of the contention that the existence of a son does not affect that power as the restriction on power to alienate where it exists, is based on the agnatic theory. Budal vs Kirpa Ram, 76 P.R. 1914, not followed. Telu vs Chuni, , Giani vs Tek Chand, Lab. III, Behari & Ors, vs Bhola & Ors, Lab. 600, Abdul Rafi Khan vs Lakshmi Chand, Lab. 505, Ram Datt vs Khushi Ram, A.I.R. (1933) Lab. 692, Pahlad Singh vs Sukhdev Singh, A.I.R. (1938) Lab. 524, Sohan Lal vs Rati Ram, Regular Second peal No. 136/43 (unreported) Pb. High Court, Suraj Mal vs Birju, Civil Regular Second Appeal No. 693 of 1952 (unreported), Pb. H.C. Sheoji vs Fajar Ali Khan, and Gujar vs Sham Das, 107 P.R. 1887, referred to.

ivil Appeal No. 539 of 1976. From the Judgment and Order dated 26.8.1975 of the Gujarat High Court in Spl. Civil Application No. 1627 of 1972. Soli J. Sorabjee, Attorney General, A. Subba Rao, C.V.S. Rao, P. Parmeswaran and Ms. Nisha Bache for the Appellants. S.K. Dhingra for the Respondents. The Judgment of the Court was delivered by R.M. SAHAI, J. By this appeal Union Government has challenged correctness of construction by High Court of Gujarat of notification No. 163 of 1965 issued under Rule 8 framed under Central Excise and Salt Act allowing exemption to all sorts of papers by "any factory commencing produc tion" to refer "not to the production of excisable goods paper in general failing under Item 17, but to pro duction of these specified exempted categories of paper in Column 2 of this notification" and canvasses for acceptance of the construction put on it by the Collector, Central Excise "that the factory must have commenced production on or after that date and not that the production of these items must have been commenced after the date". M/s. Arvind Boards & Paper Products Limited, Antalia, Bilimora, Gujarat State, was established in 1942. From 1944 when it went into production till 1964 it manufactured only straw boards and mill boards. It expanded its activities in 1965 and commenced manufacture of duplex board. The packing and wrapping paper was manufactured 661 on experimental basis in 1966 and on commercial basis after 1967. In December, 1971 the company wrote a letter to the Assistant Collector of Central Excise inquiring as to wheth er the company would be entitled to exemption under notifi cation No. 163/65 both in respect of the production at tributable to its installed capacity as in 1967 as well as in respect of the production attributable to its expanded capacity. In 1972 it was informed that it would be entitled to concession under Column 5 of the Table of the notifica tion in respect of the production attributable to the en larged capacity, namely, the third machine only. Consequent ly the claim of the petitioners for exemption on capacity as it existed in 1967 was not accepted. The order was main tained in appeal as well. The Appellate Collector held: "I do not agree with the appellant 's contention that the Assistant Collector erred in holding that "any factory which commenced production" related to any factory manufacturing paper falling under Item 17 of the said schedule irrespec tive of the varieties manufactured thereof. The exemption contained in the aforesaid Notification No. 163/65 as amend ed is in respect of the goods. Said exemption is conditional i.e. it is applicable to paper produced in a factory which commenced production on or after a specific date. Therefore, the condition is that the factory must have commenced pro duction on or after that date and not that the production of these items must have been commenced after that date. " The High Court did not agree with the construction of the Notification made by the Collector (Appeal) and held: "That is why the whole controversy has arisen as regards these key words "commencement of production". On a plain literal construction, bearing in mind the context of the exemption, where only certain specified categories of paper which is excisable item as specified in Column 2 had been exempted, it is obvious that the commencement of production must refer not to the production of excisable goods paper in general falling under item 17, but to production of these specified exempted categories of paper in Col. 2 of this notification. Any other interpretation would make the speci fication of various kinds of paper in Column 2 which alone attracted exemption redundant and would make even this condition in Cols. 3, 4 and 5 unworkable. " Excise duty was leviable under the Act on manufacture and clearance of paper under Item 17 of Schedule 1 to the Act. It reads as 662 "MANUFACTURED GOODS CLASSIFIED CHIEFLY BY MATERIAL 17. PAPER, all sorts (including pasteboard, millboard. straw board and cardboard), in or in relation to the manu facture of which any process is ordinarily carried on with the aid of power '. XXX XXX XXX (3) Printing and writing paper, packing and wrapping paper, straw board and pulp board, including grey board, corrugated board, duplex and triplex boards, other sorts . . 35 paise per kg." In 1965 the Central Government issued notification exempting papers of all sorts, from so much of the excise duty levi able thereon under the said item read within notification for the time being in force issued by the Central Government in relation to the duty so leviable, as is specified in the corresponding entry in Columns 3, 4, 5(a), 5(b) & 5(c) of the Table as the case may be: TABLE section Des Any factory Any factory Any factory commen cription which comm which comm production for the enced pro enced pro time on or after the duction duction on 1st March, 1964, or before the or after the any factory existing 1st April, 1st April, immediately, before 1961. 1961 but the 1st March 1964 before the whose production 1st March capacity has been 1964. enlarged and brought into operation on or after the extent such production is attributable to the enlarge capacity. During the During During the first 12 the period months of second subsequent the com 12 mon to the first mencement mence 24 months of produc ment of of the com duction. produc mencement of produc tion. 663 1 2 3 4 5(a) 5(b) 5(c) Entitlement of exemption depends on construction of the expression "any factory commencing production" used in the Table extracted above. Literally exemption is freedom from liability, tax or duty. Fiscally it may assume varying shapes, specially in a growing economy. For instance tax holiday to new units, concessional rate of tax to goods or persons for limited period or with the specific objective etc. That is why its construction, unlike charging provi sion, has to be tested on different touchstone. Infact an exemption provision is like an exception and on normal principle of construction or interpretation of statutes it is construed strictly either because of legislative inten tion or on economic justification of inequitable burden or progressive approach of fiscal provisions intended to aug ment state revenue. But once exception or exemption becomes applicable no rule or principle requires it to be construed strictly. Truly, speaking liberal and strict construction of an exemption provision are to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about ap plicability is lifted and the subject fails in the notifica tion then full play should be given to it and it calls for a wider and liberal construction. Therefore, the first exer cise that has to be undertaken is if the production of packing and wrapping material in the factory as it existed prior to 1964 is covered in the notification. From the table extracted above it is clear that it is in two parts and exemption is allowable in the first part to the factory commencing production on or after 31st March, 1964, and in the second part to the existing factory to extent of enlarged capacity. If the first part is read in isolation it is susceptible of construction as was adopted by the High Court. But the notification has to be read in its entirety and constured as a whole. Once that is done cloud of uncertainty disappears. A close reading of both the parts together leaves no room for doubt that it was intended to be exhaustive granting exemption to all factories produc ing packing and wrapping paper whether existing or commenc ing production from 1st March, 1964. To the former to the extent of enlarged capacity and to latter to full extent. The ambiguity arose because of absence of words new before 'factory ' or goods after the word 'production ' in the first clause. To harmonise it the High Court added the words 'goods '. But what was lost sight of that the words 'commenc ing ' in the first part and 'existing ' in the second part had to be read in juxtaposition. That is all those factories which were existing from before 664 were entitled to exemption on production of goods to the extent of enlarged capacity. This enlargement could be as a result of installation of additional machinery. The word 'capacity must necessarily relate to capacity of factory and not to goods. For instance a factory with capacity of say 1 lakh kg. of paper but producing only 75 thousand kg. achiev ing maximum after 1964 could not be covered in the clause as the production cannot be held to be due to enlarged capaci ty. That could be only if the capacity to produce goods increased due to installation of additional machinery. If this be true and correct, as it appears to be, then the first part presents no difficulty. The expression 'commenc ing production ' has to be read as commencing production of goods by a factory which was not existing and has started production on or after 1st March, 1864. Any other construc tion shall result in discrimination. A factory like respond ent existing from 1942 producing straw board and mill board shall be entitled to exemption on production of wrapping and packing paper on construction of the expression 'commencing production ' by the High Court even though it switched over from straw board and mill board to packing and wrapping paper after the relevant date whereas another unit existing and producing wrapping and packing paper itself from before 1st March, 1964 could not be entitled to exemption except to the extent of enlarged capacity. That is if an existing unit would have installed a new machinery it would have been entitled to exemption of production only to that extent whereas any unit producing goods other than the exempted goods would become entitled to exemption in respect of entire production. That could not have been the intention. A construction which results in inequitable results and is incongruous, has to be avoided. Therefore, production of packing and wrapping paper by respondent was entitled to exemption only to the extent it was attributable to enlarged capacity and not to the existing capacity. Hansraj Goverdhan vs H.H. Dave, Asstt. Collector, Central Excise & Customs, Surat and Others, relied on behalf of respondent demonstrates mis conception about interpreting an exemption provision. It was a case where goods of third persons were manufactured by cooperative society. But once initial hurdle was crossed and it was held that goods had been produced by cooperative society it was found squarely covered in the notification and the Court extended it to goods manufactured by third persons and repelled the submission that object of granting exemption was to encourage formation of cooperative societies and it should be confined to goods manufactured by its members and not others. Similarly in Commissioner of Income Tax vs Madho Prasad, ; the provision 665 allowing exemption to 'such part of the income in respect of which the said tax is payable. under the head 'property ' as is equal to the amount of rent payable for a year ', was construed liberally and it was held that the expression 'equal to the amount of rent payable for a year ' did not 'warrant the inference that the benefit of exemption ' could 'be claimed only once ' because the amount of rent which was sought to be deducted in more than one years was found squarely to fall in Item 36 of notification. It was again a case of interpreting an exemption notification at later stage. Recently in Tata Oil Mills Co. Ltd. vs Collector of Central Excise, ; , exemption was to soap made from indigenous rice bran oil as against edible oil. The assessee was engaged in manufacture of soap from rice bran fatty acid which was extracted from rice bran oil, in assesses factory. It was found rice bran oil as such could not be used unless it was converted into fatty acid. Therefore the assessee was covered in the notification. Once the ambiguity or about manufacture of soap from rice bran fatty acid was removed the Bench proceeded to construe the word "indigenous" in the notification liberally. In Collector of Central Excise vs Parle Exports (P) Ltd., AIR 1989 644 this Court while accepting that exemption clause should be construed liberally applied rigorous test for determining if expensive items like Gold Spot base or Limca base or Thums Up base were covered in the expression food products and food preparations used in item No. 68 of First Schedule of Central Excise and Salt Act and held 'that it should not be in consonance with spirit and the reason of law to give exemption for non alchoholic beverage basis under the notification in question. ' Rationale or Ratio is same. Do not extend or widen the ambit at stage of applicability. But once that hurdle is crossed construe it liberally. Since the respondent did not fall in the first clause of the notification there was no question of giving the clause a liberal construction and hold that production of goods by respondent mentioned in the notification were entitled to benefit. In the result this appeal succeeds and is allowed. The order of the High Court is set aside and the Writ Petition is dismissed with costs. R.N.J. Appeal allowed.

The Respondent Company which was established in 1942 went into production in 1944 manufacturing Straw Boards and Mill boards only uptil the year 1964. In 1965 it expanded its activities by manufacturing duplex board. In the follow ing year it started manufacturing packing and wrapping paper on experimental basis and on commercial basis after 1967. Sometime in 1971 the Company wrote to the Assistant Collec tor of Central Excise enquiring as to whether it would be entitled to exemption from duty under Notification No. 163/1965 both in respect of production attributable to its installed capacity as in 1967 as well as in respect of production attributable to its expanded capacity. The As sistant Collector passed an Order holding the company was entitled to concession under column 5 of the Table of the Notification No. 163 of 1965 in respect of production at tributable to its enlarged capacity namely, the third ma chine and rejected its claim for exemption on production attributable to its capacity as it existed in 1967. Dissat isfied the company preferred appeal to the Appellate Collec tor who maintained the order of the Assistant Collector. The Respondent Company thereupon moved the High Court by a writ petition under Article 226 of the Constitution of India. In allowing the writ Petition the High Court held that on a plain literal construction it is obvious that the commencement of production must refer not to the production of excisable goods paper in general failing under item 17. but to production of those specified exempted categories of paper in column 2 of the aforesaid notification. Hence this appeal by the Union of India. Allowing the appeal and dismissing the Writ Petition of the Company. this Court. HELD: When the question is whether a subject falls in the Notification or in the exemption clause then it being in nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is removed and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction. [663D E] A close reading of both parts of the Notification together leaves no 660 room for doubt that it was intended to be exhaustive grant ing exemption to all factories producing packing and wrap ping paper whether existing or commencing production from 1st March. 1964 to the former to the extent of enlarged capacity and to latter to the full extent. [663G H] As the Respondent Company did not fall in the first clause of the notification there was no question of giving the clause a liberal construction and hold that production of goods by the Respondent mentioned in the Notification were entitled to the benefit. Production of packing and wrapping paper by Respondent was entitled to exemption only to the extent it was at tributable to enlarged capacity and not to the existing capacity. [665F; 664F] Hansraj Goverdhan vs H.H. Dave, Asstt. Collector, Cen tral Excise & Customs, Surat and Others, [1969] 2 S.C.R. 2.52; Commissioner of Inome tax vs Madho Prasad, ; ; Tara Oil Mills Co. Ltd. vs Collector of Central Excise, ; referred to.

Petition No. 22428 Of 1988. IN SPEClAL LEAVE PETITION (CIVIL) NO. 15228 OF 1983. From the Judgment and Order dated 17.8.1983 of the Bombay High Court in Arbitration Petn. No. 6 of 1983. (FOR DIRECTIONS WlTH CMP Nos. 22429/88 & 3805f87). And in the matter of the scheme for revival sanctioned by the BIFR by its decision dated 6th September, 1988 in pursuance of the directions of this Court. R.F. Nariman, D.H. Nanavati, Raian Karanjawala, Mrs. Manik Karanjawala and Hardeep section Anand for the Petitioners. Dr. Y.S. Chitale, section Ganesh, I.R. Joshi, Arun Sinha, P. Parmeshwaran, A.K. Sinha, Mrs. Vijayalakshmi Menon, B.R. Agarwala, Ms. Sushma Manchanda, Ms. Urmila Kapoor, B.V. Desai, A.K. Verma, D.N. Misra, Shri Narain, Atul Sharma, Vineet Kumar, A.S. Bhasme, P.H. Parekh, M.K. section Menon, K.C. Dua, H.S. Parihar, K.J. John, A.K. Sinha, Girish Chandra, A.K. Sil, G. Joshi, Ms. Nina Gupta, Vineet Kumar, S.K. Dogra, Harish N. Salve, Ms. Nina Kapur and Manoj Swarup, for the Respondents. N.B. Shetye, Gopal Subramaniam and Mukul Mudgal for the Intervener. The Order of the Court was delivered by THAKKAR, J. More than a thousand brimming eyes are waiting to, replace the tears of despair by tears of relief. No less than 600 wronged _ workers of a once prosperous industrial unit ' induced or reduced to sickness ' are on their toes to resort to self help to restore 1. Kamani Tubes limited (KTL) PG NO 126 the lost source of their butterless bread. Their pens are quivering to write a new chapter in the sage of workers ' struggle for finding their true 'indentity ' and 'dignity '. Their dream is coming true with the enlightened and refreshing approach of the Central and State Governments, and the concerned Nationalized Banks, coupled with prompt, efficient and swift decision making on the part of the BIFR3 and the IDBI. And with the consensus of all the parties (which is the most heartening feature) who have risen above narrow individual interests by not opposing the workers ' scheme in order to promote the larger National interest of reviving the industry, augmenting the National product and providing employment to hundreds of starving workers (three of whom became martyrs to the cause by committing suicide). Internal discord gave rise to disputes and litigations between different branches of a family headed by a pioneering and successful industrialist in the wake of his demise, which culminated in SLP No. 15228 of 1983 wherein all the concerned members of the family were impleaded. When the said matter came up before this Court it was .1) impressed upon the parties that the internecine conflict between the warring factions deserved to be speedily resolved, not only in their own interest, and for saving the name and honour of the founder, but also to ensure that neither the industrial units nor the workers employed in the industries which were controlled by one or the other branch of the industrial family, were ruined. A retired Judge of the Supreme Court ' was accordingly prevailed upon to accept the assignment of resolving the innumerable problems in the larger interest of the warring factions as also in order to protect the interests of the community and the workers in August 1984. The learned Mediator has invested considerable time, effort and accumen in order to resolve the problems presented in the course of the proceedings and has successfully disentangled the economic mess to a considerable extent. This is evident from the fact that after the learned Mediator came on the scene Income Tax and Capital Gains Tax dues to the tune of over Rs.48 lakhs and over Rs.35 lakhs respectively have been paid. Bank of India, Canara Bank and Dena Bank. Board for Industrial and Financial Reconstruction constituted under the of 1985, (Act). Industrial Development Bank of India. Shri Ramjibhai Kamani. justice A.C. Gupta. PG NO 127 In the course of the proceedings it came to light that: (1) KTL has stopped production and ceased working in August 1985. (2) KTL has not resorted to closure of the unit or to retrenchment of the workers in accordance with the relevant provisions of law. (3) While in the eye of law and in theory the workers continue on the rolls of KTL and in employment of KTL, the workers have not been paid wages for over 8 months since December 1984 till stoppage of work in August 1985 and ever since till now. The arrears till August 1988 work out in the region of Rs.6 1/2 crores. (4) The wages due to the workers amounting to approximately Rs.2.5 crores have remained unpaid since December 1984. (5) Employees ' contribution to Provident Fund actually deducted from the wages of the workers to the tune of approximately 31/2 lakhs had been wrongfully retained by the management and criminal prosecutions are pending in the Criminal Courts. (6) The starving workers who have not been paid their wages since December 1984 have been squatting on the factory premises which have been abandoned by the Management. The workers have remained on the premises in order to keep day and night vigil for all these years since August 1985 in order to protect the plant which had provided them work and enabled them to earn their bread with the sweat of their brow. (7) Three of the starving workers have committed suicide on account of their inability to survive the burden of misfortune heaped on them. The plight of the workers notwithstanding, they exhibited exemplary conduct in their part, and the Kamani Employees Union (KEU) extended its hand of cooperation to the Kanani family group as has been noticed by the learned Mediator in his minutes dated July 2, 1986:. PG NO 128 "The bona fides of the applicant workers would be clear from the fact that in spite of the fact that no wages have been paid to them for the last 14 months, yet, in order to demonstrate their spirit of cooperation, the workers, through their union, had offered in writing to cooperate with the management and accept deferred payment of unpaid wages. The applicants repeat and reiterate that offer. The workmen always were, and still are ready and willing to accept the ar}ears of unpaid wages with increase of production and creation of surplus. I shall be happy if the authorities who have to take a decision in this matter could find their way to accepting the request of the workers who have not received wages for about 16 months now. As regards the two proposals given by the workers, neither of them was found acceptable by any of the Kamani family groups present; they thought that the proposals were not feasible." A proposal was then mooted to sell 90% of the shares of KTL. Meanwhile the workers sought leave to frame a scheme of their own for revival the 'sick ' unit. What exactly transpired 2 1/2 years back has E been recorded in the Mediator 's minutes dated July 2, 1986: "At the end of the discussions it was decided that the different groups of the family or any of them would try to find a buyer willing to buy the 90% shares held by the family in Kamani Tubes Limited as it is at present. The buyer will have to sit with the workers of the company to come to an agreement with them with regard to the payment of their dues. If the prospective buyer wishes to inspect the factories, no objection would be raised either by the workers or the present management of the company. Parties will report to me within six weeks any progress made in this matter. On behalf of the workers it was submitted that as the search for a buyer was likely to take time, they may be permitted in the meantime to try and frame a scheme of their own for restarting the factories after discussing the matter with the Bank and other authorities. They are free to do so. " PG NO 129 And after an exasperating waiting period of nearly one year thereafter the workers instituted CMP No. 3805 of 1987 on July 2, 1987 inter alia seeking the Following prayers: "(a) All appropriate orders and directions for the sale of the shares of KTL to KEU on behalf of and representing the proposed society at such price and on such valuation as this Hon 'ble Court in its absolute discretion deems proper and subject to such terms and conditions as may be stipulated. (b) appropriate orders and directions to the said Board respondent No. 59 to take expeditious remedial and other measure for the revival of the factories of the K.T. including directions to the said Board to consider the scheme of the applicants for the revival and rehabilitation of K.T in terms of Exhibits 10 and 12 hereto. (c) all appropriate orders and directions for the implementation and consideration of the scheme for the revival of the factory of K.T. as per exhibit 10 and 12 hereto including directions for management of K.T., amendment of Articles of K.T. and all matters connected therewith with such modifications as may be deemed necessary. " By an order of this Court. dated October 13, 1987 in CMP 3805/87, this Court directed the BIFR to file a feasibility report with respect to the scheme presented by the workers for the revival of KTL . This Court also directed the BIFR to hear the workers as well as the different groups of Kamani family before making its recommendations. As per this direction the Board held a number of hearings which were attended inter alia, by representatives of KEU . Financial Institutions, Banks, State Government, Central Government and different groups of the Kamani family, IDBI, an apex institution in the field of term lending and one of the operating agencies of BIFR, was entrusted with the examination of KEU 's scheme particularly with regard to technical health of the plant and time required to run it, various, assumptions made in respect of the parameters of costs/prices, estimates of production pattern vis a vis projection of future demand, correctness of cost of production, working capital requirement projected operating cash surplus etc. IDBI submitted its report which was discussed in the subsequent hearings and the views of the concerned agencies, such as, Banks, State Government, Central Government.and the commitments regarding reliefs and PG NO 130 concessions that would be available from these agencies, were obtained. On being so required IDBI subsequently revised its projections and viability estimates. Based on the above, BIFR prepared its Feasibility Report and submitted it to this Court. After considering the report of BIFR, and hearing various parties and with the consent of the parties, this Court vide its order dated 20th April, 1988 directed, inter alia, that the matter be placed before BIFR for consideration whether it should proceed to pass an order in terms of the proposed scheme as revised in consultation with IDBI under Section 18(4) of the . The Board was requested to arrive at a decision after giving notice to all the concerned parties. The relevant part of the order deserves to be quoted: "In compliance with the Court s order dated 13th October, 1987 the Board for Industrial & Financial Reconstruction New Delhi, established under section 4 of the in consultation with the Industrial Development Bank of India, constituted under section 3 of the as its operating agency within the meaning of section 3(1) of the Act, considered in depth the scheme submitted by the Kamani Employees Union and has evaluated the same by its 'feasibility report dated 12 th January, 1988. We have heard learned counsel for the parties and they agree to the order we purpose to make. We direct that the matter shall now be placed before the Board for Industrial & Financial Reconstruction for consideration as to whether it should proceed to pass an order in terms of the proposed scheme as revised in consultation with the Industrial Development Bank of India under section 18(4). The Board .shall come to a decision after notice lo all the parties and it shall act in conformity with the provisions of the Act. The Board may, if necessary, frame its own scheme or adopt the proposed scheme framed by the Kamani Employees Union, with such modifications as it deems fit. The Board shall also be at liberty to consider any alternative scheme at its discretion but the whole exercise shall be completed within eight weeks from today. If the objections to the Kamani Employees Union s scheme are not sustained the said scheme shall be dealt with according to law. ' ' PG NO 131 Pursuant to the direction of this Court, the Board afforded a hearing to all the concerned parties on 20th May, 1988 and after having ' examined the submissions made but the various groups of Kamani family, Banks, State Government and Central Government, prepared a Draft Scheme for revival of KTL. The said draft Scheme was circulated to all the parties concerned and short particulars thereof were also published in two news dailies for the information of the shareholders, the creditors and the employees etc. in general. The parties were given due notice for making suggestions/raising objections with respect to the Scheme. On receipt of various suggestions/ objections the Board held its hearing on 28.7.88 for considering the same. After hearing all the parties, and after having examined all the written/oral submissions made, the Board has financed, and sanctioned the scheme as per its decision dated 6th September, 1988 which has now been placed before this Court for further orders in the light of the submissions of the concerned parties Two questions arise in the context of the Workers ' Scheme which has been sanctioned by the BIFR as per its decision dated September 6, 1988: (1) Whether the Scheme presented by Shri Ashish Puranchand Kamani, applicant in CMP No. 22428 of ]988, at the time of the hearing on 12th September, 1988 (which was not presented before BIFR) deserves to be considered having regard to his claim that his scheme is preferable to the Workers ' Scheme already sanctioned by the BIFR on September 6, 1988: (2) Whether the Workers ' Scheme as sanctioned by BIFR deserves to be stamped with the imprimatur of the Court. The scheme presented by Shri Ashish Kamani who claims to hold 24% of the shares of KLT, could not be presented before the BIFR. which was seized with the matter in regard to the framing of a feasible Scheme in pursuance to the directions of this Court, till the BIFR rendered its decision on September 6, 1988. In the order dated April 20, 1988, this Court had observed that: The Board may, if necessary, frame its own scheme or adopt the revised scheme framed by the Kamani Employees Union, with such modifications as it deems fit. The board shall also be at liberty to consider any alternative Scheme PG NO 132 at its discretion but the whole exercise shall be completed within eight weeks from today. " Two points must be underscored. First, that the Court had merely accorded "liberty" to the Board to consider any alternative scheme. and secondly that the matter was left to the "discretion" of the Board. It is therefore clear that no 'right ' was conferred on any party to present a new scheme. Option was given to the Board to exercise its discretion to consider any alternative Scheme if it was presented within the time frame. Learned counsel for the applicant Shri Ashish Kamani, could not contend that any 'right ' was conferred on the applicant to present a Scheme. In fact there was no obligation on the part of the Board to consider the Scheme even if it was presented within the time frame. As a matter of fact the applicant did not present any scheme before BIFR within the time bracket specified by this Court. And the Board has, after full and complete deliberation, rendered a well considered decision sanctioning the Scheme of the workers. On 6th September, 1988, about a week before Shri Ashish Kamani, the applicant, was able to present his Scheme. It is not necessary to examine the issue as to whether or not there was any justification for not presenting the Scheme before the stipulated deadline. Even though it is too late to examine the applicant 's scheme it is not considered appropriate to shut out consideration of the scheme only on the ground that it is being presented so late and the workers ' scheme has already been sanctioned much earlier. In case the applicant is able to persuade the Court that the Scheme presented by him is preferable to the workers ' scheme in the larger interest of all concerned, the decision rendered by the BIFR could possibly be set aside and the Scheme presented by the applicant could possibly be remitted to the BIFR for considering the whole matter afresh. Of course it would cause great hardship to all concerned more particularly because the Scheme sanctioned by BIFR on 6th September, 1988 comes into force with 'immediate effect '. It has also to be realised that the matter would be delayed by several months at the cost of the suffering workers. These are considerations which are more than adequate to discourage and deter the Court from undertaking any such exercise. All the same we have heard the learned counsel for the applicant in regard to the Scheme presented by him even at this late stage. As indicated earlier learned counsel for the applicant stated that while the applicant did not oppose the Scheme presented by the workers, the applicant was confident of persuading the Court to hold that the Scheme presented by the applicant was by far in the larger interest of all concerned as compared to the Scheme presented by the workers and sanctioned by the Board. In PG NO 133 order to effectively deal with this question the cantours of the two Schemes require to be traced: Scheme presented by the Scheme presented by Shri Workers Ashish Kamani 1. It contemplates starting 1. It envisages the operations with the existing replacement of the existing machinery after effecting machinery by imported second necessary repairs and hand press and plant reconditioning of the plant equipment, at an estimated to the extent necessary. It cost of Rs.345 lakhs. It is is envisaged that the not known how much time will production can be commenced elapse in replacement and within about six months. when operations can be commenced. There is not even a vague idea about this factor. The scheme is fully backed 2. The Scheme does not show by the same Nationalized that there is even a banks as are secured tentative commitment much creditors of KTL. These banks less a firm commitment by any have also made firm Banks or financial commitments for further institutions to finance the financial assistance. project. Nor is it shown that the applicant himself is investing any sizeable amounts to lauch the project. The Scheme is altogether silent as to how the resources are to be raised in regard to the modernization programme involving Rs.694 lakhs. The Central Govt. and the 3. Neither the Central State Govt. have agreed to Govt. nor the State Govt. grant tax concessions having has shown its willingness to regard to the fact that it is give any concession to the the first Scheme of its kind applicant. In fact there for reviving an industrial appears little likelihood of unit framed by the very such concessions having workers rendered jobless on Regard to fact that the account of the sickness. special factors relating to public interest involved in enabling the workers themselves to revive the sick industrial unit does not exist in the case of the applicant. PG NO 134 4. The workers themselves 4. The workers would not have agreed ( I) to make wage agree to forego any part of sacrifice of 25 % for the their wages or make a wage first year of operations and sacrifice to enable the 15% for the next two years. applicant to take over the in other words the workers unit. Nor the workers would have agreed to forego 15% to accept deferment of dues or 25% of the wages which they to rationalization of staff would be otherwise entitled pattern or retrenchment. to having regard to the fact Learned counsel for KEU has that it is the workers own stated that they are not at Scheme calculated to benefit all prepared to do so. them atleast in future (2) to deferment of annual increments for two years as also (3) to rationalisation of the staff pattern by persuading the workers to be 3retrenched on payment of compensation in the larger interest of the workers and to restrict the workers to 600 (4) to forego dues subsequent to 31.12.85 (5) to deferment of prestoppage dues till other dues are paid off. The secured oreditors have 5. There is no such agreed to convert 50% of commitment on behalf of the dues into interest free loan secured creditors. Nor is repayable within 10 years and there any liklihood of such a moratorium of one year for concessions for the benefit for 50% of outstandings . of the applicant . The Scheme has been found 6. The fessibility of the to be feasible and viable by applicant 's claim has not experts and by the operating been examined by any agency viz. IDBI, which is competent or authorised fully equipped to form the agency acceptable to the opinion in this behalf. When the two Schemes are viewed in juxtaposition, there is no manner of doubt that the scheme presented by the applicant appears in a rather poor light. In fact the said scheme suffers from some fundamental infirmities. It is not shown that there is any commitment on behalf of any Bank of financial institution to provide the requisite financial PG NO 135 resources to enable the applicant to modernize the plant and to run it. The applicant 'hopes ' to purchase a second hand plant from some foreign country. It is not known whether any such second hand plant in working condition with reasonable life expectancy is available. It is not known what would be the cost thereof. It is not known whether the Central Govt. would release foreign exchange in order to enable the applicant to purchase the said plant. Thus the entire scheme is wrapped in imponderables and there is no concrete basis to entertain a reasonable belief that the 'hope ' entertained by the applicant would materialise at all in the foreseeable future. It is proposed to finance the cost of the additional plant and machinery to the tune of Rs.694 lakhs out of which it is stated that Rs.520 lakhs will be by way of term loan assistance from banks and financial institutions. It is conceded that there have been no negotiations with any Bank or financial institution and there has not been even a tentative, not to speak of a firm commitment in this behalf. With regard to the remaining Rs.174 lakhs it is stated that it will be by way of promoters contribution or through issue of share capital. whether or not Rs.174 lakhs can be so raised is in the realm of wishful thinking and conjecture. It merely reflects the hope of the applicant which is not rooted in reality. It is built on a non existant foundation. Nor is it shown whether the applicant himself has any sizeable financial resources of his own. Or whether he is in a position to raise such resources. The Scheme is a manifestation of the hope and 'desire of the applicant and no more. There is little doubt about the fact that no useful purpose will be served by granting the request of the applicant in these circumstances. Even so we would have considered the matter further if the applicant had satisfied this Court about his bona fides and provided an assurance that delay will not be to the detriment or prejudice of the workers or at their cost. An enquiry was accordingly made from the learned counsel for the applicant whether the applicant was prepared to deposit a sum of Rs. 1 crore representing about 15% of the arrears of wages which have by now become payable to the workers to enable the Court to examine the matter notwithstanding the aforesaid short comings. The learned counsel for the applicant frankly stated that the applicant was not in a position to deposit such a sum s/p In fact he did not even mention that the applicant was prepared to deposit a lesser sum in order to show his good faith and bona fides and in order to protect the legitimate interests of the workers. Counsel wanted the Court to consider the Scheme without any such provision being made merely on the assertion that the Scheme presented by the applicant was the only feasible Scheme which appears to be an altogether ill founded assertion for the foregoing reasons. Under the circumstances we do not have the slightest hesitation in refusing the applicant 's prayer in this behalf. PG NO 136 In order to deal with the remaining question as regards stamping the Scheme sanctioned by the BIFR on September 6, 1988 with the imprimatur of the Court is concerned, it will be appropriate to take a glance at the provisions of the under which the Board has been constituted, before the exercise is undertaken. The statement of objects and reasons reveals the purpose underlying the benevolent legislation as also the anxiety of the legislature to provide for preventive, ameliorative and remedial measures essential for reviving sick or potentially sick companies and for ensuring expeditious enforcement of the measures devised by the competent authority under the Act. The statement of objects and reasons discloses the anxiety of the legislature at the alarming increase in the incidence of sickness of industrial companies and it also reveals that the legislation has been enacted with the end in view to: 1. afford maximum protection of employment; 2. optimise the use of funds of the companies etc. ; 3. salvaging the production assets; 4. realising the amounts due to the Banks etc.; and 5. to replace the existing time consuming and inadequate machinery by efficient machinery for expeditious determination by a body of experts. The scheme envisaged by Section 187 of the Act inter alia provides for the reduction of the interest or rights of the shareholders in the sick industrial companies to the extent necessary for the reconstruction, rovival or rehabilitation of the sick company. There is also a very salutory provision which contemplates transfer of the shares in the sick industrial company at face value or intrinsic value (which may be discounted value or such other value as may be specified) inter alia 7. Section 18(2)(f): "the reduction of the interest or rights which the shareholders have in the sick Industrial company to such an extent as the Board considers necessary in the interests of the reconstruction, rovival or rehabilitation of the sick industrial company or for the maintenance of the business of the sick industrial company;" PG NO 137 to the employees of the sick industrial companies. The provision for transferring the shares to the employees which makes manifest the intention of the legislature to encourage the employees to take over the sick units and to clothe the competent authority with power to direct the transfer of the shares to the employees in this behalf. Thus the authority and competence of the Board to issue a direction for the transfer of the shares to the employees has the full backing of the benevolent legislation ' enacted especially in order to restructure or revive the sick undertakings. In the course of the discussion in the earlier part of this order we have referred to the abortive efforts made by the learned Mediator and the members of the different family groups of Kamanis for selling 90% of the shares of KTL. It however appears that no purchaser was coming forth. The aforesaid exercise however shows the willingness and preparedness of the concerned members of the Kamani group to transfer their shares on their own even without a directive. Their willingness is however irrelevant since the BIFR is clothed with the authority and competence to reduce the value of the shares from Rs.10 per share to Re.1 per share and direct the transfer of the shares to the employees. A point was made before the BIFR for the transfer of the shares as regards the order reducing the value of the share and the direction to transfer the shares at the reduced value of Re.1 per share. BIFR has closely, carefully and dispassionately considered this dimension of the matter and has rightly reached the conclusion that the intrinsic value of the share is zero. The liabilities far exceed the assets and even by applying the break up or back up method suggested by the members of the Kamani family the value of the shares could be determined only at the intrinsic value of the shares and the Board reached the firm conclusion that each share had zero value. And even so the Board directed that the value of the share be reduced to Re. 1 per share and directed them to transfer the shares at Re. l per share. Having given our anxious consideration to this factor even on our own, we are fully convinced and fully satisfied that the Board was perfectly right in directing the members of the Kamani family to transfer the shares at the rate of Re. l per share in order to effectuate the Scheme for revival of KTL. We may also mention that the BIFR was wholly right that the provisions of the Act were immune from challenge by virtue of the declaration contained in Section 2 of the Act attracting the application of article 31C of the Constitution. Turning to the merits of the Scheme sanctioned by 8. Section 18(2)(1): "transfer or issue of the shares in the sick industrial company at the face value or at the intrinsic value which may be a discounted value or such other value as may be specified to any industrial company or any person including the executives and employees of the sick industrial company;" PG NO 138 BIFR, it does not suffer from any infirmity. It has been considered to A be feasible and economically viable by experts. It envisages the management by a Board of Directors consisting of fully qualified experts and representatives of Banks, Government and of the employees. The Scheme has the full backing of the nationalized Banks and the encouragement from the Central Government and the State Government which have made commitments for granting tax concessions. The backing and the concessions are forthcoming essentially because it is a Scheme framed by the employees who themselves are making tremendous wage sacrifice and are trying to stand erect on their feet in order to salvage the ship which has been almost wrecked by others. It is appropriate to refer to one more important aspect. The Scheme envisages that the liability of the guarantors under the con tract of guarantee executed in favour of the concerned Banks should remain unaffected by the framing of the Scheme. BIFR has rightly made a provision in this behalf and sanctioned the Scheme subject to the direction that the sanctioning of the Scheme will not result in the detraction from the obligations incurred by the guarantors towards the Banks. Since the Scheme is being framed under the statutory authority and directive in order to revive the same in the larger public interest and inasmuch as there is a necessary declaration contained in Section 2 of the Act which attracts the applicability of article 31C of the Constitution, the decision rendered by the BIFR is unassailable and unimpeachable. Besides, the Scheme has been framed as per the direction and mandate of this Court in exercise of its inherent jurisdiction and its constitutional jurisdiction under article 142 of the Constitution and therefore the framing of the Scheme and the enforcement of the sanctioned Scheme does not detract from or have any impact on the obligation incurred by the guarantors in regard to the debts incurred by KTL in the past. The concerned Banks were and are bound by the directives and mandates. Having given our anxious consideration to the decision rendered by BIFR sanctioning the Scheme taking into account all the factors we fully agree with the reasoning and conclusion of BIFR and hereby stamp the Scheme with the imprimatur of this Court. An apprehension has been expressed that same attempts might be made by those who are not happy with the sanctioning of the Workers ' Scheme to throw a spanner in the wheel and to impede the implementation of the Scheme. We do not think any such effort would be made having regard to the fact that the Scheme has been devised as per the directions of this Court and that it has now been stamped with the PG NO 139 imprimatur of this Court pursuant to this order. It is of course true that if the legal forum is utilised with an eye on impeding the implementation of the Scheme, it could throw everything out of gear. This cannot be countenanced as implementation of the Scheme with expedition is of the essence of the present exercise. The Act itself has been enacted in order to evolve a speedy and efficient machinery so that a sick industry could be revived with utmost expedition, production could be started, locked up funds could be utilised for furthering socioeconomic development. And so that the unemployment of starving workers could be ended before they are starved to death and they are provided with employment to enable them to 'live ' with dignity instead of 'existing ' in humiliating conditions. We, therefore, make it clear that notwithstanding any order that may be secured by any party from any other forum the Scheme shall be implemented in obeisance to the judicial command embodied in this order and that in case there is any problem, it may be brought to this Court for seeking appropriate directions instead of resorting to other forums to impede the implementation of this socially and economically wholesome Scheme. A note of caution is required to be sounded before we conclude this order. While the Act enacted in 1985 does envisage the revival of sick units by the workers who had been rendered unemployed, it is (as far as is known) for the first time that the legislative intent reflected in the relevant provisions of the Act to encourage workers ' schemes is being given a concrete shape in this manner. It is perhaps for the first time that such a Scheme sponsored by the suffering employees themselves has come to be sanctioned. Under the circumstances a very heavy burden rests on the shoulders of KEU and the concerned employees. Tens of thousands of similarly situated workers would be watching with anxious eves the outcome of this bold experiment undertaken by the workers of KTL. On their success or failure will depend the future hope and destiny of tens of thousands of similarly situated workers. Success of this venture will instil new confidence and enable the workers to try to build their own future with their own hands albeit at Some initial sacrifice. Failure will be visited with disastrous consequences. We, therefore, not only hope and trust that KEU and the concerned workers will make themselves fully aware of this crucial factor, but also beseech them to rise to the occasion and individually and collectively do their best to make it a success. They will have an opportunity to show to the world that the workers in New lndia are capable of managing their own affairs, shaping their own destiny, and building their own future. They will also have an opportunity to establish that when the workers are inspired by an ideal they can produce optimum quantity PG NO 140 as also the best quality. Because, they would be working for a great cause, and working for themselves instead of working for others who often deny to them their legitimate dues and even deprive them of such legitimate dues by appropriating to themselves the fruits of the worker 's labour. Be it also realized that the Trade Union Movement, in the event of the success of this exercise, will be stepping into a new creative phase in the struggle of the working class to assert its identity. One can almost hear the footsteps of the new era in the corridors of future. The workers must therefore ensure the roaring success of this Scheme in this noble cause at any cost. We also hope and trust that the concerned nationalized Banks, IDBI, and the concerned Governments will continue to cooperate with the same enthusiasm and zeal and with the same motivation in order to make the Scheme a success so as to usher in a new era in the industrial history of New India. On this note of cautious optimism we conclude.

A dispute between different branches of an industrialist family culminated in the instant special leave petition. This Court, with a view to speedily resolve the dispute between the parties, and keeping in view the interest of the workers employed in the Kamani Tubes Ltd. (KTL). in August 1984 persuaded a retired Judge of the Supreme Court to mediate between the parties. In August 1985, (KTL) stopped production. During the discussions before the Mediator on July 2, 1986 it was decided that the different groups of the family would try to find a willing buyer for 90% shares held by them. At the same time, the Mediator permitted the workers to frame a scheme on their own for restarting the factories. In July 1987 the Kamani Employees Union (KEU) instituted a petition seeking Court 's directions for the sale of KTL shares to KEU and for expeditious consideration of the scheme submitted by the workers for the revival of the factories. In pursuance of the directions of the Court, the scheme was scrutinised by the Board for Industrial and Financial Reconstruction (BIFR) constituted under the . The Board after consultation with various agencies including the Industrial Development Bank of India, sanctioned the Workers ' Scheme on 6th September 1988, which was placed before the Court for further orders. At this stage one of the parties (Shri Ashish Kamani) submitted an alternate scheme. While stamping the Workers ' Scheme with the imprimatur of the Court, it was. PG NO 123 PG NO 124 HELD: (I) When the two Schemes are viewed in juxtaposition, there is no manner of doubt that the scheme presented by Shri Ashish Kamani appears in a rather poor light. The entire scheme is wrapped in imponderables and is built on a non existant foundation. [134G; 135B, 135C] (2) Section 18 of the inter alia provides for the reduction of the interest or rights of the shareholders in the sick industrial company to the extent necessary for the reconstruction, revival or rehabilitation of the sick company and further provides for the transfer of its shares at their face value or intrinsic value to the employees of the sick company. [136F G] (3) The provision for transferring the shares to the employees makes manifest the intention of the legislature to encourage the employees to take over the sick units and to clothe the competent authority with power to direct the transfer of the shares to the employees in this behalf. Thus the authority and competence of the BIFR to issue a direction for the transfer of the shares to the employees has the full backing Of the benevolent legislation enacted especially in order to restructure or revive the sick undertakings. [137A B] (4) The BIFR has rightly reached the conclusion that the intrinsic value of the KTL share is zero and the Board was perfectly right in directing the members of the Kamani family to transfer the shares at the rate of Re. 1 per share in order to effectuate the Scheme for revival of KTL. [137E G] (5) Since the Scheme is being framed under the statutory authority and directive in order to revive the industry in the larger public interest and inasmuch as there is a necessary declaration contained in Section 2 of the Act which attracts the applicability of article 31C Of the Constitution, the decision rendered by the BIFR is unassailable and unimpeachable. [138D] (6) The Scheme has been framed as per the direction and mandate of this Court in exercise of its inherent constitutional jurisdiction under article 142 of the Constitution and there ore the framing of the Scheme and the enforcement of the sanctioned scheme does not detract from or have any impact on the obligation incurred by the guarantors in regard to the debts incurred by KTL in past. The concerned Banks were and are bound by the directives and mandates. [138E F] PG NO 125 (7) Notwithstanding any order that may be secured by party from any other forum the Scheme shall be implemented in obeisance to the judicial command embodied in this order and that in a there is any problem, it may be brought to this Court for seeking appropriate directions instead of resorting to other forums to impede the implementation of this socially and economically wholesome scheme. [139C D]

vil Appeal No. 308 of 1964. Appeal by special leave from the judgment and order dated September 10, 1962 of the Calcutta High Court in Income tax Reference No. 115 of 1957. A.V. Viswanatha Sastri, B. Sen Gupta and P.K. Ghosh, for the appellant. N.D. Karkhanis and R.N. Sachthey, for the respondent. The Judgment of the Court was delivered by Shah, J. The appellant is a Hindu undivided family and carries on business as a dealer in "iron scrap and hardware". Messrs Hoare Miller and Company Ltd. hereinafter called 'the Company ' were owners of a jute pressing factory installed on a piece of land belonging to the Company. Adjacent to that land were two pieces of land: one was leasehold, and the other held by the Company as a licensee from the Government of West 604 605 Bengal. On January 21, 1941 the Company leased out to one Ramnath Bajoria the jute pressing factory together with the machinery standing on the land owned by the Company for ten months commencing from January 10, 1941. Ramnath Bajoria failed to vacate and deliver up possession of the premises demised to him, after the expiry of the period of the lease, and the Company instituted a suit in ejectment against him. By an agreement dated October 31, 1942 the appellant agreed to purchase all the rights of the Company in the factory and the appurtenant premises for Rs. 2,45,000. On November 14, 1942 the Company delivered to the appellant possession of the property agreed to be sold, save and except the factory demised under the lease to Ramnath Bajoria and the machinery included in the lease. On February 26, 1943 the Company executed a conveyance in favour of the appellant conveying the factory and the appurtenant premises. On June 12, 1943 the appellant agreed to sell to one Ranada Prasad Saha the property purchased from the Company for Rs. 4,73,364/3/6 free from all encumbrances. On August 10. 1943 the appellant was substituted as a plaintiff in the suit filed by the Company against Ramnath Bajoria, and obtained possession of the factory premises. By a deed of conveyance dated September 30, 1943 the appellant conveyed to Ranada Prasad Saha the factory and the appurtenant premises and delivered possession thereof. In the deed of conveyance the property sold was described in three separate Schedules. Schedule I, Press House, office, residential buildings and three warehouses on land owned by the Company: Schedule 11 ; leasehold land together with a warehouse known as Kalibari godown: Schedule II1; two warehouses on land held as licensee by the Company from the Government of West Bengal. The Income tax Officer. District Ii(1), CAlcutta. brought to tax in the hands of the appellant Rs. 2,24,864 bring the profit arising out of the sale of the property to Ranada Prasad Saha. The Income tax Appellate Tribunal partially modified the order and reduced the total income by Rs. 7,000. The Tribunal then drew up a statement of case and referred the following question to the High Court of Judicature at Calcutta: "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the surplus of Rs. 2,35,211 received by the assessee as a result of the sale of the jute press referred to in the Appellate order arose out of an adventure in the nature of trade and was therefore rightly assessed to tax?" The High Court answered the question in the affirmative. With special leave granted by this Court, the appellant has appealed to this Court. L/P(N)4SCI 12 606 At the material time, capital gains were not taxable, and the only question failing to be determined is whether profit made by the appellant by sale of the property to Ranada Prasad Saha was taxabIe under section 10 of the Indian Income tax Act. The Tribunal found the following facts proved: The appellant was carrying on business in iron scrap and hardware and never carried on any business in jute or in pressing jute. At the material time when the purchase of the Jute Press was made, the appellant had, because of abnormal conditions prevailing in the town of Calcutta, closed its business in iron scrap and hardware. The appellant purchased the jute press and the premises appurtenant thereto subject to litigation pending in the High Court, effected certain repairs and kept the factory in running condition, but made no attempt to start or organise the business of pressing jute, and his plea that he was not able to secure labour for working the press was not true. Soon after he bought the factory, the appellant received an offer from Ranada Prasad Saha to buy the factory and he immediately accepted the offer to sell it to him. These facts in the view of the Tribunal indicated that the appellant purchased the jute press, subject to litigation, with the sole object of reselling at profit at the earliest opportunity, and therefore the transaction was in the nature of a trading venture. The High Court substantially agreed with this view. Section 10 of the Indian Income tax Act, 1922 makes profits and gains of business, profession or vocation carried on by an assessee taxable. The expression "business" is defined in section 2(4) as inclusive of "any trade, commerce, or manufacture or any adventure or concern in the nature of trade, commerce or manufacture". It is common ground that the transaction of purchase and sale of the factory and appurtenant premises was an isolated venture. To reiterate the sequence of material events: the appellant agreed to purchase the Jute Press from the Company on October 31, 1942 subject to litigation pending in the High Court of Calcutta: possession of the property except the premises in the occupation of the tenant was obtained on November 14, 1942 and the sale deed was obtained on February 26, 1943: on June 12, 1943 the appellant agreed to sell the press to Ranada Prasad Saha: on August 10, 1943 the appellant was substituted as plaintiff in the suit flied by the Company against Ramnath Bajoria, and after obtaining possession of the demised premises the appellant executed on September 30, 1943 a sale deed conveying the property and delivered possession to Ranada Prasad Saha. Do these facts make out the case that the transaction was an adventure in the nature of trade? It is for the revenue to establish that the profit earned in a transaction is within the taxing provision and is on that account liable to be taxed as income. The nature of the transaction must 607 be determined on a consideration of all the facts and circumstances which are brought on the record of the income tax authorities. It has consistently been held by this Court that the question whether profit in a transaction has arisen out of an adventure in the nature of trade is a mixed question of law and fact: see G. Venkataswami Naidu & Company vs The Commissioner of Income tax(1) in which case this Court held that the expression "adventure in the nature of trade" in sub section (4) of section 2 of the Act postulates the existence of certain elements in the adventure which in law would invest it with the character of trade or business and that a tribunal while considering a question whether a transaction is or is not an adventure in the nature of trade, before arriving at its final conclusion on facts, has to address itself to the legal requirements associated with the concept of trade or business. Such a question is one of mixed law and fact and the decision of the tribunal thereon is open to consideration under section 66(1) of the Act. See also Saroj Kumar Maiumdar vs Commissioner of Income tax, West Bengal(2). A large number of cases were cited at the Bar in support of the respective contentions of the Commissioner and the assessee. Passages from judgments in the same case were often cited claiming support for the respective contentions. No useful purpose would be served by entering upon a detailed analysis and review of the observations made in the light of the relevant facts, for no single fact has decisive significance, and the question whether a transaction is an adventure in the nature of trade must depend upon the collective effect of all the relevant materials brought on the record. But general criteria indicating that certain facts have dominant significance in the context of other facts have been adopted in the decided cases. If, for instance, a transaction is related to the business which is normally carried on by the assessee, though not directly part of it, an intention to launch upon an adventure in the nature of trade may readily be inferred. A similar inference would arise where a commodity is purchased and sub divided, altered, treated or repaired and sold, or is converted into a different commodity and then sold. Magnitude of the transaction of purchase, the nature of the commodity, subsequent dealings and the manner of disposal may be such that the transaction may be stamped with the character of a trading venture: for instance, a man who purchases a large quantity of aeroplane linen and sells it in different lots, and for the purpose of selling starts an advertising campaign, rents offices, engages an advertising manager, a linen expert and a staff of clerks, maintains account books normally used by a trader, and passes receipts and payments in connection with the linen through a separate banking account: Martin vs Lowry(3): a person who carries on a money lending business purchases very cheaply a (2) [1959] Supp. 1 S.C.R. 640. (2) (3) 608 vast quantity of toilet paper and within a short time thereafter sells the whole consignment at a considerable profit: Rutledge vs The Commissioner of Inland Revenue(1); a person even though he has no special knowledge of the trade in wines and spirits, purchases a large quantity of whisky sells it without taking delivery of it at a considerable profit: Commissioners of Inland Revenue vs Fraser(2), may be presumed having regard to the nature of the commodity and extent of the transaction coupled with the other circumstances, to be carrying on an adventure in the nature of trade. These are cases of commercial commodities. But a transaction of purchase of land cannot be assumed without more to ' be a venture in the nature of trade. A director of a company carrying on the business of ware houseman purchasing a number of houses with a view to resale, and selling them at a profit some years after the purchase: Commissioners of Inland Revenue vs Reinhold(3): a person carrying on business in various lines, including an Engineering Works, purchasing land which was under requisition by the Government, negotiating sale thereof before the land was derequisitioned, and selling it after the land was released: Saroj Kumar Mazumdar vs Commissioner of Income tax, West Bengal(4); and a syndicate formed to acquire, an option over a rubber estate with a view to earn profit, and finding the estate acquired too small acquiring another estate and selling the two estates at a profit: Leeming vs Jones(3) may not be regarded as commencing a venture in the nature of trade. These are cases in which the commodity purchased and sold is not Ordinarily commercial, and the manner of dealing with the commodity does not stamp the transaction as a trading venture. It may be emphasized from an analysis of these cases that a profit motive in entering a transaction is not decisive, for, an accretion to capital does not become taxable income, merely because an asset was acquired in the expectation that it may be sold at profit. Purchase of the property by the appellant was an isolated transaction not related to the business of the appellant. The Tribunal and the High Court were, in our judgment, in error in holding that the right of the Company was not sold to the appellant in the lands in Sch. II and Sch. III properties. The land in Sch. II was leasehold, and on it was constructed a warehouse and the land in Sch. III was held as a licensee and two warehouses were standing thereon. The conveyance by the Company to the appellant is not on the record, but the recitals in the deed dated September 30, 1943 definitely indicate that the rights of the Company without any reservation were purchased by the appellant, and the appellant sold its entire rights in the properties in Schs. I, (1) (2) (3) (4) 11 T.C.297. (5) 15 T.C.333. 609 II and III without any reservation. It is true that the appellant had put the factory in a working condition, but had not organized a jute pressing business, had not obtained a licence for working the factory, had not attempted to secure orders for pressing jute, and had not employed labourers, The appellant 's claim that it was not s9 done because the appellant could not secure labourers has not been accepted. But that is not a decisive circumstance. The factory was in the occupation of the lessee Ramnath Bajoria and possession was obtained after August 10, 1943. But before the 10th of August an agreement of sale was executed by the appellant in favour of Ranada Prasad Saha. In the light of the sequence of events, the inference that the appellant had no intention to commence doing jute pressing business does not necessarily follow. Even if that inference be regarded as binding upon the Court it cannot be presumed that the sole intention of the appellant was to start a venture in the nature of trade. Barring the expectation of profit and realization of profit by sale of the property, there is no evidence bearing on the intention with which the property was purchased. In the deed of conveyance dated September 30, 1943 there is a reference to delivery of "joists, girders, fabricated steel, C.I. roofs, bolts, nuts, hooks and ceiling planks, being portions of the materials of the godowns and structures" standing on the land described in the third schedule. It was submitted that after purchasing the factory and the appurtenant premises the appellant demolished "certain godowns" in Sch. III land and sold the material as scrap. This, it was claimed, was if not part of the business = a venture similar to the normal business of the appellant. But there is no evidence on the record as to how many warehouses stood originally on Sch. III land. The sale deed dated September 30, 1943 clearly states that there were two warehouses on steel frames on the land held as licensee by the Company and possession of these was given to the purchaser Ranada Prasad Saha. Beside these warehouses there were three warehouses on the land described in Sch. I and one warehouse on the land described in Sch. It is not claimed that these warehouses were insufficient for carrying on the business of jute pressing: nor is there any evidence that the warehouse or warehouses which were demolished were in a serviceable condition. The only fact which may be taken to be established is that a warehouse or warehouses were demolished by the appellant and the materials were sold as part of the property sold under the deed dated September 30. From this circumstance, an inference that the entire property was purchased with intent to demolish and dispose of as scrap cannot be raised. Granting that the appellant made a profitable bargain when he purchased the property. and granting further that the appellant had when he purchased it a desire to sell the property if a favourable offer was forthcoming. these could not without other 610 circumstances justify an inference that the appellant intended by purchasing the property to start a venture in the nature of trade. Absence of advertisement inviting offers for purchasing the property, and absence of brokers in the negotiations for sale between the appellant and Ranada Prasad Saha, are circurmtances which lead to no positive inference. There is nothing to show that the appellant desired to convert the property to some other use. No brokers were employed for entering into a transaction of sale. It appears that Ranada Prasad Saha on coming to learn that the factory was for sale approached the Company after the sale deed was executed in favour of the appellant and he was informed that it had already been sold to the appellant. Thereafter Saha contacted the appellant and agreed to purchase the property. The property purchased was not sudh that an inference that a venture in the nature of trade must have been intended by the appellant in respect thereof may be raised. A person purchasing a jute press may intend to start his own business even if he is not already in that business, or he may let it out on favourable terms. The property purchased by the appellant was capable of being let out and it had in fact been let out by the Company before the date of sale in favour of the appellant. It was capable of fetching annual income, and there is no evidence that at the material time it could not be reasonably let out. We therefore discharge the answer given by the High Court in respect of the question submitted by the Tribunal and record a negative answer. The appeal is allowed. The Commissioner to pay the costs in this Court and the High Court. Appeal allowed.

The assessee who was dealing in iron scrap and hardware had purchased a jute press and sold it at a profit. The Income tax Officer brought to tax in the hands of the assessee, the profit arising out of this sale. The Appellate Tribunal modified the order and reduced the total income. At the instance of assessee the Tribunal referred to the High Court, the question, whether the surplus received by the assessee as a result of the sale of the jute press arose out of an adventure in the nature of trade and was, therefore, liable to tax. The High Court answered the question in affirmative. In appeal; HELD: The question must be answered in the negative. Granting that the assessee made a profitable bargain when he purchased the property and granting further that the assessee had, when he purchased it, a desire to sell the property, if a favourable offer was forthcoming, these could not without other circumstances, justify an inference that the assessee intended by purchasing the property to start a venture in the nature of trade. [609H 610A] A profit motive in entering a transact on is no decisive, for, an accretion to capital does not become taxable income, merely because an asset was acquired in the expectation that it may be sold at a profit. [608F] Purchase of the property by the assessee was an isolated transaction not related to the business of the assessee. [608G] Case law referred to.

N: Criminal Appeal No 69 of 1 975 . From the Judgment and Order dated 13th May, 1974 of the Allahabad High Court in Criminal Appeal No. 269 of 1973. M.R. Sharma, Dalveer Bhandari, H.M. Singh and Miss Rachna Joshi, for the Appellant R.K Garg, V J. Francis and N.M. Popli for the Respondents. 624 The Judgment of the Court was delivered by CHANCRACHUD, C.J. This is an appeal by the State of U.P., against the judgment of a learned single Judge of the Allahabad High Court, setting aside the order of conviction and sentence passed by the learned Sessions Judge, Fatehpur against the four respondents. Respondents 1 and 2, Ram Sagar Yadav and Shobha Nath alias Pujari were convicted by the learned Sessions Judge under section 304. Part 2, of the Penal Code and were sentenced to rigorous imprisonment for seven years. Respondent 1 was also convicted under section 220 of the Penal Code for keeping a person in confinement corruptly and was sentenced to rigorous imprisonment for five years Respondents 3 and 4 were convicted under section 304, Part 2 of the Penal Code and were sentenced to rigorous imprisonment for three years. Respondent l, Ram Sagar Yadav, was the Station House Officer of the Hussainganj Police Station, District Fatehpur, while the remaining three respondents were attached to that police station as constables. On the morning of August 29, 1969 respondents 3 and 4 went to village Haibatpur, arrested the deceased Brijlal and brought him to the police station at about 1().()0 A.M. Brijlal died the same day at about 6.00 P.M. due to the injuries which were caused to him between the time that he was brought to the police station and the forenoon of August 29. The case of the prosecution is that the respondents wanted to extort illegal gratification from Brijlal in connection with a complaint which was filed against him by one Faheeman Faqirin for cattle trespass. Respondent 2, Shobha Nath, had succeeded in obtaining a sum Of Rs. 100 from Brijlal with an assurance that no steps will be taken against him in that complaint. Respondent 2 demanded a further sum of Rs. 200 from Brijlal for hushing up the case. which the latter refused to pay. Instead, on August 7, 1969 he sent a complaint (Exhibit Ka 2) to the Superintendent of Police, Fatehpur, complaining that a bribe was being demanded from him by respondent 2, a policeman of the Hussainganj Police Station. That complaint was forwarded by the Superintendent of Police to respondent I for inquiry and report. Being incensed by the 'audacity ' of Brijlal in complaining against a policeman under his charge, respondent I sent respondents 3 and 4 to bring Brijlal to the police station in order that he could be taught a proper lesson. That is the genesis of Brijlal 's arrest. Apart from Faheeman Faqirin 's complaint that Brijlal 's bullock had damaged her crop, there was no complaint or charge against him. 625 We have heard this appeal at reasonable length and both Shri M.R. Sharma, who appears on behalf of the appellant and Shri R.K. Garg who appears on behalf of the respondents, have taken us through the relevant evidence and the judgments of the High Court and the Sessions Court. Upon a consideration of that evidence, we find it impossible to sustain the judgment of the High Court. Ii has totally overlooked crucial evidence led by the prosecution in support of its case and, with respect, taking an unrealistic view of unequivocal facts, it has not even adverted to the reasons given by the trial court in support of its conclusion that the respondents are guilty of the offences of which it convicted them. The record of the case is disproportionately bulky to the narrow point which is involved in the case. It is not an unusual experience that the wood is missed for the trees when a Judge is confronted with a jumbled up mass of data, relevant and irrelevant. It is necessary in such cases to find out the central point of the case and to concentrate upon evidence which bears upon that point. Petty details which befog the real issue and minor contradictions in the evidence which are inevitable when a story is narrated under the stress of a grave crime, ought not to be permitted to tilt the scales o justice. The more a Judge gets bogged down in superfluous details, the greater is the likelihood of his straying away from evidence which can clinch the issue. In the instant case, the High Court missed or mistook the salient features of the case and, in the result, embacked upon a hair splitting exercise while appreciating the evidence. We do not propose to discuss more than is strictly necessary since it is quite clear that upon the evidence led by the prosecution only one conclusion is possible, which is, that the respondents inflicted injuries upon Brijlal while he was in their custody, thereby causing his death. Brijlal was hale and hearty on the morning of August 29, 1969. He was ploughing his field when respondents 3 and 4 reached Haibatpur in order to arrest him. They took him on foot to the Hussaniganj Police Station which is about 3 km away from Haibatpur. They reached the police station at 10.00 A.M. Two hours later, Brijlal was taken in a police van to the Court of the learned Additional District Magistrate for obtaining remand. Shri R.C. Nigam, the Presiding Officer of the Court, had finished the winding list of the remand applications, at the end of which the Moharir of the 626 Court informed him that a remand order had remained to be passed against an accused who was brought from the Hussainganj Police Station and that the accused could not be produced in Court since he was lying in the verandah in a badly injured condition. Shri Nigam (P.W. 5) says in his evidence that since the accused could not be brought to the Court room, he himself went to the verandah where the accused was lying and he asked him his name. The accused was unable to respond at first since his condition was "very serious" but, on repeated inquiries, the accused told Shri Nigam that his name was Brijlal. On being questioned as to how he came to receive the injuries, Brijlal replied that 'the Darogah of Hussainganj and the constables had beaten him very badly '. Shri Nigam made a note of the statement made by Brijlal on the remand application (Exhibit Ka l). That application bears Shri Nigam 's signature and the thumb impression of Brijlal. Shri Nigam 's evidence is of a crucial character since it establishes , beyond any doubt, that Brijlal had extensive injuries on his person and that, at the earliest opportunity, he involved the policemen of the Hussainganj Police Station as the authors of those injuries, It is as transparent, as any fact can be, that the injuries which were found on the person of Brijlal were caused to him at the Hussainganj Police Station. The few and simple steps in the logical process leading to that conclusion are that Brijlal had no injuries on his person when he was arrested at Haibatpur in the morning or when he was brought to the police station at about 10.00 A.M, and that, when he was sent for remand he had a large number of injuries on his person which had induced a state of shock. We are unable to see what other explanation can reasonably be given of this chain of facts except that the injuries were caused to Brijlal by the policemen attached to the Hussainganj Police Station. Who, from amongst them, is or are responsible for causing the injuries has undoubtedly to be considered. But, there is no escape from the conclusion that Brijlal was assaulted while he was in custody of the respondents at the Hussainganj Police Station. The evidence of Laxmi Narain, P.W. No. 17, who was one of the constables attached to the Hussainganj Police Station has an important bearing on the guilt of the respondents, an aspect which has escaped the attention of the High, Court. Laxmi Narain says that when he went to the police station at about 10.45 a.m. On August 29,1969, respondent 1, the Station House Officer, and the other three respon 627 dents were present at the police station; that Brijlal was lying in the lock up of the police station shrieking in pain; and that, when Brijlal was handed over to his custody for being taken to the Magistrate, there were a number of injuries on his arms and legs. According to Laxmi Narain, and that is undisputed, respondent 1 also accompanied him and Brijlal to the Magistrate 's court. It seems to us surprising that respondent I was nowhere on the scene in the Magistrate 's court, especially in the light of the fact that Brijlal 's was an unusual case in which, the prisoner for whom remand was to be obtained was in a precarious condition due to the injuries suffered by him. It was respondent I who, being the S.H.O., had the custody and care of Brijlal. Instead of making himself available to the Magistrate for explaining how Brijlal came to be injured, he resorted to the expedient of deputing Laxmi Narain to face the Magistrate. Laxmi Narain has also stated in his evidence that Brijlal told the Magistrate that the Darogah and the constables of the Hussainganj Police Station had assaulted him. It is notorious that remand orders are often passed mechanically without a proper application of mind. Perhaps, the Magistrates are not to blame because, heaps of such applications are required to be disposed of by them before the regular work of the day begins. Shri Nigam has to be complimented for the sense of duty and humanity which he showed in leaving his seat and going to the verandah to see an humble villager like Brijlal. It is obvious that he was led into passing an order of remand on the basis of the usual statement that the offence of which the accused was charged was still under investigation. What is important is that Brijlal had not committed any offence at all for which he could be remanded and, far from being an accused, he was in the position of a complainant. Respondent I was the architect of his remand and the motive for obtaining the remand order was to keep Brijlal in custody so as to prevent him from disclosing to his people who beat him and where. After obtaining the remand order, Brijlal was sent to the Fatehpur District Jail at 3.40 p.m. Sheo Shanker Sharma, P.W.8, who was the Assistant Jailor of the Fetehpur Jail, says that when he examined Brijlal at about 3.45 p.m. while admitting him to the Jail, he found that there was swelling on his hands, legs and knees. Brijlal was unable to get up and on being questioned, he told Sharma that the policemen belonging to the Police Station arrested him H 628 from his field, took him to the Police Station and committed "marpit" on him, as a result of which the was unable to stand. Finding that Brijlal 's condition was serious, he called the Jail Doctor. Dr. section C. Misra P W. 21, went to the District Jail at about 5.20 IS p.m. He found that there were 19 injuries on the various parts of Brijlal 's person. On being questioned, Brijlal told him in a faltering voice that he had been beaten by the policemen. Dr. Misra says that Brijlal 's condition was precarious but that, he had neither any fever nor any symptoms of Pneumonie. The evidence of Dr Misra proves that Brijlal died on account of the injuries received by him and that, the suggestion made by the defence that he died on account of some kind of a fever or on account of the pneumonic condition of his lungs, is utteiy baseless. The congestion in his lungs was the result of the beating administered to him. It is well settled that, as a matter of law, a dying declaration can be acted upon without corroboration. (See Khushal Rao vs The State of Bombay(1);Harbans Singh vs State of Punjab,(2) and Gopalsingh vs State of M.P.)(3) There is not even a rule of prudence which has hardened into a rule of law that a dying declaration cannot be acted upon unless it is corroborated. The primary effort of the Court has to be to find out whether the dying declaration is true. If it is, no question of corroboration arises. It is only if the circumstances surrounding the dying declaration are not clear or convincing that the Court may, for its assurance, look for corroboration to the dying declaration. The ease before us is a typical illustration of that class of eases in which, the Court should not hesitate to act on the basis of an uncorroborated dying declaration. Brijlal had no reason for involving the policemen falsely for having assaulted him. There was no possibility of anyone tutoring him, for the simple reason that he was in the exclusive custody of the policemen of Husssainganj Police Station. It is the respondents who were in a position to exert influence over him. No one else had access to him, which not only excludes the possibility of his being tutored, but which also excludes the possibility that he was assaulted by any one else. Indeed, the circumstances of the case leave no doubt that the dying declaration (1) ; (2) [19621 Supp. 1 SCR 104, (3) 119721 3 SCC 268. 629 made by Brijlal to Shri Nigam is true in every respect. We consider it safe to accept the statement made by Brijlal to Shri Nigam that he was beaten by the 'Darogah and the constables ' of the Hussainganj Police Station. The only question which remains for consideration is as to the identity of the persons belonging to the Hussainganj Police Station who participated in the assault on Brijlal. Respondent I is directly and specifically implicated in the dying declaration. He was the "Darogah` ' of that Police Station. Laxmi Narain says in his evidence that at 10.45 a.m. when Brijlal was brought to the police station by respondents 3 and 4 respondent I was present. It is difficult to believe that The police constables would beat an accused so mercilessly in the police station without the connivance, consent or coollaboration of the Station House Officer. The Police Station of Hussainganj is not so large that the Station House Officer would not know what is happening there during his presence. The possibility of any other officer being a "Darogah" is removed by the evidence of S.I. Bajrang Bahadur Singh, P.W. 19, who says that, at the relevant time, there was no other Second Officer at the Hussainganj Police Station except him. Any doubt lurking about the involvement of respondent I in the incident is removed by his own conduct. Though he was unquestionably present at the police station at the material time, he prepared a false record in order to show that he had gone for the purpose of an identification parade to another place. We agree with the leaned Sessions Judge that the record was thus prepared by respondent 1 falsely in order to support the defence of alibi. That, indeed, was his defence at the trial. He also prepared false record to show that Brijlal was involved in a dacoity case and was brought to the police station for that reason. There was no such charge against Brijlal and yet, respondent ], as the S.H.O., authorised or allowed respondents 3 and 4 to go Haibatpur for arresting Brijlal. The true reason for arresting him was that the respondent were incensed at the complaint made by Brijlal against respondent 2 for extorting a bribe. In so far as respondent 2 is concerned, he is truly the cause of the assault on Brijlal. It was he who had extorted a bribe from Brijlal and was attempting to get some money from him. Brijlal sent a complaint on August 7, 1969 to the Superintendent of Police, Fatehpur, complaining against respondent 2. That complaint having 630 been referred for inquiry and report to the Hussainganj Police Soltion, respondents hatched a conspiracy to put Brijlal under arrest, bring him to the police station and assault him. In so far as respondents 3 and 4 are concerned, it is they who arrested Brijlal on a false charge of dacoity and brought him to the police station at 10 a.m., on August 29. Shortly thereafter, constable Laxmi Narain found that Brijlal was lying in the lock up in a badly injured condition and was shrieking in agony. In the light of these findings, it is unnecessary to refer to the evidence of P.Ws. 6. 7 and 9 who are respectively the nephew, the daughter and the wife of Brijlal. We agree with the learned Sessions Judge that these persons went to the police station immediately after Brijlal was taken there under arrest. It is not, however, possible to say with a reasonable amount of certainty that they saw the respondents assaulting Brijlal. They reached the police station quite some time after Brijlal was taken there and it would be too much of a coincidence to suppose that they arrived at the police station precisely at the time when Brijlal was being beaten. They might have heard the shrieks of Brijlal who was writhing in pain. But, standing outside the police station, as they were, it could not have been possible for them to see who was assaulting Brijlal. The limited relevance of their evidence is for showing, apart from the other circumstances stated above, that Brijlal was lying injured in the police station. For these reasons, we allow this appeal, set aside the judgment of the High Court and affirm that of the Sessions Court. It is to be greretted that the learned Sessions Judge convicted the respondents under section 304 instead of convicting them under section 302 of the Penal Code. The distinction between murder and culpable homicide not amounting to murder is often lost sight of, resulting in undue liberality in favour of undeserving culprits like the respondent police officers, Except in cases covered by the five exceptions mentioned in section 300 of the Penal Code, culpable homicide is murder if the act by which the death is caused is done with the intention of causing death, or if the act falls within any of the three clauses of section 300, namely, 2ndly, 3rdly and 4thly. In this case, the injuries suffered by Brijlal would appear to fall under the clause '2ndly ' of section 300, since the act by which his death was caused was done with the intention of causing such bodily injury as the respondents knew to be likely to cause his death. However, we will not pursue that matter 631 any further since the State did not file an appeal against the judgment of the learned Sessions Judge asking that the respondents should be convicted under section 302 of the Penal Code and since the prosecution did not lead sufficient evidence through the Medical Officer in order to bring out the true nature of the injuries suffered by Brijlal. Before we close, we would like to impress upon the Government the need to amend the law appropriately so that policemen who commit atrocities on persons who are in their custody are not allowed to escape by reason of paucity or absence of evidence. Police Officers alone, and none else, can give evidence as regards the circumstances in which a person in their custody comes to receive injuries while in their custody. Bound by ties of a kind of brotherhood, they often prefer to remain silent in such situations and when they choose to speak, they put their own gloss upon facts and pervert the truth. The result is that persons, on whom atrocities are perpetrated by the police in the sanctum sanctorum of the police station, are left without any evidence to prove who the offenders are. The law as to the burden of proof in such cases may be re examined by the legislature so that hand maids of law and order do not use their authority and opportunities for oppressing the innocent citizens who look to them for protect on. It is ironcial that, in the instant case, a person who complained against a policeman for bribery, was done to death by that policeman, his two companions and his superior officer, the Station House Officer. The vigilant Magistrate, Shri R.C. Nigam, deserves a word of praise for dutifully recording the dying declaration of the victim, which has come to constitute the sheet anchor of the case of the prosecution. A. P. J. Appeal allowed.

Respondent 1 was the Station House Officer and Respondents 2 to 4 were attached as constables to the Police Station. The prosecution alleged that a complaint was filed against the deceased for cattle trespass. The Respondent pursuant to the said complaint sought to extort illegal gratification from the deceased for hushing up the case. Respondent 2 succeeded in obtaining Rs. 100 and made a further demand of Rs. 200. The deceased refused to oblige him and made a complaint to the Superintendent of Police, who forwarded it to Respondent 1 for inquiry and report. This incensed Respondent 1. The deceased was arrested and brought to the Police Station by Respondents 3 and 4 at about 10.00 A.M. Same day at about 6.00 P.M. the deceased succumbed to injures which were caused to him by Respondents while he was in their custody. The Sessions Court tried the four Respondents, convicted each of them under section 304, Part 2 of the Penal Code while Respondent I was also convicted under section 220 of the Penal Code and all were sentenced to different terms of imprisonment. The Respondents appealed to the High Court and a Single Judge set aside their order of convictions and sentences. Allowing the Appeal of the State, 622 ^ HELD: 1. It is impossible to sustain the judgment of the High Court as it has totally overlooked crucial evidence led by the prosecution and taken an unrealistic view of unequivocal facts. It has not even adverted to the reasons given by the trial court for holding the Respondents guilty of the offences of which they were convicted. [625B C] 2. It is quite clear that upon the evidence led by the prosecution only one conclusion is possible, which is, that the Respondents inflicted injuries upon Brijlal while he was in their custody, thereby causing his death. [635F] 3. It is well settled that, as a matter of law, a dying declaration can be acted upon without corroboration. There is not even a rule of prudence which has harden d into a rule of law that a dying declaration cannot be acted upon unless it is corroborated. The primary effort Or the Court has to be to find out whether the dying declaration is true. If it is, no question of corroboration arises. It is only If the circumstances surrounding the dying declaration are not clear or convincing that the Court may, for its assurance, look for corroboration to the dying declaration. [628D E] The instant case. is a typical illustration of that class of cases in which the Court should not hesitate to act on the basis of an uncorroborated dying declaration The circumstances leave no doubt that the dying declaration made by the deceased to the Judicial Magistrate to the effect that he was beaten by Darogah and the constables at the Police Station is true in every respect and it is safe to accept the same. [628F; G; 629A B] Khushal Rao vs The State of Bombay, ; , Harbans Singh vs State of Punjab, [1967] Supp. ISCR 104 and Gopalsingh vs State of M.P, , followed. The distinction between murder and culpable hom cide not amounting to murder is often lost sight of, resulting in undue liberality in favour of undeserving culprits like the respondent police officers Except in cases covered by five exceptions mentioned in section 300 of the Penal Code, culpable homicide is murder if the act by which the death is caused is done with the intention of causing death, or if the act falls within any of the three clauses of section 300, namely, 2ndly, 3rdly and 4thly. [630 F G] The instant case, appears to fall under the clause '2ndly ' of section 300 since the act by which the death of was caused, was done with the intention of causing such bodily injury as the Respondents knew to be likely to cause his death. It is regrettable that the Sessions Court convicted the Respondents under section 304 instead of convicting them under sect on 302 of the Pen 11 Code. This Court, would not however pursue the matter further since the State did not fled an appeal against the judgment of the Sessions Court. [630H; 631A] 5. The record of the case is disproportionately bulky to the narrow Point which is involved in the case. It is not an unusual experience that the wood is missed for the trees when a Judge is confronted with a jumbled up mass of data 623 relevant and irrelevant. it is necessary in such cases to find the central point of the case and to concentrate upon evidence which bears upon that point. Petty details which befog the real issue and contradictions in the evidence which are inevitable when a story is narrated under the stress of a grave crime, ought not to be permitted to tilt the scales of justice. The more a Judge gets bogged down in superfluous details the greater is the likelihood of his straying away from evidence which can clinch the issue. [625C E] R In the instant case, the High Court missed or mistook the salient features of the case and embarked upon a hair splitting exercise while appreciating the evidence. Remand orders are often passed mechanical,y without a proper application of mind. In this case, the Magistrate was led into passing an order of remand on the basis of the usual statement that the offence of which the accused was charged was still under investigation. What is important is that deceased had not committed any offence at all for which 1 could be remanded and, far from being an accused, he was in the position of a complainant. Respondent 1 was the architect of his remand and the motive for obtaining the remand order was to keep him in custody so as to prevent him from disclosing to his people who beat him and where. [627D F] 7. It is necessary that the Government amends the law appropriately so that policemen l who commit atrocities on persons who are in their custody are not allowed to escape by reason of paucity or absence of evidence. Police Officers alone and none else. can give evidence as regards the circumstances in which a person in their custody comes to receive injuries while in their custody. Bound by ties of a kind of brotherhood, they often prefer to remain silent in such situations and when they choose to speak they put their own glass upon facts and pervert the truth. The result is that persons on whom atrocities are perpetrated by the police in the sanctum sanctorum OF the Police Station, are left without evidence to prove who the offenders are. The law as to the burden of proof in such cases may be re examined by the legislature so that hand maids of law and order do not use their authority and opportunities for oppressing the innocent citizens, who look to them for protection. [631C E]

tions (C) Nos. 331 47 of 1984. (Under Article 32 of the Constitution of India. ) Rajinder Sachar and K.T. Anantharaman for the Petitioners. Narayan B. Shetty, G.B. Pai, S.S. Shroff, Mrs. P.S. Shroff, Miss Girja Krishan, S.A. Shroff, Mrs. Pallavi Shroff, O.C. Mathur and A.M. Dittia for the Respondents. The Judgment of the Court was delivered by 365 DUTT, J. In these writ petitions, the petitioners are former officers and employees of the Caltex Oil Refining (India) Ltd., which has since been amalgamated with the Hindustan Petroleum Corporation Limited. The complaint of the petitioners is with regard to the inter se fitment of the officers and employees of the Caltex Oil Refining (India) Ltd. and the other two Companies which have also been amalgamated with Hindustan Petroleum Corporation Ltd., namely, ESSO Standard Refining Company of India Ltd. and Lube India Ltd. In 1974, the Undertakings in India of ESSO Eastern Inc. that is, ESSO Standard Refining Company of India Ltd. (for short 'ESSO ') and Lube India Ltd. (for short 'LIL ') were acquired by the ESSO (Acquisition of Undertakings in India) Act, 1974 and vested in Hindustan Petroleum Corporation Ltd. (for short 'HPCL '), a Government Company. In 1977, the shares of Caltex Oil Refining (India) Ltd. and Undertakings in India of Caltex (India) Ltd. were acquired by the Caltex (Acquisition of Shares of Caltex Oil Refining (India) Ltd. and the Undertakings in India of Caltex (India) Ltd. Act, 1977 and vested in Caltex Oil Refining (India) Ltd. (for short 'CORIL '), a Government Company. On May 5, 1978, by the order of the Company Law Board, CORIL was amalgamated with HPCL. By an order dated June 17, 1978, the Central Government appointed a one man Committee of Mr. B.B. Tandon, IAS (Retd.), for the purpose of examining the problems arising out the the integration of the management staff of CORIL and HPCL. The said Committee was to make recommendation inter alia on the following: (i) fitment in equivalent Groups; (ii) criteria to be adopted for determination of seniori ty and fixation of inter se seniority; and (iii) placement in appropriate positions. In September, 1970, the Tandon Committee submitted a report to the Central Government recommending that for equating positions in the two companies and fitting them in equivalent groups, the following two principles should be followed: 1. The principle of functional similarity 2. The principle of co equal responsibility. 366 We shall have occasion to refer to the report of the Tandon Committee later in this judgment, for much reliance has been placed by the petitioners on the report. While the report of the Tandon Committee was under the consideration of the Central Government, HPCL appointed two functional directors for the purpose of formulating a rationalisation scheme. In this connection, we may refer to a letter dated July 28, 1979 of the Central Government whereby it advised HPCL that the pay scales and perquisites of management and employees in the nationalised oil companies should be ratio nalised and fitted into the pay scales of the Indian Oil Corporation, hereinafter referred to as 'IOC ', a public sector Company. Further, it was stated in the said letter that the guiding principle to be adopted for the purpose was to find out the equivalence, that is to say, the equality of duty and also the equality of responsibility. On July 7, 1980, a circular letter was issued by HPCL annexing thereto a rationalisation scheme consisting of two pans. In the first part, the past service benefits that would be admissible to each employee of CORIL on the basis of existing pay scales and in the second pan, details were given of the rationalised conditions of service, payscales, perquisites and retirement benefits. In the circular it was stated as follows: "In relation to your fitment or fixation of salary in the proposed rationa lised scales, should you have any grievance you will be at liberty to represent your case to a Grievance Committee, which has been specially constituted for the purpose. I am directed to request you to signify your acceptance of this offer within 30 days from the date of receipt of this letter by returning the duplicate copy of this letter duly signed by you. On receipt of your acceptance, consequent letters will be issued. " In the scheme the pay scales of ESSO, LIL and CORIL sought to be equated with the pay scales of HPCL are as follows: From ESSO To : HPCL HPCL Salary Group Salary Group Salary Scale RS. E 7, E 8 A 750 40 1150 50 1550 E 6 B 1050 50 1450 60 1750 367 E 5, E 5A C 1450 60 1690 65 1950 E 4 D 1600 65 2120 E 3 E 1850 100 2350 E 2 F 2000 100 2500 O & E 1 & Unclassified G 2250 100 2750 General Manager H 2500 100 3000 From : LIL To : HPCL HPCL Salary Group Salary Group Salary Scale L 7 A 750 40 1150 50 1550 L 6 B 1050 50 1450 60 1750 L 5 C 1450 60 1690 65 1950 L 4 D 1600 65 2120 L 3 E 1850 100 2350 L 2 F 2000 100 2350 L 1 G 2250 100 2750 General Manager H 2500 100 3000 From CORIL To : HPCL HPCL Salary Group Salary Group Salary Scale R 6 A, R 6 B A 759 40 1150 50 1550 R 7 A, R 7 B B 1050 50 1450 60 1750 R 8 C 1450 60 1690 65 1950 R 9 D 1600 65 2 120 R 10 E 1850 100 2350 R R 12 G 2250 100 2750 General Manager H 2500 100 3000 So far as CORIL is concerned, it appears that it has 10 grades, while HPCL has 8 Grades. For, the purpose of equa tion of these 10 grades of CORIL with 8 Grades of HPCL, some compression has been made in the lower Grades, namely, R6 A and R6 B have been clubbed together and equated with Grade A of HPCL. Again Grades R7 A and R7 B of CORIL have been clubbed together and equated with Grade B of HPCL. In ESSO, .the Grades E 7 and E 8 have been clubbed together and equated with Grade A of HPCL. In the Salary Group of ESSO, the Grades E 5 and E SA have been shown to be two different Grades, but it is not disputed before us that these two Grades are really one Grade. 368 The complaint of the petitioners is that in the matter of fitment/ integration of the officers of CORIL, that is, the petitioners, and the officers of ESSO/LIL into HPCL/IOC Grades, gross disparities have been made to the prejudice of the officers of CORIL. It is the case of the petitioners that the officers of CORIL have been fitted by HPCL consist ently in one or two Grades lower in HPCL vis a vis their counterparts in ESSO/LIL, performing similar duties and having similar responsibilities and status. It is urged on behalf of CORIL that in integrating the officers CORIL with those of ESSO and LIL, HPCL did not make any attempt to equate all the positions held by the officers of CORIL with those held by the officers of ESSO/LIL. It is submitted that before any fitment can be made into any scale of pay, it is incumbent to make an equation of posts and without such equation the officers of CORIL could not be fitted into the pay scales of HPCL along with the officers of ESSO and LIL. In support of the contention that HPCL has not made any equation of posts before fitment in HPCL/IOC scales of pay, Mr. Sachar, learned Counsel appearing on behalf of the petitioners, has placed much reliance on the Tandon Commit tee 's Report. In the said report, the post of General Sales Representative of ESSO has been equated with the post of Retail Development Supervisor of CORIL. In the scheme pre pared by HPCL, the post of General Sales Representative of ESSO (E 6) and that of Depot Superintendent (E 6) have been placed in the Salary Group B of HPCL, while the post of Retail Development Supervisor (R6 A) and Depot Superintend ent/Relief Depot Superintendent (R6 B) of CORIL have been placed in the Salary Group A of HPCL. In Tandon Committee 's Report, it has been observed that the functional similari ties and the responsibility carried by both these function aries, namely, Retail Development Supervisor of CORIL and General Sales Representative of ESSO, are alike. Further, it has been observed that since these two posts are congruent, they can be fitted in the same Group, that is, in Group B of the new HPCL Grade Structure representing IOC scales of pay. The post of Depot Super intendent A (R7 B) and that of Mar keting Representative (R7 A) of CORIL have been placed in the Salary Group B of HPCL, but similar posts of ESSO being E 5/E 5A have been placed in the Salary Group C of HPCL. It is thus complained that the scheme, which has been prepared by HPCL, is arbitrary and is not based on a proper equation of posts. On the other hand, it is the case of HPCL that before the rationalisation scheme was finalised. HPCL Employees Management 369 Staff Association and CORIL Staff Association submitted their written submissions on December 6, 1977 and July 17, 1977 respectively. These representations were considered by the Government and after several meetings between the Chief Executives of HPCL and CORIL and the Secretary and other senior officers of the Ministry and Bureau of Public Enter prise, Government formulated the guidelines for rationalisa tion and communicated its decision to both CORIL and HPCL by its letter dated July 28, 1979. With a view to giving a further opportunity to the employees of erstwhile ESSO and CORIL group of officers, the Chairman of HPCL appointed two Committees to submit their recommendations as to the equiva lence and fitment of existing officers on the basis of IOC 's scales of pay in accordance with the Government guidelines. HPCL considered the reports submitted by the said two Com mittees and also different methods of fitment and equiva lence of different pay scales of ESSO, LIL and CORIL with the pay scales of IOC and, keeping in view all these factors including the submissions made by the Officers ' Association through their representations, HPCL approved the proposal of rationalisation of pay scales, allowances and perquisites. Accordingly, an offer letter dated July 7, 1980 together with the terms and conditions of new appointment as per the rationalisation scheme was sent to each of the employees. The further case of HPCL is that without exception every one of the CORIL Management Employees accepted the fresh terms offered to them by the said letter dated July 7, 1980. It is, accordingly, contended by Mr. Pai, learned Coun sel appearing on behalf of HPCL, that the impugned rational isation scheme having been finalised after repeated consul tations with the officers of CORIL and their Association and all the officers of CORIL having accepted in writing the said scheme, they are precluded from challenging the same. Another fact, upon which reliance has been placed on behalf of HPCL, is an order of this Court dated December 17, 1979 passed in Civil Appeal No. 3214 of 1979 whereby HPCL challenged the judgment of the Delhi High Court quashing a circular dated March 8, 1978 issued by the Board of Direc tors of CORIL, on the writ petition filed by the employees of CORIL being Writ Petition No. 426 of 1978. Two other appeals being Civil Appeal No. 3212 of 1979 and Civil Appeal No. 35 186 of 1979 were also filed by the officers of CORIL and Bharat Petroleum Corporation Ltd. respectively. The said order is as follows: "The petitioner Corporation will be at liberty to frame a 370 scheme, if it wishes to do so, in accordance with the judg ment of the High Court under appeal. If the scheme is framed, it will not be implemented for a period of three weeks from the date of its framing and the respondents will be at liberty within the period of 3 weeks to apply to this Court for stay. This order will be without prejudice to the rights and contentions of the petitioner Corporation in the appeal. " Admittedly, no application was made to this Court by the officers of CORIL praying for stay of the rationalisation scheme within a period of three weeks. Relying on the said order of this Court and also on the fact that no application for stay was made to this Court within the period allowed, it is submitted on behalf of HPCL that the petitioners accepted the rationalisation scheme which is also evidenced by their written acceptance. If they had any objection to the scheme, they would have surely made a representation to this Court in the said Civil Appeal No. 3214 of 1979 which was then pending. In the writ petition, the petitioners have emphatically denied the allegation of HPCL that discussions were made with individuals and groups of Management Staff of CORIL with regard to the rationalisation scheme. As to the accept ance of the rationalisation scheme, the case of the peti tioners is that on July 12, 1980 a news item appeared in the Bombay edition of the Times of India to the effect that under the scheme of rationalisation, the services of nearly 950 officers of HPCL would be terminated, and that such officers would simultaneously be reappointed on the basis of public sector salary. In view of the said news, the peti tioners filed an application in this Court in the said Civil Appeals praying for stay or suspension of the operation of the said offer letter dated July 7, 1980 and for restraining HPCL from terminating the services of the Management Staff of CORIL pending the disposal of the Civil Appeals. HPCL filed an affidavit in opposition to the said application of the petitioners to the effect that no decision had been taken by HPCL to terminate the services of the officers of CORIL. Accordingly, this Court disposed of the said applica tion recording that in view of the said affidavit of HPCL, no order was needed to be passed. Further, the case of the petitioners is that in spite of the said order of this Court, the petitioners still apprehended that HPCL would terminate the services of the petitioners in the event of their refusal to accept the said scheme and, as such, the petitioners under duress were forced to signify their con sent to the said scheme. 371 We have considered the explanation of the petitioner justifying the acceptance of the said offer letter dated July 7, 1988 and the rationalisation scheme sent therewith and also the contention of HPCL in that regard. In our opinion, the apprehension of the petitioners that in the event of their refusal to accept the scheme, their services will be terminated cannot be rejected on the face of it. It may be that there was no reasonable basis for such apprehen sion, but the plea that because of such apprehension the petitioners had no other alternative than to accept the scheme, cannot be disbelieved. At the same time, we do not also put any blame on HPCL for implementing the said scheme which was accepted by the petitioners and other officers of CORIL. Instead of disposing of these writ petitions on this technical grounds, we may proceed to consider the respective contentions of the parties on merits. The main grievance of the petitioners appears to be that in the rationalisation scheme a compression has been made at the lower level, namely, Grades R6 A and R6 B have been clubbed together and instead of placing them in the Salary Group B of HPCL, as has been done for the equivalent Grade E 6 of ESSO, they have been placed in the Salary Group A of HPCL. Similarly, the Grades R7 A and R7 B have been clubbed together and placed in Salary Group B of HPCL, while the equivalent Grade of ESSO has been placed in the Salary Group C of HPCL. The contention of the petitioners is that the compres sion should have been made at the higher grades, namely, Grades R11 and R12 and the Grade of General Manager. This is not for this Court to say whether the compression should have been made in the lower grades or in the higher grades. By such compression, Grades R6 A and R7 A have been upgraded and the persons placed in those Grades have been benefited by such upgradation. There is much substance in the conten tion made on behalf of HPCL that if compression had been made in the upper grades, there would be much complications and, moreover, such compression in the upper grades was not convenient to be made in view of functional differences. The Grade of General Manager cannot be clubbed together with a lower grade. In the circumstances, we are unable to accept the contention of the petitioners that the compression should have been made in the higher grades of CORIL. The most important question that requires consideration is whether in framing the rationalisation scheme HPCL has really made the equation of posts of CORIL with those of ESSO/LIL. It is the 372 positive case of the petitioners that no such equation has been made and the fitment of the officers of CORIL and those of ESSO/LIL in the IOC/HPCL scales of pay have been made without the equation of posts, which is a sine qua non for integration of officers coming from different sources. The petitioners have mainly relied upon the recommendation of the Tandon Committee that General Sales Representative of ESSO has been equated with the post of Retail Development Supervisor of CORIL. In the scheme prepared by HPCL, the post of General Sales Representative of ESSO and that of Depot Superintendent have been placed in the Salary Group B of HPCL, while the post of Retail Development Supervisor and Depot Superintendent/Relief Depot Superintendent of CORIL have been placed in the Salary Group A of HPCL. As against this, the contention of HPCL is that the two Committees that were appointed by the Chairman of HPCL considered the different methods of fitment and equivalence of different pay scales of ESSO, LIL and CORIL with the pay scales of IOC. Except the bare allegation, no material has been produced before us on behalf of HPCL to show that the said Committees had, as a matter of fact, considered the question of equation of posts on the basis of the principle as laid down by the Central Government while referring the matter to the Tandon Committee, namely, functional similari ty and co equal responsibility. In the affidavits filed on behalf of HPCL, no particulars have been given with regard to the functional equivalence or otherwise of the different grades of these officers of CORIL, ESSO and LIL. It is also not stated what happened to the consideration by the Govern ment of the Tandon Committee 's report. There can be no doubt that the Government is not bound to accept the recommenda tion of the Tandon Committee but, at the same time, the equation of posts has to be made on the principle of func tional equivalence and co equal responsibility. As no mate rials have been produced in that regard on behalf of HPCL, it is difficult for us to hold that the different grades of posts have been compared before placing the officers of these companies in the IOC/HPCL scales of pay. While it is not within the domain of the Court to make the equation of posts for the purpose of integration, it is surely the concern of the Court to see that before the integration is made and consequent fitment of officers in different grades/scales of pay is effected, there must be an equation of different posts in accordance with the principle stated above. As there is no evidence or material in support of such equation of posts, it is difficult to accept the ra tionalisation scheme with regard to the placing of the officers of CORIL in different IOC/HPCL grades of pay. 373 The petitioners approached the Grievance Committee, but the Grievance Committee did not consider the objections of the petitioners to the said scheme. In our opinion, there is much substance in the contention made on behalf of HPCL that it was not the business of the Grievance Committee to con sider the propriety or otherwise of the rationalisation scheme, but if any officer has not been placed in the proper grade, the Grievance Committee may place such officer in the proper grade in accordance with the rationalisation scheme. Be that as it may, in the view which we take, namely, that there has been no equation of posts, the rationalisa tion scheme cannot be accepted in full. The prayer of the petitioners in the writ petition is for a declaration that the said scheme is violative of Articles 14 and 16 of the Constitution of India and for a writ, order or direction in the nature of mandamus directing HPCL to remove the discrim ination against the petitioners in regard to the impugned rationalisation scheme. The question is whether we should set aside the scheme after the lapse of about eight years. During these eight years, by virtue of implementation of the scheme, many changes have taken place with regard to the positions and ranks of the officers of HPCL including the petitioners and to set aside the whole scheme at this stage would surely affect the service structure of HPCL. We are also not obliv ious of the order of this Court dated July 20, 1984 record ing the statement made in the affidavit of HPCL that if this Court would ultimately decide the matter in favour of the petitioners, HPCL would accord to them all the benefits which they would be entitled to. That is an undertaking given by HPCL, but we should also look to the interest of several officers of HPCL who would be affected, if the scheme is set aside. In the circumstances, without setting aside the scheme, we direct HPCL to appoint a Committee consisting of high officials of HPCL and Central Government, other than those who were in the previous Committees, within one month from date for the purpose of considering the question of equation of posts on the basis of functional similarity, equivalence and co equal responsibility, that is to say, whether on that basis Grades R6 A and R6 B of CORIL, either jointly or separately, can be equated with the Grade E 6 of ESSO and, similarly, Grades R7 A and R7 B of CORIL, either jointly or separately, can be equated with Grade E 5/E 5A of ESSO. In considering the question of equation of posts, the respond ents shall also take into its consideration the report of the Tandon Committee. Such consideration shall be 374 made within six months from today. If such equation is found to be in favour of the petitioners, HPCL shall give effect to the same. But, in view of the lapse of about eight years for which the petitioners are also to some extent responsi ble, the date or dates from which the consequential benefit will be given effect to and also the quantum of such benefit will be such as may be deemed fit and proper by the respond ents, having regard to the financial involvement and the changes that have taken place. We make it clear that, in no event, promotions and the existing positions of the officers of HPCL, by virtue of the implementation of the impugned scheme, will be interfered with. The writ petitions are disposed of as above. There will be no order as to costs. P.S.S Petitions allowed.

ESSO Standard Refining Company of India Ltd. and Lube India Ltd. were acquired by the ESSO (Acquisition of Under takings in India) Act, 1974 and vested in the Hindustan Petroleum Corporation Ltd. In 1978 Caltex Oil Refining India Ltd., another Government company was amalgamated with HPCL. Consequent upon this integration of management staff of CORIL and HPCL, dispute arose as to their fitment in equiva lent groups and fixation of inter se seniority. The Tandon Committee appointed to examine the issues recommended the application of the principles of (1) functional similarity, and (2) co equal responsibility, for equating positions in the two companies. The HPCL appointed two functional direc tors for framing a rationalisation scheme. In the said scheme for the purpose of equation of 10 grades of CORIL with 8 grades of HPCL some compression was made in the lower grades, namely, R6 A and R6 B of CORIL were clubbed together and equated with grade A of HPCL. Again, grade R7 A and R7 B were clubbed together and equated with grade B of HPCL. The complaint of the petitioners, former officers and employees of CORIL, was that the rationalisation scheme was arbitrary, in that the fitment of officers of CORIL and those of the ESSO/LIL in the HPCL scales of pay had been made without the equation of posts, which was a sine qua non for integration of officers coming from different sources, so much so that they had been consistantly fitted in one or two grades lower in HPCL vis a vis their counterparts in ESSO/LIL performing similar duties and having similar re sponsibilities and status; that in the Tandon Committee report, the post of General Sales Representative of ESSO had been equated with the post of Retail Development Supervisor of CORIL on the principle of functional similarity and co equal responsibility; that since these two posts were con gruent, they should have been fitted in the same group, that is, in Group B of the new HPCL 363 Grade structure, whereas in the said scheme the post of General Sales Representative of ESSO (E 6) and that of Depot Superintendent (E 6) have been placed in the Salary Group B of HPCL, while the post of Retail Development Supervisor (R6 A) and Depot Superintendent/ Relief Depot Superintendent (R6 B) of CORIL have been placed in Salary Group A of HPCL. It is further averred that the post of Depot Super intend ent A (R7 B) and that of Marketing Representative (RT A) of CORIL have been placed in the Salary Group B of HPCL, but similar posts of ESSO being E 5/E5A have been placed in Salary Group C of HPCL; that the compression should have been made at the higher grades namely, grades R 11 and 12 and the grade of General Manager, and that the petitioners were forced to signify their consent to the said scheme under duress. They, therefore, prayed for a declaration that the said scheme was violative of Articles 14 and 16 of the Constitution of India. For the respondents, it was contended that the two committees that were appointed by the Chairman of HPCL considered the different methods of fitment and equivalence of different pay scales of ESSO, LIL and CORIL with the pay scales of IOC, that the reports submitted by these two committees were considered by the HPCL along with the sub missions made by the officers ' association through their representations before approval, that the terms and condi tions of the new appointments as per the rationalisation scheme were circulated to each of the CORIL employees with its letter dated July 7, 1980 and they having accepted in writing the said scheme they were precluded from challenging the same. Allowing the writ petitions, HELD: 1. While it is not within the domain of the Court to make the equation of posts for the purpose of integra tion, it is surely the concern of the Court to see that before the integration is made and consequent fitment of officers in different grades/scales of pay is effected, there must be an equation of different posts in accordance with the principle Of functional equivalence and co equal responsibility. [372G H] In the instant case, no evidence or material has been placed before the Court on behalf of the HPCL in support of such equation of posts. The rationalisation scheme with regard to the placing of the officers of CORIL in different IOC/HPCL grades of pay, therefore, cannot be accepted in full. [372H] 364 2. This is not for the Court to say whether the compres sion should have been made in the lower grades or in the higher grades. By such compression, grades R6 A and R7 A have been upgraded and the persons placed in those grades have been benefitted. If compression had been made in the upper grades there would have been much complications in view of the functional differences, for the grade of General Manager cannot be clubbed together with a lower grade. The contention that the compression should have been made in the higher grades of CORIL cannot, therefore, be accepted. [371F G] 3. The apprehension of the petitioners that in the event of their refusal to accept the scheme, their services will be terminated cannot be rejected. It may be that there was no reasonable basis for such apprehension, but the plea that because of such apprehension the petitioners had no other alternative than to accept the scheme, cannot be disbe lieved. [371B] 4. Having regard to the interest of several officers of HPCL who would be affected if the scheme is set aside, and in view of the fact that during the eight years in which the scheme had been in operation many changes had taken place with regard to the positions and ranks of the officers of HPCL including petitioners, HPCL is directed to appoint a committee consisting of high officials of HPCL and Central Government, other than those who were in the previous com mittees, within one month for the purpose of considering the question of equation of posts on the basis of functional similarity, equivalence and co equal responsibility, and to give effect to the same. Promotions and the existing posi tions of the officers of HPCL by virtue of the implementa tion of the impugned scheme, not to be interfered with. [373D, F G; 374B]

ivil Appeal Nos. 1103 & 1104 of 1979. From the Judgment and Order dated 20.3. 1978 of the Allahabad High Court in I .T.R. Nos. 428/72 and 542 of 1973. Ashok Grover for the Appellant. J. Ram Murthy, section Rajappa and Ms. A. Subhashini for the Respondent. The Judgment of the Court was delivered by V. RAMASWAMI, J. The appellant is a private limited company in Liquidation. The winding up order was made by the High Court on 8th November, 1949 land the Liquidator was directed to submit reports every three months respecting the progress of the winding up proceedings and realisation of the assets. In the course of winding up the Liquidator sold certain assets and deposited the money in fixed deposits with certain banks. During the previous year relevant to the assessment year 1966 67 the appellant earned by way of interest from fixed deposits a sum of Rs.32,237.60. The Liquidator had in the relevant previous year incurred the following expenditure totalling Rs. 12,379.45: Salaries Rs. 1,2 15.00 Legal fees Rs. 9,725.00 Liquidation expenses Rs. 538.85 T.A. & D.A. Rs. 751.51 Postage Rs. 95.34 Stationery Rs. 53.75 Total: Rs. 12,379.45 386 The assessee company claimed a deduction of the above said sum of Rs. 12,379.45 from the interest income of Rs.32,237.60. The Income Tax Officer did not allow any part of the expenditure claimed by the assessee company and assessed the entire amount of Rs.32,237.60 as taxable under section 56 of the Income Tax Act, 1961 (hereinafter referred to as the 'Act '), under the head 'INCOME FROM OTHER SOURCES". This assessment order was confirmed by the Appel late Assistant Commissioner and the Tribunal on an appeal. In the assessment year 1967 68 also the assessee earned certain amounts of money by way of interest from fixed deposits and the Liquidator incurred identical expenditures as in the assessment year 1966 67 except for the difference in the amount. The Income Tax Officer refused to allow any deduction of any part of the expenditure claimed by the assessee. Even in this assessment year the entire interest income was taxed under section 56 of the Act under the head "Income From Other Sources". The appeals flied in respect of this assessment year also were unsuccessful. In respect of both these assessment years the following identical question was directed to be referred by the High Court under section 56(2) of the Act on the refusal of the Tribunal to refer the same under section 256( 1): "Whether on the facts and in the circumstances of the case, the assessee is entitled to the deduction of the whole or any part of the expenses incurred by the Liquidator in the computation of the assessee 's total income". It may be mentioned that in respect of the assessment year 196263 the assessee had claimed deduction of simmilar expenditure from the interest income earned from fixed deposit. At the instance of the assessee the Tribunal re ferred the following question: "Whether, on the facts and in the circum stances of the case, the sum of Rs. 13,023 is an admissible charge against the income of the previous year". In the decision reported in Vijay Laxmi Sugar Mills Ltd. vs Commissioner of Income Tax, Delhi Central, All. the High Court answered that reference holding that the income from the fixed deposit has to be considered as income from other sources and only that ex penditure can be deducted which under section 57(iii) of 387 the Act can be considered as incurred for earning that income and that the expenses claimed are not related to the earning of that income. Accordingly the High Court answered the question in the negative and in favour of the Revenue. It may also be mentioned that the assessing officers and the Tribunal followed this decision which was assessee 's own case for the earlier assessment year, in the assessments now in question. The learned counsel for the appellant canvassed the correctness of the view propounded in Vijay Laxmi Sugar Mills Ltd. vs Commissioner of Income Tax, Delhi Central, (supra). The learned counsel contended that among the ob jects mentioned in the memorandum of association of the company provision is made for advancing and lending money, investment of the company 's money and dealing in debentures, shares, stocks and other securities and carrying on various other businesses such as the company considered desirable in lieu of any other business which it was authorised to carry on. Therefore, in effecting sale and realising of the assets of the company in Liquidation and investing in fixed depos its the Liquidation was engaged in the businesses of making investment in fixed deposits. The interest income earned therefrom is a business income taxable under section 28 of the Act and not under section 56 of the Act under the head "Income From Other Sources". If this contention of his is right the expenditure incurred by the Liquidator shall also be considered as for the purpose of earning the above men tioned income or at least could be said as wholly and exclu sively laid out or expended for the purposes of that busi ness and deductable from the total income earned by the company during the relevant previous year. We are wholly at a loss to understand how this argument is possible on the facts and circumstances of this case. As already stated the company had been directed to be wound up and a Liquidator was appointed by the High Court as early as in 1950. The company before its Liquidation was engaged in the manufac ture of sugar. The records do not disclose that the Liquida tor was carrying on the business of manufacture of sugar or any trading activity for the purpose of facilitating the winding up. The statement of facts on record show that the Liquidator realised certain amount by way of sale of the assets of the company in Liquidation and it is those sale proceeds that was invested in fixed deposit which earned the interest. The Liquidator in merely realising the assets of the company could not be considered as carry on any business of the company. The activity of realising the assets and banking them in fixed deposit was in the course of winding up and it was not in furtherance of any business activity 388 carried on by the company before its winding up. There may be cases where the Liquidator may be said to carry on the company 's business in so far as is necessary for the winding up or facilitate the winding up or realise the assets of the company in such a way as to involve the carrying on trade. But in this case there is no evidence in this regard. In fact the winding up order was made as early as in 1950 and nothing of the winding up activity is in evidence. The only accepted fact is that the interest income was derived from fixed deposits purchased out of the pro ceeds of sale of assets during winding up. The assessee, therefore, could not be said to have carried on any business to bring the interest income within the meaning of section 28 of the Act and that therefore the interest income was liable to be assessed only under the head "Income From Other Sources". Very near to the facts of this case is the decision reported in Morvi Mercantile Bank Ltd. (In Liquidation) vs Commissioner of Income Tax, Gujarat, Guj. In that case the assessee a banking company was compul sorily wound up and its licence was suspended by the Reserve Bank. The Official Liquidator realised the assets and in vested the money in short term deposit pending distribution. It was contended on behalf of the company in Liquidation that the income realised by the Liquidator was business income and that the Income Tax Officer was not right in treating it as "Income From Other Sources". Rejecting this contention the Gujarat High Court held: "That the assets of which the liquidator was seized and which he tried to realise for purposes of winding up were of capital nature and they cannot be said to be business assets; nor can it be said that merely because he was investing the realisations, assuming that that was permissible either under the memorandum or under the statute, the activities which he was carrying on as a liquidator were those of a businessman. In the circumstances, therefore, we cannot uphold the contention of Mr. Patel that the liquidator was making for merecantile necessity the investment of realisations as a business for beneficial winding up of the company. The Tribunal has found as a fact that the main business of the assessee company having gone as a result of the winding up order, there did not remain any other activity 389 which can be legitimately said to be a busi ness activity and whatever the liquidator did was merely as a liquidator for purposes of liquidation of the company". This is indeed the view to be taken even in this case also. The Tribunal was, therefore, right in holding that the interest income in the instant case is not governed by section 28 but fails to be considered under section 56. The next submission of the learned counsel for the assesee was that in the course of effecting the winding up of the assessee company the Liquidator has been incurring expenses such as salaries, legal fees, travelling expenses and other liquidation expenses and that these expenses are allowable deduction from income earned by way of interest from fixed deposits in the relevant year. In computing the income chargeable under the head "Income From Other Sources", section 57(iii) provides that deduction is to be made in respect of expenditure laid out or expended wholly and exclusively for the purpose of making or earning such income. The question for consideration, therefore, is wheth er the expenses of the type incurred by the Liquidator in this case can be said to have been incurred solely for the purpose of earning the interest income. It is true that the connection between the expenditure and the earning of income need not be direct and it may be indirect. But since the expenditure must have been incurred for the purpose of earning that income there should be some nexus between the expenditure and the earning of the income. There is not even some sort of an evidence to show that the expenses incurred by the Liquidator was to facilitate the earning or at least for protecting of the income. The interest accrues SUI GENERIS. The interest is payable by the bank whether it is claimed or not and whether there is any establishment or not. Normally there was no necessity for spending anything separately for earning the interest. However we may hasten to add that if any explenditure was incurred like commission for collection or such similar expenditures which may be considered as spent solely for the purpose of earning that income, the position may be different. But that was not so in this case. It could not also be said that the expenditure incurred was to preserve or acquire the asset. Nor could it be said that the expenses were incurred for the purpose of maintenance of the source. The requirement under section 57(iii) that the expenditure should have been incurred "for the purpose of making or earning such income" show that the object of spending or the end or aim or the intention of such spending was for earning the interest 390 income. There could be no doubt that the expenditure incurr eid by the Liquidator in this case can by no stretch be said to have been incurred with the object or for the purpose of earning the interest income. The Tribunal was, therefore, right in holding that the expenses claimed are not related to the interest income and was not a deductable expenditure under section 57. We are, therefore, of the view that the High Court correctly answered the reference in the negative and in favour of the Revenue. The appeals are accordingly dismissed with costs. R.P. Appeals dismissed.

The appellant company was ordered to be wound up in 1949. In the course of its winding up the liquidator sold certain assets of the company and invested the sale proceeds thereof in fixed deposits with certain banks. The liquidator incurred certain expenditures on salaries, legal fees, travelling expenses, postage and stationery. The assessee company claimed a deduction of the said expenses from the interest income. The I.T.O. did not allow it, and assessed the entire interest income as taxable u/s 56 of the Income Tax Act, 1961 under the head "Income from other sources". The assessment orders were confirmed by the Appellate As sistant Commissioner and by the Income Tax Appellate Tribu nal in appeal. On a reference by the Tribunal the High Court held that the income from fixed deposit was income from other sources; and it disallowed deduction of the expenditure section 57(iii) on the ground that the expenses claimed were not related to the earning of the interest income. Aggrieved the assessee companY preferred appeal by special leave to this Court. On the questions whether: (1) in effecting the sale and realisation of the assets of the Company in liquidation and investing the same in fixed deposits the liquidator was engaged in the business of the company and the interest income was a business income taxable u/s 28 of the Act and not under section 56 under the head "Income from other sources", and (2) the expenses incurred by the liquidator were in curred solely for the 384 purpose of earning the interest income so as to claim deduc tion section 57(iii). Dismissing the appeal, this Court, HELD: 1. The Liquidator in merely realising the assets of the Company could not be considered as carrying on any business of the Company. [387G] 2. In the instant case, the company before its liquida tion was engaged in the manufacture of sugar. The records did not disclose that the liquidator was carrying on the business of manufacture of sugar or ' any trading activity for the purpose of facilitating the winding up. The only accepted fact was that the interest income was derived from fixed deposits purchased out of the proceeds of sale of assets during winding up. The assessee, could not be said to have carried on any business to bring the interest income within the meaning of section 28 of the Act and, therefore, the interest income was liable to be assessed only under the head "Income from other sources". The Tribunal was, there fore, right in holding that the interest income in the instant case was not governed by section 28 but fell to be con sidered under section 56. [387F; 388B C; 389A B] Vijay Laxmi Sugar Mills Ltd. vs Commissioner of Income Tax, Delhi Central, All., affirmed. Morvi Mercantile Bank Ltd. vs Commissioner of Income Tax, Gujarat., Guj., approved. 3.1 In computing the income chargeable under the head "Income from other sources", requirement under section 57(iii) of the Act is that the expenditure should have been incurred "for the purpose of making or earning such income" and the deduction is to be made in respect of expenditure laid out or expended wholly and exclusively for the purpose of making or earning such income. [389C D & G] 3.2 It is true that the connection between the expendi ture and the earning of income need not be direct and it may be indirect. But since the expenditure must have been in curred for purpose of earning that income, there should be some nexus between the expenditure and the earning of the income. [389D E] 3.3 The interest accrues sui generis. The interest is payable by the bank whether it is claimed or not and whether there is any establishment or not. [389E F] 385 3.4 In the instant case there could be no doubt that the expendidure incurred by the liquidator can by no stretch be said to have been incurred with the object or for the pur pose of earning the interest income. It could not be said that the expenditure incurred was to preserve or acquire the asset. Nor could it be said that the expenses were incurred, for the purpose of maintenance of the source. The Tribunal was, therefore, right in holding that the expenses claimed were not related to the interest income and was not a de ductable expenditure under section 57. [390A B; 389G]

ivil Appeal No. 525 of 1989. From the Judgment and Order dated 11.12.1985 of the Calcutta High Court in Civil Rule No. 2716 of 1981 Shankar Ghosh and Rathin Das for the Appellant. D.P. Mukherjee, and G.S. Chaterjee for the Respondent. The Judgment of the Court was delivered by 399 RAY, J. Special leave granted. Heard learned counsel for both the parties. This appeal on special leave arises out of an applica tion for preemption filed under the provisions of Section 8 of West Bengal Land Reforms Act, 1955 (West Bengal Act X of 1956) by the respondent, Md. Nasiruddin to pre empt the land sold to the appellant, Abdulla Kabir by a Kobala dated May 16, 1974 by a co sharer having 1/4th interest in plot No. 115/852 appertaining to Khatian No. 1944 on the ground of his being co sharer in the said holding. The land in ques tion i.e. plot No. 115/852 measuring 0.3 cents was owned by one Sarat Chandra Dutta, son of Amulaya Ratan. Sarat Chandra Dutta was an agriculturist and he used to keep his agricul tural implements in the said property. He also possessed along with the said land other agricultural lands as agri culturist and in occupancy raiyati interest. During R.S. operation also the said property was recorded in his name as 'Raiyat Sthitiban ' and the classification of land was re corded as 'Bari ' i.e. homestead of the said agriculturist. On September 20, 1967, Sarat Chandra Dutta, owner of the said plot of land, sold the same by a registered Kobala to four persons namely Sisir Kumar Mondal, Naba Kumar Mondal, Madhusudan Mondal and Purmlakshmi Mondal. Thereafter on October 28, 1968 Sisir Kumar Mondal and Naba Kumar Mondal sold their shares to Nurunessa Khatun, predecessor of the respondent petitioner. On the basis of this Kobala Nurunessa Khatun became co sharer in respect of the said land. After the death of Nurunessa Khatun her heirs including the eldest son, the respondent petitioner, inherited the right of occupancy as co sharer. On May 16, 1974, Purnalakshmi sold her 1/4th interest to the appellant, Abdulla Kabir by Kobala (Exh. l(b). It is the case of the respondent petitioner that as no notice of the said sale was served on his mother, Nurunessa Khatun, he could not know of the said sale earli er. However, on taking certified copy of the said sale on May 3, 1977, the respondent petitioner filed an application for pre emption under Section 8 of the West Bengal Land Reforms Act after depositing the requisite sum as required to be deposited under the said Act. This application was registered as Misc. Case No. 36 of 1977 in the Court of Munsif, 2nd Court, Bolpur. The appellant contested the case by filing a written objection contending inter alia that the respondent petitioner was neither co sharer of the holding nor an adjoining land owner. The disputed property is non agricultural tenancy. The petition for preemption is barred by limitation as the respondent petitioner was all along aware of the said sale and the story of his coming to know of such sale after taking copy of sale deed on May 3, 1977 was absolutely false. 400 The distuted deed does not contain the recital that the respondentpetitioner was an adjoining land owner. The peti tion for pre emption in such circumstances was liable to be dismissed. Three issues were framed by the Trial Court i.e.: (1) Whether the case land is non agricultural and whether section 8 of the West Bengal Land Reforms Act will be ap plicable in this case; (2) Whether the petitioner was a co sharer in respect of case holding from before purchase of the disputed land; (3) Whether the case is barred by limitation? The Trial Court held that the petitioner respondent was a cosharer and was entitled to pre empt; the application for pre emption was not barred by limitation as it was filed within a period of three years of knowledge of the same as no notice of sale was served on the petitioner respondent. The Trial Court further held that the subject matter of the sale was recorded as "Bastu" in the Kobala dated May 16, 1974 (Exh. l(b) and "Bari" in the R.S. Record of Right (Exh. 3(h) and though Sarat Chandra Dutta, the owner of the land was an agriculturist yet this homestead land being not included in the raiyat holding could not be treated as agricultural land according to the provisions of West Bengal Land Reforms Act because of the nonagricultural use as evident from the R.S. Record of rights. The land is non agricultural land and as such the application for pre emp tion under Section 8 of the said Act was not maintainable. The Misc. Case was, therefore, dismissed. Against the said judgment and order, Misc. Appeal No. 84 of 1980 was filed by the respondent in the 2nd Court of the Addl. District Judge, Birbhum. The appellate court reversed the findings of the trial court and held that the suit property was recorded as of raiyati interest in the R.S. Record of rights and the suit land being the homestead of Sarat Chandra Dutta who was an agriculturist, it was agri cultural land according to the provisions of the said Act and the application for pre emption under Section 8 of the West Bengal Land Reforms Act was maintainable. The appellate court further upheld the findings of the trial court that the application was not barred by limitation and the appel lant (respondent herein) was a co sharer of the said land. The Misc. Appeal was, therefore, allowed and the judgment of the trial court was set aside. 401 Against this judgment and order of the appellate court, the appellant, Abdulla Kabir filed a petition in revision being C.R. No. 2716 of 1981 in the High Court at Calcutta. During the pendency of the said Revisional case the respond ent pre emptor made an application for amendment of the relief claimed in the application for pre emption by adding an alternative relief for pre emption under Section 24 of the West Bengal Non Agricultural Tenancy Act. After hearing both the parties, the amendment was allowed subject to the payment of costs quantified at Rs. 1,000. Thereafter, on December 11, 1985 the Civil Rule was discharged by holding that: " . . I am not satisfied that the finding recorded by the appellate court based as it is on an assessment of evidence, suffers from any jurisdictional defect or error, so as to entitle this Court to interfere in revision. This Court cannot enter into evidence and come to its conclusion. " It has also been held that in view of the amendment of the petition even if it is held that the land was non agri cultural land, preemption could be granted under Section 24 of the Non Agricultural Tenancy Act. Against this judgment and order, the instant appeal on special leave has been preferred in this Court. Dr. Ghosh, learned counsel appearing on behalf of the appellant has contended in the first place that the land in question has been recorded as "Bari, teen khanna ghar" in the R.S. Record of rights i.e. it is not agricultural land. The land is used for non agricultural purposes though the right of the owner of the land has been recorded as agricul turist "raiyat sthitiban. " He further contended that as the 'bari ' or the homestead is not situated on the agricultural land in the holding held by a Raiyat, it cannot be treated as agricultural land. It is non agricultural land used for non agricultural purposes and the provisions of Section 8 of the Land Reforms Act are not applicable to such a holding as has been held by the trial court. The finding of the High Court to the effect that there was no error of jurisdiction is wholly unwarranted and as such the appeal should be allowed. Dr. Ghosh next contended referring to the decision in Eyachhin Ali Naskar and Ant. vs Golap Gazi, that the nature of the holding whether it is agricultural or non agricultural has to be determined with reference to the user of the land 402 comprised in the holding. The land in question is used for nonagricultural purposes and it does not form a part of his raiyati holding comprising of Agricultural land. Therefore, it cannot be treated as agricultural land under the West Bengal Land Reforms Act. The land being recorded as "Bastu" in the R.S. Record of rights, it is to be treated as non agricultural land. Dr. Ghosh next submitted that the High Court did not give a definite finding whether Section 8 of the Land Re forms Act or Section 24 of the West Bengal Non Agricultural Tenancy Act was applicable in this case. Mr. Ghosh, there fore, submitted that there has been an error of jurisdiction and the appeal should be allowed. Dr. Ghosh has lastly contended that Section 3A was inserted by West Bengal Land Reforms (Amendment) Act, 1981 and assent of the President to the same was published in the Gazette on 24th March, 1986. Referring to this provision he submitted that the matter should be sent back and the appel lant should be permitted to take such defences in view of the amended provisions as are available to him and the matter should be re heard by the trial court. He drew the notice of the court to the decisions in Dwarka Nath Prasad Atal vs Ram Rati Devi, and Luigi Ambrosini Ltd. vs Bakare Tinko and Another, A.I.R. 1929 PC 306. We are unable to accept the contentions made on behalf of the appellant for the reasons stated hereinbelow. The land in question which is 1/4th share of plot No. 115/852 has been recorded in the R.S. Record of rights as "Raiyat Sthitiban" i.e. the original owner of the said land Sarat Chandra Dutta was a raiyat and the classification of the land has been recorded as "bari". The entry in the record of right is presumed to be correct and this has not been challenged by any body. It, therefore, appears that the land in question is the homestead land of Sarat Chandra Dutta who is on agriculturist being recorded as raiyat. Section 2(6) of the West Bengal Land Reforms Act, 1955 defines holding as: "holding" means the land or lands held by a raiyat and treated as a unit for assessment of revenue. " Section 2(7) defines land as under: 403 "land" means agricultural land other than land comprised in a tea garden which is retained under sub section (3) of section 6 of the West Bengal Estates Acquisition Act, 1953, and includes homesteads but does not include tank. Explanation: "Homestead" shall have the same meaning as in the West Bengal Estates Acquisi tion Act, 1953" So according to the above provisions the homestead of an agriculturist is agricultural land. It has been found by the courts below that the land in question is a homestead land recorded as "Bari" in the R.S. record of rights. The owner of the said land Sarat Chandra Dutta is also recorded as a raiyat i.e. "raiyat sthitiban". In other words, it is the homestead of a raiyat i.e. an agriculturist. The trial court held that this R.S. record of right is not erroneous as the same has not been challenged by any body in the petition. Rather the respondentpetitioner supported the contention that "Sarat Chandra Dutta, the owner of plot No. 115/852 was mainly an agriculturist and his main source of living was agriculture. " The learned Munsif however, held that since the said homestead is not included in the holding of the raiyat i.e. the homestead does not stand on the agricultural land included in his holding, the homestead land cannot be treated as agricultural land relying on the decision in Eyachhin Ali Naskar and Anr. vs Golap Gazi (supra). This finding of the trial court has been negatived by the lower appellate court as well as by the High Court and it has been held that the said homestead land is agricultural land. This finding, in our view, is quite valid and legal. It has been observed by the Calcutta High Court in Eyachhin Ali Naskar and Anr. vs Golap Gazi that: " . . It is thus obvious that the nature of the holding has to be determined with reference to the user of its land or lands under the said Act. Section 2(6) of the West Bengal Land Reforms Act defines "holding" as the land or lands held by a raiyat and treated as a unit for assessment of revenue. Under clause (7) of Section 2 of the same Act "land" in the Act means agricultural land other than land comprised in a tea garden which is re tained under subsection (3) of Section 6 of the West Bengal Estate Acquisition Act, 1953 and includes homesteads. " It has been further observed that: 404 " . . In a case where as here the holding is recorded as bastu and the non agricultural user is also evident, as appearing from the revisional record of rights wherein it has been stated that there are two huts standing thereon, the land cannot be treated as land to which the provisions of the Land Reforms Act will be applicable, as the Act applies to agricultural lands only. " This observation of the High Court has been made wrongly in as much as the High Court did not take notice of the amended provision of the West Bengal Non Agricultural Tenan cy Act, 1949 amended by Act 8 of 1974. Section 2(4)(a) defines non agricultural land as land used for purposes not connected with agriculture or horticulture but does not include a homestead to which the provisions of the West Bengal Land Reforms Act, 1955 apply. Taking notice of this provision it is crystal clear that homestead land does not fall within the province of non agricultural land both under the Non Agricultural Tenancy Act as well as under the West Bengal Land Reforms Act, 1955. In that view of the matter the whole basis of the observation of the High Court to the effect "that where the holding is recorded as bastu and the non agricultural user is also evident, as appearing from the revisional record of rights wherein it has been stated that there are two huts standing thereon, the land cannot be treated as land to which the provisions of the Land Reforms Act will be applicable as the Act applies to agricultural lands only" is wrong. The judgment is per incuriam. As has been stated hereinbefore that the definition of land as given in the West Bengal Land Reforms Act, 1955 refers to agricultural land and includes homestead. Explanation to sub section 7 of section 2 further provides that "Homestead shall have the same meaning as in the West Bengal Estates Acquisition Act, 1953. " Section 2(g) of the West Bengal Estates Acquisition Act, 1953 defines; "Homestead" means a dwelling house together with any court, yard, compound, garden, out house, place of worship, family graveyard, library, office, guest house, tanks, wells, privies, latrines, drains and boundary walls annexed to or appertaining to such dwelling house ;" Therefore, on a conspectus of the aforesaid provisions, it obviously follows that homestead of an agriculturist even though the same is included in the holding of the raiyat but not on the agricultural land still it is to be treated as agricultural land being the homestead of the agriculturist under the provisions of the West Bengal Land Reforms 405 Act read with West Bengal Estates Acquisition Act and West Bengal Non Agricultural Tenancy Act. Therefore, the applica tion under Section 8 of the West Bengal Land Reforms Act filed by the respondentpetitioner as a co sharer of the said holding for pre emption of the land purchased by a stranger i.e. the appellant is maintainable under law as has been rightly held by the lower appellate court as well as High Court. The application for pre emption under Section 8 of West Bengal Land Reforms Act was properly allowed by lower appellate court and the said order was maintained by High Court. There is no infirmity in this finding and we uphold the same. As regards the second contention it appears that by amendment an alternative relief under Section 24 of the West Bengal NonAgricultural Tenancy Act has been inserted in the application for preemption. It also appears that the said application for amendment was allowed after hearing both the parties and that no objection to the said application for amendment was taken at the time of hearing of the applica tion for amendment nor at the final hearing of the Revision Case any objection was raised on this score. Moreover, we have already held that Section 8 of West Bengal Land Reforms Act is applicable to this case. The appellant therefore, cannot be permitted to raise this question anew in this Court. The last submission advanced on behalf of the appellant is, also, in our considered opinion, of no substance. Sec tion 3A which has been introduced by West Bengal Land Re forms (Amendment) Act, 1981 is quoted hereinbelow: "3 A. Rights of all non agricultural tenants and undertenants in non agricultural land to vest in the State (1) The rights of all non agricultural tenants and undertenants under the West Bengal Non Agricultural Tenancy Act, 1949 (West Bengal Act XX of 1949), shall vest in the State free from all encumbrances and the provisions of sections 4, 5 and 5A of Chapter II of the West Bengal Estates Acquisi tion Act, 1953 (West Bengal Act I of 1954), shall, with such modification as may be neces sary, apply mutates mutant to non agricultural tenants and under tenants within the meaning of the West Bengal Non Agricultural Tenancy Act, 1949 as if such non agricultural tenants and under tenants were intermediaries and the land held by them were estates and a person holding under a nonagricultural tenant or under tenant were a raiyat. 406 (2) On the vesting of the estates and rights of intermediaries in any non agricultural land under sub section (1), the provisions of Chapter IIS of this Act shall apply. (3) Every intermediary whose estates or inter ests have vested in the State under sub sec tion (1), shall be entitled to receive an amount to be determined in accordance with the provisions of section 14V of this Act. " The said section refers to the vesting of the interest of nonagricultural tenants by treating them as intermedi aries and a right of retention of such non agricultural lands within the ceiling limit has been provided therein. This provision has nothing to do with the questions involved in this appeal. There is nothing to show that the nonagri cultural land in plot No. 115/852 has vested in the State and the same has not been retained by the owner nor there is any thing to show that the original owner, Sarat Chandra Dutta had in his possession non agricultural land exceeding the ceiling limits even assuming for arguments sake that the land in question is non agricultural land. But we have held hereinbefore that the land being homestead of an agricultur ist is agricultural land. Therefore, the amended provision of Section 3 A of the said Act does not require considera tion in the instant appeal in the background of the facts and circumstances of the case and the issues involved here in. The submission made on behalf of the appellant that the matter should be sent back to the trial court for giving the defendant an opportunity to raise issues on the amended provision for hearing and deciding the same by the court, is not tenable. In the circumstances it is needless to consider the decision in Dwarka Nath Prasad Atal vs Ram Rati Devi (supra). In that case an application was filed under Section 24 of West Bengal NonAgricultural Tenancy Act asking for pre emption in respect of the property mentioned in Schedule A of the application. The appellant resisted the respond ent 's claim for pre emption on various grounds including the ground that the property involved in the proceedings being agricultural land civil court in which the respondent had filed her application for pre emption had no jurisdiction to entertain the application for pre emption by reason of the provisions of the West Bengal Land Reforms Act. The learned Subordinate Judge held that the property involved in the proceeding was agricultural land and so Section 24 of West Bengal Non Agricultural Tenancy Act was not attracted and civil court had no jurisdiction to entertain the applica tion. The application was dismissed. The order was set aside on appeal holding that the land was non agricultural land and the Subordinate 407 Judge had jurisdiction to entertain the application. The judgment having been confirmed in appeal by the High Court of Calcutta, the petitioner filed an appeal on special leave before this Court. It had been held that since the judgment was rendered only on the preliminary question whether the court had jurisdiction to entertain the application and the other issues raised therein were not decided by the trial court, the lower appellate court over ruled the said finding but instead of remanding the matter to the trial court for decision on the other issues, disposed of the matter on merits whereas on the other issues the appellant might desire to lead evidence but that opportunity was denied to him. It was in the interest of justice that the appellant should be afforded an opportunity of being heard on the other issues. In that view of the matter the case was re manded for disposal. The decision in Luigi Ambrosini, Ltd. vs Bakare Tinko and Another (supra) does not apply to this case as the facts of that case are different from the facts of the instant case. As stated hereinbefore that this ruling has no applica tion to the facts of this case inasmuch as the application was not decided on a preliminary issue but the same has been decided on all the issues raised. Therefore, there is no question for remanding the matter for decision on the other issues. We therefore, find no substance in this contention advanced by the learned counsel for the appellant. For the reasons aforesaid we do not find any infirmity nor any illegality in the findings arrived at by the High Court. We, therefore, dismiss this appeal and uphold the judgment and order of the High Court. In the facts and circumstances of the case, there will be no order as to costs. N.V.K. Appeal dis missed.

An application for pre emption was filed under the provisions of section 8 of the West Bengal Land Reforms Act, 1955 by the respondent to pre empt a plot of land sold to the appellant by a Kobala dated May 16, 1974 by a co sharer having 1/4 interest in the plot. The land in question was owned by an agriculturist and he used to keep his agricultural implements in the said property. He also possessed other agricultural lands as agriculturists and in occupancy raiyati interest. The suit property was recorded in his name as 'Raiyat Sthitiban ' and the classification of land was recorded as 'Bari ' i.e. homestead of the said agriculturist. On September 20, 1967 the land was sold by a registered Kobala to 4 persons, and on October 28, 1968 one of the persons sold his share to the predecessor of the respondent. On the basis of this Kobala it was alleged that he was a co sharer. The respondent filed an application for pre emption under section 8 of the West Bengal Land Reforms Act, 1955. The appellant contested the same contending in the written statement that the respondent was neither co sharer of the holding nor an adjoining owner and that the disputed proper ty is non agriculture tenancy, that the petition was barred by limitation as the respondent was all along aware of the sale of the property and that the story of his coming to know only after taking copy of the sale deed was absolutely false. 397 The Trial Court held that the respondent was a co sharer and was entitled to pre empt, the application of pre emption was not barred by limitation as it was filed within a period of 3 years of the knowledge of the same as no notice of the sale was served on the respondent. The Trial Court further held that the land was non agricultural land and as such the application for pre emption under section 8 was not main tainable. The miscellaneous case was accordingly dismissed. The respondent filed an appeal, and the Additional District Judge reversed the findings of the Trial Court, and held that the suit property was recorded as raiyati interest in the R.S. Record of Rights and being the homestead land of an agriculturist, the application for pre emption under section 8 was maintainable. The appeal was allowed and the judgment of the trial court was set aside. The appellant filed a revision petition in the High Court. During its pendency he made an application for amend ment claiming alternative relief for pre emption under section 24 of the West Bengal NonAgricultural Tenancy Act, 1949. The High Court held that even if the land was non agricultural land, pre emption could be granted under sec tion 24 of the W.B. Non Agricultural Tenancy Act, but dis missed the petition on the ground that there was no juris dictional defect or error entitling the Court to interfere in revision. In the appeal to this Court by special leave, it was contended on behalf of the appellant that the land has been recorded as in the R.S. Record of rights as non agricultural land, and that the Trial Court had rightly held that Section 8 of the Land Reforms Act was not applicable to such a holding. The decision of the High Court to the effect that the finding recorded by the Appellate Court to the contrary suffered from no jurisdictional error was therefore wholly unwarranted. Relying on Eyachhin Ali Naskar vs Golap Gazi, it was contended that nature of holding had to determined with reference to the user of land comprised in the holding. Dismissing the appeal, HELD: 1. The application for pre emption under section 8 of West Bengal Land Reforms Act was properly allowed by the lower appellate court and the said order was maintained by High Court. There is no infirmity in this finding, and the same is upheld. [400G H] 398 2. The definition of land as given in section 2(7) of the West Bengal Land Reforms Act, 1955 means agricultural land, and includes homesteads. But, homestead land does not fail within the province of non agricultural land both under the Non Agricultural Tenancy Act as well as under the West Bengal Land Reforms Act, 1955. Eyachhin Ali Naskar and Anr. vs Golap Gazi, per incuriam & over ruled. [404E F] 3. On a conspectus of the provisions contained in sec tion 2(8) W.B. Estates Acquisition Act 1953 & section 2(4)(a) W.B. NonAgricultural Tenancy Act, 1974 it follows that 'Homestead ' of an agriculturist even though the same is included in the holding of the raiyat but not on the agri cultural land, still it is to be treated as agricultural land being the homestead of the agriculturist under the provisions of the West Bengal Land Reforms Act read with West Bengal Estates Acquisition Act and West Bengal Non Agricultural Tenancy Act. [404G H; 405A] 4. There is nothing to show that the non agricultural land in the instant case has vested and the same has not been retained by the owner, nor is there anything to show that the original owner had in his possession non agricul tural land exceeding the ceiling limits, even assuming that the land is non agricultural land. But the land being home stead of an agriculturist is agricultural land. Therefore, the amended provision of section 3A of the West Bengal Land Reforms Act does not require consideration in this matter. [406C E] Dwarka Nath Prasad Atal vs Ram Rati Devi, and Luigi Ambrosini, Ltd. vs Bakara Tinko and Another, A.I.R. 1929(PC) 306, distinguished.

Civil Appeal Nos. 1491 and 1693 of 1971. Appeals by Special Leave from the Judgment and order dated the 13th January 1971 of the Calcutta High Court in I.T. Reference No. 192 of 1966. K. Kay and D. N. Gupta, for the Appellant in CA No. 1491/71 for respondent in C.A. 1693/71. Hardayal Hardy, B. B. Ahuja and section P. Nayar for Respondent in CA1491/71 and for Appellant in 1693/71. The Judgment of the Court was delivered by KHANNA, J. This judgment would dispose of two cross civil appeals Nos. 1491 and 1693 of 1971 which have been filed by special leave by the assessee M/s Tea Estate India (P) Ltd. and the Commissioner of Income tax West Bengal respectively against the judgment of the Calcutta High Court answering the following question referred to it under section 66(1) of the Indian Income tax Act 1922 (hereinafter referred to as the Act) partly in favour of the assessee and partly in favour of the revenue: Whether on the facts and in the circumstances of the case the balances in the under noted accounts are includible in the accumulated profits within the meaning of section 2(6A)(c) and if so to what extent? 148 Dibru Darang Taikrong Tea Tea Co. Ltd. Co. Ltd. Rs. Rs. Land A/o 19,30,374, 10,11,216/ Profit & Loss Account 16,69,285/ 18,73,125/ General Reserves and liabilities for taxation 3,50,799/ 2,243/ Reserve created on writing up the value of the assets of the ten estates 15,69,828/ 58,772/ The matter relates to the assessment year 1956 57, the corresponding accounting year for which ended on June 30, 1955. The assessee company held 52,350 shares out of the total issued shares of 54,600 in Dibru Darang Tea Co. Ltd (hereinafter referred to as DDT Co.) and 22,998 shares out of the total issued shares of 23,000 in Taikrong Tea Co. Ltd. (hereinafter referred to as TT Co.). DDT Co. and TT Co. were tea companies growing, manufacturing and selling tea. For this purpose, those two companies owned large tea estates consisting of land, building, plant and machinery. On August 11, 1947 the said tea companies sold their entire lea estates, including all the assets, to Brooke Bond Estate India Ltd. As a result of these sales, DDT Co. received a surplus of Rs. 17,l8,081 over the book value of its assets. Likewise, TT Co. received a surplus of Rs. 13,11,339 over the book value of its assets. The amount relating to the land of the tea estate of DDT Co. was Rs. 19,30,374 and that relating to TT Co. was Rs. l0,11,216. DDT Co. realized Rs. 2,12,313 less than their book value on the sale of the other assets. It may also be mentioned that in 1936 the assets of the two companies were revalued. On such revaluation the hook value of the assets of DDT Co. appreciated by an amount of Rs. l 5,69,828 and Those of TT Co. by an amount of Rs. 58,772. These amounts were carried to the respective reserves of the two companies. DDT Co. and TT Co. went into voluntary liquidation on october 29, 1954. On account of the liquidation of the two companies, the assessee company became entitled to receive Rs. 57,69,186 out of the total distributable assets of DDT Co. and Rs. 36,53,453 out of the total distributable assets of TT Co. During the relevant accounting period the assessee received Rs. 52,23,786 and Rs. 34,15,500 (in all Rs. 86,39,286) from the liquidators of DDT Co. and TT Co. respectively. On behalf of the assessee company, it was urged before the lncome tax officer that apart from Rs. 2,47,921 which had been assessed as capital gain under section 12B of TT Co. for the assessment year 1949 SO, no other amount could be included in the computation of the accumulated profits available for distribution under section 2(6A) (c) of the Act. The Income tax officer rejected this 149 contention and allowed only a deduction of Rs. 27,000 being payment on share premium account and included the balance of Rs. 86,11,986 (grossed up to Rs. 91,64,075) as the assessees dividend income under section 2(6A)(c) of the Act. On appeal the Appellate Assistant Commissioner allowed a further deduction of Rs. 1,77,964 representing pre incorporation advances in the case of TT Co. The Appellate Assistant Commissioner rejected all other contentions of the assessee including the contention that 60 per cent of the amounts appearing under the head balance of appropriation account in the balance sheets as also the general reserves and liabilities for taxation appearing in the books of the two tea companies should be excluded from the computation of accumulated profits. On further appeal before the Tribunal two main contentions were raised on behalf of the assessee: (1) that in determining the quantum of the accumulated profits the surplus arising from sale of land of the two tea estates as also the reserves created on the revaluation of the agricultural assets should be left out and (2) that only 40 per cent of the balance in the profit and loss account and the general reserves of the two companies should be included as only 40 per cent of these amounts had been assessed under the Act. Regarding the first contention the Tribunal observed: In the case before us since the lands of the two tea estates were utilised for producing and selling the tea it can not be said that the said assets could be termed as land from which the income derived was agricultural income. At best what can be said is that barring 40% of such income the balance was agricultural income. We must, therefore hold that only 40% of the profits derived on sale of the land of tea estates as also the reserves created on writing up the value of the assets of the land of the tea estates was referable to land from which income derived was agricultural income. To that extent therefore the total of the profit on sale of the land of tea estates and reserves created on revaluation were to be excluded in computing the accumulated profits for finding out the section 2(6A) (c) dividend. Dealing with the second contention of the assessee the Tribunal observed that the ratio of 60:40 as laid down in rule 24 of the Income tax Rules 1922 could not be applied for finding out the proportion of accumulated profits in a tea business and that profit whether capitalised or did not admit of such a bifurcation for determination of accumulated profits. General and taxation reserves having been included in the pool of distributable surplus could. in the opinion of the Tribunal only be held to be excess provisions out of the profit of the two tea companies which were not required to be paid out in discharge of any liability. The Tribunal accordingly held that balance left over after making the deduction indicated above from the total distributable pool, was accumulated profits of the two tea companies 150 and the share received by the assessee on distribution of such accumulated profits was dividend within the meaning. Of section 2(6A) (c) of the Act. Accumulated profits in the case of two tea companies immediately before the liquidation were determined as under: "DDT Co. 40% of (Rs. 19,30,374+Rs. 15,69,828)+the whole of (Rs. 16,69,285+Rs. 3,50,799)=Rs. 34,20,165. TT Co. 40% of (Rs. 10,11,216 Rs. 58,772) the whole of (Rs. 18,73,125 + Rs. 2,243)=Rs. 23,03,363". The Tribunal accordingly came to the conclusion that out of the distributable surplus an amount of Rs. 57,23,528 was attributable to accumulated profits and hence was dividend within the meaning of section 2(6A) (c) of the Act. The assessee s appeal was allowed to that extent. Both the assessee company as well as the Commissioner applied to the Tribunal for reference of certain questions arising from the order of the Tribunal to the Court. The Tribunal thereupon referred the question reproduced above in a composite reference to the High Court. Dealing with items 1 and 4 mentioned in the question the High Court held as under: "As both the learned counsel agree that the same treatment should be given to the reserves created on writing up the value of the assets as to the excess and/or profit realised on sale either of the lands or of the assets or the tea estates it should be sufficient to consider the case of such excess arising from the sale and or transfer by the two tea companies. Whether the excess of the price realised over the book value of the lands as shown in the land account balance and as envisaged in the question referred or whether the excess on the sale of the entire tea estates over the book value of the assets are to be considered for inclusion in the accumulated profits under section 2(6A)(c) there can be no doubt that such excess or profit is a realisation of capital rise and not profit of the business. As according to the decision of the Supreme Court in Short Brothers '(1) case unless such appreciation has been included in capital gains distribution thereof by the liquidator will not be deemed to be divided for the purpose of the Income tax Act we have to find out how much of such excess or profit has been included in the computation of capital gains of the two tea companies on the transfer of the tea estates in 1947. In his order the Appellate Assistant Commissioner has recorded that for the assessment year 1949 50 the assessment order on Dibru Darang Tea Company Ltd. showed that the com 151 pany was not liable to capital gains tax while the assessment order for that year of M/s. Taikrong Tea Co. Ltd. showed that a sum of Rs. 2,47,921 was brought under tax under the head of Capital gains. It must therefore be held that it is only the sum of Rs. 2,47,921 which could be included in accumulated profits for the purpose of determining the dividend under section 2(6A) (c). Mr. B. L. Pal contended that there was no conclusive finding in the order of the Appellate Assistant Commissioner as to the capital gains of the two tea companies in respect of the transfer of the tea estates and the proper determination of capital gains payable in respect thereof had not been established. We are unable to accept this contentions. Accordingly so far as the first and last items in the referred question are concerned the answer would be that only the sum of Rs. 2,47,921 was includible in the accumulated profits within the meaning of section 2(6A) (c) . Regarding items 2 and 3 in the question the finding of the High Court was as under: The balance in the profit and loss account is arrived at after deducting or providing for all out goings including the estimated liability for both income tax and agricultural income tax. Therefore the balance carried to the balance sheet is pure profit that is to say the commercial profit of the undertaking. We are unable to accept Mr. Rays contention that each item in the balance sheet contains in itself the proportion of the income attributable to the business activity and to the agricultural activity of the tea companies and must be distintegrated into its component parts at the time of inclusion in dividends. Tea companies carry on a business activity though such activity may include agricultural operation as part thereof. Overall excess of incomings over out goings as reflected in the balance of profit and loss account, would represent the commercial profits of the business undertaking of the tea companies and though a bifurcation is necessary for the purpose of assessment and imposition of tax no further bifurcation could be made once the balance of profit was finally determined of such balance it could not be said that a part represents agricultural income and the rest represents income from business. So far as the general and taxation reserve is concerned, Mr. Ray agrees that such reserve is usually built up out of the profits to meet future liabilities but contends that is in this case also such reserve had been built up of 60 per cent. agricultural profit such reserve should again be disintegration into the component parts. We are entirely unable to accept this contention As pointed out by Mr. Pal the Supreme Court in Girdhar das 's(2) case advocated disintegration of the amount distributed into two components namely, capital and accumulated profits. There is no scope for further distintegration of profits into its component parts. (1) 63 I.T.R.300 152 The amounts mentioned in terms 2 and 3 of the question were accordingly held to be wholly includible in the accumulated profits within the meaning of section 2(6A) (c) of the Act. Before dealing with the contentions advanced by the counsel for the parties it would be convenient to set out the relevant provisions of the Act. section 2(1) defines agricultural income to mean, inter alia "(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 (1) agriculture or (ii) the performance by a cultivator or receiver of rent in kind of my 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 rent in kind of the produced raised or received by him in respect of which no process has been performed other than process of the nature described in sub clause (ii); (c). . "Capital asset in section 2(4A) means property of any kind held by an assessee whether or not connected with his business profession or vocation but does not include (1) . . . . (ii) . . . . (iii)any land from which the income derived is agricultural income. "Dividend" according to section ? (A) (c) includes any distribution made to the shareholders of a company on its liquidation to the extent to which the distribution is attributable to the accumulated pro fits of the company immediately before its liquidation whether capitalised or not. The explanation to clause 2(6A) reads as under: "Explanation. The expression `accumulated profits, wherever it occurs in this clause shall not include capital gains arising before the 1st day of April 1946 or after the 31st day of March 1948, and before the 1st day of April 1956. "Income" has been defined in section 2(C6) to include dividend. Total income has been defined in section 2(15) to mean the total amount of income profits and gains referred to sub section (1) of section 4 computed in the matter laid down in the Act. Section 3 153 provides inter alia that income tax shall be charged for a year in respect of the total income of the previous year of every individual and company. Section 4 relates to total income of a previous year of any person. According to clause (8) of sub section (3) of that section agricultural income shall not be included in the total Income chargeable to tax under section 3 of the Act. Section 6 enumerated the six heads of income to be: (1)salaries (ii) interest on securities (iii) income from property. (iv) profits and gains of business profession or vocation (v) income from other sources and (vi) capital gains. According to section 12(1A) income from other sources shall include dividends. Under section 12B as it stood at the relevant time capital gains tax shall be charged in respect of any profits or gains arising from the sale exchange relinquishment or transfer of a capital asset affected after the 31st day of March 1946 and before the 1st day of April 1948 and such profits and gains shall be deemed to be income of the previous year in which the sale, exchange relinqishment or transfer took place. Section 59 empowers the Central Board of Revenue subject to the control of the Central Government to make rules for carrying out the purposes of the Act. Indian Income tax Rules 1922 were framed in pursuance of that section. Rule 23 of the said rules provides for assessment of income which is partly agricultural and partly income chargeable to income tax. Rule 24 with which we are concerned reads as under: "Income derived from the sale of tea grown and manufactured by the seller in the taxable territories shall be computed as if it were income derived from business and 40 per cent. Of such income shall be deemed to be income profits and gains liable to tax. " There is a proviso to this rule but it is not necessary to reproduced the same. In appeal filed by the assessee company, its learned counsel Mr. Ray, has contended before us in respect of items 2 and 3 of the question that 60 per cent of the amounts mentioned in these items were agricultural income and as such were not income for the purpose of the Act. To that extent it is urged the amounts did not constitute accumulated profits within the meaning of section 2(6A)(c) of the Act. The High Court according to the contention was in error in holding to the contrary. The above contentions has been controverted by Mr. Hardy on behalf of the revenue and in our opinion is not well founded. In Inland Revenue Commissioners vs George Burrell(1) it was held that super tax was not payable on the undivided profits of past years and of the year in which the winding up of a company occurred were distributed among the shareholders, because in the winding up (1) 154 they had ceased to be profits and were assets only. It was further observed in Burrell 's case that the only thing the liquidator of a company in liquidation may do is to turn the assets into money and divide the money among the shareholders in proportion to their shares. Surplus of trading profit made in a particular year are distributable rateably among all the shareholders as capital and it is not right to built up the sums received by the shareholders into capital and income and thus disintegrate the sums received by the shareholders subsequently into component parts based on an estimate of what might possibly have been done but was not done. As the Indian Companies Act 1913. closely followed the scheme of the English Companies Act and the view expressed in Burrell 's case (supra) applied to the Indian Income tax Act a special definition of "dividend" was devised by the legislature by the enactment of the Income tax (Amendment) Act 7 of 1919 with a view to undo the effect of Burrell 's (supra) case. Clause (c) of sub section (6A) as originally enacted stood as follows: " `Dividend ' includes (c) any distribution made to the shareholders of a company out of accumulated profits of the company on the liquidation of the company: Provided that only the accumulated profits so distributed which arose during the six previous years of the company preceding the date of liquidation shall be so included. By the Finance Act 1955 the proviso to sub clause (c) of clause (6A) was omited. There was a further amendment made by the Finance Act,. 1956 and clause (c) to the amended section read as follows: " `Dividend ' includes (c) any distribution made to the shareholders of a company on its liquidation to the extent to which the distribution is attributable to the accumulated profits of the company immediately before its liquidation whether capitalised or not. As a result of the above distribution which is attributable to the accumulated profits of the company immediately before its liquidation is deemed to be dividend and as such liable to be taxed. Sixty per cent of the profits made by DDT Co. and TT Co. by sale of tea grown and manufactured by them were not liable to be taxed under the Act in view of rule 24 of 19?.2 Rules because they were to be treated as agricultural income of these two companies. The question with which we are concerned however is that even though 60 per cent of the said profits constitute agricultural income in the hands of DDT Co. and TT Co, once these profits got accumulated with those two companies did they answer to the description of accumulated profits as used in the definition of dividend in section 2(6A) (c) ? The answer to this question in our opinion should plainly be in the affirmative. We were unable to accede to the contention of Mr. Ray that as only 40 per cent of the profits which got 155 accumulated were liable to be taxed in the hands of DDT and TT companies under the Act and 60 per cent were not liable to be so taxed only 40 per cent of the amount of accumulated profits should be treated as accumulated profits for the purpose of section 2(6A) (c). The acceptance of the contention would necessarily postulate reading in section 2(6A) (c) the words accumulated profits as are liable to be taxed under the Act . The words as are liable to be taxed under the Act are not there in the definition and it would not in our opinion be permissible to so construe the clause as if these words were a part of that clause. There is also nothing in the language or context of that clause as would warrant such a construction. Accumulated profits would remain their character as such even though a part of them were not taxed as profits under the Act. It is pertinent to mention in this connection that we are concerned in the appeal of the assessee with items 2 and 3 of the question which relate to accumulated profits in the ordinary sense and not to accumulated profits arising out of capital gains which are dealt with by the explanation to section 2(6A) of the Act. There can also be no doubt that whatever amount has been distributed to the assessee company and is attributable to accumulate profits in items 2 and 3 mentioned in the question would constitute dividend in the hands of the assessee and the whole of the amount so received would be liable to be taxed as such. This is clear from the Constitution Bench decision of this Court in the case of Mrs. Bacha F. Guzdar, Bombay vs Commissioner of Income tax Bombay(1). The assessee in that case was a shareholder in certain tea companies. 60 per cent of whose income was exempt from tax as agricultural income under section 4(3) (viii) of the Indian Income tax Act. The assessee claimed that 60 per cent of the dividend income received by her on her shares in those companies was also exempt from tax as agricultural income. This claim was rejected and it was held that the dividend income received by the assessee was not agricultural income but was income assessable under section 12 of the Act. Agricultural income as defined in the Act according to that decision was intended to refer to revenue received by direct association with the land which is used for agricultural purposes and not by indirectly extending it to cases where that revenue or part thereof changes hands either by way of distribution of dividends or otherwise. Mr. Ray has assailed the correctness of the view taken by the Constitution Bench of this Court in the above decision and has submitted that the matter should be reconsidered. Apart from the fact that this Bench is bound by the decision of the Constitution Bench we find nothing in that decision as warrants reconsideration of the matter. We would therefore uphold the answer given by the High Court in respect of items 2 and 3 of the question. In appeal by the Commissioner of Income tax his learned counsel Mr. Hardy has submitted in respect of items 1 and 4 that as 60 per cent of the income from the land held by DDT Co. and TT Co. was to be treated as agricultural income in view of rule 24 of 1922 Rules (1) 156 the said land to the extent of only 60 per cent would not answer to the description of capital asset as defined in section 2(4A) of the Act. As 40 per cent of the income derived from that land was not agricultural income 40 per cent interest in that land according to the submission should be held to be capital asset for the purpose of section 2(4A) of the Act. Forty per cent interest in that land it is further submitted. would not be taken out of the definition of capital by virtue of clause (iii) of section 2(4A) and any appreciation in the value of the land to the extent of 40 per cent would constitute capital gain. As such gain arose during the period from April 1 1946 to March 31 1948 the same according to Mr. Hardy would answer to the description of accumulated profits as mentioned in the explanation to section (6A) of the Act. The above contention of Mr. Hardy, in our opinion is not well founded. Income which is realised by sale of tea by a tea company which grows tea on its land and thereafter subjects it to manufacturing process in its factory is an integrated income. Such income consists of two elements or components. One element or component consists of the agricultural income which is yielded in the form of green leaves purely by the land over which tea plants are grown. The second element or component consists of non agricultural income which is the result of subjecting green leaves which are plucked from the tea plants grown on the land to a particular manufacturing process in the factory of the tea company. Rule 24 prescribes the formula which should be adopted for apportioning the income realised as a result of the sale of tea alter it is grown and subjected to the manufacturing process in the factory. Sixty per cent is taken to be agricultural income and the same consists of the first element or component while 40 per cent represents non agricultural income and the same comprises the second element or component. We are fortified in the above conclusion by two decisions of this Court in the cases of Karimtharuvi Tea Estates Ltd. vs State of Kerala(1) and Anglo American Direct Tea Trading Co. Ltd. vs Commissioner of Agricultural Income tax, Kerala(2). In the case of Karimtharuvi Tea Estates Ltd. it was observed while dealing with the income derived from the sale of tea grown and manufactured by the seller in the context of rule 24: Of the income so computed 40 per cent is under rule 24 to be treated as income liable to income tax and it would follow that the other 60 per cent only will be deemed to be agricultural income within the meaning of that expression in the Income tax Act. In the case of Anglo American Direct Tea Trading Co. Ltd. the Constitution Bench of this Court held that income from the sale of tea grown and manufactured by the assessee is derived partly from business and partly from agriculture. This income Las to be computed as if it were income from business under the Central Income tax Act and the Rules made thereunder. Forty per cent of the income or com (1) (2) 157 puted is deemed to be income derived from business and assessable to non agricultural income tax. The balance of 60 per cent of the income so computed is agricultural income within the meaning of the Central Income tax Act. So far as the lands held by DDT Co. and TT Co. were concerned they yielded purely agricultural income in the shape of green tea leaves. Forty per cent of the income on sale of tea which was received by DDT Co. and TT Co. was not income from land. It was income which should be ascribed to manufacturing process to which the green tea leaves were subjected in the factories of those companies. As the lands held by DDT Co. and TT Co. yielded agricultural income it would allow that those lands did not constitute capital asset as defined in section (4A) of the Act. Clause (iii) appended to section 2(4A) expressly states that capital asset does not include any land from which income derived is agricultural income . Any gain arising from the transfer of such land would not constitute capital gain under the Act and consequently would not be liable to be taxed as such. The distribution; of that amount on the liquidation of the companies would also not partake of the character of dividend. It may be apposite in this context to refer to the case of First Income tax officer, Salem vs Short Brothers (P.) Ltd. (supra) wherein this Court dealt with the sale of a coffee estate by a company which went into liquidation was held by this Court that the capital appreciation ill respect of the lands for which the income was derived as agricultural income and was not to able in the hands of the company as capital gains would not of distribution be liable to be so taxed as dividend under section 12 of the Act. We therefore see no reason to interfere in the appeal filed by the Commissioner of Income tax with the answer given by the High Court in respect of items 1 and 4 or the question. It is the common case of the parties that items 1 and 4 share the same fate. As a result of the above we dismiss both the appeals. In view of the divided success we leave the parties to bear their own costs of the appeals.

The assessee company held certain shares in Dibru Darang Tea Co. Ltd. (D.D.T. Company) and Taikron Tea Company Ltd. (TT Company) . Both the Companies were companies growing, manufacturing and selling tea and owned large tea estates consisting of land, building plant, machinery etc. In 1947, both the said companies sold their entire tea estates including all assets to Brooke Bond Estate India Ltd. Consequently DDT Company received a surplus is Rs. 17,18,081/ over the book value of its assets. The amount relating to the land of DDT Company was Rs. 19,30,374/ and that relaung to the T.T. company was Rs. 10,11,216/ . Both the companies went into voluntary liquidation in 1954. On account of the liquidation of the two companies the assessee company became entitled to receive Rs. 57,69,186/ out of the total distributable assets of DDT Company and Rs. 36,53,453/ out of the total distributable assets of T.T. Company. Section 2(1) defines agricultural income. Section 2(4A) defines capital asset to mean property of any kind held by an assessee whether or not connected with his business, profession or vocation but does not include any land from which the income derived is agricultural income. It was defined to include any distribution made to the shareholders of a company on its liquidation to the extent to which the distribution is attributable to the accumulated profits of the company immediately before its liquidation, whether capitalised or not. Explanation provides that expression "accumulated profits" shall not include capital gain arising during certain periods. The income has been defined by section 2(6C) to include dividend. Section 2(3)(8) provides that; agricultural income shall not be included in the total income chargeable to tax under section 3 or the Act. Rule 23 provides for assessment of income which is partly agricultural income and partly income chargeable to income tax. Rule 24 provides that income derived from the sale of tea grown and manufactured by the seller in the taxable territories shall be computed as if it were income derived from business and 40 per cent or such income shall be deemed to be income, profits and gains liable to tax. The assessee contended before the Income Tax officer that apart from Rs. 2,47,921/ which had been assessed as capital gain under section 12B of Income Tax Act 1922 in respect of T.T. company, no other amount could be included in the computation of the accumulated profits available for distribution under section 2(6A)(c) of the Act. The Income Tax officer rejected the claim of the assessee. On an appeal, the Appellate Assistant Commissioner rejected the main claim of the assessee. On further appeal the Tribunal held as far as item 1 (land) and item 4 (reserve on revaluation) are concerned that since the lands of the two tea estates were utilised for producing and selling tea it cannot be said that the said assets were lands from which the income derived was agricultural income. At best, what could be said is that barring 40 per cent of such income the balance was agricultural income. As far as item 2 (profit and loss a/c) 12 833Sup CI/76 146 and item 3 (general reserve) are concerned, the Tribunal held that the ratio of 60 : 40 as laid down in rule 24 of the Income Tax Rules, 1922 could not be applied for finding out the proportion of accumulated profits in a tea business and that profits whether capitalised or not did not admit of such a bifurcation for the determination of accumulated profits. The Tribunal held that the general and taxation reserves were accumulated profits and the share received by the assessee company on the distribution of such accumulated profits was taxable as dividend within the meaning or section 2(6A) (c) of the Act. Both the assessee as well as Revenue approached the High Court in two references arising out of the judgment of the Tribunal. The High Court held: (1) Regarding item No. 1 and 4 the excess of the prices is not profit of the business, unless such appreciation has been included in the capital gains. The High Court arrived at certain figures of excess profit which was included in the computation of capital gains and held that only that figure was includible in the accumulated profits within the meaning of section 2(6A) (c). (2) Regarding items 2 and 3 the High Court held that the balance in the profit and loss account is arrived at after deducting or providing for all out goings including the estimated liability for both the income tax and agricultural income tax. Therefore, the balance carried to the balance sheet is pure profit, i.e. the accumulated profit. The High Court negatived the contention that each item in the balance sheet contains in itself the proportion of the income attributable to business activity and to the agricultural activity of the companies or that they must be disintegrated into 6 components parts at the time of inclusion in dividends. Tea companies carry on a business activity though such activity may include agricultural operation as part thereof. Overall excess of incomings over out goings as reflected in the balance of profit and loss account would represent the commercial profits of the business undertaking and though in bifurcation is necessary for the purpose of assessment and imposition of tax no further bifurcation could be made once the balance of profit was finally determined. In appeals filed by both the assessee and Revenue by special leave the assessee contended that 60 per cent of the amounts mentioned in items 2 and 3 were agricultural income and as such, were not income for the purpose of the Act. To that extent the said amount did not constitute accumulated profits within the meaning of section 2(6A) (c). Revenue contended that 10% of income derived in respect of item 1 not being agricultural should be held to be capital asset and, therefore, accumulated profits. Dismissing both the appeals, ^ HELD: (1) Clause 2(6A) (c) provides that dividend shall include any distribution made to the shareholders of a company on its liquidation to the extent to which the distribution is attributable to the accumulated profits of the company immediately before its liquidation whether capitalised or not. The proviso is, however, to the effect that only the accumulated profits so distributed which arise during the 6 previous year of the company proceeding the date of liquidation shall be so included. 60 per cent of the profits made by both the companies by sale of tea grown and manufactured by them were not liable to be taxed in view of rule 24. However, once those profits got accumulated with the two companies they became accumulated profits within the meaning of h. 2(6A)(c). The contention of the assessee that only 40 per cent of the profits which got accumulated were liable to be taxed and therefore only 40 per cent should be treated as accumulated profit for the purpose of 147 section 2(6)A) (c) cannot be accepted. I`he assessee wants to add to section 2(6A) (c) the following words: "as are liable to be taxed under the Act" It is not permissible for us to construe the clause by adding those words. [152 F G, 154 G H, 155 A B] (2) The decision of the case in Mrs. Bacha F. Guzdar Bombay vs Commissioner of Income Tax Bombay 27 I.T.R. 1, followed with approval. [155 E] (3) The contention of the Revenue that the land in question to the extent of 60 per cent would not answer the description of capital asset, and as 40 per cent of the income derived from that land was not agricultural income 40 per cent interest in that land should be held to be capital asset for the purpose of section 2(4A), is not well founded. The income which is realised by sale of tea by a tea company which grows tea on its land and thereafter subject is to manufacturing process in its factory is an integrated income consisting of agricultural and non agricultural components. Rule 24 prescribes the formula which should be adopted for apportioning the income realised as a result of the sale of tea after it is grown and subjected to manufacturing process in the factory. So far as the lands held by the company were concerned they yielded purely agricultural income in the shape of green tea leaves. 40 per cent of the income on sale of tea which was received by both the companies was not income from land. It was income which could be ascribed to manufacturing process to which the green tea leaves were subjected in the factories of those companies. As the lands held by both the companies yielded agricultural income it would follow that those lands did not constitute capital asset as defined in section 2(4A). Section 2(4A) expressly states that capital asset does not include any land from which income is derived as agricultural income. Any gain arising from the transfer of such land would not constitute capital under the Act and consequently would not be liable to be taxed as such. [155H, 156 A D, 157 B D]

Civil Appeal No. 2152 of 1969. Appeal by Special Leave from the Judgment and Order dated 1 8 1967 of the Assam and Nagaland High Court in Civil Rule No. 256 of 1966. Naunit Lal for the Appellant. section K. Dutta, section K. Nandy and A. Sen for the Respondent. J. Respondent J. Ahmed joined service in Assam State in 1945 and some time in 1959 came to be promoted to the Indian Administrative Service Cadre. In that very year he was posted as Deputy Commissioner and District Magistrate, Nowgong District. While he was holding the aforementioned post, some time in the beginning of June 1960 there were large scale disturbances in Nowgong city and District area described in official parlance as 'language disturbances '. There was considerable damage to property. One Shri A. N. Kidwai, the then Additional Chief Secretary to the Government of Assam, undertook an inquiry into the causes of disturbances at Nowgong with a view to ascertaining the responsibility of District officials. After Shri Kidwai submitted his Report, the Government took the first step of suspending the respondent from service by an order dated 14th September 1960. The Chief Secretary to the Government of Assam by his communication dated 13th September 1960 conveyed to the respondent various charges framed against him and called upon him to submit his explanation. A statement of allegations was annexed to the communication. Respondent submitted his explanation and thereafter the Government appointed respondent 507 No. 4, K. Balachandran as the Enquiry Officer. After the inquiry was concluded, the Enquiry Officer submitted his report. It may be noticed that respondent was born on 1st February 1907 and according to Rule 16 of the All India Services (Death cum Retirement Benefits) Rules, 1958 ( 'Retirement Rules ' for short), then in force, the age of retirement being 55 years, the respondent would have retired from service on 1st February 1962. First, the Governor of Assam by his order dated 31st January 1962 purporting to exercise power under Rule 16(1) of the Retirement Rules, directed that the respondent then under suspension be retained in service for a period of three months beyond the date of his retirement which fell on Ist February 1962 or till the termination of departmental proceedings drawn up against him whichever is earlier. By subsequent orders dated 21st June 1962, Ist September 1962, 23rd February 1963 and 28th August 1963 respondent was retained in service, till the inquiry pending against him concluded and final orders were passed in the proceedings. It may be mentioned that the order dated 28th August 1963 was made by the Governor in exercise of the powers conferred by subrule (2) of rule 16 of the Retirement Rules. The Enquiry Officer submitted his report holding charges 1, 2, 3, 5 and 6 proved and in respect of charge No. 4 the finding recorded was that though the charge was proved, the Enquiry Officer took note of certain extenuating circumstances mentioned in the report. A Memorandum dated 22nd February 1963 was served by the Government of India on the respondent forwarding the report of the Enquiry Officer and the respondent was called upon to show cause why the provisional penalty determined by the Government of removal from service be not imposed upon him. Ultimately, by order dated 11th October 1963 the President, after consultation with the Union Public Service Commission, imposed the penalty of removal from service on the respondent. A memorial submitted by the respondent to the President under Rule 20 of the All India Services (Discipline & Appeal) Rules, 1955, ( 'Discipline and Appeal Rules ' for short), against the imposition of the penalty was rejected. The respondent filed a petition under Article 226 of the Constitution in the High Court of Assam and Nagaland. Two contentions were raised before the High Court: (1) Whether rule 16(2) of the Retirement Rules is attracted so as to retain the respondent in service beyond the period of his normal retirement for the purpose of completing disciplinary proceedings against the respondent; and (2) if rule 16(2) was not attracted, whether the retention of respondent beyond the normal period of his retirement was valid and if it was not valid, whether he 508 could be removed from service after he had actually and effectively retired from service ? While examining these two contentions, the High Court was of the opinion that disciplinary proceedings can be held and punishment can be imposed for misconduct and the charges held did not disclose any misconduct because negligence in performance of duty or inefficiency in discharge of duty would not constitute misconduct. On the second point it was held that if the Enquiry was not for any misconduct, sub rule (2) of rule 16 would not be attracted and the Government had no power to retain the respondent in service for the purpose of holding or completing disciplinary proceeding which can only be for misconduct, and as there was no inquiry into what can be styled as misconduct, the retention in service of the respondent beyond the period of retirement was not legal and valid, and, therefore, the respondent could not bemoved from service from which he had retired. In accordance with these findings, the writ petition filed by the respondent was allowed declaring that the respondent was deemed to have retired from service from Ist February 1962 and that the punitive or disciplinary action taken against him after that date is completely without jurisdiction and wholly unjustified, and the same was quashed. The Union of India and the State of Assam have preferred this appeal by special leave. Rule 3 of the Discipline and Appeal Rules provides that the penalties therein set out may, for good and sufficient reasons, be imposed on a member of service. One such penalty prescribed therein is 'removal from service which shall not disqualify for future employment '. Rule 4 prescribes the authority competent to institute disciplinary proceedings. Where a member of a service has committed any act or omission which renders him liable to any penalty specified in rule 3, an inquiry shall be held according to procedure prescribed in rule 5. Therefore penalty prescribed in rule 3 can be imposed upon a member of the service for any act or omission committed by him which, according to rule 3, must provide good and sufficient reason to impose one or the other of the penalties mentioned therein. Rule 7 of the Discipline and Appeal Rules enables the Government to put under suspension a member of the Service during disciplinary proceeding if having regard to the nature of charges and circumstances the Government thinks it proper to do so. Sub rule (2) of Rule 16 of the Retirement Rules as it stood at the relevant time reads as under: "16(2). A member of the service under suspension on a charge of misconduct shall not be required or permitted to retire from the service but shall be retained in service until the 509 inquiry into the charges against him is concluded and a final order is passed". A survey of these rules would show that disciplinary proceedings can be held against a member of the service for any act or omission which renders him liable to a penalty and such penalty can be imposed for good and sufficient reasons. All India Services (Conduct) Rules, 1954, prescribe a code of conduct for members of service. Discipline and Appeal Rules provide for disciplinary action and imposition of penalties. Sub rule (2) of rule 16 of the Retirement Rules contemplates a situation where a member of service against whom disciplinary proceeding is pending is likely to retire and the proceedings may be thwarted and provides for his retention in service beyond the date of his retirement till the completion of the inquiry, provided the delinquent officer is under suspension on a charge of misconduct. The respondent contended and the contention has found favour with the High Court that the charges framed against the respondent, even if they are held proved, would not constitute misconduct, and, therefore, it could not be said that he was under suspension on a charge of misconduct and accordingly sub rule (2) of rule 16 would not be attracted and he could not be retained in service beyond the date of his retirement. It was said that retention in service being invalid, imposition of penalty after his retirement is illegal. Therefore, what constitutes misconduct for a member of a service liable to be removed from service on proof of such misconduct in a disciplinary proceeding, looms large in this case. To appreciate the contention it is better to have a look at the charges framed against the respondent. They are as under: "(i) Completely failed to take any effective preventive measures against widespread disturbances breaking out in Nowgong District in spite of adequate warning being conveyed. (ii) Showed complete lack of leadership when the disturbances actually did break out and failed to give proper direction to your subordinate Magistrates and co ordinate co operations with the police to restore Law and Order; (iii) Did not personally visit the scenes of disturbances within the town or in the Rural areas, in time to take personal control of the situation and to exercise necessary supervision; 510 (iv) Did not keep Government informed of the actual picture and extent of the disturbances; (v) Showed complete inaptitude, lack of foresight, lack of firmness and capacity to take quick and firm decision and were, thus largely responsible for complete break down of Law and Order in Nowgong town as well as the rural areas of Nowgong District. Thus you proved yourself completely unfit to hold any responsible position". The Inquiry Officer has treated the statement in the letter conveying the charges that the respondent proved himself completely unfit to hold a responsible position as a separate and independent charge which on the face of it is merely a surmise or a conclusion drawn from the five charges set out above. This surmise or conclusion has to be ignored and cannot be treated as a specific charge. The five charges listed above at a glance would convey the impression that the respondent was not a very efficient officer. Some negligence is being attributed to him and some lack of qualities expected of an officer of the rank of Deputy Commissioner are listed as charges. to wit, charge No. 2 refers to the quality of lack of leadership and charge No. 5 enumerates inaptitude, lack of foresight, lack of firmness and indecisiveness. These are qualities undoubtedly expected of a superior officer and they may be very relevant while considering whether a person should be promoted to the higher post or not or having been promoted, whether he should be retained in the higher post or not or they may be relevant for deciding the competence of the person to hold the post, but they cannot be elevated to the level of acts of omission or commission as contemplated by Rule 4 of the Discipline and Appeal Rules so as to incur penalty under rule 3. Competence for the post, capability to hold the same, efficiency requisite for a post, ability to discharge function attached to the post, are things different from some act or omission of the holder of the post which may be styled as misconduct so as to incur the penalty under the rules. The words 'acts and omission ' contemplated by rule 4 of the Discipline and Appeal Rules have to be understood in the context of the All India Services (Conduct) Rules, 1954 ( 'Conduct Rules ' for short). The Government has prescribed by Conduct Rules a code of conduct for the members of All India Services. Rule 3 is of a general nature which provides that every member of the service shall at all times maintain absolute integrity and devotion to duty. Lack of integrity, if proved, would undoubtedly en 511 tail penalty. Failure to come up to the highest expectations of an officer holding a responsible post or lack of aptitude or qualities of leadership would not constitute failure to maintain devotion to duty. The expression 'devotion to duty ' appears to have been used as something opposed to indifference to duty or easy going or light hearted approach to duty. If rule 3 were the only rule in the Conduct Rules it would have been rather difficult to ascertain what constitutes misconduct in a given situation. But rules 4 to 18 of the Conduct Rules prescribe code of conduct for members of service and it can safely stated that an act or omission contrary to or in breach of prescribed rules of conduct would constitute misconduct for disciplinary proceedings. This code of conduct being not exhaustive it would not be prudent to say that only that act or omission would constitute misconduct for the purpose of Discipline and Appeal Rules which is contrary to the various provisions in the Conduct Rules. The inhibitions in the Conduct Rules clearly provide that an act or omission contrary thereto as to run counter to the expected code of conduct would certainly constitute misconduct. Some other act or ommission may as well constitute misconduct. Allegations in the various charges do not specify any act or omission in derogation of or contrary to Conduct Rules save the general rule 3 prescribing devotion to duty. It is, however, difficult to believe that lack of efficiency, failure to attain the highest standard of administrative ability while holding a high post would themselves constitute misconduct. If it is so, every officer rated average would be guilty of misconduct. Charges in this case as stated earlier clearly indicate lack of efficiency, lack of foresight and indecisiveness as serious lapses on the part of the respondent. These deficiencies in personal character of personal ability would not constitute misconduct for the purpose of disciplinary proceedings. It would be appropriate at this stage to ascertain what generally constitutes misconduct, especially in the context of disciplinary proceedings entailing penalty. Code of conduct as set out in the Conduct Rules clearly indicates the conduct expected of a member of the service. It would follow that that conduct which is blameworthy for the Government servant in the context of Conduct Rules would be misconduct. If a servant conducts himself in a way inconsistent with due and faithful discharge of his duty in service, it is misconduct [see Pierce vs Foster(1)]. A disregard of an essential condition of the contract of service may constitute misconduct [see Laws vs London Chronicle .(Indicator Newspapers) (2)]. This 512 view was adopted in Shardaprasad Onkarprasad Tiwari vs Divisional Superintendent, Central Railway, Nagpur Division, Nagpur(1), and Satubha K. Vaghela vs Moosa Raza(2). The High Court has noted the definition of misconduct in Stroud 's Judicial Dictionary which runs as under: "Misconduct means, misconduct arising from ill motive; acts of negligence, errors of judgment, or innocent mistake, do not constitute such misconduct". In industrial jurisprudence amongst others, habitual or gross negligence constitute misconduct but in Management, Utkal Machinery Ltd. vs Workmen, Miss Shanti Patnaik(3), in the absence of standing orders governing the employee 's undertaking, unsatisfactory work was treated as misconduct in the context of discharge being assailed as punitive. In section Govinda Menon vs Unio nof India(4), the mamnner in which a member of the service discharged his quasi judicial function disclosing abuse of power was treated as constituting misconduct for initiating disciplinary proceedings. A single act of omission or error of judgment would ordinarily not constitute misconduct though if such error or omission results in serious or atrocious consequences the same may amount to misconduct as was held by this Court in P. H. Kalyani vs Air France, Calcutta(5), wherein it was found that the two mistakes committed by the employee while checking the load sheets and balance charts would involve possible accident to the aircraft and possible loss of human life and, therefore, the negligence in work in the context of serious consequences was treated as misconduct. It is, however, difficult to believe that lack of efficiency or attainment of highest standards in discharge of duty attached to public office would ipso facto constitute misconduct. There may be negligence in performance of duty and a lapse in performance of duty or error of judgment in evaluating the developing situation may be negligence in discharge of duty but would not constitute misconduct unless the consequences directly attributable to negligence would be such as to be irreparable or the resultant damage would be so heavy that the degree of culpability would be very high. An error can be indicative of negligence and the degree of culpability may indicate the grossness of the negligence. Carelessness can often be productive of more harm than deliberate wickedness or malevolence. Leaving aside the classic example of the sentry who sleeps at his post 513 and allows the enemy to slip through, there are other more familiar instances of which a railway cabinman signals in a train on the same track where there is a stationary train causing headlong collision; a nurse giving intravenous injection which ought to be given intramuscular causing instantaneous death; a pilot overlooking an instrument showing snag in engine and the aircraft crashes causing heavy loss of life. Misplaced sympathy can be a great evil [see Navinchandra Shakerchand shah vs Manager, Ahmedabad Co op. Department Stores Ltd.(1)]. But in any case, failure to attain the highest standard of efficiency in performance of duty permitting an inference of negligence would not constitute misconduct nor for the purpose of Rule 3 of the Conduct Rules as would indicate lack of devotion to duty. The High Court was of the opinion that misconduct in the context of disciplinary proceeding means misbehaviour involving some form of guilty mind or mens rea. We find it difficult to subscribe to this view because gross or habitual negligence in performance of duty may no involve mens rea but may still constitute misconduct for disciplinary proceedings. Having cleared the ground of what would constitute misconduct for the purpose of disciplinary proceeding, a look at the charges framed against the respondent would affirmatively show that the charge inter alia alleged failure to take any effective preventive measures meaning thereby error in judgment in evaluating developing situation. Similarly, failure to visit the scenes of disturbance is another failure to perform the duty in a certain manner. Charges Nos. 2 and 5 clearly indicate the shortcomings in the personal capacity or degree of efficiency of the respondent. It is alleged that respondent showed complete lack of leadership when disturbances broke out and he disclosed complete inaptitude, lack of foresight, lack of firmness and capacity to take firm decision. These are personal qualities which a man holding a post of Deputy Commissioner would be expected to possess. They may be relevant considerations on the question of retaining him in the post or for promotion, but such lack of personal quality cannot constitute misconduct for the purpose of disciplinary proceedings. In fact, charges 2, 5 and 6 are clear surmises on account of the failure of the respondent to take effective preventive measures to arrest or to nip in the bud the ensuing disturbances. We do not take any notice of charge No. 4 because even the Enquiry officer has noted that there are number of extenuating circumstances which may exonerate the respondent in respect of that charge. What was styled as charge No. 6 is the conclu 514 sion, viz., because of what transpired in the inquiry, the Enquiry Officer was of the view that the respondent was unfit to hold any responsible position. Somehow or other, the Enquiry Officer completely failed to take note of what was alleged in charges 2, 5 and 6 which was neither misconduct nor even negligence but conclusions about the absence or lack of personal qualities in the respondent. It would thus transpire that the allegations made against the respondent may indicate that he is not fit to hold the post of Deputy Commissioner and that if it was possible he may be reverted or he may be compulsorily retired, not by way of punishment. But when the respondent is sought to be removed as a disciplinary measure and by way of penalty, there should have been clear case of misconduct, viz., such acts and omissions which would render him liable for any of the punishments set out in rule 3 of the Discipline & Appeal Rules, 1955. No such case has been made out. Mr. Naunit Lal for the appellant contended that the word 'misconduct ' is nowhere used either in the Conduct Rules or in the Discipline and Appeal Rules and the Court should not import any concept of misconduct in this inquiry. The word 'misconduct ' has relevance here because the respondent in due course would have retired from service on 1st February 1962 on attaining the age of 55 years. The inquiry could not be completed before the relevant date and it became necessary for the Government to retain the respondent in service beyond the normal period of retirement on superannuation for continuing the inquiry. Rule 16(1) of the Retirement Rules 1955 as it stood at the relevant time provided for retirement on superannuation on attaining the age of 55 years. There is a proviso to rule 16(1) which enables the State Government to postpone the period of retirement and retain the Government servant in service for an aggregate period not exceeding six months and if the retention in service beyond that period is required, the same will have to be with the sanction of the Central Government. Respondent would have retired from service on attaining the age of 55 years on 1st February 1962. He was served with a charge sheet dated 13th September 1960. The inquiry could not be completed before the date of retirement of the respondent. The Government of Assam by order dated 31st January 1962 retained the respondent in service for a period of three months beyond the date of his retirement which fell on 1st February 1962 or till the termination of the departmental proceedings drawn up against him whichever is earlier. In view of the language of rule 16(1), the Assam Government had no power to extend the period of service of a member of the service beyond a period of six months in the aggregate. Therefore, retention for a period of three months would be legal and valid with the result that the 515 date of retirement of the respondent would be postponed to 1st May 1962. Admittedly no order was made by the Assam Government before 1st May 1962. The order postponing the date of retirement and retention of the respondent in service beyond 1st May 1962 was made on 21st June 1962. No order was made by the Assam Government for postponing the period of retirement of the respondent and his retention in service before 1st May 1962. The State Government had power under rule 16(1) (a) of the Retirement Rules to retain the respondent in service for a period of six months in aggregate and therefore, even though specific period was mentioned in the order, simultaneously providing for retention in service till the date of termination of the proceedings, the extension would be valid for a period of six months in the aggregate if the inquiry was continuing till the expiration of six months but not exceeding six months. In that event the respondent would retire from service by 1st August 1962. Putting the construction on rule 16 (1) (a) and the order of extension, most favourable to the State Government, it may be stated at once that retention in service upto 1st August 1962 would be valid but unfortunately the inquiry was not over by 1st August 1962. No order was made before 1st August 1962 for retention of the respondent in service beyond 1st August 1962. The order next in succession in of 1st September 1962. This order is again made by the State of Assam. The State Government had no power to retain a member of the service for a period exceeding six months in the aggregate after the date of his normal retirement. The maximum period for which retention could be ordered by the State Government being thus six months, the respondent would have retired from service on 1st August 1962. Even if an order had been made by the State Government to retain the respondent in service it would be without jurisdiction and the order in fact was made on 1st September 1962. Now, undoubtedly under rule 16(1) (b) the Central Government has power to retain a member of the service in service after the date of retirement for any period beyond six months. But in this connection it may be pointed out that no such order appears to have been made by the Central Government. All the subsequent orders were made by the Government of Assam. Such orders made by the Government of Assam would not have the effect of retaining the respondent in service beyond a period of six months from the date of his normal retirement. That being the maximum period, the State Government had no power to retain the respondent in service. If the State Government could not retain him in service beyond 1st August, 1962, it could not continue the inquiry thereafter. This position seems to be clearly established by the decision of this Court in State of Assam 516 vs Padma Ram Borah(1). In that case the State Government had made an order to retain the Government servant in service up to the end of March 31, 1961. Subsequent order extending the period was made on 9th May 1961. This Court held that according to the earlier order of the State Government itself the service of the Government servant had come to an end on March 31, 1961 and the State Government could not by unilateral action create a fresh contract of service to take effect from April 1, 1961. If the State Government wished to continue the service of the respondent for a further period, the State Government should have issued a notification before March 31, 1961. It is thus clear that the retention of the respondent in service by order of the State Government not made before the retirement taking place on 1st August 1962 and the State Government not having the power to retain the respondent, a member of the Indian Administrative Service, beyond a period of six months, the respondent could not be said to have continued in service so that an inquiry could be continued against him. Mr. Naunit Lal, however, contended that sub rule(2) of rule 16 clearly provides that a member of the service under suspension on a charge of misconduct shall not be required or permitted to retire from the service until the enquiry into the charges against him is concluded and a final order is passed. It is in the context of sub rule (2) of rule 16 that the question of the nature of the proceedings held against the respondent assumed importance. If the inquiry was on a charge of misconduct, the respondent could be retained in service until the inquiry into the charges against him was concluded and a final order was made. But before sub rule (2) of rule 16 would be attracted it must be shown that the member of the service was under suspension on a charge of misconduct and an inquiry was being conducted against him. As pointed out earlier, no misconduct as one would understand that word in the context of disciplinary proceeding was alleged against the respondent. There was an inquiry but before sub rule (2) of rule 16 is attracted, it had to be an inquiry on a charge of misconduct. What is alleged is not misconduct as the word is understood in service jurisprudence in the context of disciplinary proceedings. Therefore, it could not be said that an inquiry on a charge of misconduct was being held against the respondent and sub rule (2) of rule 16 would thus be attracted and he would be deemed to have been retained in service till the inquiry was concluded. It thus appears crystal clear that there was no case stricto sensu for a disciplinary proceeding against the respondent. In fact the inquiry was held to establish that the respondent was not fit to hold a respon 517 sible post. The respondent was actually retiring from service and there was no question of his any more holding a responsible position. Yet not only the inquiry was initiated but he was retained in service beyond the date of his normal retirement till the final order was made on 11th October, 1963 when he was removed from the Indian Administrative Service. It appears that there were large scale disturbances in the State. There followed the usual search for a scapegoat and the respondent came handy. Some charges were framed none of which could costitute misconduct in law. Some charges were mere surmises. Substance of the allegations was that he was not a very efficient officer and lacked the quality of leadership and was deficient in the faculty of decision making. These deficiencies in capacity would not constitute misconduct. If the respondent were a young man and was to continue in the post for a long period, such an inquiry may be made whether he should be retained in the responsible post. He may or may not be retained but to retain him in service beyond the period of his normal retirement with a view to punishing him was wholly unjustified. The High Court was, therefore, right in coming to the conclusion that the respondent was no longer in service on the date on which an order removing him from service was made and, therefore, the order was illegal and void. Accordingly, this appeal fails and is dismissed with costs. P.B.R. Appeal dismissed.

The respondent, an officer belonging to the Indian Administrative Service, was due to retire on February 1, 1962. Since a departmental enquiry in respect of some charges levelled against him was pending, he was retained in service, in the first instance, for a period of three months beyond the date of his retirement or till the termination of departmental proceedings whichever was earlier. This date was, however, extended from time to time and eventually on August 28, 1963 an order under r. 16(2) of the All India Services (Death cum Retirement) Rules, 1958 was passed. That Rule provides that "a member of the service under suspension on a charge of misconduct shall not be required or permitted to retire from service but shall be retained in service until the enquiry into the charges against him is concluded and a final order is passed. " The charges levelled against the respondent were (1) that he completely failed to take any effective preventive measures against widespread disturbances which broke out in the district, (2) that he showed complete lack of leadership and failed to give proper directions to his subordinate officers, (3) that he did not personally visit the scene of disturbances; (4) that he did not keep the Government informed of the extent of disturbances; and (5) that he showed complete inaptitude, lack of foresight, capacity to take firm and quick decision and, that therefore, he proved himself completely unfit to hold any responsible position. On the report of the enquiry officer that all the charges (except one) were substantially proved, he was removed from service. Striking down the order of his removal from service, the High Court held that (i) negligence and efficiency in the performance of one 's duty would not constitute misconduct so as to attract punishment of removal from service and (ii) under r. 16(2) an officer could be retained in service only for the purpose of holding or completing disciplinary proceedings for misconduct and since in this case there was no enquiry into what could be called misconduct, his retention in service beyond his date of retirement was void. Dismissing the appeal, ^ HELD: 1(a) No case, stricto sensu, for a disciplinary proceeding for misconduct had been made out against the respondent. Any deficiency in the discharge of one 's duties would not constitute misconduct. The enquiry held 505 was to establish that the respondent was not fit to hold a responsible post; it did not establish any misconduct on his part to deserve the punishment. [516 H] (b) Conduct which is blameworthy on the part of a government servant in the context of the Conduct Rules would be misconduct, that is if a government servant conducts himself in a way which is not consistent with due and faithful discharge of his duties it is misconduct. Similarly, disregard of an essential condition of the contract of service may constitute misconduct. So too an error or omission resulting in serious or atrocious consequences may amount to misconduct. But competence for the post, capability to hold and discharge the functions attached to it with requisite efficiency are different from some act or omission on the part of its holder so as to be called misconduct. A single act or omission or error of judgment while holding a post of responsibility unaccompanied by serious or atrocious conduct would not constitute misconduct. [511 G H] Pierce vs Foster, 17 QB 536 at 542; Laws vs London Chronicle (Indicator Newspapers),[1959] 1 WLR 698; section Govinda Menon vs Union of India, ; ; P.H. Kalyani vs Air France, Calcutta, ; ; referred to. (c) The All India Services (Conduct) Rules, 1954 prescribe a code of conduct for members of the service, such for example as, that every member shall at all times maintain absolute integrity and devotion to duty and that an act or omission contrary to or in breach of the prescribed norms of conduct would constittute misconduct for disciplinary proceedings. But the Rules are not exhaustive. In the absence of an exhaustive or self contained code, therefore it would not be correct to say that only that act or omission would constitute misconduct for the purposes of Discipline and Appeal Rules which is contrary to the provisions of the Conduct Rules. [511 C E] In the instant case all that the charges framed against the respondent show is that he was not a very efficient officer. They did not specify any act or omission in derogation of or contrary to Conduct Rules, except the general rule (r.3) prescribing devotion to duty. Lack of leadership, inaptitude, lack of foresight, lack of firmness and indecisiveness which are deficiencies in the personal character or ability of a Government servant would not by themselves constitute misconduct for the purpose of disciplinary proceedings. They may be relevant while considering an officer 's promotion to higher post or for his retention in a higher post but they cannot be elevated to the level of acts of omission or commission contemplated by Discipline and Appeal Rules for imposing punishment. When the respondent was sought to be removed from service as a disciplinary measure by way of penalty, a clear case of misconduct should have been established. (d) In the context of disciplinary proceedings, misconduct does not mean misbehaviour involving some form of guilty mind or mens rea. Gross or habitual negligence in the performance of one 's duty may not involve mens rea but yet it may constitute misconduct for disciplinary proceedings. [513 D] 2(a) The respondent was no longer in service on the date on which the order removing him from service was made and to retain him in service 506 beyond the period of his normal retirement with a view to punishing him was wholly unjustified. [517 C D] (b) Since the State Government had no power to retain him in service under r. 16(1)(a) of the Retirement Rules beyond August 1, 1962 it could not continue the enquiry thereafter. Although under r. 16(1)(b) the Central Government had power to retain him in service beyond six months of the date of his retirement, no order had been passed by it. [515 H] (c) Before r. 16(2) (which provides that a member of the service under suspension on a charge of misconduct shall not be required or permitted to retire from service until the enquiry into the charges against him is concluded and a final order passed) would be attracted it must be shown that a member of the service was under suspension on a charge of misconduct and an enquiry was being conducted against him. No misconduct having been alleged against the respondent, it cannot be said that r. 16(2) was attracted and that he was deemed to have been retained in service until the enquiry was concluded. [516 F G]

Civil Appeal No. 1588 of 1974. Appeal by special leave from the Judgment and order dated the 9th July, 1973 of the Madhya Pradesh High Court in Misc. Petition No. 163/73. L M. Singhvi and section K. Dhingra, for the appellant. section C. Manchanda, Urmila Kapoor and Kamlesh Bansal, for respondent. The Judgment of the Court was delivered by ALAGIRISWAMI,J. This appeal raises the question of the validity of the appointment of the appellant as a Professor of Zoology in the University of Saugar. In pursuance of an advertisement dated 31 5 1971 by the University calling for applications for the post of Professor of Zoology five persons including the appellant and the respondent applied. A Committee of Selection was constituted in accordance with section 47 A of the Saugar University Act 1946 to consider these applications. On 4 12 1971 the Selection Committee recommended the name of the appellant to the Executive Council, which was competent to make the appointment. Under the provisions of section 47 A the Executive Council has to take the final selection from among persons recommended by the Selection Committee. But where the Executive Council proposes to make appointment otherwise than in accordance with the order of merit arranged by the committee the Executive Council should record its reasons in writing and submit its proposal for the sanction of the Chancellor. In the present case the appellant being the only person whose name had been recommended had ordinarily to be appointed. The Executive Council, however, refused to accept the recommendation of the Selection Committee on the ground that it would lead to administrative and disciplinary complications. Thereupon the appellant filed a writ petition for quashing the resolution of the Executive Council and it was quashed by the High Court of Madhya Pradesh. Thereafter on 18 2 1973 the Executive Council appointed the appellant as Professor of Zoology. On 9 7 1973 the respondent filed a writ petition for quashing the appellant 's appointment. The High Court of Madhya Pradesh quashed the resolution dated 18 2 1973 appointing the appellant as Professor of Zoology and indicated that the University may advertise the post afresh if they desire to fill in the vacancy. The ground on which the resolution was quashed was that the appointment was made more than a year after the re commendation of the Selection Committee was made and this was not 150 permissible. The High Court relied upon the statute 2 l AA of the Statutes of the University made under s.31 (aa) of the Act for this conclusion. This section enables statutes to be made, among other things, for the mode of appointment of teachers of the University paid by the University. The statute in question reads as follows: "Statute, No. 21 AA" (1) All vacancies in teaching posts of the University (except those to be filled by promotion as provided for under sub section (aaa) of Section 31 ) shall be duly advertised and all applications will be placed before the Committee of Selection as provided for under Sub Section (2) of Section 47 A of the University of Saugar Amendment Act, 1965. (2) If no appointment is made to a post within one year from the date of the nomination by the Selection Committee then the post shall be readvertised before making an appointment as provided for under (1) above." Quite clearly the appointment made more than a year after the date of nomination by the Selection Committee is not in accordance with the statute 21 AA. The requirement of the statute is that the post should be readvertised before making an appointment if the appointment is not made within a year of the Selection Committee 's recommendation. On behalf of the appellant it was argued that the statute is directory and not mandatory, that in any case the statute is beyond the rule making power conferred by section 31(aa). A number of decisions were relied upon in support of the submission that where a provision of law lays down a period within which a public body should perform any function, that provision is merely directory and not mandatory. The question whether a particular provision of a statute is directory or mandatory might well arise in a case where merely a period is specified for performing a duty but the consequences of not performing the duty within that period are not mentioned. In this case clearly the statute provides for the contingency of the duty not being performed within the period fixed by the statute and the consequence thereof. This proceeds on the basis that if the post is not filled within a year from the date of the nomination by the Selection Committee the post should be readvertised. So unless the post is readvertised and an appointment is made from among those persons who apply in response to the readvertisement the appointment cannot be said to be valid. Though the reason for the delay in making the appointment was the wrongful refusal of the Executive Council to act in pursuance of the recommendation of the Selection Committee and the pendency of the writ petition filed by the appellant in the High Court, that does not in any way minimise the effect of sub rule (2) of statute No. 21 AA. The position may well have been otherwise if there had been a stay 151 or direction prohibiting the Executive Council from making the appointment. Such is not the case here. We do not therefore think it necessary to discuss the various decisions relied upon by the appellant. Nor can we agree that the statute in question is beyond the rule making power. Under section 31(aa) statutes can be made with regard to the mode of appointment of teachers of the University. The statute provides that the appointment should be made after the post is advertised and the applications received considered by a committee of selection. It also provides that if no appointment is made to the post with in one year from the date of nomination by the selection committee The post shall be readvertised. The rule therefore certainly relates to the mode of appointment. It cannot be said to be unrelated to the mode of appointment. It apparently proceeds on the basis that after the lapse of a year there may be more men to choose from. Unless it could be said that the rule has no relation to the power conferred by the rule making power it cannot be said to be beyond the rule making power. Such is not the position here. We are also unable to agree that the statute is in conflict with or ill derogation of the provisions of the statute. It was then argued on behalf of the appellant that the post of the Professor of Zoology is not a public office and therefore a writ of quo warranto cannot be issued. The decisions in Dr. P. section Venkataswamv v University of Mysore(1) and section B. Ray vs P. N Banerjee(2) were relied upon to contend that the post in question is not a public office and therefore no writ of quo warranto can issue. But it should be noticed that no writ of quo warranto was issued in this case. What was issued was a writ of certiorari as the order of the High Court only quashed the resolution of the Executive Council dated 18 2 1973. In his petition the respondent had asked for (1) a writ of certiorari, (2) a writ of mandamus, and (3) a writ of quo warranto. What was assumed was a writ of certiorari. The question whether a writ of quo warranto could issue in the circumstances of this case and whether the office was a public office was not raised or argued before the High Court. Indeed it was not even raised in the special leave petition filed by the appellant. We cannot therefore decide the present appeal on the basis that was issued was a writ of quo warranto. It should also be noticed that the post has since been readvertised and it is open to the appellant to apply again. We see no merits in this appeal and it is accordingly dismissed. But in the circumstances of the case there will be no order as to costs. V.M.K. Appeal dismissed.

In pursuance of an adevertisement dated 31 5 1971 by the University of Saugar calling for applications for the post of Professor of Zoology, five persons including the appellant and the respondent applied. The Selection Committee constituted in accordance with section 47 A of the Saugar University Act 1946 for considering these applications recommended on 4 12 1971 the name of the appellant to the Executive Council, which was competent to make the appointment. The Executive Council refused to accept the recommendations of the Selection Committee on the ground that it would lead to administrative and disciplinary complications. Thereupon the appellant filed a writ petition for quashing the resolution of the Executive Council and it was Quashed by the High Court of Madhya Pradesh. Thereafter on 18 2 1973 the Executive Council appointed the appellant as Professor of Zoology. On 9 7 1973 the respondent filed a writ petition for quashing the appellants appointment. The High Court of Madhya Pradesh quashed the resolution dated 18 2 1973 appointing the appellant as Professor of Zoology and indicated that the University may advertise the post a fresh if they desire to fill in the vacancy. The ground on which the resolution was quashed was that the appointment was made more than a year after the recommendation of the Selection Committee was made and this was not permissible. The High Court relied upon the Statutes of the University made under section 31(aa) of the Act for this conclusion. Section 31 (aa) enables statutes to be made among other things, for the mode of appointment of teachers of the University paid by the University. The requirement of sub rule (2) of statute No. 21 AA is that the post should be readvertised before making an appointment if the appointment is not made within a year of the Section Committee 's recommendation. In this appeal by special leave it was contended for the appellant that (i) the statute is directory and not mandatory, and (ii) that, in any case, the statute is beyond the rule making power conferred by section 31(aa). Rejecting the contentions and dismissing the appeal, ^ HELD : The question whether a particular provision of a statute is directory or mandatory might arise in a case where merely a period is specified for performing a duty but the consequences of not performing the duty within that period are not mentioned. In this case, the statute clearly provides for the contingency of the duty not being performed within the period fixed by the statute and the consequence thereof. Unless the post is readvertised and an appointment is made from among those persons who apply in response to the readvertisement the appointment cannot be said to be valid. Though the reason for the delay in making the appointment was the wrongful refusal of the Executive Council to act in pursuance of the recommendation of the Selection Committee and the pendency of the writ petition filed by the appellant in the High Court that does not in any way minimise the effect of sub rule (2) of statute No. 21 AA. [150F H] (ii) Unless it could be said that the rule has no relation to the power conferred by the rule making power it cannot be said to be beyond the rule making power. The statute provides that the appointment should be made after the post 149 is advertised and the applications received considered by a committee of selection. It also provides that if no appointment is made to the post within one year from the date of nomination by the selection committee the post shall be readvertised. The rule therefore certainly relates to the mode of appointment. It cannot be said to be unrelated to the mode of appointment.[151A C] Dr. P. section Venkataswamy vs University of Mysore A.I.R. and S.B. Ray vs P.N. Banerjee, , referred to.

(Civil) No. 1615 of 1986. (Under Article 32 of the Constitution of India). R.P. Gupta for the Petitioner. C.V. Subba Rao for the Respondents. 1140 The Order of the Court was delivered by B.C. RAY, J. The petitioner who was appointed as a constable in the Haryana Police Force on November 7, 1979 has challenged in this writ petition the order dated August 24, 1982 issued by the Commandant, 2nd Bn. Haryana Armed Police, Madhuban on the ground that the impugned order of removal from service was in effect a penal order and as such the same being made without complying with the requirements of Article 311(2) as well as the Rule 16.24(ix)(b) of the Punjab Police Rules, 1934 is wholly arbitrary, illegal and unwarranted and so the impugned order is liable to be quashed and set aside and the petitioner to be reinstated in service. The facts of the case in a nutshell are that the petitioner was enrolled as a constable in the Haryana Police Service in November, 1979 and he had been discharging his duties attached to his office duly and properly. The peti tioner was a member of an unregistered Haryana Police Asso ciation. The said association had been convassing for im provement in the Service conditions of the police personnel serving with the Haryana Police and on several occasions made representations for improvement of the service condi tions of the members of the police service. As a part of its campaign for improvement in service conditions, the associa tion in the month of July gave a call to all its members to participate in "a nontaking of food campaign" which was to take place on 15th August, 1982. On that day the petitioner and other police personnel numbering about 16,000 consisting of constables and head constables of Haryana Police Force attended to their duties but they did not take their food in the Mess. The protest undertaken by the Haryana police constables/ head constables was a symbolic and peaceful one and no incident whatsoever had occurred on that day. The respondents, however issued order of dismissal/removal against 425 policemen under rule 12.21 of the said rules without serving on them any charge sheet and without giving them any opportunity of hearing against the charges, prior to the passing of the said order of dismissal/removal from service. About 154 of such policemen challenged the order of their dismissal/removal from service in writ petition Nos. 9345 to 9498 of 1983 before this Court and the Constitution Bench of this Court after hearing, set aside the said order of dismissal from service and directed reinstatement in service without any break in their service. The petitioner because of his activities in the Associa tion was served with the impugned order of removal from service without being given any opportunity of hearing and without being asked to show cause against the purported order of dismissal from service. The 1141 petitioner has challenged the validity of this impugned order in this writ petition. A return has been filed on behalf of the respondents sworn by one Raj K. Vashishta, IPS, Commandant 2nd Bn. Haryana Armed Police, Madhuban District, Karnal wherein in paragraph. 2 it has been stated that the impugned order is not an order of dismissal from service and in fact this is an order of discharge made under rule 12.21 of the Punjab Police Rules, 1934 as applicable in Haryana. It has been further stated in paragraph 3 of the said affidavit that the petitioner deliberately suppressed the facts that: (i) That for his absence from duty, without leave for more than 24 hours with effect from 25.10.80 he had been awarded 5 days P.D. (ii) Again he had been warned for absence without leave for five hours on 21.4.81. (iii) Notwithstanding the warnings and punishments awarded for absence from duty in 1980, and again in 1981, the petitioner did not show any improvements in his performance and conduct and again absented from duty on 15th August, 1982. It has also been stated that a recruit constable who within a span of three years of his enrolment repeatedly absents from duty and does not improve himself in spite of warnings, is not likely to prove an efficient police offi cer. It has further been averred in the said affidavit that the petitioner was discharged because the appointing author ity (Superintendent of Police) was of considered opinion on due assessment of his conduct and performance that he was unlikely to prove an efficient police officer. These aver ments have been verified as correct according to the infor mation derived from the official records and believed by the deponent to be true. There is no dispute that the petitioner was enrolled as a constable with effect from November 7, 1979 and he was on probation which is for a period of three years. It is also well settled that a probationer has no right to the post and if he is found by the concerned authorities to be unsuitable for the post during the probation period his service may be done away with. But nonetheless such a probationer has a right to have an opportunity of hearing against the order of dismissal removal from service if the same is made in effect by way of 1142 punishment or the same casts a stigma on the service career of the petitioner. In other words if the order of dismissal/removal from the service is not one simpliciter on the ground that his service is no longer required but in substance and in effect the same is made by way of punish ment, the probationer like the petitioner who has no right to the post is to be given an opportunity of hearing. If such an order of dismissal/removal from service is made without following the procedure envisaged in Article 311(2) of the Constitution of India as well as rule 16.24(ix)(b) of the Punjab Police Rules, 1934 the same will be illegal and bad and liable to be quashed. This position has been well settled by this Court in the case of P.L. Dhingra vs Union of India, AIR 1958 (SC) 36 wherein it has been observed as under: " . . Passing on to Article 311 we find that it gives a two fold protection to persons who come within the article, namely, (1) against dismissal or removal by an authority subordinate to that by which they were ap pointed and (2) against dismissal or removal or reduction in rank without giving them a reasonable opportunity of showing cause against the action proposed to be taken in regard to them. Incidentally it will be noted that the word "removed" has been added after the word "dismissed" in both Clauses (1) and (2) of article 311. Upon article 311 two questions arise, namely, (a) who are entitled to the protection and (b) what are the ambit and scope of the protection?" " . . Shortly put, the principle is that when a servant has right to a post or to a rank either under the terms of the contract of employment, express or implied, or under the rules governing the conditions of his service, the termination of the service of such a servant or his reduction to a lower post is by itself and prima facie a punish ment, for it operates as a forfeiture of his right to hold that post or that rank and to get the emoluments and other benefits attached thereto. But if the servant has no right to the post, as where he is appointed to a post, permanent or temporary either on probation or on an officiating basis and whose temporary service has not ripened into a quasi permanent service as defined in the Temporary Service Rules, the termination of his employment does not deprive him of any right and cannot, therefore, by itself be a punishment. One test for determining whether the termination of the service of a government servant is by way of punishment is to ascertain 1143 whether the servant, but for such termination, had the right to hold the post. If he had a right to the ' post as in the three cases hereinbefore mentioned, the termination of his service will by itself be a punishment and he will be entitled to the protection of article 311." " . . But even if the Government has, by contract or under the rules, the right to terminate the employment without going through the procedure prescribed for inflicting the punishment of dismissal or removal or reduc tion in rank, the Government may, neverthe less, choose to punish the servant and if the termination of service is sought to be founded on misconduct, negligence, inefficiency or other disqualification, then it is a punish ment and the requirements of article 311 must be complied with. " In the case of Samsher Singh vs State of Punjab and Anr., AIR 1974 (SC) 2 192 it has been observed as under: "No abstract proposition can be laid down that where the services of a probationer are termi nated without saying anything more in the order of termination than that the services are terminated it can never amount to a pun ishment in the facts and circumstances of the case. If a probationer is discharged on the ground of misconduct, or inefficiency or for similar reason without a proper enquiry and without his getting a reasonable opportunity of showing cause against his discharge it may in a given case amount to removal from service within the meaning of Article 311(2) of the Constitution. " It has been further observed that the form of the order may be innocuous but if the order is really by way of pun ishment then the protection under Article 311(2) will come into play and the probationer will be entitled to have an opportunity of hearing before the impugned order of dismiss al/removal from service is made. The substance of the order and not the form could be decisive. In a later decision of this Court i.e. Anoop Jaiswal vs Government of India and Anr., AIR 1984 (SC) 636 following the aforesaid two decisions this Court has observed that: 1144 "The form of the order is not decisive as to whether the order is by way of punishment and that even an innocuously worded order termi nating the service may in the facts and cir cumstances of the case establish that an enquiry into allegations of serious and grave character of misconduct involving stigma has been made in infraction of the provision of article 311(2). Where the form of the order is merely a camouflage for an order of dismissal for misconduct it is always open to the Court before which the order is challenged to go behind the form and ascertain the true charac ter of the order. If the Court holds that the order though in the form is merely a determi nation of employment is in reality a cloak for an order of punishment, the Court would not be debarred, merely because of the form of the order, in giving effect to the rights con ferred by law upon the employee." In the instant case it is clear and evident from the averments made in paragraph 3, sub para (i) to (iii) and paragraph (v) of the counter affidavit that the impugned order of removal/dismissal from service was in substance and in effect an order made by way of punishment after consider ing the service conduct of the petitioner. There is no doubt that the impugned order casts a stigma on the service career of the petitioner and the order being made by way of punish ment, the petitioner is entitled to the protection afforded by the provisions of Article 311(2) of the Constitution as well as by the provisions of Rule 16.24(IX)(b) of the Punjab Police Rules, 1934. The petitioner has not been served with any charges of misconduct in discharge of his duties as a police constable nor has he ever been asked to show cause against the said charges. The order of removal from service was made because of his union activities namely participat ing in the call for expressing the protest of the associa tion for improvement in service conditions by abstaining from taking meals in the Mess on 15th August, 1982 although the petitioner like other members of the association per formed his duties on that day and did not abstain from duty. It cannot be said in the facts and circumstances of the case that the impugned order is an order simpliciter of removal from service of a probationer in accordance with the terms and conditions of the service. The impugned order undoubted ly, tantamounts to dismissal from service by reason of misconduct of the petitioner in discharge of the official duties aS police constable. This matter is fully covered by the decision dated October 17, 1984 of the Constitution Bench in Ajit Singh & Ors. vs State of Haryana & Ors. , (W.P. Nos. 9345 9498/1983) and we are bound to follow the same. 1145 In the premises aforesaid the writ petition succeeds and is allowed, the impugned order of discharge of the petition er from Haryana Police Force under rule 12.21 of the Punjab Police Rules, 1934 passed by the Commandant, 2nd Bn., Har yana Armed Police is quashed and it is directed that he be reinstated in service with 50% back wages from the date of termination of his service till the date of his reinstate ment. He would, however, be entitled to his full salary and other allowances admissible with effect from the date of his reinstatement. It is further directed that there would be no break in continuity of service for purposes of seniority and pensionary benefits. No costs. M.L.A. Petition allowed.

The petitioner, a Constable in the Haryana Police Serv ice, was removed from service during the period of proba tion. However, he was not given any opportunity of hearing against the purported order of dismissal from service. He challenged the impugned order of removal on the ground that he was removed from service because of his activities in the Haryana Police Association and it was in fact a penal order and as such the same being made without complying with the requirements of Article 311(2) as well as Rule 16.24(ix)(b) of the Punjab Police Rules, 1934, it is wholly arbitrary, illegal and unwarranted. It was contended on behalf of the respondent that the impugned order is not an order of dismissal from service and in fact this is an order of discharge made under Rule 12.21 of the Rules since the appointing authority was of consid ered opinion on the assessment of his conduct and perform ance that the petitioner was unlikely to prove an efficient police officer. Allowing the writ petition to this Court, HELD: 1. (i) The impugned order of removal/dismissal from service was in substance and in effect an order made by way of punishment after considering the service conduct of the petitioner. It is therefore quashed and it is directed that he be reinstated in service with 50 per cent back wages from the date of termination of his service till the date of his reinstatement. He would, however, be entitled to his full salary and other allowances admissible w.e.f. the date of his reinstatement. There would however be no break in continuity of service for purposes of seniority and pension benefits. [1144D; 1145A C] 1139 (ii) There is no doubt that the impugned order casts a stigma on the service career of the petitioner and the order being made by way of punishment, the petitioner is entitled to the protection afforded by the provisions of Article 311(2) of the Constitution as well as by the provisions of Rule 16.24(ix)(b) of the Punjab Police Rules 1934. [1144E] (iii) It cannot be said that the impugned order is an order simpliciter of removal from service of a probationer in accordance with the terms and conditions of service. The impugned order undoubtedly tantamounts to the dismissal from the service for reasons of misconduct of the petitioner in discharge of the official duties as police constable. [1144G H] 2. A probationer has no right to the post and if he is found by the concerned authorities to be unsuitable for the post during the probation period his service may be done away with. But nonetheless such a probationer has a right to have an opportunity of hearing against the order of dismiss al/removal from the service if the same is made in effect by way of punishment or the same casts a stigma on the service career of the petitioner. [1141G H; 1142A] In the instant case, the petitioner has not been served with any charges of misconduct in discharge of his duties as a police constable nor has he ever been asked to show cause against the said charges. The order of removal from service was made because of his union activities namely participat ing in the call for expressing the protest of the Associa tion for improvement in service conditions by abstaining from taking meals in the Mess on 15th August, 1982 although the petitioner like other members of the association per formed his duties on that day and did not abstain from duty. [1144E G] P.L. Dhingra vs Union of India, AIR 1958 (SC) 36; Samsh er Singh vs State of Punjab and Anr., AIR 1974 (SC) 2192; Anoop Jaiswal vs Government of India & Anr., AIR 1964 (SC) 636 and Alit Singh & Ors. vs State of Haryana & Ors. , W.P. No. 9345 94 98/1983, followed.

Appeals Nos. 386 and 387 of 1966. Appeal by special leave from the judgment and_decree dated April 16, 1963 of the Madhya Pradesh High Court in First Appeal No. 217 of 1959. section V. Gupte, P. C. Bhartari and J. B. Dadachanji, for the appellants (in C.A. No. 386 of 1966) and the respondents (in C.A. No. 387 of 1966). I. N. Shroff and Rama Gupta, for the State of Madhya Pradesh. The Judgment of the Court was delivered by Ramaswami, J. These appeals are brought by special leave from the judgment of the High Court of Madhya Pradesh dated 16th April, 1963 in ' First Appeal No. 217 of 1959, whereby the High Court modified partly the judgment of the first Additional District Judge, Jabalpur dismissing Civil Suit No. 10 A of 1954. The suit was instituted against the State of Madhya Pradesh by Beohar Raghubir Singh and his three grand sons. Beohar Raghubir Singh 's son, Beohar Rajendra Sinha, was a pro forma defendant. A notice under section 80 of Civil Procedure Code had been given by Raghubir Singh on 11th January, 1954. Plaintiffs 2, 3 and 4, his grand sons were joined as plaintiffs because in a partition made subsequent to the giving of the notice, they were each entitled to 1/5th share along with the first plaintiff. Beohar, Rajendra Sinha was joined as a defendant because he did not choose to join as the plaintiff. The plaintiffs sought a declaration (1) that the three nazul plots in suit had been in possession of the plaintiffs and the predecessors in their own right from time immemorial and their status was that of Raiyat Sarkar; and (2) that the order of the State Government in the Survey and Settlement Department refusing to recognise their possession over the plots was wrong and ultra vires. The dispute relates to Phoota Tal a tank situated within the town of Jabalpur. It was plot No. 282 in the settlement of 1863 A.D. Its area then was 957 5.24 acres. it was recorded as malkiat Sarkar and in the last column there was an entry showing possession of Aman Singh Thakur Prasad. The next settlement took place in 1890 91. The survey number of Phoota Tal was changed to plot No. 325. Its area remained the same, it was recorded as "water (pani)" and in the last column, the entry showed the possession of Beohar Narpatsingh Raghubir Singh. , The third settlement took placed in 1909 10. The plot number of Phoota Tal was then , it was still recorded change to 327. Its area remained the same it was still recorded as 'water", but there was no entry in favour of any one showing possession. The nazul settlement took place in 1922 23. In this settlement, the tank was given numbers 33, 34, 35, 36, 37 and 171. Its area was recorded as 5.24 acres. In this settlement about 2 acres of land was found to be occupied by the Municipal Committee, Jabalpur. The land so found to be occupied was recorded in the possession of the Muncipal Committee, Jabalpur and the remaining land was again recorded as "Milkiat Sarkar". There was no entry regarding possession in the remarks column so far as the remaining land was concerned. The plaintiffs alleged that Thakur Prasad and Aman Singh were their ancestors, that they had been in continuous possession of the disputed landand the omission to record their possession in the last two settle ments of 1909 10 and 1922 23 was due to some oversight. In 1948 the first plaintiff made an application for correction to the Deputy Commissioner, Jabalpur who made an order in his favour exhibit P 5. The order of the Deputy Commissioner was however set aside by the State Government on 28th May, 1953 and it was held that the plaintiffs had no title to the disputed land. The plaintiff therefore prayed for a declaration of the title to the disputed plots and for the correction of the entry in the settlement record showing the status of the plaintiff as that of "Raiyat Sarkar". The suit was contested by the State of Madhya Pradesh. It was urged that the plaintiff had no possession over the disputed land and the order of the State Government dated 28th May, 1953 was correct. It was contended that plaintiffs 2, 3 and 4 had no right to institute the suit because no notice under section 80 of the Civil Procedure Code was given on their behalf. The suit was not contested by the second defendant Beohar Rajendra Sinha. By its judgment dated 24th January, 1959 the trial court held that there was no documentary evidence from 1891 to 1932 to support the possession of the ancestors of the plaintiffs regarding Phoota Tal. The trial court also held that in all the settlement entries, the land was recorded as belonging to the Government "Milkiat Sarkar". In any event, between 1891 to 1932 there was no evidence regarding the user of the property by the plaintiffs and in the subsequent years a part of the property was found in possession of the Municipal Committee. The trial court dismissed the suit. Against the judgment of the trial court 958 the plaintiffs preferred an appeal to the High Court. The High Court held in the first place the notice exhibit P 8 was not in conformity with section 80 of the Civil Procedure Code. The High Court held that Beohar Raghubir Singh had lost the right to represent the joint family as karta at the time of institution of the suit because there had been a severence of joint status and the notice served by Beohar Raghubir Singh could not ensure to, the benefit of the other plaintiffs. On the merits of the case, the High Court found that the plaintiffs had established their possession for the statutory period of 60 years. The High Court held that the plaintiffs had acquired the right of Raiyat Sarkar and that the order of the State Government refusing to correct the revenue record was illegal. On these findings the High Court modified the judgment of the trial court to the extent that there was a declaration in favour of the plaintiffs that they were entitled to 1/5th share of the property in dispute and the claim regarding the 4/5th share was dismissed The order of the State Government dated 28th May, 1953 refusing to recognise the possession of the plaintiffs was held to be wrong and illegal. The first question to be considered in these appeals is whether the High Court was right in holding that the notice given under section 80 of the Civil Procedure Code by the first plaintiff was effective only with regard to Raghubir Singh and. the notice was ineffective with regard to the other plaintiffs and therefore Raghubir Singh alone was entitled to a declaration as regards the 1/5th share of the dispute plot. On behalf of defendant No. 1 it was contended by Mr. Shroff that at the time of giving notice the plaintiffs and the second defendant were joint and plaintiff No. 1 Raghubir Singh was karta of the joint family. The notice was given on 11th January, 1954 and the suit was instituted on 20th July, 1954. It was admitted that between these two dates there was a disruption of the joint family of which Raghubir Singh was a karta. It was argued that the right of the first plaintiff to represent the family had come to an end before the institution of the suit, and hence plaintiffs 2, 3 and 4 had to comply individually with the provisions of section 80 of the Civil Procedure Code before appearing as plaintiffs in the suit, In our opinion, there is no justification for this argument. , We consider that there is substantial identity between the person giving the notice and the persons filing the suit in the present case. At the time of giving notice the first plaintiff Beohar Raghubir Singh was admittedly the eldest member of the joint family and being a karta he was entitled to represent the joint family in all its affairs. The cause of action had accrued at the time of giving of the notice and it was not necessary to give a second notice merely because there was a severence of the joint family, before 20th July, 1954 when the suit was actually instituted. It is obvious 959 that the notice was given by Beohar Raghubir Singh as a representative of the joint family and in view of the subsequent partition the suit had to be instituted by, all the divided members of the joint family. We are of the opinion that the notice given by Beohar Raghubir Singh on 11th January, 1954 was sufficient in law to sustain a suit brought by all the divided coparceners who must be deemed to be as much the authors of the notice as the karta who was the actual signatory of the notice. There is substantial identity between the person giving the notice and the persons bringing the suit in the present case and the argument of defendant No. 1 on this point must be rejected. The object of the notice under section 80, Civil Procedure Code is to give to the Government or the public servant concerned an opportunity to reconsider its or his legal position and if that course is justified to make amends or settle the claim out of court. The section is no doubt imperative; failure to serve notice complying with the requirements of the statute will entail dismissal of the suit. But the notice must be reasonably construed. Any unimportant error or defect cannot be permitted to be treated as an excuse for defeating a just claim. In considering whether the provisions of the statute are complied with, the Court must take into account the following matters in each case (1) whether the name, description and residence of the plaintiff are given so as to enable the authorities to identify the person serving the notice; (2) whether the cause of action and the relief which the plaintiff claims are set out with sufficient particularity; (3) whether a notice in writing has been delivered to or left at the office of the appropriate authority mentioned in the section; and (4) whether the suit is instituted after the expiration of two months next after notice has been served, and the plaint contains a statement that such a notice has been so delivered or left. In construing the notice the Court cannot ignore the object of the legislature, viz., to give to the Government or the public servant concerned an opportunity to reconsider its or his legal position. If on a reasonable reading of the notice the plaintiff is shown to have given the information which the statute requires him to give, any incidental defects or irregularities should be ignored. In the present case, the notice was served on 11th January, 1954 by Beohar Raghubir Singh. The notice stated the cause of action arising in favour of the joint family. The requirements as to cause of action, the name, description and residence of the plaintiff were complied with and the reliefs which the plaintiff claimed were duly set out in the notice. It is true that Beohar Raghubir Singh did not expressly describe himself as the karta. But reading the contents of the notice exhibit P 8 in a reasonable manner it appears to us that the claim of Beohar Raghubir Singh 960 was made on behalf of the joint family. It is true that the term of section 80 of the Civil Procedure Code must be strictly complied but that does not mean that the terms of the notice should be scrutinised in an artificial or pedantic manner. In Dhian Singh Sobha , Singh & Anr. vs The Union of India & Anr. (1) Bhagwati, J. observed in the course of his judgment : "We are constrained to observe that the approach of the High Court to this question was not well founded. The Privy Council no doubt laid down in Bhagchand Dagadusa vs Secretary of State (2) that the terms of this section should be strictly complied with. That does not however mean that the terms of the notice should be scrutinised in a pedantic manner or in a manner completely divorced from common sense. As was stated by Pollock C. B. in Jones vs Nicholls(3) We must impprt a little common sense into notices of this kind '. Beaumonth, C.J., also observed in Chandu Lal Vadilal vs Government of Bombay(4) "One must construe section 80 with some regard to common sense and to the object with which it appears to have been passed. ." As already pointed out, the suit was instituted in the present case by the divided members of Hindu joint family on 20th July, 1954. The notice had been given on 11th January, 1954 by Beohar Raghubir Singh who was the karta of the undivided joint family. In our opinion there was identity between the person giving a notice and the persons filing the suit because it must be deemed in law that each of the plaintiffs had given the notice under section 80 of the Civil Procedure Code through the karta Beohar Raghubir Singh. It is not disputed that the cause of action set out in the notice remained unchanged in the suit. It is also not said that the relief set out in the plaint is different from the relief set out in the notice. We are accordingly of the opinion that the notice given by the karta was sufficient to sustain the suit brought by the divided coparceners and the decision of the High Court on this point must be over ruled. The view that we have expressed is borne out by the judgment of this Court in State of Andhra Pradesh vs Gundugola Venkata Suryanarayan Garu(5). In that case, the Government of Madras applied the provisions of the Madras Estates Rent Reduction Act, 1947 to the lands in the village Mallindhapuram on the ground that the grant was of the whole village and hence an estate within the meaning of section 3 (2) (d)of the Madras Estates (1) ; (2) [1927] L.R. 54 I.A. 338. (3) ; , 363; ; ,150.(4) I.L.R. (5) ; 961 Land Act, 1908. The respondent and another person served a notice under section 80 of the Code of Civil Procedure upon the Government of the State of Madras in which they challenged the above mentioned notification and asked the Government not to act upon it. Out of the two persons who gave the notice, the respondent alone filed the suit. The trial court held that the original grant was not of the entire village and was not so confirmed or recognised by the Government of Madras and as it was not an "Estate" within the meaning of section 3 (2) (d) of the Madras Estates Land Act, the Madras Rent Reduction Act, 1947 did not apply to it. But the suit was dismissed on the ground that although two persons had given notice under section 80 of the Code of Civil Procedure, only one person had filed the suit. The High Court agreed with the trial court that the grant was not of an entire village but it also held that the notice was not defective and the suit was maintainable as it was a representative suit and the permission of the Court under 0.1, r. 8 had been obtained in this case. The High Court granted the respondent the relief prayed for 'by him. Against the order of the High Court the appellant appealed to this Court which dismissed the appeal holding that in the circumstances of the case there was no illegality even though the notice was given by two persons and the suit was filed by only one. If the Court grants permission to one person to institute a representative suit and if the person had served the notice under section 80, the circumstance that another person had joined him in serving the notice but did not join him in the suit, was not a sufficient ground for regarding the suit as defective. At page 953 of the Report Shah, J. observed as follows : "The notice in the, present suit was served by the plaintiff and Yegneswara Sastri. They raised a grievance about the notification issued by the Government of Madras on May 16, 1950; it was not an individual grievance of the two persons who served the notice but of all the Inamdars or agrahamdars. The relief for which the suit was intended to be filed was also not restricted to their personal claim. The notice stated the cause of action arising in favour of all the Inamdars, and it is not disputed that the notice set out the relief which would be claimable by all the Inamdars or on their behalf in default of compliance with the requisition. The plaintiff it is true alone filed the suit, but he was permitted to sue for and on behalf of ' all the Inamdars by an order of the Court unuder O. 1, r. 8 of the Code of Civil Procedure. The requirements as to the cause of action, the name, description and place of residence of the plaintiff was therefore 962 complied with and the relief which the plaintiff claimed was duly set out in the notice. The only departure from the notice was that two persons served a notice under section 80 informing the Government that proceedings would be started, in default of compliance with the requisition, for violation of the rights of the Inamdars, and one person only out of the two instituted the suit. That in our judgment is not a defect which brings the case within the terms of section 80". On behalf of respondent No. 1 reference was made, to the two decisions of the Judicial Committee in Vellayan Chettiar & Ors. vs Government of the Province of Madras and Anr.(1) and Government of the Province of Bombay vs Pestonji Ardeshir Wadia & Ors.(2) But the 'principle of these decisions has no bearing on the question presented for determination in the present case. In Vellayan Chettiar 's case(1) a notice was given by one plaintiff stating the cause of action, his name, description and place of his residence and the relief which he claimed although the suit was instituted by him and another. It was observed by the Judicial Committee: "The section according to its plain meaning requires that there should be in the language of the High Court of Madras 'identity of the person who issues the notice with the person who brings the suit ' : See Venkata Rangiah Appa Rao vs Secretary of State(3) and on appeal Venkata Rangiah Appa Rao vs Secretary of State (4). To hold otherwise would be to admit an implication or exception for which there is no jurisdiction" Two persons had sued for a declaration that certain lands belonged to them, and for an order setting aside the decision of the Appellate Survey Officer in regard to those lands. It was found that one alone out of the two persons had served the notice. The relief claimed by the two persons was personal to them and the right thereto arose out of their title to the land claimed by them. It was held by the Judicial Committee that without a proper notice under section 80 the suit could not be instituted for to hold otherwise would be to admit an, implication or exception for which there was no justification. In the other case, in Pestonji Ardeshir Wadia 's case(2) two trustees of a trust served a notice in October, 1933 upon the Government of Bombay under section 80 intimating that the trustees intended to institute a suit against the Government on the cause of action and for the relief set out (1) A.I.R. 1947 P.C. 197. (2) 76 I.A. 85. (3) I.L.R. Mad 416. (4) 963 therein. One of the trustees died before the plaint was lodged in court, and two more trustees were appointed in the place of the deceased trustee. Thereafter the two now trustees and the surviving trustee filed the suit out of which the appeal arose which was decided by the Judicial Committee. No notice was served on the Government on behalf of the two new trustees. The Judicial Committee accepted the view of the High Court that where there were three plaintiffs, the names and addresses of all of them must be given in the notice. Their Lordships observed that : "the provisions of section 80 of the Code are imperative and should be strictly complied with before it can be said that a notice valid in law has been served on the Government. In the present case it is not contended that any notice on behalf of plaintiffs 2 and 3 was served on the Government before the filing of the suit". It is clear that the principle of these two decisions of the Judicial Committee has no application in the present case because the material facts are different. We proceed to consider the next question arising in these appeals viz., whether the High Court was right in holding that the plaintiffs had established their title as raiyat sarkar with regard to 1/5th share in nazul plots Nos. 34/3, 33 and 171/1 mentioned in the Deputy Commissioner 's order dated 7th May, 1948 in Revenue Case No. 9/45 46. It was argued on behalf of defendant No. 1 that there was no evidence to show that the plaintiffs were in possession of the land from 1909 to 1932, and the plaintiffs had not established their title by prescription for the statutory period of 60 years. It was contended that the High Court had no justification for holding that the plaintiffs had established the title of "Raiyat Sarkar" and the finding of the High Court was not based upon any evidence. In our opinion, the argument put forward on behalf of defendant No. 1 is wellfounded and must be accepted as correct. In the settlement of the names of Amansingh and Thakurprasad were noted in the remarks column. But the column regarding tenancy right is definitely blank. The owner is shown in the Khasra as the State "Milkiat Sarkar". In the settlement of 189091 Amansingh Narpatsingh is again shown in the remarks column of the khata. But the column regarding any kind of tenancy right is again blank. It is clear that in the settlements of 1860 and 1890 91 the ownership of the land is recorded as that of the Government. The possession of the plaintiffs or of their ancestors could not be attributed to ownership or tenancy right of the property. In the settlement of 1909 10, exhibit P 3 there is no entry in the remarks column showing the possession of the ancestors of the plaintiffs. It was said on behalf of the plaintiffs that no (1) 76 I.A. 85. L11 Sup. C.I./69 12 96 4 notice was given to them of the proceedings of the. settlement of 1909 10. Even assuming that this allegation is correct, the entries of the khasra P 3 cannot be treated to be a nullity and of no effect. In any event, it was open to the plaintiffs to adduce other reliable evidence to prove their possession between the years 1909 to 1932. But the plaintiffs have failed to produce any such evidence. ln the nazul settlement of 1922 23 the tank was given new plot numbers 33, 34, 35,36, 37 and 171 and its area was recorded as 5.24 acres. In this settlement about 2 acres of land was found to be occupied by the Municipal Committee, Jabalpur. The land so found to be occupied was recorded in the possession of the Municipal Committee, Jabalpur and the remaining land was again recorded as "Milkiat Sarkar". There is no entry as regards the remaining land recording anybody 's possession in the. remarks column. Actually proclamations were made during this settlement and objections were invited as per exhibit ID 14. A date was fixed upto 31 8 1924 but no one came forward. The proclamation clearly recited that the vacant sites which were not in possession of anybody were not recognised as belonging to any person. It is impossible to believe that the plaintiffs or their ancestors were unaware of such a proclamation. Had they been in possession they would not have failed to make a claim. For the period after 1933 34 the plaintiffs produced account books to show that they exercised certain rights. Certain receipts were also proved but they also relate to a period after 1939. We have gone through the oral evidence produced by the plaintiffs and it appears to be unreliable. The result is that for the period 1891 till 1932 there is no reliable oral or documentary evidence to prove that the plaintiffs or their ancestors had any possession over the disputed land. On the contrary the disputed land i.e. Phoota Tal was always recognised as Milkiat Sarkar and the State Government was justified in holding that the order of the Deputy Commissioner dated 7th May, 1948 should be set aside. In the course of the argument reference was made by Mr. Gupte to the following passage in the Central Provinces Settlement Instructions (Reprint of 1953) page 213 "In dealing with proposed method of the settlement of titles it will be convenient in order to remove all causes for misapprehension among residents, to lay emphasis on the policy of Government in making these settlements. That policy was defined in the Chief Commissioner 's Resolution No. 502 B X dated the 19th October, 1917, in the Revenue & Scarcity Department, but its main principles will bear repetition. As it is not the intention of Government in making the settlement to disturb long possession, but only to 965 obtain an accurate record of the lands which are its property and to secure its right to any land revenue to which it may be entitled, long possession even without clear proof of a definite grant from Government will be recognised as entitled the holder to possession. In deciding what constitutes long possession in any individual town, regard will be had to the special circumstances of the place, and while this point will be dealt with more particularly in the Deputy Commissioner 's report, the following general principles will ordinarily be observed : (1) all occupants who are able to prove possession to any land prior to 1891 or such later date as may be fixed for each town, either by themselves or by a valid title from a previous holder, and all occupants who can prove a definite grant or lease from Government will be recorded as entitled to hold such land as against Government (paragraph 6 of the Resolution) On the basis of this passage it was argued that it was the duty of the settlement officer to treat the plaintiffs as having established their title because they were shown to be in possession in the settlement of the year 1890 91. We are unable to accept this argument as correct. The passage quoted above only applies to a case where the ownership of the land was unknown i.e. where possession is proved for a long time, but its original title could not be traced, and not to a case where the land is recorded as Government land. For the reasons expressed, we hold that the suit brought by the plaintiffs being Civil Suit No. 10 A of 1954 should be dismissed. Civil Appeal 386 of 1966 is accordingly dismissed and Civil Appeal 387 of 1966 is allowed with costs in favour of defendant No. 1 i.e. State of Madhya Pradesh. There will be one hearing fee. R.K.P.S. Civil Appeal 386/66 dismissed. Civil Appeal 387/66 allowed.

The appellant, who was at the time the Karta of a Hindu Joint Family, gave notice in January, 1954, to the respondent State under section 80 of the Civil Procedure Code. Thereafter a suit was filed in July, 1954, by which time a partition had taken place in the family. In view of this the appellant 's three grand sons were joined as plaintiffs in the suit the plaintiffs sought a declaration that three nazul plots in suit had been in the possession of the plaintiffs and their ancestors from time immemorial and their status was that of Raiyat Sarkar; so that an order of the State Government in the Survey and Settlement Department refusing to recognise their possession over the plots was wrong and ultra vires. Apart from contesting the suit on the merits, the respondent State contended that plaintiffs 2, 3 and 4 i.e. the appellant 's grand sons had no right to institute a suit because no notice under section 80 C.P.C. was given on their behalf. The trial court dismissed the suit. In an appeal, the High Court held that the appellant had lost the right to represent the joint family as karta at the time of institution of the suit because their had been severence of joint status and the notice served by him could not enure to the benefit of other plaintiffs. On the merits the High Court found that the plaintiffs had shown their possession for the statutory period of 6 years. On appeal to this Court, HELD: (1) The notice given by the appellant in January, 1954, was sufficient in law to sustain a suit brought by all the divided coparceners who must be deemed to be as much the authors of the notice as the Karta who was the actual signatory of the notice. There was substantial identity between the person giving the notice and the persons bringing the suit in the present case. [959 B] At the time of giving notice the appellant was admittedly the eldest member of the joint family and being a Karta he was entitled to represent the joint family in all its affairs. The cause of action had accrued at the time of giving of the notice and it was not necessary to give a second notice merely because there was a severance of the joint family, before 20th July, 1954, when the suit was actually instituted. [958 G H] Although the terms of section 80 C.P.C. must be strictly complied with, that does not mean that the terms of the notice 'should be scrutinised in an artificial or pedantic manner. [960 A] Dhian Singh Sobha Singh & Anr. vs The Union of India, ; , referred to, 956 State of Andhra Pradesh vs Gundugola Venkata Suryanarayan Garu, ; ; Vellayan Chettiar & Ors. vs Government of the Province of Madras and Anr. , A.I.R. 1947, P.C. 197; Government of the Province of Bombay vs Pestonji Ardeshir Wadia & Ors., 76 I.A. 85, distinguished. (2) On the merits, the appellants had failed to produce reliable oral or documentary evidence to prove that their ancestors had possession over the disputed land for many years. On the contrary this land was always recognised as Milkiat Sarkar and the respondent State Government was justified in holding it as such.

Special Leave Petition (Civil) Nos. 5228 and 5286 of 1977. From the Judgment and order dated 8 8 1977 of the Punjab and Haryana High Court in F.A.O. No. 81 and 82 of 1977. P. P. Malhotra and R. N. Dikshit for the Petitioner. section K. Gambhir for the Respondent. The order of the Court was delivered by KRISHNA IYER, J. An explosive escalation of automobile accidents, accounting for more deaths than the most deadly diseases, has become a lethal phenomenon on Indian Roads everywhere. The jural impact of this tragic development on our legislatures, courts and law enforcing agencies is insufficient, with the result that the poor, who are, by and large, the casualty in most of these cases, suffer losses of life or limb and are deprived of expeditious legal remedies in the shape of reasonably quantified compensation promptly paid and this, even after compulsory motor insurance and nationalisation of insurance business. The facts of this special leave petitions, which we dismiss by this order, raise two serious issues which constrain us to make a speaking order. The first deals with legal 696 rights, literacy in the case of automobile accidents and the processual modalities which secure redressal of grievances. The second relates to the consequences of negligence of counsel which misleads a litigant into delayed pursuit of his remedy. Medieval roads with treacherous dangers and total disrepair, explosive increase of heavy vehicles often terribly overloaded and without cautionary signals, reckless drivers crazy with speed and tipsy with spirituous potions, non enforcement of traffic regulations designed for safety but offering opportunities for systematised corruption and little else and, as a cumulative effect, mounting highway accidents demand a new dimension to the law of torts through no fault liability and processual celerity and simplicity in compensation claims cases. Social justice, the command of the Constitution is being violated by the State itself by neglecting road repairs, ignoring deadly overloads and contesting liability after nationalising the bulk of bus transport and the whole of general insurance business. The jurisprudence of compensation for motor accidents must develop in the direction of no fault liability and the determination of the quantum must be liberal, not niggardly since the law values life and limb in a free country in generous scales. In the present case, a doctor and his brother riding a motor cycle were hit, by a jeep driver and both were killed. The fatal event occurred in November 1971 but the Motor Accident Claims Tribunal delivered judgment five years later awarding sums of Rs. 80,000/ and Rs. 73,500/ to the two sets of claimants. The delay of five years in such cases is a terrible commentary on the judicial process. If only no fault liability, automatic reporting by the police who investigate the accident in a statutory proforma signed by the claimants and forward to the tribunal as in Tamil Nadu and decentralised empowerment of such tribunals in every district coupled with informal procedures and liberation from court fees and the sophisticated rules of evidence and burden of proof were introduced easy and inexpensive if the State has the will to help the poor who mostly die in such accidents law 's delays in this compassionate jurisdiction can be banished. Social justice in action is the measure of the State 's constitutional sensitivity. Anyway, we have made these observation hopefully to help focus the attention of the Union and the States. The nationalised insurance company appealed to the High Court against the award. We have no doubt that the finding on both the 697 culpability and the quantum as rendered by the trial court are correct. But the High Court dismissed the appeal on the ground of delay, dismissing the application of the petitioner for condonation under section 5 of the Limitation Act. The Accident Claims Tribunal pronounced its award on September, 15, 1976, after making the necessary computations and deductions. The appeal had to be filed on or before January 19, 1977 but was actually filed 30 days later. Counsel for the petitioner is stated to have made the mistake in the calculation of the period of limitation. He had intimated the parties accordingly with the result that the petitioner was misled into instituting appeal late. The High Court took the view that the lawyer 's ignorance about the law was no ground for condonation of delay. Reliance was placed on some decisions of the Punjab High Court and there was reference also to a ruling of the Supreme Court in ; The conclusion was couched in these words: "The Assistant Divisional Manager of the Company appellant is not an illiterate or so ignorant person who could not calculate the period of limitation. Such like appeals are filed by such companies daily. The facts of this case clearly show, as observed earlier, that the mistake is not bonafide and the appellant has failed to show sufficient cause to condone the delay. " We are not able to agree with this reasoning. A company relies on its Legal Adviser and the Manager 's expertise is in company management and not in law. There is no particular reason why when a company or other person retains a lawyer to advise it or him on legal affairs reliance should not be placed on such counsel. Of course, if there is gross delay too patent even for layman or if there is incomprehensible indifference the shield of legal opinion may still be vulnerable. The correct legal position has been explained with reference to the Supreme Court decision in a judgment of one of us in AIR 1971 Ker. 211: "The law is settled that mistake of counsel may in certain circumstances be taken into account in condoning delay although there is no general proposition that mistake of counsel by itself is always a sufficient ground. It is always a question whether the mistake was bonafide or was merely a device to cover an ulterior purpose such as laches 698 on the part of the litigant or an attempt to save limitation in an underhand way. The High Court unfortunately never considered the matter from this angle. If it had, it would have seen quite clearly that there was no attempt to avoid the Limitation Act but rather to follow it albeit on a wrong reading of the situation." "The High Court took the view that Mr. Raizada being an Advocate of 34 years ' standing could not possibly make the mistake in view of the clear provisions on the subject of appeals existing under Section 39(1) of the Punjab Courts Act and therefore, his advice to file the appeal before the District Court would not come to the rescue of the appellant under Section 5 of the Limitation Act. The Supreme Court upset this approach." "I am of the view that legal advice given by the members of the legal profession may sometimes be wrong even as pronouncement on questions of law by courts are some times wrong. An amount of latitude is expected in such cases for, to err is human and lay men, as litigants are, may legitimately lean on expert counsel in legal as in other departments, without probing the professional competence of the advice. The court must of course, see whether in such cases there is any taint of mala fides or element of recklessness or ruse. If neither is present, legal advice honestly sought and actually given, must be treated as sufficient cause when an application under Section 5 of the Limitation Act is being considered. The State has not acted improperly in relying on its legal advisers. " We have clarified the legal position regarding the propriety and reasonableness of companies and other persons relying upon legal opinion in the matter of computation of limitation since it is a problem which may arise frequently. If Legal Adviser 's opinions are to be subjected by company managers to further legal scrutiny of their own, an impossible situation may arise. Indeed Government, a large litigant in this country, may find itself in difficulty. That is the reason why we have chosen to explain at this length the application of section 5 vis a vis counsel 's mistake. This does not automatically secure a visa for the petitioner into this Court under Article 136. There must be manifest injustice or gross misappreciation or perversity in factual findings. We have 699 examined the merits of the matter to the extent available on the record and have heard counsel for the petitioner. He has hardly convinced us that the merits of the case call for any intervention at all. In this view we are constrained to dismiss the Special Leave Petitions now that we have expressed ourselves or both the points dealt with above. S.R. Petitions dismissed.

A doctor and his brother riding a motor cycle were hit by a jeep driver and both were killed in November 1971, but the Motor Accident claims Tribunal delivered judgment on 5 9 1976 five years later awarding sums of Rs. 80,000/ and Rs. 73,500/ to the two sets of claimants. The appeal in this case had to be filed on or before 19 1 77 but was actually filed 30 days later with an application for condonation under section 5 of the Limitation Act on the ground of Counsel 's mistake in the calculation of the period of limitation. The High Court dismissed the appeal and the application. Dismissing the special leave petitions, the Court ^ HELD: A company relies on its Legal Adviser and the Manager 's expertise is in company management and not in law. There is no particular reason why when a company or other person retains a lawyer to advise it or him on legal affairs reliance should not be placed on such counsel. Of course, if there is gross delay too patent even for layman or if there is in comprehensible indifference the shield of legal opinion may still be vulnerable. If legal Adviser 's opinions are to be subjected by company managers to further legal scrutiny of their own, an impossible situation may arise. Indeed Government, a large litigant in this country, may find itself in difficulty. [697E F, 698 F G] This does not automatically secure a visa for the petitioner into this Court under article 136. There must be manifest injustice or gross misappreciation or perversity in factual findings. [698H] State of Kerala vs Krishna Kurup Madhava Kurup, A.I.R 1971 Kerala 211; approved. State of West Bengal vs Howrah Municipal Corporation, ; ; referred to. Observations 1. The jurisprudence of compensation for motor accidents must develop in the direction of no fault liability and the determination of the quantum must be liberal, not niggardly since the law values life and limb in a free 695 country in generous scales. Social justice, the command of the Constitution is being violated by the State itself by neglecting road repairs, ignoring deadly over loads and contesting liability after nationalising the bulk of bus transport and the whole of general insurance business. [696C D] 2. Medieval roads with treacherous dangers and total disrepair, explosive increase of heavy vehicles often terribly overloaded and without cautionary signals, reckless drivers crazy with speed and tipsy with spirituous potions, non enforcement of traffic regulations designed for safety but offering opportunities for systematised corruption and little else and, as a cumulative effect, mounting highway accidents, demand a new dimension to the law of torts through no fault liability and processual celerity and simplicity in compensation claims cases. [696B C] 3. If only no fault liability, automatic reporting by the police who investigate the accident in a statutory proforma signed by the claimants and forwarded to the tribunal as in Tamil Nadu and decentralised empowerment of such tribunals in every district coupled with informal procedures and liberation from court fees and the sophisticated rules of evidence and burden of proof were introduced easy and inexpensive, if the State has the will to help the poor who mostly die in such accidents law 's delays in this compassionate jurisdiction can be banished. Social justice in action is the measure of the State 's constitutional sensitivity. [696F G]

Civil Appeal No. 1001 Of 1977. Appeal by Special Leave from the Judgment and order dated 24 2 77 of the Bombay High Court in Sales Tax Reference No. 28 of 1975. Hemendra K. Shah, M. H. Gami, P. H. Parekh, C. B. Singh and M. Mudgal for the Appellant. section T. Desai and M. N.Shroff for the Respondent. The Judgment of the Court was delivered by BHAGWATI, J. This appeal by special leave raises the vexed question whether a particular contract is a contract of sale or a con tract of work and labour. This has always been a difficult question, because most of the cases which come before the courts are border line cases and the decisions given by courts are by no means uniform. But so far as the present case is concerned, it does not present any serious difficulty and is comparatively free from complexity or doubt for there is a decision of this Court which is directly applicable and is determinative of the controversy between the parties. The assesses who is the appellant before us is a private limited company carrying on business as engineers, contractors, manufacturers and fabricators and in the course of its business, it entered in to a contract dated 28th June, 1972 with M/s C. M. Shah & Co. (P) Ltd. (hereinafter referred to as the Company) for fabrication, supply, 647 erection and installation of Sentinel 's Pull and Push type and reduction Gear type rolling Shutters in sheds Nos. 3 and 4 of the Sidheswar Sahakari Sakar Karkhana belonging to the Company. The detailed specifications of the Rolling Shutters were given in the contract and the price was stipulated to be Rs. 7/ per sq. ft. and rft. for Pull and Push Type Rolling Shutters and Rs. 9/ per sq. ft. and rft. for the Reduction Gear Type Rolling Shutters, the price in both cases being inclusive of "erection at site". The contract was expressed to be subject to the terms and conditions set out in a printed form and there were also certain special terms and conditions which were specifically written out in the contract. Since considerable reliance was placed on behalf of the Revenue on some of the printed terms and conditions of the contract, we shall set them out in extenso: "2. Once the delivery of the goods is effected, rejection claims cannot be entertained. All erection work shall be carried out at Customer 's own risk and no claim for incidental structural breakages, damages to the property of the customers or others shall be entertained. All masonry works require before and or after erection shall be carried out by customer 's own cost. All payment shall be on overall measurements only. Customer desiring to check the correctness of the overall measurements shall notify their intention in advance and shall get the measurements checked before installation. No dispute on this ground shall be entertained once the erection is completed. Terms of Business: 50% advance with the order and the balance against delivery of the goods ex work prior t erection, or against through Banks. " The special terms and conditions provided that the actual transportation charges would be in addition to the price stipulated in the con tract and the delivery would be 6/8 weeks ex works from the date of receipt of the final confirmation of the order. The terms of payment also formed part of the special terms and conditions and they provided "25% advance, 65% against delivery and remaining 10% after completion of erection and handing over of shutters to the satisfaction" of the Company. The assesses carried out its part of the contract and manufactured the two types of Rolling Shutters according to the specifications provided in the contract and erected and 648 installed them in sheds Nos. 3 and 4 of the Sidheswar Sahakari Sakar Karkhana. It does not appear from the record as to when the bill relating to the contract was submitted by the assesses to the Company, but it was dated 19th August 1972 and presumably it was sent by the assessee after the fabrication of the two types of Rolling Shutters was completed, but before they were erected and installed at the premises of the Company. Since the assessee entertained doubt as to whether the contract was a contract for sale or a contract for work and labour, the assessee made an application dated 16th September 1972 to the Commissioner of Sales Tax for determining this question, for on the answer to it depended the taxability of the amount to be received by the assessee against fulfilment of the contract. The deputy Commissioner of Sales Tax, who heard the application, took the view that the contract was a contract for sale of the two types of Rolling Shutters and the work of erection and installation was merely incidental to the sale and the assessee was, therefore, liable to pay sales tax on 95% of the amount receivable by it under the contract, since that represented the sale price of the Rolling Shutters, the remaining 5% being attributable to the work and labour involved in erection and installation. The assessee, being aggrieved by the order passed by the Deputy Commissioner of Sales Tax, preferred an appeal to the Sales Tax Tribunal, but the Sales Tax Tribunal also took the same view and held that the transaction of supply of the two types of Rolling Shutters embodied in the contract amounted to a sale but so far as the price was concerned, the Sales Tax Tribunal observed that since 90% of the amount under the contract was payable at the stage of delivery, that should be taken to be the sale price and the balance of 10% should be held to be "the charges for the work". The contract was thus held by the Sales Tax Tribunal to be a composite contract consisting of two parts, one for sale of the two types of Rolling Shutters and the other for execution of the work of erection and installation. This led to an application for a reference by the assessee and on the application, the following question of law was referred for the opinion of the High Court: "Whether having regard to the facts and circumstances of the case the Tribunal was justified in law in coming to the conclusion that the contract in question essentially consisted of two contracts, one for supply of materials for money consideration and the other for service and labour done. " The High Court made a detailed and exhaustive review of the decided cases and held, agreeing with the Sales Tax Tribunal, that the con tract between the assesses and the Company "was a divisible con 649 tract which essentially consisted of two contracts, one for the supply A of shutters of the aforesaid two types for money and the other for service and labour", and accordingly answered the question in favour of the Revenue and against the assesses. The assesses thereupon brought the present appeal with special leave obtained from this Court. Now the question whether a particular contract is a contract for sale or for work and labour is always a difficult question and it is not surprising to find the taxing authorities divided on it. The difficulty, however, lies not in the formulation of the tests for determining when a contract can be said to be a contract for sale or a contract ' for work and layout, but in the application of the tests to the facts of the case before the Court. The distinction between a contract for sale and a contract for work and labour has been pointed out by this Court in a number of decisions and some tests have also been indicated by this Court, but it is necessary to point out that these tests are not exhaustive and do not lay down any rigid or inflexible rule applicable D alike to all transactions. They do not give any magic formula by the application of which we can say in every case whether a contract is a contract for sale or a contract for work and labour. I`hey merely focus on one or the other aspect of the transaction and afford some guidance in determining the question, but basically and primarily, whether a particular contract is one for sale of goods or for work and labour depends upon the main object of the parties gathered from the terms of the contract, the circumstances of the transaction and the custom of the trade. It may be pointed out that a contract where not only work is to be done but the execution of such work requires goods to be used may take one of three forms. The contract may be for work to be done for remuneration and for supply of materials used in the execution of the work for a price: it May be a contract for work in which the use of materials is necessary or incidental to the execution of the work; or it may be a contract for supply of goods where some work is required to be done as incidental to the sale. Where a contract is of the first type, it is a composite contract consisting essentially of two contracts, one for the sale of goods and the other for work and labour. The second type of contract is clearly a contract for work and labour not involving sale of goods, while the third type is a contract for sale where the goods are sold as chattels and some work is undoubtedly done, but it is done only as incidental to the sale. No difficulty arises where a contract is of the first type because it is 650 divisible and the contract for sale can be separated from the con tract for work and labour and the amount payable under the compo site contract can be apportioned between the two. The real difficulty arises where the contract is of the second or third type, because in such a case it is always a difficult and intriguing problem to decide n in which category the contract falls. The dividing line between the two types of contracts is some what hazy and "thin partitions do their bounds divide". But even so the distinction is there and it is very much real and the Court has to perform at times the ingenious exercise of distinguishing one from the other. The distinction between a contract for sale and a contract for work and labour has been pointed out in Halsbury 's Laws of England Third Edition, Volume 34, Article 3 at page 6 in the following words: "A contract of sale is a contract whose main object is the transfer of the property in, and the delivery of the possession of, a chattel as a chattel to the buyer. Where the main object of work undertaken by the payee of the price is not the transfer of a chattel qua chattel, the contract is one for work and labour. The test is whether or not the work and labour bestowed end in anything that can properly become the subject of sale: neither the ownership of the materials, nor the value of the skill and labour as com pared with the value of the materials is conclusive, although such matters may be taken into consideration in determining, in the circumstances of a particular case, whether the contract is in substance one for work and labour or one for the sale of a chattel. " The primary test is whether the contract is one whose main object is transfer of property in a chattel as a chattel to the buyer, though some work may be required to be done under the contract as ancillary or incidental to the sale or it is carrying out of work by bestowal of labour and service and materials are used in execution of such work. A clear case of the former category would be a contract for supply of airconditioner where the contract may provide that the supplier will fix up the airconditioner in the premises. Ordinarily a separate charge is provided in such contract for the work of fixing up but in a given case it may be included in the total price. Such a contract would plainly be a contract for sale because the work of fixing up the airconditioner would be incidental to the sale. Then take a contract for constructing a building where considerable quantity of materials are required to be used in the execution of the work. This 651 would clearly be a contract for work and labour and fall within the latter category. But, as we pointed out earlier, there may be, and indeed as the decided cases show, there are a large number of cases which are on the border line and it is here that difficulty is often experienced in the application of this primary test. To resolve this difficulty, the courts have evolved some subsidiary tests. One such test is that formulated by this Court in Commissioner of Madhya Pradesh vs Purshottam Prentji(1), where it has been said: "The primary difference between a contract for work or service and a contract for sale of goods is that in the former there is in the person performing work or rendering service no property in the thing produced as a whole. In the case of a contract for sale, the thing produced as a whole has individual existence as the sole property of the party who produced it, at some time before delivery, and the property therein passes only under the contract relating thereto to the other party for price. " This was the test applied by this Court in the State of Rajasthan vs Man Industrial Corporation(2) for holding that a contract for providing and fixing four different types of windows of certain size according to "specifications, designs, drawings and instructions" set out in the contract was a contract for work and labour and not a contract for sale. This Court, speaking through Shah, J., analysed the nature of the contract and pointed out: "The contract undertaken by the respondent was to prepare the window leaves according to the specifications and to fix them to the building. There were not two contracts on. , of sale and another of service. "Fixing" the windows to the building was also not incidental or subsidiary to the sale, but was an essential term of the contract. The window leaves did not pass to the Union of India under the terms of the contract as window leaves. Only on the fixing of the windows as stipulated, the contract could be fully executed and the property in the windows passed on the completion of the work and not before. " The contract was not for transfer of property in the window leaves as window leaves. It was a contract for providing and fixing windows and windows could come into existence only when the window leaves were fixed to the building by bestowing labour and skill. It was, therefore, held to be a works contract. The same reasoning was applied by this Court in State of Rajasthan vs Nenu Ram(3) for holding that a contract for supply and (1) 26 S.T.C. 38 (2) [1969] 24 S.T.C. 349 (S.C.) (3) 26 S.T.C. 268 652 fixing of wooden doors and windows with sashes and frames and wooden chawkhats in the Police Lines building was a contract for work and labour. Let us, therefore, apply this test in order to deter mine what is the nature of the contract in the present case: is it a contract for sale or a contract for work and labour ? Now, it is clear that the contract is for fabrication, supply, erection and installation of two types of Rolling Shutters and not only are the Rolling Shutters to be manufactured according to the specifications, designs, drawings and instructions provided in the contract, but they are also to be erected and installed at the premises of the Company. The price stipulated in the contract is inclusive of erection and installation charges and the contract does not recognise any dichotomy between fabrication and supply of the Rolling Shutters and their erection and installation so far as the price is concerned. The erection and installation or the Rolling Shutters is as much an essential part of the contract as the fabrication and supply and it is only on the erection and installation of the Rolling Shutters that the contract would be fully executed. It is necessary, in order to understand the true nature of the contract, to know what is a Rolling Shutter and how it is erected and installed in the premises. It is clear from the statement exhibit to the petition for special leave, which statement was submitted before the Sales Tax Tribunal and the correctness of which was at no time disputed before us, that a Rolling Shutter consists of five components parts. namely, two brackets welded with 'U ' type clamps, one pipe shafting with high tension springs Shutter screen made out of 20G/18G thickness of metal as required by the customer, side guides or guide channels welded with iron clamps to the bottom with provision of locking arrangements with welded handles and tope cover. These component parts are fabricated by the manufacturer and taken to the site and fixed on the premises and then comes into existence a Rolling Shutter as an identifiable commercial article. The method of fixing the component parts in position in the premises so as to bring into existence the commercial article known as a Rolling Shutter is fully described in the statement Ext. C. First of all, certain masonry work is required to be done by the customer and that has to be carried out by the customer at his own cost. Then the brackets are fixed on either side on the top portion of the opening by grouting holes on the masonry walls and inserting the bolts. Thereafter the holes are filled with cement and the pipe shafting with high tension springs is inserted into the 'U ' clamps of the brackets. Then the iron curtain of the Rolling Shutter is hoisted over the high tension springs and tightened by means of nut bolts and guide channels are then fixed 653 by grouting masonry walls where side guide clamps are to be fixed After fixing the clamps to the grouted portion of the wall, the same is plastered and then the iron curtain of the shutter is lowered through the guide channels to operate the shutter manually up and down. The Rolling Shutter is then 'born ' and it becomes a permanent fixture to the premises. The Indian Standards Specification Book for Metal Rolling Shutter and Rolling Grills also gives a similar procedure for fixing the component parts of the Rolling Shutter on the premises It clearly shows that a rolling shutter consists of curtain, lock plates, guide channels, bracket plates, rollers, hood covers, gears, worms, fixing bolts, safety devices, anchoring rods, central hasp and staple. Each guide channel has to be provided with a minimum of three fixing cleats or supports for attachment to the walls or column by means of bolts or screws. The guide channels are further attached to the jambs, plumb either in the overlapping fashion, projecting fashion or embedded in grooves, depending on the method of fixing. All these operations take place at the site after despatch of the component parts of the rolling shutter. Hood cover is fixed in a neat manner and supported at the top at suitable intervals. This also has to be done at the site. Item 11.1 of the specifications shows that the rolling shutter curtain and bottom lock plate are interlocked together and rolled in one piece, but the other parts like guide channels, bracket plates, rollers, etc., are despatched separately. Item ]2.] shows that all the rolling shutters are erected by the manufacturer or his authorised representative in a sound manner, so as to afford trouble free and easy operation, long life and neat appearance". It will, thus, be seen that the component parts do not constitute a rolling shutter until they are fixed and erected on the premises. It is only when the components are fixed on the premises and fitted into one another that they constitute a rolling shutter as a commercial article and till then they are merely component parts and cannot be said to constitute a rolling shutter. The erection and installation of the rolling shutter cannot, therefore, be said to be incidental to its manufacture and supply. It is a fundamental and integral part of the contract because without it the rolling shutter does not come into being. The manufacturer would undoubtedly be the owner of the component parts when he fabricates them, but at no stage does he become the owner of the rolling shutter as a unit so as to transfer the property in it to the customer. The rolling shutter comes into existence as a unit when the component parts are fixed in position on the premises and it becomes the property of the customer as soon as it comes into being. There is no transfer of property in the rolling shutter by the manufacturer to the customer as a chattel. It is 654 essentially a transaction for fabricating component parts and fixing them on the premises so as to constitute a rolling shutter. The contract is thus clearly and indisputably a contract for work and labour and not a contract for sale. The Revenue leaned heavily on the provision in the contract that the delivery of the goods shall be ex works and once the delivery of the goods is effected, no claim for rejection shall be entertained and relying on this provision, the Revenue contended that under the contract the rolling shutters were to be delivered by the assessee to the company ex works, that is, at the works of the assessee and the property in the rolling shutters passed to the company as soon as they were delivered and hence it was a contract for sale. We do not think this contention of the Revenue has any force and it must be rejected. It is clear from the above discussion that a rolling shutter as a complete unit is not fabricated by the manufacturer in his factory but he manufactures only the component parts and it is only when the component parts are fitted into position and fixed on the premises that a rolling shutter comes into being as a commercial article and, therefore, when the contract provides that the delivery of the goods shall be ex works, what is obviously meant is that the component parts shall be delivered to the company at the works of the assessee and once they are delivered, they shall not be liable to be rejected by the company. But that does not mean that as soon as the component parts are delivered to the company, the contract is Fully executed. The component parts do not constitute a rolling shutter and it is the obligation of the assessee under the contract to fix the component parts in position on the premises and erect and instal a rolling shutter. The execution of the contract is not completed until the assessee carries out this obligation imposed upon it under the contract and a rolling shutter is erected and installed at the premises. It is true that clause (12) of the printed terms and conditions provides that 50% of The amount under the contract shall be paid as advance and the balance against delivery of the goods ex works but this clause is clearly overridden by the special term specifically written out in the contract that 25% of the amount shall be paid by way of advance, 65% against delivery and the remaining 10% after completion of erection and handing over of the rolling shutters to the satisfaction of the company. This provision undoubtedly stipulates that 90% of the amount due under the contract would be paid before erection and installation of the rolling shutters has commenced, but that would not make it a contract for sale of rolling shutters. The true nature of the contract cannot depend on the mode of payment of the amount provided in the contract. The parties may provide by mutual agreement that the 655 amount stipulated in the contract may be paid at different stages of the execution of the contract, but that cannot make the contract one for sale of goods if it is otherwise a contract for work and labour. It may be noted that the contract in State of Madras vs Richardson & Cruddas Ltd.(1) contained a provision that the full amount due under the contract shall be paid in advance even before the execution of the B, work has started and yet the Madras High Court held, and that view was affirmed by this Court, that the contract was a works contract. The payment of the amount due under the contract may be spread over the entire period of the execution of the contract with a view either to put the manufacturer or contractor in possession of funds for the execution of the contract or to secure him against any risk of non payment by the customer. That cannot have any bearing on the determination of the question whether the contract is one for sale or for work and labour. Here the last portion of the special term in regard to payment of the amount due under the contract also makes it clear that it is only when the component parts are fitted into position in the premises that t a rolling shutter would be complete and this rolling shutter has to ii be to the satisfaction of the company and it is then to be handed over by the assessee to the company and then, and then alone, would the remaining 10% be payable by the company to the assessee. It is, therefore, clear that the contract is one single and indivisible contract and the erection and installation of the rolling shutter is as much a fundamental part of the contract as the fabrication and supply. We 'j must, in the circumstances,.hold, driven by the compulsion of this logic, that the contract was a contract for work and labour and not a contract for sale. This view which we are taking is completely sup ported by the decision of this Court in Vanguard Rolling Shutters & Steel Works vs Commissioner of Sales Tax, U.P.(2) to which one of us (Bhagwati, J.) was a party. We accordingly allow the appeal, set aside the judgment of the High Court and hold that the contract in the present case was a con tract for work and labour and not a contract for sale and conformably G with this view, we answer the question referred by the Sales Tax Tribunal in favour of the assessee and against the Revenue. The State will pay the costs of the assessee throughout. S.R. Appeal allowed. (1) 21 S.T.C. 245. (2) 39 S.T.C. 372.

The appellant assessee entered into a contract dated 28th June, 1972 for fabrication, supply erection and installation of Sentinel 's Pull and Push type and Reduction Gear type rolling shutters in sheds Nos. 3 and 4 of the Sidheshwar Sahakari Sakar Karkhana belonging to M/s. C. M. Shah & Co. (P) Ltd as per the terms and conditions of the contract. The special terms and conditions provided that the actual transportation charges would be in addition to the price stipulated in the contract and the delivery would be 6/8 weeks, ex works from the date of receipt of the final confirmation of the order. The terms of payment also formed part of the special terms an(l conditions and they provided 25% advance, 65% against delivery and remaining 10% after completion of erection and handing over of shutters to the satisfaction of the company. The assessee carried out its part of the contract by erecting and installing the rolling shutters. Since the assessee entertained doubt as to whether the contract was a contract for sale or a contract for work and labour, the assessee made an application dated 16 9 72 to the Commissioner of Sales Tax for determining this question. The Deputy Commissioner of Sales Tax took the view that the contract was a contract for sale of rolling shutters and the work of erection and installation was merely incidental to the sale and the assessee was therefore liable to pay sales tax on 95% of the amount receivable by it under the contract. In appeal the Sales Tax Tribunal held the contract to be a composite contract consisting of two parts, one for sale of the rolling shutters and the other for execution of the work of erection and installation. The High Court on a reference agreed with the tribunal and answered it in favour of the Revenue. Allowing the appeal by special leave the Court ^ HELD: ( 1 ) The contract was a contract for work and labour and not a contract of sale. The contract is one single and indivisible contract and the erection and installation of the rolling shutter is as much a fundamental part of the contract as the fabrication and supply. [655 D E] Vanguard Rolling Shutters & Steel Works vs Commissioner of Sales Tax, U.P. 39 STC 372 applied. Various component parts do not constitute a rolling shutter until they are fixed and erected on the premises. It is only when the component parts are fixed on the premises and fitted into one another that they constitute a rolling shutter as a commercial article and till then they are merely component parts and cannot be said to constitute a rolling shutter. The erection and installation of the rolling shutter cannot, therefore, be said to be incidental to its manufacture and supply. It is a fundamental and integral part of the contract because without it the rolling shutter does not come into being. The manufacturer would undoubtedly be the owner of the component parts When he fabricates them, but at no stage does he become the owner of the 645 rolling shutter as a unit so as to transfer the property in it to the customer. The rolling shutter comes into existence as a unit when the component parts are fixed in position on the premises and it, becomes the property of the customer as soon as it comes into being. There is no, transfer of property in the rolling shutter by the manufacturer to the customer as a chattel. It is essentially a transaction for fabricating component parts and fixing them on the premises so as to constitute a rolling shutter. The contract is thus clearly and indisputably a contract for work and labour and not a contract for sale. [653 H, 654 A] (2) Whether a particular contract is one for sale of goods or for work and labour depends upon the main object of the parties gathered from the terms of the contract, the circumstances of the transaction and the custom of the trade. [649 D E] (3) A contract where not only work is to be done but the execution of such work requires goods to be used may take one of three forms. The contract may be for work to be done for remuneration and for supply of materials used in the execution of the work for a price: it may be a contract for work in which the use of materials is accessory or incidental to the execution or the work; or it may be a contract for supply of goods where some work is required to be done as incidental to the sale. Where a contract is of the first type, it is a composite contract consisting essentially of two contracts, one for the sale of goods and the other for work and labour. The second type of contract is clearly a contract for work and labour not involving sale of goods. while the third type is a, contract for sale where the goods re sold as chattels and some work is undoubtedly done, but it is done only as incidental to the sale. The primary test is whether the contract is one whose main object is transfer of property in a chattel as a, chattel to the buyer, though some work may be required to be done under the contract as ancillary or incidental to the sale or it is carrying out of work by bestowal of labour and service and materials are used in execution of such work. [649 F H, 650 F G] (4), To resolve the difficulties experienced in application of the primary test courts have evolved some subsidiary tests. one such test may be formulated as follows: "The primary difference between a contract for work or service and a contract for sale of goods is that in former there is in the person performing work or rendering service no property in tho thing produced as a whole . In the case of a contract for sale, the thing produced as a whole has individual existence as the sole property of the party who produced it, at some time before delivery, and the property therein passes only under the contract relating thereto to the other party for price". [651 B C] Commissioner of Madhya Pradesh vs Purushottam Premji 26 S.T.C. 38; State of Rajasthan vs Man Industrial Corporation, 24 S.T.C. 349; State of Rajasthan vs Nenu Ram, 26 STC 268; referred to. (5) The provision "ex works delivery" in the contract does not make the contract a contract for sale. A rolling shutter as a complete unit is not fabricated by the manufactures in his factory but he manufactures only the component parts and it is only when the component parts are fitted into position and fixed on the premises that a rolling shutter comes into being as a commercial article and, therefore, when the contract provides that the delivery af the goods shall be ex works, what is obviously meant is that the com 646 ponent parts shall be delivered to the company at the works of the assessee and once they are delivered, they shall not be liable to be rejected by the company. But that does not mean that as soon as the component parts are delivered to the company, the contract is fully executed. The component parts do not constitute a rolling shutter and it is the obligation of the assessee under the contract to fix. the component parts in position on the premises. and erect and instal a rolling shutter. The execution of the contract is not completed until the assessee carried out this obligation imposed upon it under the contract and a rolling shutter is erected and installed at the premises. [654 C F] (6) The true nature of The contract cannot depend on the mode of payment of the amount provided in the contract. The parties may provide by mutual agreement that the amount stipulated in the contract may be paid at different stages of the execution of the contract, but that cannot make the contract one for sale of goods if it is otherwise a contract for work and labour. The payment of the amount due under the contract may be spread over the entire period of the execution of the contract with view either to put the manufacturer or contractor in possession of funds for the execution of the contract or to secure him against any risk of non payment by the customer. That cannot have any bearing on the determination of the question whether the contract is one for sale or for work and labour. [654 H, 655 A C] State of Madras vs Richardson & Cruddes Ltd., 21 STC 245 referred to.

ed Case No.7 of 1987 In Transfer Petition No. 390 of 1986. Dr. Y.S Chitale, T .U. Mehta and R.P. Kapur for the Petitioners N.N. Keshwani, R.N. Keshwani, Ms. Madhu Moolchandani and K. Rajendra Chodhary for the Respondents. The Judgment of the Court was delivered by SEN, J. The principal question in controversy in this petition under article 226 of the Constitution filed by the Hindustan Petroleum Corporation Ltd., a Government of India undertaking, which has been transferred from the High Court of Bombay to this Court under article 139A Of the Constitution, is whether the petitioner is entitled to the protection of PG NO 48 section 15A of the Bombay Rent, Hotel and Lodging House Rates Control Act, 1947, introduced by Maharashtra Act No. 17 of 1973 read with section 5 of the Esso (Acquisition of Undertakings in India) Act, 1974. Put very briefly, the essential facts are these. The Esso Eastern Inc., a company organised and existing under the laws of the State of Belaware, U.S.A., was carrying on, in India the business of distributing and marketing petroleum products manufactured by Esso Standard Refining Company of India Ltd., and Lube India Ltd. and had, for that purpose, established places of business in India. The company had taken several fiats in the Metropolitan City of Greater Bombay and elsewhere for accommodating their employees including Flat No.35 in Block No.8 in the housing colony known as Shyam Niwas situate at Warden Road, now called Bhulabhai Desai Road, Bombay on leave and licence basis for a period of one year in terms of an agreement in writing dated 26th November, 1968 from Smt. Nanki M. Malkani. respondent No. 2 herein. On 4th December. 1968 respondent No 1 Shyam Co operative Housing Society Ltd. passed a Resolution admitting petitioner No. 2 T.J. Nansukhani, and employee of the company as a nominal member of the society though he was not the licensee The company on 16th January, 1970 exercised the option of renewal of the licence for another year i.e. till 30th November 1970. On 29th November, 1971, respondent No. 2 Smt. Nanki M. Malkani addressed a letter to the company intimating that the agreement for leave and licence was due to expire on that date and accordingly the period of the said licence was renewed, yearly, from time to time to time years on the expiry of each term of licence i.e. on 30th November, 1972 and 30th November, 1972 and 30th November, 1973. In the meanwhile, the State Legislature of Maharashtra enacted Act No. 17 of 1973. The amendment Act also made consequential changes to which we shall presently refer. Undoubtedly, the Esso Standard Inc. was in occupation of the flat in question as on 1st February, 1973 and thus acquired the status of a tenant under section 15A of the Act. On 13th March. the Esso (Acquisition of Undertakings in India) Act, 1974 was brought into force. As from that date. the Central Government by virtue of sub section (1) of section 5 of the Act was deemed to be the tenant of the flat in question. On 9th April. 1975, respondent No. 2 Smt. Nanki M. Malkani sent a communication to the petitioner affirming the terms and conditions of the licence. Again, on 24th March 1975, she addressed a letter confirming that she had given the aforesaid flat to Esso Eastern Inc. in December 1968 on leave and licence basis and the petitoner PG NO 49 being the successor in tittle of that company had been occupying the flat as licensee on the same terms and conditions. On 11th September, 1980, the society passed a resolution calling upon the petitioner Corporation to vacate the said premises and directing that respondent No. 2 Smt. Nanki M. Malkani should herself occupy the flat. Upon failure of the Corporation to vacate the premises, the society on 15th September, 1980 filed an application under section 9I(I) of the Maharashtra Co operative Societies Act, 1960 before the 3rd Co operative Court, Bombay for eviction of the petitioner and its employee. On 7th January, 1981, petitioner No. I permitted another employee to occupy the flat. The 3rd Co operative Court, Bombay after consideration of the evidence adduced by the parties, by its well reasoned judgment dated 6th June, 1983 dismissed the claims of the society holding inter alia that Esso Eastern Inc. was in occupation of the flat in dispute under a subsisting licence as on 1st February, 1973 and thus got the protection available to a licensee under section I5A of the Bombay Rent Act and the said protection could not be taken away merely by the society making a claim for eviction under section 91(I) of the Act. Aggrieved, the society went up in appeal to the Maharashtra State Co operative Appellate Court which by its judgment dated 17th March, 19X4 allowed the appeal and decreed the claim of the society requiring petitioner No. 1 Hindustan Petroleum Corporation Ltd. to vacate Flat No. 35 in Block No. 8 of the society building with a further direction that respondent No. 2 Smt. Nanki M. Malkani should occupy the flat in question herself. I hereupon, the petitioner moved the High Court under article 226 of the Constitution for an appropriate writ, direction or order for quashing the impugned judgment and order passed by the Maharashtra State Co operative Appellate Court. This petition mainly raises three questions. They are [1] Whether the Hindustan Petroleum Corporation Limited being a successor in interest of the Esso Eastern Inc. the licensee, was entitled to the protection of section 15A of the Bombay Rents Hotel and Lodging House Rates Control Act, 1947, introduced by the Maharashtra Act No. 17 of 1973, having regard to the fact that the Esso Eastern Inc. was in occupation of the flat in dispute under a subsisting licence as existing on 1st February 1973 (2) Whether the Maharashtra State operative Appellate Court was justified in holding that a licence being purely personal. upOn acquisitiOn of the Esso Eastern Inc. by the Central Government under the Esso (Acquisition of Undertakings in India) Act, 1974, the agreement for leave and licence as existing on the appointed day i.e. 13th March, 1974 under section 2 (a) of that Act, stood extinguished and therefore the right acquired by Esso PG NO 50 Eastern Inc. under section 15A of the Bombay Rent Act of being a protected tenant in relation to the flat in question, could not stand transferred to, or be vested in, the Central Government under section 3 of the Acquisition Act. Was it also justified in holding that although the Esso Eastern Inc. was deemed to be a tenant of the disputed flat under section 15A of the Bombay Rent Act, the Central Government could not be deemed to have become the tenant thereof under sub section (I) of section 5 of the Acquisition Act merely because prior to the enactment of section ISA of the Bombay Rent Act the premises were held by Esso Eastern Inc. on an agreement for leave and licence? (3) Whether a claim for ejectment of an occupant of a flat in a cooperative housing society having been let into possession of the premises under an agreement for leave and licence executed between it and a member of the society, by virtue of its employee having become a nominal member thereof, is a 'dispute touching the business of the society ' within the meaning of section 9 (1) of the Act. In the view that we take on the first two questions, there is no need to answer the third which is already covered by the decision of this Court in O N. Bhatnagar vs Smt. Rukibai Narsindas & Ors. [ ; The statutory provisions bearing on these questions are set out below. The relevant provision in sub section [I] of section 91 of the Act, prior to its amendment, provided: "91 (1) Notwithstanding anything contained in any other law for the time being in force, any dispute touching the parties to the dispute . .to the Registrar 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 . . The definition of the term 'landlord ' as contained in section 5(3) of the Bombay Rent Act was amended to include in respect of a licensee deemed to be tenant by section 15A, the licenser who has given such licence '. The expression licensee ' as defined in sub section (4A) thereof introduced by the Amending Act, insofar as material, reads as follows: "(4A) 'licensee ', in respect of any premises or any part thereof, means the person who is in occupation of the pre PG NO 51 mises 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 cooperative housing society registered or deemed to be registered under the Maharashtra Cooperative Societies Act, 1960; but does not include a paying guest, a member of a family residing together, a person in the service or employment of the licensor etc; . and the expressions "licence", "licenser" and "premises given on licence ' shall be construed accordingly. " Sub section (1) of section 15A of the Bombay Rent, as introduced by the Maharashtra Act No. 17 of 1973 provides: '15A(1). Notwithstanding anything contained elsewhere 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 February 1. 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 part thereof, in his occupation. " Sec. 28(1) of the Act insofar as material reads. "28 (1). Notwithstanding anything contained in any law and notwithstanding that by reason of the amount of the claim or for any other reason, the suit or proceeding would not, but. for this provision be within its jurisdiction. (a) in Greater Bombay, the Court of Small Causes Bombay, [aa] [b] shall have jurisdiction to entertain and try any suit or proceeding between a landlord and a tenant relating to the recovery of rent or possession of any premises to which any of the provisions of this Part apply . .and to decide any application made under this Act and to deal with any claim PG NO 52 or question arising out of this Act or any of its provisions and . no other court shall have jurisdiction to entertain any such suit, proceeding or application or to deal with such claim or question. " We must then refer to the relevant provisions of the Esso Eastern Inc. The avowed object and purpose of the Esso (Acquisition of Undertakings in India) Act, 1974, as reflected in the long title is to provide for the acquisition and transfer of the right, title and interest of Esso Eastern Inc., the foreign company, in relation to its undertakings in India with a view to ensuring co ordinated distribution and utilisation of petroleum products distributed and marketed in India by Esso Eastern Inc. and for matters connected therewith or incidental thereto. The preamble to the Act is in these terms: "Whereas Esso Eastern Inc. a foreign company, is carrying on, in India, the business of distributing and marketing petroleum products manufactured by Esso Standard Refining Company of India Limited and Lube India Limited, and has, for that purpose, established places of business at Bombay and other places in India; And whereas it is expedient in the public interest that the undertakings, in India, of Esso Eastern Inc. should he acquired in order to ensure that the ownership and control of the petroleum products distributed and marketed in India by the said company are vested in the State and thereby so distributed as best to subserve the common good;" Section 3 of the Act provides: "3. Transfer and vesting in the Central Government of the undertakings of Esso in India On the appointed day, the right, title and interest of Esso, in relation to its undertakings in India, shall stand transferred to and shall stand in, the Central Government. The Act received the assent of the President on the 13th March, 1974 and published on that day became the appointed day, as defined in section 2(a) of the Act. Sub section ( 1) of section 5 provides: "5. Central Government to be lessee or tenant under certain circumstances (l) Where any property is held in India by Esso under any lease or under any right of tenancy PG NO 53 the Central Government shall on and from the appointed day, be deemed to have become the lessee or tenant, as the case may be, in respect of such property as if the lease or tenancy in relation to such property had been granted to the Central Government, and thereupon all the rights under such lease or tenancy shall be deemed to have been transferred to and vested in the Central Government." Section 7(1) provides that, notwithstanding anything contained in sections 3 4 and 6, the Central Government may, if it is satisfied that a Government company is willing to comply, or has complied, with such terms and conditions as that Government may think fit to impose direct, by notification, that the right, title and interest and the liabilities of Esso in relation to any undertaking in India shall, instead of continuing to vest in the Central Government, vest in the Government company either on the date of the notification or on such earlier or later date (not being a date earlier than the appointed day) as may be specified in the notification. The Act makes provision that if there was any dispute with regard to what is vested in the Central Government, the proper forum was the Central Government for taking a decision. 19 of the Act reads as under: "19. Power to remove difficulties If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order, not inconsistent with the provisions of this Act. remove the difficulty; Provided that no such order shall be made after the expiry of a period of two years from the appointed day. " In exercise of the powers conferred by sub s.(l) of section 7 of the Act, the Central Government, in the Ministry of Petroleum & Chemicals issued a notification No. GSR 131(F.) dated 14th March 1974. that on being satisfied that Esso Standard Refining Company of India Limited? a Government company, is willing to comply with the terms and India imposed by the Central Government, hereby directs that the right, title and interest and the liabilities of Esso Eastern Inc., in relation to its undertakings in l ndia, shall, instead of continuing to vest in the Central Government. vest, w.e.f. the 15th day of March, 1974, in Esso Standard Refining Company of India Limited. Indubitably. as on the appointed day i.e. 13th March, 1974 PG NO 54 under section 2(a) of the Acquisition Act, the Esso Eastern Inc. had acquired the status of a protected tenant under section 15A of the Bombay Rent Act and the tenancy rights so acquired in relation to the flat in question stood transferred to, and became vested in, the Central Government. By virtue of the aforesaid notification issued under section 7(1) of the Act, the rights of tenancy in the 13 flat in question instead of continuing to vest in the Central Government became vested in Esso Standard Refining Company of India Limited, a Government of India undertaking, w.e.f. 15th March, 1974. It is also necessary to mention that the Central Government held, in the name of the President, 74% of the equity share capital of the Esso Standard Refining Company of India Limited, which therefore became a Government company as defined by section 617 of the . On 12th July, 1974 the Company Law Board, in exercise of the powers conferred by sub sections (1) and (2) of section 396 of the , read with the notification of the Government of India in the Department of Company Affairs No. GSR 443(E) dated 18th October, 1972, made Lube India Limited a Esso Standard Refining company of India Limited (Amalgamation) Order, 1974. (3) of the said Order provided that as from the appointed day, the undertaking of Lube India Limited shall stand transferred to, and vest in, Esso Standard Refining Company of India Limited. As a result of the amalgamation of the two companies, the name of Esso Standard Refining Company of India Limited was changed to Hindustan Petroleum Corporation Limited. It is therefore evident that petition No. 1 Hindustan Petroleum Corporation Limited, a Government of India undertaking, is a successor in interest of Esso Eastern Inc. which acquired the status of a deemed tenant under section ISA of the Bombay Rent Act, which right devolved on the Central Government under section 6(1) of the Acquisition Act. Upon these facts and the statutory provisions, the 3rd Cooperative Court rightly concluded as under: "Thus, it is clear that there was a subsisting licence in favour of opponent No. 3 as on 1.2.73. The definition 'Licensee ' as given in Section 5(4A) of the Rent Act includes inter alia a person in occupation of premises of a co operative housing society. PG NO 55 My findings on this issue are that the opponent No. 3 has a right to the premises against opponent No. 1 as protected tenant under Section 15A of the Rent Act. " In dealing with the question, it observed: "The Supreme Court has clearly observed that the protection given to a licensee under a valid licence as on 1.2.73 under Act 17 of the amended Rent Act is available to a licensee of any premises or any part thereof in a building vesting in or leased to a co operative housing society. This protection given to a licensee in the position mentioned above cannot be taken away merely by the society filing the case against the member and occupant for reliefs to the opponent member. The provisions of the two legislations are to be harmoniously interpreted and such harmonious interpretation is possible. In case the occupant of a premises gets protection under section 15A of the Rent Act against the member, the society can implement the provisions of section 2( l6) of the Maharashtra Co operative Societies Act, 1960 by determining the rights of the member and admitting a new member for the premises. Hence, my finding on the second part of the issue are that the rights of opponent No. 3 cannot be determined without determining the rights of opponent No. I i.e. Nanki M. Malkani, a co partner member in the suit premises. " In view of these findings, the 3rd Co operative Court held in favour of the petitioner corporation and dismissed the claim for eviction filed by the society under section 9( l) of the Act. Curiously enough, while allowing the appeal, the State Appellate Court has observed as follows: "One thing is clear that Hindustan Petroleum took over the rights and liabilities of Esso Standard Eastern Co. We would like to point out that leave and licence agreement confers only a personal right to occupy . that right cannot be transferred nor it can be inherited by Hindustan Petroleum Corporation by virtue of the merger of Esso Company with Hindustan Petroleum Corporation. Under these circumstances it has to be noted that as soon as the Esso PG NO 56 Standard Eastern Co. was taken over by Hindustan Petroleum Corporation, the rights under the leave and license agreement came to an end . . it cannot be said that it (Hindustan Petroleum Corporation) also took over the rights of Esso Standard Eastern Co. to occupy the flat under the leave and licence agreement. Again it observed: " At P. 299 of the record there is a letter dated 24.3.80 written by respondent No. 1 to the personal adviser of Hindustan Petroleum Corporation Ltd. In the first para of the said letter it is stated by respondent No. 1 that he has given the suit that to Esso Standard Eastern Inc. in December 1968 on leave and licence basis and that Hindustan Petroleum Corporation is the successor in title of the Esso Company and that Hindustan Petroleum Corporation is occupying the said flat: Probably in ignorance of this legal position, the respondent No. I wrote the above mentioned letter dated 24. 3.80 to Hindustan Petroleum Corporation . Even supposing that respondent No. I intended that respondent No. 3 should continue as a licensee after Esso Standard Eastern Co. was taken over by respondent No. 3 it has to be noted that there was no separate leave and licence agreement with Hindustan Petroleum Corporation namely. respondent No. 3. Even assuming for the sake of argument that respondent No. I intended that the flat should be occupied on leave and licence basis by respondent No. 3 that leave and licence agreement was terminated by respondent No. I by the above mentioned letter. " Further, it observed: "However there is absolutely no evidence to show the licence was renewed, at any time. The evidence of the witness examined on behalf of respondent No. 2 clearly shows that there was no renewal of the leave and licence agreement respondent No. 3 the leave and licence agreement automatically came to an end . .under these circumstances we feel that the rights that were given under PG NO 57 the leave and licence agreement were not available to respondent No. 3" Dr. Y.S. Chitale, learned counsel appearing for the petitioners rightly contends that the findings reached by the Appellate Court are manifestly erroneous and have caused a grave miscarriage of justice. The finding that there was no subsisting licence existing as on 1st February, 1973 to attract the provisions of section 15A of the Bombay Rent Act in the case of the petitioner Corporation is vitiated by its failure to give effect to the admission contained in the letter dated 24th March, 1980 written by respondent No. 2, Smt. Nanki M. Malkani which is to the effect: "I had given the above flat to the then Esso Standard Inc. in December 1968 on leave and licence basis. You as a successor in title of that company have been occupying the flat as licensee on the same terms and conditions. As you and your predecessors in title are reputed organisation I had given the flat for your officers use in the expectation that you will return the flat. when l require it for my own use. " Besides this letter, the learned counsel for the petitioners drew our attention to a sheaf of letters exchanged between respondent No. 2 Smt. Nanki M. Malkani and the Hindustan Petroleum Corporation Ltd. showing that she accepted that there was subsisting agreement of leave and licence as late as 24th March, 1980 which must be necessary implication, give rise to the inference as to the existence of such a licence between its predecessor Esso Eastern Inc. as on 1st February, 1973 which conferred on it the status of a protected tenant under section 15A of the Act. Indeed, the correspondence shows that it was at the behest of respondent No. 2 that every time on the expiry of a term of licence it came to be renewed from year to year till section 15A of the Bombay Rent Act was brought into force. Thereafter, the predecessor in interest of the petitioner, corporation was deemed to be her tenant under section I5A of the Bombay Rent Act. For instance, by letter dated 9th April, 1975 she wrote to the Hindustan Petroleum Corporation Ltd. that the above flat had been in its possession since December 1, 1968. Again, by letter dated 15th November, 1976, she wrote to the Corporation forwarding the original bill of the society in support of her demand for payment of enhanced taxes and PG NO 58 charges. In view of these admissions made in these letters and more particularly in the letter dated 29th November, 1971 to Esso Eastern Inc. which reads as under: "As the present agreement of leave and licence in regard to above flat is due to expire on 30th November, 1973 that is two years from hence, you would like me to give you an undertaking of renewal of this agreement to justify the expenditure being incurred by you now," the findings of the Appellate Court are clearly erroneous. On the other hand, it stands proved that Esso Eastern Inc. had acquired the status of deemed tenant or protected licensee under section 15A of the Bombay Rent Act as on 1st February, 1973. The findings of the Appellate Court to the contrary are therefore clearly erroneous. We are unable to sustain the view taken by the Appellate ' Court in not giving effect to sub section [1] of section 5 which vested the tenancy rights in relation to the flat in question on the Central Government as from appointed day. While it is true that a licence being personal is not capable of being transferred; there was no warrant for the assumption by the Appellate Court that the licence stood extinguished with the acquisition of the right, title and interest of Esso Eastern Inc. under section 3 of the Acquisition Act. That Act came into force on 15th March, 1974 and in the meanwhile, the licensee Esso Eastern Inc. had already acquired the status of deemed tenant under section 15A of the Bombay Rent Act admittedly, there was a subsisting licence as on 1st February, 1973. The Appellate Court has also failed to appreciate that the name of Esso Eastern Inc. was changed to Esso Eastern Inc. by a Certificate of Amendment dated/22nd December, 1970 vide a Resolution passed by the Board of Directors of the Corporation on 15th December, 1970. In view of all this, the finding of the Appellate Court that the Hindustan Petroleum Corporation Ltd. was entitled to the protection of section 15A of the Bombay Rent Act clearly borders on traversity and can hardly be swtained. The Appellate Court was clearly in error in not appreciating that section by 4. 3 of the Acquisition Act, the right, title and interest of Esso Eastern Inc. in relation to its undertakings in India, shall stand transferred to, and shall vest in, the Central Government as from the appointed day i.e. as from 13th March. Under sub section (I) of section 5 thereof, the Central Government became the lessee or tenant, as the case may be. By sub section (2) thereof, on the expiry of the term of any or tenancy refereed to in sub section (1), such lease or tenancy shall, if PG NO 59 so desired by the Central Government, be renewed on the same terms and conditions on which the lease or tenancy was held by Esso immediately before the appointed day. By a notification issued on the next date, the right, title and interest of the Central Government became vested in Esso Standard Refining Company of India Ltd., a Government company, w.e.f. 15th March, 1974. Furthermore, by reason of Lube India and Esso Standard Refining Company of India Ltd. Amalgamation Order, 1974 made by the Company Law Board under section 396 [1] & (2) of the , the undertaking of Lube lndia Ltd. vested in Esso Standard Refining Company of India Ltd. and immediately upon such transfer, the name of Esso Standard Refining Company of lndia Ltd., stood changed to Hindustan Petroleum Corporation Ltd. In the premises, petitioner No. 1 Hindustan Petroleum Corporation Ltd. is clearly protected under section 15A of the Bombay Rents, Hotel and Lodging House Rates Control Act. In that view of the matter, we do not think it necessary to deal with the contention as regards the applicability of section 91 of the Maharashtra Cooperative 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 on O.N. Bhatnagar 's case and we reiterate the principles laid down therein. In the result, the petition under article 226 of the Constitution succeeds and is allowed. I he judgment and order passed by the Maharashtra State Co operative Appellate Court dated June 6, 1983 allowing the claim of respondent No. 1 Shyam Co operative Housing Society for eviction of the petitioners as also the proceedings initiated by it under section 91 of the Maharashtra Co operative Societies Act. 1960 are quashed. Y. Lal Petition allowed.

The Esso Eastern Inc., a Company Organised and existing under U. section Laws was engaged in the business of distributing and marketing petroleum products manufactured by Esso Standard Refining Co. of India Ltd. and Lube India Ltd. and had established places of business in India. In order to provide residential accommodation to its employees the Co. had taken on leave and licence basis, Flat No. 35 in Block No. X in the Housing Colony known as Shyam Niwas situate at Warden Road now called Bhulabhai Desai Road, Bombay, for a period of one year in terms of the agreement in writing dt. 28th Nov., 1968 from one Smt. Nanki M. Malkani, a member of the Co operative Society. On 4th Dec., 1968 Respondent No. 1 Shyam Cooperative Housing Society Ltd. passed a resolution admitting Petitioner No. 2 T.J. Mansuknani an employee of the Co. as a nominal member of the Society though he was not the licencee. The period of lease was initially renewed at the instance of the licensor for one year. On 29th Nov., 1971, Ms. Malkani wrote a letter to the Company saying that the agreement for lease and licence was due to expire on that date; hence the period of licence be renewed yearly, from time to time for 3 years on the expiry of each term of the licence. On this basis the lease period stood extended till Nov. 30, 1973. In the meanwbile the State of Maharashtra enacted Act 17 of 1973. Since the Esso Standard Inc. was in fact in occupation of the flat in question as on 1st Feb., 1973, it acquired the status of a tenant under PG NO 44 PG NO 45 section 15A of the Act. On 13th March, 1974, the Esso (Acquisition of Undertakings in India) Act, 1974 came into force and from that date by virtue of subsection (1) of section 5 of the Act, the Central Govt. was deemed to be the tenant of the flat in question. By a letter of 9th April, 1975, sent by Ms. Malkani Res. 2, to the Petr. she affirmed the terms and conditions of the licence and by her subsequent communications she informed that the Petr. who is successor in interest of Esso Eastern Inc. to whom she had given the flat continues in possession on the same terms and conditions of the lease. On 11th Sept., 1980, the Society passed a resolution calling upon the Petr. Corporation to vacate the premises and asked Ms. Malkani, Res. 2 for occupying the flat herself. Upon the Petitioner 's failure to vacate the premises the Society on September 15, 1986 filed an application under section 91(1) of the Maharashtra Co operative Society Act 1960 before the 3rd Co operative Court Bombay, for eviction of the petitioner and its employee. On January 1981, Petitioner No. 1 permitted its another employee to occupy the flat. The 3rd Cooperative Court after considering evidence led by the parties, dismissed the claim of the Society holding inter alia that Esso Eastern Inc. was in occupation of the flat in dispute under a subsisting licence as on Feb. 1, 1973 and thus got the protection available to a licencee under sec. 15A of the Bombay Rent Act and that the said protection could not be taken away merely by the Society making a claim for eviction u/s 91 [1] of the Act. The Society being aggrieved appealed to the Maharashtra State Co operative Appellate Court. The appellate Court took the view that leave and licence agreement confers only a personal right to occupy; that right cannot be transferred nor inherited by the Hindustan Petroleum Corpn., being successor in interest of Esso Eastern Inc. In that view of the matter the appellate Cooperative Court held that the Petitioner Corpn. cannot be said to have taken over the right vt Esso Eastern Inc. to occupy the flat under the leave and licence agreement. Accordingly it allowed the appeal filed by the Society and decreed the claim of the Society and directed the Petr. Hindustan Petroleum Corpn. to vacate the premises in question and further directed Res. 2, Ms. Malkani to herself occupy the flat. The Petitioner thereupon filed a Writ Petition under Article 226 of the Constitution for quashing the judgment PG NO 46 and order passed by the Maharashtra State Co operative Appellate Court. The said Writ Petition was withdrawn to this Court under Article 139A of the Constitution. In the Writ Petition 3 questions have been raised viz (1) Whether the Hindustan Petroleum Corporation Ltd. being a Successor in interest of the Esso Eastern Inc. the licensee, was entitled to the protection of section 15A of the Bombay Rents, Hotels and Lodging House Rates Control Act, 1947, (Maharashtra Act 17 of 1973) having regard to the fact that Esso Eastern Inc. was in occupation of the flat in dispute under a subsisting licence as existing on 1st February, 1973? (2) Whether the Maharashtra State Co operative Appellate Court was justified in holding that the licence being purely personal and upon acquisition of the Esso Eastern Inc. by the Central Government under the Esso (Acquisition of Undertakings in India) Act 1974 the agreement for leave and licence as existing on the appointed day i.e. D 13th March, 1974 under section 2(a) of that Act, stood extinguished and therefrom the right acquired by Esso Eastern Inc. under section 15A of the Bombay Rent Act of being a protected tenant in relation to the flat in question, could not be transferred to, or be vested in the Central Government under section 3 of the Acquisition Act. Further was it also justified in holding that although the Esso Eastern Inc. was deemed to be a tenant of the disputed flat under section 15A of the Bombay Rent Act, the Central Government could not be deemed to have become the tenant thereof under Sub section (1) of section 5 of the Acquisition Act merely because prior to the enactment of section 15A of the Bombay Rent Act the premises were held by Esso Eastern Inc. on an agreement of leave and licence? (3) Whether a claim for ejectment of an occupant of a flat in a cooperative housing society having been let into possession of the premises under an agreement for leave and licence executed between it and a member of the Society, by virtue of its employer having became a nominee member thereof is a "dispute touching the business of the Society" within the meaning of section 91(1) of the Act? Allowing the Petition (which stood transferred from the High Court to this Court) the Court, HELD: Petitioner No. I Hindustan Petroleum Corporation Ltd. is clearly protected under section 15A of the Bombay Rents, Hotel and Lodging House Rates Control Act 1947. [47G 1{; 48A] PG NO 47 That Act came into force on March 15, 1974 and in the meanwhile, the licencee Esso Eastern Inc. had already acquired the status of deemed tenant under section 15A of the Bombay Rent Act as admittedly, there was a subsisting licence as on 1st February, 1973. The appellate Court has also failed to appreciate that the name of the Esso Standard Refining Co. of India Ltd. was changed to Esso Eastern Inc. by a certificate of Amendment dated December 22, 1970 vide a Resolution passed by the Board of Directors of the Corporation on 15th December, 1970. [58D E] The appellate Court was clearly in error in not appreciating that under section 3 of the Acquisition Act, the right, title and interest of Esso Eastern Inc. in relation to its undertakings in India, shall stand transferred to, and shall vest in the Central Government as from the appointed day i. e. as from 13th March, 1974. Under Sub section (1) of section 5, thereof, the Central Government became the lessee or tenant, as the case may be. By sub section (2) thereof, on the expiry of the term of any lease or tenancy referred to in sub section (1) lease or tenancy, shall, if so desired by the Central Government, be renewed on the same terms and conditions on which the lease or tenancy was held by Esso immediately before the appointed day. [158F, 59A] O.N. Bhatnagar vs Smt. Rukibai Narsingdas & Ors. , ; , referred to.

Appeals Nos. 228 and 229 of 1962. Appeals from the judgment and order dated June 26, 1961 of the Madras High Court in W. P. Nos. 829 and 833 of 1960. A. V. Viswanatha Sastri, G. Ramaswami, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellants. 284 section Kothandarama Nayanar and M. section K, Aiyanyar,for the respondent No. 1. A. Ranganadham Chetty and A. V. Rangam,for Intervener No. 1 (iii both the appeals.) R.Thiagarajan, for Intervener No. 2 (in C. A. No. 228 of 1962). September 26. The judgment of the Court was delivered by SUBBA RAO, J. These two appeals, on certificate raise the same points and arise out of a common order made by the High Court. of judicature at 'Madras in Writ Petitions Nos. 829 and 830 of 1960. Both of them may conveniently be disposed of together. The facts in Civil Appeal No. 228 of 1962 are briefly as follows : The first appellant is a limited company carrying on transport business. The second appellant is its managing director. The first appellant took over the business of Swami Motor Service Company, of which the second appellant was the Managing Partner. In his capacity as Managing Partner of the said company, the second appellant took a lease of a vacant site, being survey No. 2770, belonging to the first respondent. After the first appellant took over the business of the said partnership company ' including its leasehold interest in the said site, the first respondent recognized him ;is his tenant and was receiving the rent from him. It is alleged that the appellants constructed many valuable structures on the said site. The first responder i.e., ' Sri Sankaraswamigal Mutt, through its trustee, filed a suit, O. section No. 103 of 1953, in the court of the District Munsif, Tanjore. for evicting the appellant company from the site; and on July 30, 1954 a compromise decree for eviction was made therein giving six month 's time for the appellant company to vacate the site. The decree holder filed an execution petition 285 in the. said court against the first appellant for executing the decree. Pending the execution petition, Madras Act XIX of 1955 was passed empowering the State Government to extend the Madras City Tenants ' Protection Act, 1921 (III of 1922), hereinafter called the "Principal Act", to any municipal town by notification in the Fort St. George Gazette. In exercise of the powers confer red by Act XIX of 1955, the Government made an order notifying the Town of Tanjore to have come within the purview of the Principal Act. Under the provisions of the Principal Act, the appellants filed Original Petition No. 39 of 1956 in the said court for an order directing the execution of a conveyance of the said site in favour of the company on payment of a price fixed by the court. Those proceedings took a tortuous course mainly, it is alleged, on account of obstructive tactics adopted by the respondents in anticipation of , an expected legislation withdrawing the benefits conferred on tenants of non residential buildings in the Town of Tanjore. As anticipated the State Legislature passed Act XIII of 1960, amending the Principal Act : the effect of the amendment was to withdraw the protection given to tenants of non resi dential buildings in the municipal town of Tanjore and certain other towns. Under the provisions of the impugned Act, proceedings instituted under the provisions of the Principal Act relating to non residential buildings 'situated in towns other than those ,preferred would abate. The appellants filed a petition under article 226 of the Constitution in the High Court of judicature at Madras for the issue of a writ of mandamus directing the District Munsif to dispose of the petition in accordance with the provisions of section 9 of the Principal Act, as it stood before its amendment by Act XIII of 1960. In Civil Appeal No. 229 of 1962 the subject matter is a site, being survey No. 74, Railway Road, Tanjore belonging to the first respondent to this 286 appeal. The appellant 's father executed a lease deed in favour of the first respondent in respect of some parts of the said site; the lease deed contained a clause giving an option to the tenant to renew the lease for a further period of 10 years. It is alleged that the appellant 's father had erected substantial structures at heavy cost on the site even before the said lease as he was in possessions of the said site as a tenant under the predecessor of the first respondent. After the expiry of 10 years, the appellant 's father. exercised the option and continued to be in possession of the property as tenant. The first respondent filed a suit (O. section No. 315 of 1950) in the Court of the District Munsif, Tanjore, for evicting the appellant from the property, and obtained a compromise decree dated January 10, 1952. Under the compromise decree the tenancy was extended to 12 years from January 1, 1952 and after the expiry of that period the first respondent was entitled to execute the decree and take possession of the site after removing the superstructures. Subsequently as already noticed, the provisions of the Principal Act were extended to the Town of Tanjore. Thereupon the appellant 's father filed O. P. No. 43 of 1956 in the Court of the District Munsif, Tanjore, for an order directing the first respondent to convey the site in his favour on payment of the price to be fixed by the court. As in the first case, in this case also the proceedings dragged on till the Act of 1955 was passed. The appellant filed a petition under article 226 of the Constitution in the High Court of judicature at Madras for the issue of a writ of mandamus directing the District Munsif, Tanjore, to dispose of the application in accordance with the provisions of the Principal Act prior to its amendment by Act XIII of 1960. In both the petitions the appellants attacked the constitutional validity of Act XIII of 1960. The High Court, by a common order, upheld the 287 constitutional validity of the said Act following the decision of a, division Bench of the same Court, in Suaminathan vs Sundara (1). These two appeals, as aforesaid, have been preferred on certificate issued by the High Court. Mr. A. V. Viswanatha Sastri, learned counsel for the appellants in both the appeals, raised before us the following points: (1) The 1960 Act infringes the fundamental right of the appellants under article 14 of the Constitution for two reasons, namely, (i) while the object of enacting the 1960 Act was for safeguarding ' tenants from eviction from residential buildings, its provisions introduce a classification between non residential buildings in different municipal areas and gives relief to tenants of non residential buildings in some towns and refuses to give the same relief to similar tenants of such buildings in other towns in the State and such a classification has abso lutely no relevance to the object sought to be achieved by the Act; and (ii) the 1960 Act makes a distinction between non residential buildings in Madras, Salem, Madurai, Coimbatore and Tiruchirappalli on the one hand and those in other towns, including Tanjore, on the other and gives protection to the tenants of such buildings in the former group and denies the same to tenants of similar buildings in the latter group, though the alleged differences between the two sets of localities have no reasonable relation to the object sought to be achieved, namely, the protection of tenants who have built substantial structures from eviction. (2) The 1960 Act also offends articles 19 (1)(f) and 31(1) of the Constitution as it is not a reasonable restriction in the interest of the public on the proprietary rights acquired by the appellants under the earlier Act XIX of 1955. Mr. Nayanar, appearing for the first respondents in both the appeals, contends that sections 3 and 9 of the Principal Act could not be invoked by the appellants, as the lease deeds executed by them contain a (1) I. L. R. 288 clear covenant that they would vacate their lands within a prescribed period and as they had put up their buildings subsequent to the execution of the lease deeds. He sustains the constitutional validity of the 1960 Act on the ground that it neither offends article 14 nor article 19 of the Constitution. Mr. A. Ranganadham Chetty, appearing for the State of Madras, to which notice was given, elaborates the second contention advanced by learned counsel for the respondents by placing before us some statistical data which, according So him, affords a reasonable basis for the classification. As regards the contention based on article 19, he contends that the rights conferred under Act XIX of 1955, namely, right to compensation on eviction under section 3 of the said Act and the right to obtain a sale deed under section 9 thereof, are only analogous to a right to sue or a right to purchase a property and they could not in any sense of the term be equated with property rights. Before we consider the arguments, it would be convenient to notice the scope of the relevant provisions of the Principal Act, Act XIX of 1955 and Act XIII of 1960. The Principal Act, as amended by Act XIX of 1955, was enacted, as its preamble shows, to give protection to certain classes of tenants who in municipal towns and adjoining areas in the State of Madras have constructed buildings on others ' lands in the hope that they would not be evicted so long as they paid a fair rent for the land. The gist of the relevant provisions of the Principal Act, as amended by Act XIX of 1955, may be stated thus: The Act applies to any building whether it is residential or non residential. Every tenant shall on ejectment be entitled to be paid as compensation the value of any building, which may have been erected by him and also the value of trees which may have been planted by him; in a suit for ejectment the court shall ascertain the amount of compensation payable 289 by the landlord to the tenant and the decree shall direct that the landlord shall be put in possession of the land only on payment of the said amount in court within the prescribed time; if the landlord is unable or unwilling to pay the compensation within the prescribed time, he may apply for fixing a reasonable rent for the occupation of the land by the tenant; a tenant, who is entitled to compensation and against whom a suit for ejectment has been instituted, may apply for an order that the landlord may be directed to sell the land to him for a price to be fixed by the court, and thereupon the court shall fix the price in the manner prescribed in section 9 and direct the said amount to be paid to the landlord by the tenant within a particular time and in default his application shall stand dismissed. Nothing contained in the Act shall affect any stipulations made by the tenant in writing registered as to the erection of buildings, in so far as they relate to buildings erected after the date of the contract : the provisions of the Act apply to suits for ejectment which are pending and in which decrees for ejectment have been passed but have not been executed before the coming into force of the Act: vide sections 2(1), 2(1 A), 3, 4, 6, 9 and 12 of the Act. It is, therefore, clear that under the Principal Act tenants in the Madras City acquired valuable rights which they did not have before the said Act was passed. Prior to the Principal Act a tenant of a land over which he had put up buildings for residential or non residential purposes was liable to be evicted in accordance with law and his only right was to remove the superstructure put up by him on the land before delivering vacant possession. But after the Principal Act, a tenant similarly situated has an option to claim either compensation for the superstructure put up by him or to apply to the court to have the land sold to him for a consideration to be fixed by it. The Principal Act was amended by the Madras Act XIX of 1955 empowering the State Government 290 to extend, by notification in the Official Gazette, the protection given by the Principal Act to tenants of any other municipal town in the State of Madras and any specified village within five miles of the City of Madras or such municipal towns who have constructed buildings in others ' lands with the hope that they would not be evicted so long as they paid fair rent. In exercise of the power so conferred, the State Government issued on March 28, 1956, a notification extending the Principal Act to the municipal town of Tanjore. The result of the notification was that tenants like the appellants who were tenants of land over which they had put up non residential buildings acquired a right to ask for compensation for the buildings so erected on ejectment or to apply to court for directing the decree holder. to sell the land to the tenants after fixing the price in the manner prescribed in the Act. This Act was also extended to various other towns like Madurai, Coimbatore, Salem and Tiruchirappalli. The Legislature again changed its mind and passed Act XIII of 1960. By section 3 of that Act the following amendments were made in section 2 of the Principal Act: "(i) for clause (1), the following clause shall be substituted, namely: (1) 'Building ' means any building, hut or other structure, whether of masonry, bricks, wood, mud, metal or any other material whatsoever used (i)for residential or non residential purposes, in the City of Madras, in the municipal towns of Coimbatore, Madurai, Salem and Tiruchirappalli and in any village within five miles of the City of Madras or of the municipal towns aforesaid and 291 (ii) for residential purposes only, in any other area, and includes the appurtenance thereto. " Section 9. Every proceeding pending before any Court, other than a proceeding relating to any property situated in (i)the City of Madras, (ii)the municipal towns of Coimbatore, Madurai, Salem and Tiruchirappalli, and (iii)any village within five miles of the City of Madras or of the municipal towns aforesaid, on the date of the publication of this Act in the Fort St. George Gazette, and instituted under the provisions of the Principal Act, shall in so far as such proceeding relates to non residential buildings, abate, and all rights and privileges which may have accrued immediately before such date to any person in respect of any property situated in any area other than the areas referred to above by virtue of the Principal Act, shall, in so far as they relate to non residential buildings, cease and determine and shall not be enforceable: Provided that nothing contained in this section shall be deemed to invalidate any suit or proceeding in which the decree or order passed has been executed or satisfied in full before the date mentioned in this section. The result of this amending Act in respect of non residential buildings in places other than the City of Madras and the other specified municipal towns is that all proceedings pending in courts in respect of those buildings abated and the rights acquired by tenants under the 1955 Act in respect of the said buildings are extinguished. The rights, so far relevant to the present enquiry, which the tenants 292 had acquired under the 1955 Act were: (i) they were entitled on ejectment to be paid as compensation the value of the buildings erected by them or by their predecessorsin in terest, (ii) the court before issuing a decree for eviction should ascertain the amount due to a tenant and the decree for eviction. should be made conditional on the payment of the decree amount, (iii) in suits where decree for ejectment had been passed before the 1955 Act came into force, a tenant could file an application for ascertainment of the compensation due in execution and for a fresh decree to be passed in accordance with section 4 of the Principal Act, and (iv) he had also a right, at his option, to apply within the prescribed time to the court for an order directing the landlord to sell the land to him for a price fixed by the court, whether a decree for ejectment had or had not been passed. The tenants of non residential buildings in places other than the City of Madras and the specified municipal towns lost the said rights after the 1960 Act came into force. The first question is whether the 1960 Act, in so far as it withdrew the rights conferred upon the tenants of non residential buildings in Tanjore, offends article 14 of the Constitution, or whether it can be justified on the doctrine of classification. The law on the subject is so well settled that it does not call for an extensive restatement : it would be enough if the relevant propositions in the judgment of this Court in Shri Ram Krishna, Dalmia vs Shri Justice section R. Tendolkar(1) are noticed, and they are : "(1) there is always a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles 2 it must be presumed that the legislature understands and correctly appreciates the need (1) ; , 297 298. of its own people, that its laws arc directed to problems made manifest by experience and that its discrimination are based on adequate grounds ; (3) in order to sustain the presumption of constitutionality the court may take into con sideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation ; and (4) while good faith and knowledge of the existing conditions on the part of a legislature are to be presumed, if there is nothing on the face of the law or the surrounding circumstances brought to the notice of the court on which the classification may reasonably be regarded as based, the presumption of constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to hostile or discriminating legislation. " All the said propositions are subject to the main principle of classification, namely, that classification must be founded on intelligible differential and the differential must have a rational relation to the object sought to be achieved by the statute in question ; and that the classification may be founded on different bases, such as, geographical, or according to objects or occupations or the like : see Budhan Chaudhry vs The State of Bihar(1) and The State of West Bengal vs Anwar Ali Sarkar. (2) Bearing the said well settled principles in mind, let us now proceed to consider them in relation to the facts of this case. The first contention is that the object of the Act is to safeguard the tenants from eviction from residential quarters, but it affords (1) ; (2) ; 294 protection to tenants of non residential buildings in the City of Madras, in the municipal towns of Coimbatore Madurai, Salem and Tiruchirappalli and in any village within five miles of the aforesaid City and municipal towns, and there is no rational relation between the said classification and the object of the Act. The object of the Act, the argument proceeds, is to protect the tenants of residential buildings, whereas the Act protects also the tenants of non residential buildings in the aforesaid City and municipal towns. So stated the argument appears to be plausible, but a closer scrutiny reveals that the object of the Act is to protect not only tenants of residential buildings but also of other buildings, though it is mainly conceived to protect the tenants of residential buildings. The following is the statement of objects and reasons attached to Act XIII of 1960: " 'The Madras City Tenants ' Protection Act, 1921, was enacted with the main object of safeguarding the tenants from eviction from residential quarters. In consistence with this object it is proposed to restrict the application of the Madras City Tenants ' Protection Act, 1921 (Madras Act III of 1922) to residential buildings only. " It will be noticed from the above that the main object of the Act is to safeguard 'the tenants of residential buildings from eviction but it is not the sole object of that legislation. The objects of the 1960 Act only refer to the objects of the Principal Act. The objects and reasons of the Principal Act are given in the Fort St. George Gazette dated July 26, 1921, at p. 1491. The relevant part of the objects reads thus : "In many parts of the City of Madras dwelling houses and other buildings have, from time to time, been erected by tenants on land belonging to others in full expectation that subject to 295 payment of fair ground rent, they would be left undisturbed in possession, notwithstanding the absence of any specific contract as to the duration of the lease or the terms on which the buildings were to be erected. Recently attempts made or steps taken to evict a large number of such tenants, have shown that such expectations are likely to be defeated. . . . . The Bill provides for the payment of compensation to the tenant in case of ejectment for the value of any buildings which may have been erected by him or by his predecessors in intercst. It also provides for settlement of fair rent at the instance of the landlord. " The object of the said Act was to protect the tenants not only of dwelling houses in the City of Madras but also of other buildings in that City. The provisions of the Principal Act also, it is not disputed, apply both to residential and non residential buildings. So too the 1955 Act. Therefore, when in the " objects and reasons" attached to Act XIII of 1960 the authors of that Act stated that it was enacted with the main object of safeguarding the tenants from eviction from residential quarters, they were only emphasizing upon the main object but were not excluding the operation of that Act to non residential buildings. So it is not correct to state that the object of the Act is only to protect the tenants of residential buildings. There are no merits in this contention. The more serious contention is that there is no rational basis for classifying the tenants of non residential buildings in the City of Madras and the municipal towns of Madurai, Goimbatore Salem and Tiruchirappalli and those of similar buildings in other towns like Tanjore. It is said that if protection is necessary for the tenants of non residential buildings in the said City and towns, the same protection is equally necessary for tenants of similar buildings 296 in Tanjore and other towns. To state it differently, the argument is that there are no intelligible differences between the non residential buildings located in the City of Madras and the municipal towns of Madurai, Coimbatore, Salem and Tiruchirappalli and those situated in other towns. The learned judges of the High Court in Swaminathan vs Sundara (1),which was followed in ' the present case, adverting to this argument observed at p. 987 : "It is apparent that having regard to the large population in the first five areas and the large scale commercial activities in these areas, the Legislature thought fit that non residential quarters occupied by tenants on lands belonging to others should also be offered relief from being evicted summarily and arbitrarily. " This passage was criticized by learned counsel for the appellants and it was asked, what was the relevancy between the population of the different towns in the matter of eviction of tenants from non residential buildings ? The population of a town is not a relevant circumstance though its density may be : the pressure on the buildings or on the sites suitable for building purposes does not depend solely upon population without reference to the area available for building purposes, so the argument proceeds. Mr. A. Ranganadhm Chetty, appearing for the state of Madras, attempted to place before us statistics to establish that towns preferred under. the Act are highly populated industrial and commercial centers of the State compared to other towns like Tanjore and, therefore, there would necessarily be high pressure on non residential buildings in the said localities and consequently a spate of evictions. Before looking into the statistics it would be convenient to notice the allegations made in the affidavits. On behalf of the State of Madras, J. Sivanandam, Secretary to Government, has filed an affidavit, wherein he says in paragraph 8 : (1) 1. L. R. 297 " 'On facts the position is that these four towns of Madurai, Tiruchirappalli, Salem and Coimbatore ranked the first four next to the City of Madras in population, income and commercial activities and a very large number of tenants had been enjoying the protection afforded by the then existing provision of this Act, in respect of residential and non residential buildings as well. It was therefore thought that it would not be proper to deprive these tenants of the protection in respect of non residential buildings. It may at once be noticed that the industrial potential of the preferred towns is not specifically mentioned. But it appears to us that the expression "commercial activities" is used in a comprehensive sense so as to take in industrial activities. This statement is sought to be supported in the affidavit by the proceedings of relevant authorities and the correspondence that passed between the State and the Union Governments. The following extract from the Select Committee 's proceedings throws further light on the subject : ". . . on the reports received from Collectors, the Act was extended to certain Municipalities. But it was found that such extension caused inconvenience to public bodies and other institutions which owned the lands inasmuch as they were not able to get sufficient returns from these to carry on their activities under present conditions. . . . . However it was represented that in the case of Madras City such a restriction would cause considerable hardship to the large number of small business establishments and the privilege and concession enjoyed by them over such a long period should not be interfered with. While the Government felt the reasonableness of this demand that in the City non residential buildings should not be excluded from the protection afforded by the 298 Act, they were of the view that in place where the provisions were being extended they should apply only to residential buildings." ". . having regard to the wishes of certain Hon. members that not only in the City but in other municipalities also there should be no distinction between residential and non residential buildings, he (the Chairman) proposed to add the four municipalities of Madurai, Tiruchirappalli, Salem and Coimbatore, in sub clause (1) of the proposed clause (1). " These passages disclose not only the legislative objects but also the political pressures for certain amendments. But we are not concerned with the political aspects of the legislation but only with its objects. The special treatment given to the City of Madras and the other specified town is based upon the fact that there are a number of small business establishments in Madras and other specified towns implying thereby that there are not so many such establishments in other towns. The correspondence between the Government of India and the Government of Madras throws light on this question. It is stated therein "Most of the tenancies of non residential buildings which enjoyed protection from eviction are in the City of Madras and the Municipal towns of Madurai, Coimbatore ' Salem and Tiruchirappalli which have been classed as Special Grade or Selection Grade municipalities on the basis of income and population ; "This concession is considered necessary because in the City of Madras and in the said four Municipal towns there are a large number of such tenants to whom denial of the protection will cause great hardship. They have been enjoying this protection for some time past and they have invested large sums of money in the hope 299 that they will not be evicted so long as they pay the rent due. " This again emphasizes the fact that the preferred towns are of special importance and that comparatively a large number of non residential buildings are situated in the said City and towns. G. O. No. 331, L. A., dated February 18, 1953, passed by the Government of Madras also shows the com parative importance of the said towns. It is stated therein : "They (Government) consider, however, that in view of the size and importance of the thre e municipalities (Tiruchirappalli, Coimbatore and Vijayawada) referred to above and also of those of the Salem Municipality, the four municipalities stand distinctly apart from the other first grade municipalities, excluding of course Madurai Municipality which stands in a class by itself. The Government accordingly direct that with effect from 1 4 1953 the municipalities of Coimbatore, Salem and Tiruchirappalli And Vijayawada be classified as selection grade municipalities. . . . ". In the reply affidavit many of the factual assertions made in the counter affidavit have been denied. It is alleged that the number of tenants of non residential buildings who enjoyed the benefit of the provisions of the Act in municipal towns like Tanjore, Vellore and Connors is also large. It is denied that the preferred towns other than the City of Madras have been enjoying the protection for a long time, for the amending Act itself was passed only in 1955. It is pointed out that the population of a town is irrele vant but density of population matters and that the density of population in Tanjore, Coimbatore, Madurai and Salem is the same. Out of the allegations and counter allegations the following facts emerge (1) Madras is a city of large population and 300 commercial importance; (2) Madurai is classified as a special grade municipality and the municipalities of Coimbatore, Salem and Tiruchirappalli as selection grade municipalities on account of their size and importance: they have comparatively larger population and commercial potentialities; (3) in the said towns there are a large number of nonresidential buildings; and (4) except for some vague averments made in the reply affidavit, there is nothing on record to establish that the number of non residential buildings in Tanjore compares favorably with that in the preferred towns. These facts are, to some extent, supported by the statistical data furnished before us from authorized Government publications. In ",Madras District Gazetteers, Madurai" it is stated at p. 172: "Madurai is one of the very few districts in this State in which a comparatively large portion of the population, about 37 per cent., lives by industries, trade and other avocations. I This is no wonder, seeing that it has never had, in spite of irrigation works, any facilities like Tanjore for absorbing the great bulk of its population in agriculture. In fact it stands next to the Coimbatore district in possessing a considerable proportion of the non agricultural population". Though the statement refers to the districts as a whole, it is well known that most of the industries are concentrated in the municipal towns of Madurai and Coimbatore. In "India, 1962" the following figures of population in some Towns of Madras State are given: Madurai . 4,24,975 Coimbatore 2,85,263 Tiruchirappalli. . 2,49,933 Salem 2,49,084 Tuticorin 1,24,273 Vellore. 1,13,580 301 Tanjore . 1,10,968 Nagercoil . .1,06,497 It is not necessary to pursue the matter further. it is true that population alone cannot be a basis for the classification made under the Act, but concentration of large population is generally found only in towns where there are commerce and industries. Though it is possible that a smaller town with a lesser population may also 'have heavy industries and commercial activities, that is an exception rather than the rule. But in this case the Gazetteer supports the averment made by the State in the affidavit that the municipal towns selected for preferential treatment are more advanced commercially than other towns in the State. Though the Government, at the earlier stages 'of this litigation or even before the 1960 Act was passed, did not bring out these differences based upon commercial and industry as prominently as its counsel now seeks to do before us, we cannot brush aside the argument as an afterthought. That apart, the Government of Madras was not a party in the High Court and it had no opportunity to put forward its case before that Court. On the basis of the allegations made in the affidavit filed on behalf of the State of Madras, supported as it is by the statistical data furnished before us, we hold that there are real differences between non residential buildings in the towns of Madurai, Coimbatore, Salem and Tiruchirappalli and those in other towns of the Madras State which have reasonable nexus to the object sought to be achieved by the Act. The more difficult point is the impact of articles 19 (1) (f) and 31 (1) of the Constitution on the impugned provisions of the Act. The relevant Articles of the Constitution read thus: Article 19 (1) (f). All citizens shall have the right to acquire, hold and dispose of property. 302 Article 31. No person shall be deprived of his property save by authority of law. To seek the protection of either of these Articles it must be established that the tenants of residential buildings in Tanjore had acquired a right to property, for unless they had acquired such a right, the 1960 Act could not have deprived them of such a right or imposed any restrictions thereon. The question, therefore, is whether the rights created by the 1955 Act by extending the provisions of sections 3 and 9 of the Principal Act to such tenants had given them a right to property. The argument of learned counsel for the State of Madras may be summarized thus: article 19(1) (f) deals with abstract rights of property, while article 31 (1) with concrete rights; under Art.31(1) there is no limitation on the power of the appropriate Legislature to make a law depriving a person of his property; the only restriction in the case of deprivation of property by a State is that it can be done only by a statutory law; if so, on the assumption that the Act of 1955 conferred a concrete right of property on the appellants, they have been validly deprived of it by the 1960 Act and, therefore, no fundamental right of the appellant had been infringed; if, on the other hand, the argument proceeds, articles 19 (1) (f) and 31(1) are both held to relate to concrete rights of property, it would lead to two anomalies, namely, (i) article 31(1) would become otiose, and (ii) as deprivation of property cannot possibly be a restriction on the right to hold property, every law depriving a person of his property would invariably infringe Art.19 and, therefore, would be void. In support of his contentions he relies upon the observations of Patanjali Sastri, C. J., and Das, J., as he then was, in The State of West Bengal vs Subodh Gopal Bose(1). In that case Patanjali Sastri, C. J., made the following observations: " 'I have no doubt that the framers of our Constitution drew the same distinction and classed (1). [1954] section C. R. 587. 597. 303 the natural right or capacity of a citizen " 'to acquire hold and dispose of property" with; other natural rights and freedoms inherent in the status of a free citizen and embodies them in article 19(1), while they provided for the protection of concrete rights of property owned by a person in article 31. " These observations no doubt support learned counsel 's contention, but this Court in a later decision in The Commissioner, Hindu Religious Endowment '3, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt(1) considered the said observations and remarked: "This, it may be noted, was an expression of ,Opinion by the learned Chief justice alone and it was not the decision of the court; for out of the other four learned judges who together with the Chief justice constituted the Bench, two did not definitely agree with this view, while the remaining two did not express any opinion one way or the other. This point was not raised before us by the Advocate General for Madras, who appeared in support of the appeal. , nor by any of the other counsel appearing in this case. The learned Attorney General himself stated candidly that he was not prepared to support the view taken by the late Chief justice as mentioned above and he only raised the point to get an authoritative pronouncement upon it by the court. In our opinion, it would not be proper to express any final opinion upon the point in the present case when we had not the advantage of any arguments addressed to us upon it. We would prefer to proceed, as this court has proceeded all along, in dealing with similar cases in the past, on the footing that article 19 (1) (f) applies equally to concrete as well as abstract rights of property." (1) ; , 1020. 304 Though this Court has not finally expressed its opinion on the question raised, it has pointed out that it has proceeded all through on the basis that article 19(1) applies equally to concrete as well as abstract rights of property. In Chiranjit Lal Chowdhuri vs The Union of India(1), Mukherjea, J., as he then was, held that the right to hold property under article 19 (1) (f)meant the right to possess as well as enjoy all the benefits which were ordinarily attached to ownership of property. jagannadhadas, J., in The State of West Bengal vs Subodh Gopal Bose(2). dealing with this point observed at pp. 668 669: "To me, it appears, that article 19(1) (f), while probably meant to relate to the natural rights of the citizen, comprehends within its scope also concrete property rights. That, I believe, is how it has been generally understood without question in various cases these nearly four years in this Court and in the High Courts". The phraseology used in article 19(1)(f) is wide and prima facie it takes in its sweep both abstract and concrete rights of property. To suggest that abstract rights of a citizen in property cannot be infringed by the State but his concrete rights can be, is to deprive article 19(1)(f) of its real content. It would mean that the State could not make a law declaring generally that a citizen cannot acquire, hold and dispose of property, but it could make a law taking away the property acquired or held by him and preventing him from disposing it of It would mean that the Constitution makers declared platitudes in the Constitution while they gave unrestricted liberty to the Legislature to interfere with impunity with property rights of citizens. If this meaning was given to article 19(1)(f), the same meaning would have to be given to other clauses of article 19(1) with the result that the Legislature cannot make a law preventing generally citizens from expressing their views, assembling peacefully, forming associations, and moving (1) [1950] section C. R. 869. (2) ; , 597. 305 freely throughout the country, but can make a law curbing their activities when they are speaking, when they are assembling and when they are moving freely in the country. Such an intention shall not be attributed to the Constituent Assembly, unless the Article is clear to that effect. Indeed, the words, as we have stated, are comprehensive and take in both the rights. Though there is no final expression of opinion by this Court on this question, as has been pointed out, this Court and the High Courts all through since the date of promulgation of the Constitution proceeded on the assumption that article 19 applied to both the rights. We hold that article 19 applies both to concrete as well as to abstract rights of property. It is said that if this construction be given to article 19(1)(f), article 31(1) would become otiose. We do not see how it becomes an unnecessary provision. Article 31(1) is couched in a negative form. It says that no person shall be deprived of his property save by authority of law. In effect it declares a fundamental right against deprivation of property by executive action ; but it does not either expressly or by necessary implication take the law out of the limitations imp limit in article 19(1)(f) of the Constitu tion. The law in article 31(1) must be a valid law and to be a valid law it must stand the test of other fundamental rights. All the other points urged in support of the contention have been considered by this Court in Kavalappara Kottarathil Kochuni vs The State of Madra 's(1), where it was held that a law depriving a person of his property must be a valid law and, therefore, it should not infringe article 19 of the Constitution. We have no reason to differ from the view expressed therein. Indeed that view has been followed in later decisions. We, therefore, hold that a law depriving a person of his property would be bad unless it amounts to a reasonable restriction in the (1) 306 interest of the general public or for the protection of the interests of Scheduled Tribes. We now come to the last question, namely, whether the 1960 Act deprived the appellants of their right in property. To state it differently, the question is whether a tenant of a non residential building in Tanjore had acquired a right of property under the 1955 Act and whether he was deprived of that right or otherwise restricted in the enjoyment thereof by the 1960 Act. The 1955 Act, as we have already noticed, conferred two rights on such a tenant, namely, (i) every tenant on ejectment would be entitled to be paid as compensation the value of any building erected by him, and (ii) such a tenant against whom a suit in ejectment has been instituted has an option to apply to the court for an order directing the landlord to sell the land to him for a price to be fixed by the court. We are not concerned here with the rights conferred under section 3 of the Act, for the simple reason that neither of the appellants claimed a right thereunder. Both of them have taken proceedings only under section 9 of the Act and they have approached the High Court for a writ of mandamus that the petition should be disposed of under the provisions of section 9 of the Act. This Court 's opinion on the question of the constitutional validity of the Act in so far as it deprived the appellants of their right under section 3 of the Principal Act is not called for : that will have to be decided in an appropriate case. The question that falls to be considered is whether the second right, namely, the right of a tenant to apply to the court for an order directing the landlord to sell the land to him for a price to be fixed by it, under section 9 of the Principal Act is a right to property. The law of India does not recognize equitable 'estates. No authority has been cited in support of the contention that a statutory right to purchase land is, or confers, an interest or a right in property. The fact that the right is created not by 307 contract but by a statute cannot make a difference in the content or the incidents of the right: that depends upon the nature and the scope of the right conferred. The right conferred is a right to purchase land. If such a right conferred under a contract is not a right of property, the fact that such a right stems from a statute cannot obviously expand its content or make it any the less a non proprietary right. In our view, a statutory right to apply for the purchase land is not a right of property. It is settled law that a contract to purchase a property does not create an interest in immovable property. Different consideration may arise when a statutory sale has been effected and title passed to a tenant : that was the basis of the judgment of this Court in Jayvantsinghji vs State of Gujarat(1), on which Mr. Viswanatha Sastri relied. But we are not concerned here with such a situation. It is said that the appellants have acquired a right under the 1955 Act to hold and enjoy the buildings erected by them by exercising their right to purchase the site of the said buildings and that the impugned Act indirectly deprived them of their right to hold the said buildings. This argument mixes up two concepts, namely, (i) the scope and content of the right, and (ii) the effect and consequences of the deprivation of that right on the other properties of the appellants. Section 9 of the Principal Act, extended by the 1955 Act, only confers a right in respect of the land and not of the superstructure. If that Act held the field, the appellants could have purchased the land, but by reason of the 1960 Act they could no longer do so. Neither the 1955 Act conferred any right as to the superstructure under section 9 of the Principal Act nor did the 1960 Act take that right away. If this distinction between the land and the superstructure is borne in mind the untenability of the argument would become obvious. The 1960 Act does not in any way affect the appellants ' fundamental right. Therefore, their prayer that the District Munsif should be directed to proceed with the (1). [1962] Supp. 2 section C. R. 41 1. 308 disposal of the applications filed by them under section 9 of the Principal Act could not be granted. In this view it is not necessary to express our opinion on the question whether the appellants. , by reason of the specific stipulation in their lease deeds, would not be entitled to any relief even under the 1955 Act. In the result, the appeals fail and are dismissed with costs. One hearing fee. Appeals dismissed.

Each of the appellants in the two appeals who were tenants of land in Tanjore on which non residential premises had been constructed by them, applied to the Munsif under section 9 of the Madras City Tenants Protection Act, 1921 (111 of 1922) to have the respective sites conveyed to them after fixing the sale price as contemplated by the Act. Pending the decision of he applications by the Munsif, the protection and rights given to the tenants who had constructed buildings on leased and by the Principal Act was withdrawn by Act XIII of 1960, in respect of non residential buildings in Tanjore but with regard to the cities of Madras, Salem, Madurai, Coimbatore and Tiruchirappalli the protection and rights were retained both as regards residential buildings and non residential buildings. The appellants applied under article 226 of the Constitution to the High Court of Madras praying for a mandamus directing the Munsif to determine their applications under section 9 of the Principal Act as extended to the town of Tanjore by Notification and the Act of 1955 ignoring Act XIII of 1960 which was impugned as offending articles 14, 19 and 31 of the Constitution. The High Court upheld the validity of the Act following the earlier decision of that Court. Held that confining the protection to residential buildings only in the town of Tanjore while giving protection to tenants of both residential and non residential buildings in the other 283 towns was based upon real differences between Tanjore and the other towns regarding the pressure on non residential accommodation and other relevant factors including population and that the differentiation was related to the object namely protecting tenants of residential buildings principally and also of nonresidential buildings where the need was most felt. Shri Ram Krishna Dalmia vs Shri Justice section R. Tendolkar ; , Bhudan Choudhury vs State of Bihar, ; and The State of West Bengal. vs Anuwar Ali, ; , referred to. Held, further, that article 19(1) (f) guarantees both abstract as well as concrete rights of property and that property has the same meaning in article 19(1) (f) and article 31 (1). State of West Bengal vs Subodh Gopal Bose ; , The Commissioner Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Nutt, ; and Chiranjit Lal Choudhury vs Union of India, [1950] 869, referred to. Held, further, that law ' under article 31 must be a valid law and to be valid it must stand the test of other fundamental rights including article 19(1) (f) of the Constitution. Kavalappara Kottarathil Kochuni vs State of Madras, referred to. Held, further, that the right to purchase property conferred by a Statute is in its nature the same as the right of purchase conferred by contract and in neither event could it amount to a right of property. Maharana Shri Jayvantsinghji Ranmalsinghji etc. vs The, State of Gujrat, [1662] Supp. 2 section C. R. 41 1. Held, also that the principal Act did not confer a right on the tenant to the superstructure and therefore, the impugned Act did riot take away any such right.

Civil Appeals Nos. 1867 1924, 1952 of 1975 and 9 to 66 of 1976. From the Judgments and orders dated the 18 4 75, 28 4 75 and 27 5 75 of the Mysore (Karnataka) High Court in Writ Appeal Nos. 1034 1039/74 and 116 to 143/75, 951 74, 922 923/74, 32/75, 1035 of 1974 and 976 to 1033/74 respectively. L. N. Sinha, Sol. General in C.A. No. 1891 and 1952 for the appellants in C.As. 1867 1924 and Respondent in CA 1952/75 and K.S. Puttaswamy, 1st Addl. Government Advocate (In Cas. 1867 1924 and 1952/75) B. R. G. K. Achar. section G. Sundaraswamy, K. section Gourishanker and K. N. Bhatt for the Appellants in C.As. 1952/75 and Respondents in C.A. 1891/75. L. N. Sinha, Sol. General in (CA 9) K. section Puttaswamy, Asstt. Government Advocate, Narayan Netter and B. R. G. K. Achar for the Appellants in C.As. 9 to 66 of 1976. section V. Gupta (In CA 1890/75), section section Javali and B. P. Singh for Respondents in CAs. 1875 to 79, 1882 83 1885, 1887 90, 1893, 1895, 1897, 1902 08, 1909, 1910, 1912, 1914, 1917, 1920, 1923 24/75 and for R. 2 in C.As. 1867, 1874, 1880 81, 1884, 1889 1901, 1903 1906 07 and 1921/75 and for Respondent in Appeals Nos. 9, 13 18, 20, 21, 39 44, 54, 56, 58, 60 63 and for Respondent No. 1 in Cas 19, 22 23, 37, 43, 46, 51, 55, 59, 65 and Respondent No. 2 in C.As 38 of 1975. The Judgment of the Court was delivered by RAY, C.J. These appeals are by certificate from the judgment dated 18 April, 1975 of the High Court of Karnataka. The respondents were the petitioners in the High Court. The respondents are either holders of Bane lands in the District of Coorg or holders of such lands who purchased timber standing on them from such holders. The respondents in the High Court asked for writ directing the Divisional Forest officer of the State to issue permits to the respondents to remove trees standing on Bane lands as particularised in the petition. 1090 The Divisional Forest Officer refused permits to the respondents to cut trees and remove timber. The two grounds on which the respondents challenged the order of refusal are these. First, the respondents claimed a vested right to redeem the trees on Bane lands on payment of 50 per cent of the value of timber under Coorg Land and Revenue Regulation of 1899 and the rules framed thereunder. Second the respondents claimed that, by section 75 of the Karnataka Land Revenue Act, 1964, an absolute right was conferred on them in respect of trees on Bane lands and the Government have no right even to demand 50 per cent of the value. The learned Single Judge referred to the provisions of Coorg Land and Revenue Regulation of 1899 and in particular rule 97 thereof. The learned Single Judge came to the conclusion that rules conferred a right on the holders of Bane land to redeem the trees standing on such Bane lands. He also held that under the rules, the respondents were required to pay 50 per cent of the value of the timber to the State along with other incidental charges. The contention of the State that the Coorg Land and Revenue Regulation, 1899 was repealed and, therefore, the respondents had no right under those Regulations to remove timber was repelled by the learned Single Judge. The learned Judge held that section 202 of the Karnataka Land Revenue Act of 1964 did not affect the right acquired by the holders of Bane lands in spite of repeal of the Coorg Land and Revenue Regulation of 1899. In this view of the matter, the learned Single Judge did not consider it necessary to express any opinion on the second contention of the respondents whether under section 75 of the Karnataka Land Revenue Act of 1964, the State had no right to demand 50 per cent of the value. The Division Bench on appeal held that the respondents could be divided into two categories. As to the first category, the Division Bench in sub paragraph (1) of paragraph 59 of the judgment said that those who deposited before 15 January, 1974, 50 per cent of the value of timber as determined by the Divisional Forest officer, could be granted permits to cut and remove timber. If there was any difference between the 50 per cent of the actual value of timber and the amount paid on the basis of determination by the Divisional Forest officer, the Divisional Forest officer would recover the difference as mentioned in the said paragraph 59(1). In sub paragraph (2) of paragraph 59, the Division Bench dealt with respondents who did not fall within category 1, but made applications before 15 January, 1974. The Solicitor General appearing for the State with his usual fairness said that he did not want to take up time of the Court in going into the merits of the appeals. He accepted the conclusions of the High Court in paragraph 59 of the judgment. The result is that the conclusions of the High Court in paragraph 59 are affirmed. The matter, however, does not end there because counsel for the respondents submitted that the Division Bench went into the nature and tenure of Bane lands and expressed views which are not correct 1091 and which in any event were not necessary for the purpose of the present case. The learned Single Judge rightly did not express any view on the second question as to whether the Bane land holders could ask for removal of trees without payment of full value. The Division Bench, however, in paragraphs 16 and 20 dealt with the legal position of Bane lands prior to 1 November, 1899, in paragraph 30 on the legal position between 1 November 1899 and 1 April 1964 and in paragraphs 36 and 43 on the legal position after 1 April 1964. The Division Bench of the High Court in paragraphs 17 and 19 of the judgment dealt with Bane and Kumki lands and equated the same. It may be stated here that one of the respondents Consolidated Coffee Ltd., also filed an appeal from the judgment of the High Court. The Solicitor General contended that the Consolidated Coffee Ltd. was not competent to file an appeal because the company had obtained relief and could not, therefore, attack the judgment. Having heard the Solicitor. General and counsel for the respondents, we are of opinion that the course adopted by the learned Single Judge was correct. The Division Bench of the High Court need not have gone into the question on the nature and tenure of Bane lands and expressed opinion on rights of the parties. These observations were not necessary. We, therefore, hold that we affirm the conclusions of the Division Bench of High Court as stated in paragraph 59 of the judgment and make it clear that the observations and opinions expressed by the Division Bench on the nature and tenure of Bane lands and rights of the parties will not bind the parties on these questions in future. It will be open to both parties, namely, the appellants and respondents to urge their rival contentions on these questions if in future there will be any dispute between the parties. The directions given by the Division Bench in paragraph 59 of the judgment will be followed by the parties. The directions are explicable because of 15 January 1974 being taken as the dividing line with regard to persons who made payment and persons who did not make payment consequent upon the repeal of Rule 137 of the Karnataka Forest Rule, 1969. The appeals are dismissed. Parties will pay and bear their own costs. S.R. Appeals dismissed.

"Bane lands" are forest lands granted for the service of the "Warg", holding rice fields to which they are allotted to be held, free of revenue, for grazing, leaf manure/firewood and for timber required in the Warg, capable of being alienated only along with the Warg lands u/s 97 of the Coorg Land and Revenue Regulation 1899, which is in pari materia with Rule 151 A and B made under the Indian Forest Rules 1954. The holders of the Bane Land had the right to redeem the trees standing on such Bane lands subject to the payment of seignorage etc. Under Rule 137 of the Karnataka Forest Rules 1969, effective from 1st March 1969, redemption of the growth on "Bane lands" was allowed on payment of 50% of the value of the timber. Rule 137 was however deleted w.e.f. 15th January 1974. The various appellants who were holders of "Bane Lands" challenged, under article 226. the orders of the Forest authorities demanding full value of the timber sought to be "redeemed" by them contending that (i) they had vested right to redeem the trees on Bane lands on payment of 50% of the value of timber under the Coorg Land and Revenue Regulations of 1899 and (ii) Section 75 of the Karnataka Land Revenue Act, 1964 vested in them an absolute right in respect of the trees on Bane lands and the Government therefore had no right even to demand 50% of the value. All the writs were accepted by the Mysore High Court following its earlier decision in I.L.R. (Karnataka) 1975 Vol. 25, p. 443 (Ramaraju Naidu vs Divl. Forest officer) holding that the Rules conferred a right on the holders of Bane lands to redeem the trees standing on such lands on payment of 50% of the value of the timber to the State along with other incidental charges. The court did not express any opinion whether the State had no right to demand 50% of the value under the Karnataka and Revenue Act of 1964. Allowing the State appeal against I.L.R. (Karnataka) 1975 Vol. 25 page 443 the Division Bench held [in State of Karnataka vs Ramaraju Naidu I.L.R. (Karnataka) 1975 Vol. 25 p. 1361] that (i) the Bane holders had no propriety right to the soil of Bane Land and to the trees standing thereon but only limited privilege to collect grass leaves timber etc. for domestic purposes (ii) Even after section 75(1) of the Karnataka Land Revenue Act was enacted the Bane holders did not become holders or occupants as defined in the Act and ownership of trees did not accrue to them and (iii) Section 79 of the Karnataka Land Revenue Act which preserved the preexisting privileges of Bane holders has no application to Bane lands. Keeping 15 1 74, the date of deletion of Rule 137 of the Karnataka Forest Rules 1969, the Division Bench, however directed that (1) the respondents who deposited before 15th January 1974, 50% of the value of timber as determined by the Forest officer could be granted permits to cut and remove timber, with liberty to the Forest officer to recover and any differential amount between the 50% of the actual value of timber and amount paid on the basis of prior determination and (ii) those respondents who have made applications under rule 137 before 15th January 1974, but not deposited the amount could also be granted permits on deposit of 50% of the value of timber. Dismissing the State appeals, by certificate, the court ^ HELD: (1) The learned single judge in ILR (Karnataka) 1975 Vol. 25 p. 443 rightly did not express any view on the second question as to whether 1089 the Bane Land holders could ask for removal of trees without payment full of value u/s 75 of the Karnataka Land Revenue Act, 1964. [1091A] Ramaraju Naidu vs Divl. Forest Officer I.L.R. (Karnataka) 1975, Vol. 25 p. 443 (partly affirmed). (ii) The directions given by the Division Bench are explicable because of 15th January 1974 being taken as the dividing line with regard to persons who made payments and persons who did not make payment consequent upon the repeal of Rule 137 of the Karnataka Forest Rules, 1969. [109lF] [Their Lordships left open to the parties to urge their rival contentions on the questions of the nature and terms of Bane lands and right, if in future, there will be any dispute between them, in view of their making clear that the observations and opinions of the High Court Division Bench should not operate as res judicata]

on No. 8209 & 882 1 of 1983. (Under Article 32 of the Constitution of India.) M.A. Krishnamoorthy, Pramod Dayal, Rishi Kesh, R.B. Mehrotra, M.G. Ramachandran, C.M. Nayyar, M. Karanjawala, S.A. Sayed, Sushil Kumar Jain, section Dikshit, P.P. Juneja, P.K. Jain, K.N. Bhatt, D.N. Misra, I. Makwana, A. Subba Rao, Harjinder Singh, B.P. Singh, Parijat Sinha, C.P. Lal, Shri Narain, S.K. Gupta, K.R. Nambiar, S.S. Khanduja, K.K. Jain, C.M. Nargolkar, Kapil Sibal, R. Ramachandran, Miss A. Subha shini for the Appearing Parties and Devi Ditta Mal, Peti tioner in person. The Judgment was delivered by AMARENDRA NATH SEN, J: We disposed of these two writ petitions by an order made on 12th March, 1985 by which we directed that the lime stone quarries classified in category C in the Bhargava Committee Report should not be allowed to be operated and the same direction of closing down the lime stone quarries should also apply to the lime stone quarries in the Sahsatdhara Block even though they, are placed in category B by the Bhargava Committee. We also directed by our order that so far as the other lime stone quarries classified as category B in the Bhargava Committee Report and category 2 in the Working Group Report are concerned, they should not be allowed to continue nor should they be closed down permanently without further inquiry and we accordingly appointed a high powered committee consisting of several officers to examine any scheme or schemes which may be submitted by the lessees of these lime stone quarries and submit report to ' this Court on the question whether in its opinion a particular lime stone quarry can be allowed to be operated in accordance with the scheme and if so, subject to what conditions and if it cannot be allowed to be operated, the reasons for taking that view. We gave the same direc tions also in regard to the lime stone quarries Classified as category A in Bhargava Committee Report and for category 1 in the Working Group Report and falling within the city limits of Mussoorie. We also directed by our order that the lime stone quarries placed in category 2 by the Working Group other than those which are placed in categories B and C by the Bhargava Committee should also not be allowed to be operated and should be dosed down save and except for the lime stone quarries covered by Mining Leases Nos. 31, 36 and 37 for which we gave the same direction as in the case of lime 639 stone quarries classified as category B in the Bhargava Committee Report. So far as lime stone quarries classified as category A in the Bhargava Committee Report and/or cate gory 1 in the Working Group Report and falling outside the city limits of Mussoorie are concerned we directed that they should be allowed to be operated subject to the observance of the requirements of the , the Metalliferous Mines .Regulations 1961 and other relevant statutes, rules and regulations. This order made by us was a detailed order and we stated at the time when we made this order that we shall proceed to give detailed reasons for the same in due course. I do not think it necessary to give any further reasons than those which are already stated in the order made by us on 12th March, 1985. Speaking personally for myself I think that the broad reasons have been adequately set out in the order and it would be an unnecessary exercise to elaborate them. We have referred in the order to the reports of the Bhargava Committee and the Working Group and we have accept ed these reports. The Bhargava Committee has classified the lime stone quarries into three categories namely, A, B and C while the Working Group has classified them into two catego ries, namely, 1 and 2. The lime stone quarries comprised in category A by the Bhargava Committee are the same as the lime stone quarries classified in category 1 by the Working Group and the lime stone quarries in categories B and C of the Bhargava Committee are classified in category 2 by the Working Group. Both the Bhargava Committee and the Working Group are unanimous in their view that the lime stone quar ries classified in category A by the Bhargava Committee and category 1 by the Working Group are suitable for continuance of mining operations and they have given their reasons for taking this view. So far as the lime stone quarries in category C of the Bhargava Committee Report are concerned, they are regarded both by the Bhargava Committee and by the Working Group as unsuitable for continuance of mining opera tions and both are of the view that they should be closed down for reasons which they have given in their respective reports. I agree with the reasons given in the Reports of the Bhargava Committee and the Working Group. The only difference between the Bhargava Committee and the Working Group is in regard to lime stone quarries classified in category B where the Bhargava Committee has taken the view that these lime stone quarries need not be closed down while the Working Group has definitely taken the view that these lime stone quarries are not suitable for further mining. I have preferred not to take the extreme view of the Working Group so far as the lime stone quarries classified in cate gory B by the Bhargava Committee are con 640 cerned, but have instead given an opportunity to the lessees of those lime stone quarries to submit a scheme or schemes to the high powered committee constituted by us, so that if the high powered committee thinks that any particular lime stone quarry out of these can be allowed to be operated in accordance with such scheme or schemes, the court may allow such lime stone quarry to be operated subject to conditions which may be thought fit to be imposed. These are the rea sons which have prevailed with me in making the order dated 12th March, 1985. I wish to observe that though exploitation of mineral resources in the interest of industrial growth of the coun try is necessary, yet such mines should be so worked as not to disturb the ecology and not to affect the livelihood and the living conditions of a very large number of people. Advantage gained by working the mines for industrial growth and national development in a manner which may seriously prejudice the interests of a large number of human beings and disturb the ecological balance, may very much be out weighed by the serious consequences which are likely to follow. Industrial development is necessary for economic growth of the country in the larger interests of the nation. If, however, industrial growth is sought to be achieved by haphazard and reckless working of the mines resulting in loss of life, loss of property, loss of basic amenities like supply of water and creation of ecological imbalance, there may ultimately be no real economic growth and no real pros perity. It is necessary to strike a proper balance. In my opinion the appropriate authorities at the time of granting leases should take all these facts and factors into consid eration and should while granting lease of mines for exploi tation of mineral provide for adequate safeguards. Had appropriate safeguards been provided at the time of granting of leases, it would not, indeed, have been necessary for us to direct the closure of so many mines and to good deal of sufferings of the people of the locality would have been avoided.

These Writ Petitions relate to the mining of lime stone quarries in Dehradun mining area. During the pendency of the Writ Petitions, the Court appointed a Committee known as Bhargav Committee for the purpose of inspecting the lime stone quarries mentioned in the Writ Petitions. The Govern ment of India had also appointed a working Group headed by the same, Shri D.N. Bhargav, who was a member of the Bhargav Committee appointed by the Court, on the mining of lime stone quarries in Dehradun Mussoorie area, some time in 1983. After the hearing was over, the Court passed a de tailed order on 12th March, 1985 [1985) 3 SCR 169] giving various directions and observing that the reasons for the order will be set out in the judgment to follow later. Hon 'ble Mr. Justice A.N. Sen, one of the members of the Bench who heard these petitions before his retirement, speaking for himself, OBSERVED: I. It is not necessary to give any further reasons than those which are already stated in the order made by the Court on 12th March, 1985 because the broad reasons have been adequately set out in that order and it would be an unnecessary exercise to elaborate them. [639C] 2. Industrial development is necessary for economic growth of the country. If, however, industrial growth is sought to be achieved by haphazard and reckless working of the mines resulting in loss of life, loss of property, loss of basic amenities like supply of water and creation of ecological imbalance, there may ultimately be no real eco nomic growth and no real prosperity. It is necessary to strike a proper balance. Appropriate authorities at the time of granting leases should take all these facts into consid eration and also provide for adequate safeguards. [640D F]

tition (Civil) No. 47 of 1992. (Under Article 32 of the Constitution of India). 789 P.L Singal and NA. Siddiqui for the Petitioner. D.N. Dwivedi, Additional Solicitor General and Mrs. Niranjana Singh for the Respondent. The Judgment of the Court was delivered by SHARMA CJ. By the present application under Article 32 of the Constantine of India, the petitioner has challenged the constitutional validity of the Representation of the People (Amendment) Ordinance, 1992 (Ordinance No.1 of 1992) and the Representation of the people (Second Amendment) Ordinance, 1992 (Ordinance No.2 of 1992), on the grounds of violation of Articles 14, 19 and 21. By the first Ordinance, section 52 of the Representation of the People Act, 1951 (the Act) providing for countermanding elections in certain circumstances has been amended. By the second Ordinance the period of 20 days in section 30 of the Act has been reduced to 14 days. Later, when the Parliament met, the amendments were incorporated by an amending Act. 2.The provisions of section 52, as they stood before the amendment, provided for countermanding the election in either of 2 contingencies (i) if a candidate whose nomination was found valid on scrutiny under section 36 or who has not withdrawn his candidature under section 37 died and a report of his death was received before the publication of the fist of contesting candidates under section 38, (ii) if a contesting candidate died and a report of his death was received before the commencement of the poll. On countermanding the Returning Officer will have to report the fact to the Election Commission; and all proceedings with reference to the election will have to be commenced de novo in all respects as if for a new election. By the first Ordinance, the area attracting the provisions of countermanding has been narrowed down by confining the provisions only to such cases where a candidate of a retired political party dies. 3.Section 30 deals with appointment of dates for nomination, scrutiny and the holding of poll and in clause (d) it is provided that the date of poll shall not be earlier than the twentieth day after the last date for the withdrawal of candidatures. With a view to expedite the whole process the words 'twentieth day ' have been substituted by the words "fourteenth day" in the said clause by the impugned Ordinace. 790 4. Learned counsel for the petitioner has strenuously contended that the distinction made by the impugned amendment between a candidate set up by a recognised political party and any other candidate is artificial inconsistent with the spirit of the election law and discriminatory. The Constitution does not confer on a candidate set up by a registered political party any special right and treats all candidates similarly. It does not recognize any categorisation. It is, therefore, argued that the difference which is being introduced by the impugned amendment is contrary to the scheme of the Constitution and violative of the equality clause in Article 14. According to the learned counsel this will also infringe the guarantee under Article 19(1)(a) in respect of freedom of speech and expression. 5.Elaborating his argument, the learned counsel contended that the right to choose its representative belongs to the voters of a particular constituency, and this should not be whittled down by amendments which have a tendency to undermine this element. Lack of wisdom in giving importance to recognized political parties was emphasised by saying that such parties almost always impose their choice of candidates in their own interest and at the cost of the welfare of the constituencies. By introducing this imbalance in the Act, it is stated, the republican character of the Constitution is jeopardised. The sum and substance of the argument on behalf of the petitioner is that no distinction can be made between one candidate and another purely depending on recognition as a political party. 6.So far the second Ordinance is concerned, the objection is that the period of 14 days, substituted by the amendment, is too short and the reduction from the period of 20 days is arbitrary and prejudicial to the larger interest for which elections are held. 7.In reply, Mr. Altaf Ahmad, Additional Solicitor General, appearing on behalf of the Union of India has strongly relied upon the statements made in the counter affidavit filed on behalf of the respondent stating that on account of increase in terrorism and physical violence in several parts of the country combined with the phenomenal increase in the number of independent candidates, the danger of disruption of the election process has been fast growing and the problem was, therefore, taken up for serious consideration. The issue was examined by the Electoral Reforms Committee set up in 1990 under the Chairmanship of the then Minister of law and 791 Justice, late Dinesh Goswami. After studying the problem deeply and considering various points of view presented in this regard the. Committee made its recommendation and, accordingly, the impugned amendment was made. Explaining the urgency of introducing the amendment by an Ordinance (when Parliament was not in session) the counter affidavit states that it had then been decided to hold the General Elections to the House of People from the State of Punjab as also the election to the State Legislature of that State and having regard to the law and order situation prevailing in the State, it was considered essential to curb the danger of disruption of the election process by amending section 52 immediately. With the same object in view, the period of 20 days mentioned in section 30 was substituted by 14 days. 8.Before proceeding to examine the merits of the argument addressed on behalf of the petitioner it will be useful to note that the right to vote or to stand as a candidate for election is neither a fundamental nor a civil right. In England also it has never been recognised as a common law right. In this connection, we may usefully refer to the following observations in,Jyoti Basu & Others vs Debi Ghosal & Others, A.I.R.1982 S.C.983 and 986 which reads as under : "The nature of the right to elect, the right to be elected and the right to dispute an election and the scheme of the constitutional and statutory provisions in relation to these rights have been explained by the Court in N.P. Ponnuswani vs Retuming Officer, Namakkal Constituency, ; : ; and Jagan Nath vs Jaswant Singh, ; We proceed to state what we have gleaned from what has been said, so much as necessary for this case. A right to elect, fundamental though it is to democracy, is, anomalously enough, neither a fundamental right nor a Common Law Right. It is pure and simple, a statutory right. So is the right to be elected. So is the right to dispute an election. Outside of statute, there is no right to elect, no right to be elected and no right to dispute an election. Statutory creations they are, and therefore, subject to statutory limitation. " 792 The objection raised by the petitioner, therefore, must be examined in this background. 9.The challenge of the petitioner is directed against the differential treatment which the election law in India gives to candidates set up by political parties. The main thrust of the argument of the learned counsel is that the party system and the recognition of political parties is itself detrimental to the cause of real democracy. In any event, no additional advantage ought to have been allowed to candidates set up by political parties. This stand runs counter to the constitutional scheme adopted by the nation. It has firmly been established that the Cabinet system of Government has been envisaged by our Constitution and that the same is on the British pattern. (See Shamsher Singh vs State of Punjab; , at 827). In England where democracy has prevailed for longer than in any other country in recent times, the Cabinet system of Government has been found to be most effective. In the other democratic countries also the party system has been adopted with success. It has been realised that for a strong vibrant democratic Government, it is necessary to have a parliamentary majority as well as a parliamentary minority, so that the different points of view on controversial issues are brought out and debated on the floor of the Parliament. This can be best achieved by the party system, so that the problems of the nation may be discussed, considered and resolved in a constructive spirit. To abolish or ignore the party system would be to permit a chorus of discordant notes to replace an organised discussion. In his book "Cabinet Government" (2nd Edition page 16) Sir Ivory Jennings has very rightly said. "Party warfare is thus essential to the working of the democratic system". It is, therefore, idle to suggest that for establishing a true democratic society, the party system should be ignored. Our Constitution has clearly recognized the importance of this system, which was further emphasized by the addition of the 10th Schedule to it. The Election Symbols (Reservation and Allotment) Order is also a step in that very direction. There is also no merit whatsoever in the contention that candidates set up by political parties should not receive any special treatment. The fact that candidates set up by political parties constitute a class separate from the other candidates has been recognized by this Court in numerous cases. In paragraph 14 of the judgment in the case of Dr. P.N. Thampy Terah vs Union of India [1985] Suppl. SCC 189, the Constitution 793 Bench observed thus : "It is the political parties which sponsor candidates, that are in a position to incur large election expenses which often run into astronomical figures. We do not consider that preferring political parties for exclusion from the sweep of monetary limits on election expenses, is so unreasonable or arbitrary as to justify the preference being struck down upon that gournd." In D.M.L. Agarwal vs Rajiv Gandhi, ; a Division Bench of this Court took note of and emphasized the vital role of political parties in a parliamentary form of democracy and anxiety was expressed about the growing number of independent candidates. For the reasons indicated above, we do not find any substance in the argument of the learned counsel for the petitioner challenging the constitutional validity of the impugned amendment of section 52. The argument against the reduction of the period of 20 days to 14 days in section 30 is equally without any merit. The learned counsel could not suggest any good reason for holding that the period of 14 days would be inadequate or inappropriate, especially in the changed circumstances which are prevailing in the country. Consequently, this writ petition is dismissed with costs assessed at Rs. 2,500 payable to the respondent Union of India. N.V.K. Petition dismissed.

The petitioner In his Writ Petition Under Article 32 of the Constitution of India, challenged the constitutional validity of the Representation of the People (Amendment) Ordinance, 1992 (Ordinance No. 1 of 1992), and the Representation of the People (Second Amendment) Ordinance, 1992 (Ordinance No.2 of 1992) on the grounds of violation of Articles 14, 19 and 21 of the Constitution of India. The provisions of Section 52 of the Representation of the People Act, 1951 as they stood before amendment provided for countermanding the election In either of two contingencies: (1) If a candidate whose nomination was found valid on scrutiny under section 36 or who has not withdrawn his candidature under section 37 died and a report of his death was received before the publication of the list of contesting candidates under section 38, (II) If a contesting candidate died and a report of his death was received before the commencement of the poll. By Ordinance No. 1 of 1992, the area attracting the provisions of countermanding in section 52 had been narrowed down by confining the provisions only to such cases where a candidate of a recognized political party dies. 787 Section 30 of the Representation of People Act, 1951 dealt with appointment of dates for nomination, scrutiny and the holding of poll, and in clause (d) it was provided that the date of poll shall not be earlier than the twentieth day after the last date for the withdrawal of candidatures. With a view of expedite the whole process, the words 'twentieth day ' have been substituted by the words 'fourteenth day ' in clause (d) of Section 30 by the Second Ordinary viz. Ordinance No. 2 of 1992. On behalf of the petitioner it was contended that the distinction made by the impugned amendment between a candidate set up by a recognised political party and any other candidate is artificial, inconsistent with the spirit of the election law and discriminatory, that the Con stitution does not confer on a candidate set up by a registered political party any special right, and treats all candidates similarly, and does not any categorisation, that the difference being introduced by the impugned amendment was contrary to the scheme of the Constitution and violative of the equality clause in Article 14, and that it also infringed the guarantee under Article 19(1) (a). In respect of the Second Ordinance the objection was that the period of 14 days substituted by the amendment was too short, and the reduction from the period of 20 days was arbitrary and prejudicial to the larger interest for which elections are held. The Petition was contested on behalf of Union of India by stating that on account of increase in terrorism and physical violence in several parts of the Country combined with the phenomenal increase in the number of independent candidates, the danger of disruption of the election process had been fast growing and the problem was, therefore, taken up, examined and it was considered that the amendments were essential to curb the danger of disruption of the election process. Dismissing the Writ Petition, this Court, HELD : 1. The right to vote or to stand as a candidate for election is neither a fundamental right nor a civil right In England also it has never been recognised as a common law right [791D] Jyoti Basu & Ors. vs Debi Ghosal & Ors, ; and 986, referred to. 2. The Cabinet system of Government has been envisaged by our 788 Constitution, and the same is on the British pattern. In England, where democracy has prevailed for longer than in any other country in recent times, the Cabinet system of Government has been found to be most effective. In other democratic countries also the party system has been adopted with success. [792C D] Shamser Singh vs State of Punjab, ; at 827, referred to. 3.For a strong vibrant democratic Government, it is necessary to have a parliamentary majority as well as a parliamentary minority, so that the different points of view on controversial issues are brought out and debated on 'he floor of the Parliament. This can be best achieved by the party system, so that the problems of the nation may be discussed, considered and resolved in a constructive spirit. To abolish or ignore the party system would be to permit a chorus of discordant notes to replace an organised discussion. [792E] Sir Ivor Jennings 'Cabinet Government 2nd Edn. p.16, referred to. 4.Our Constitution has dearly recognised the importance of the party system, which was further emphasized by the addition of the 10th Schedule to it The Election Symbols (Reservation and Allotment) Order is also a step in that very direction. [792F] 5.That candidates set up by political parties constitute a class separate from other candidates has been recognised in numerous cases by this Court which has also emphasized the vital role of political parties in a parliamentary form of democracy and expressed anxiety about the growing number of independent candidates. [792H, 793C] Dr. P.N. Thampy Terah vs Union of India ; and D.M.L. Agarwal vs Rajiv Gandhi, ; , referred to. 6.The Representation of the People (Amendment) Ordinance, 1992 and theRepresentation of the People (Second Amendment) Ordinance, 1992 are constitutionally valid. [789C]

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

Under an agreement dated December 8, 1933, the appellant firm was appointed managing agent of a limited company for a period of thirty years from November 9, 1933. Clause 2 of the agreement provided for the remuneration of the managing agent. Some of the shareholders and directors of the company having felt that the scale of remuneration paid to the managing agent was extraordinarily excessive and unusual, negotiations were started for a reduction of the remuneration, and as a result the appellant and the company entered into a Supplementary Agreement on March 24, 1948, whereby in consideration of the company paying a sum of Rs. 7,50,000 " as compensation for releasing the company from the onerous term as to remuneration ", contained in the original agreement, the managing agent agreed to accept as remuneration as from September i, 1946, for the remaining term of the managing agency ten per cent. of the net annual profits of the company as defined in section 87C, sub section (3) of the Indian Companies Act, 1938 The sum of Rs. 7,50,000 was paid by the company to the appellant in 1947. For the assessment year I948 49 the Income tax Officer treated the aforesaid sum as a revenue receipt in the hands of the appellant and taxed it as such. The appellant claimed that the sum was a payment made by the company whole in discharge of its contingent liability to pay the higher remuneration and it was, therefore, a capital expenditure incurred by the company and received by the appellant as a capital receipt and was, as such, not liable to tax. The income tax authorities maintained (i) that though the payment of Rs. 7,50,000 had been described as compensation, the real object and consideration for the payment was the reduction of remuneration, (2) that it was a lump sum payment in consideration of the variation of the terms of employment and was, therefore, not a capital receipt but was a revenue receipt, and (3) that there was, in fact, no break in service and the payment was made in the course of the continuation of the service and, therefore, represented a revenue receipt of the managing agency business of the appellant. Held, that the sum of Rs. 7,50,000 was paid by the company for securing immunity from the liability to pay higher remuneration to the appellant for the rest of the term of the managing 528 agency and was, therefore, a capital expenditure ; and, so far as the appellant was concerned, it was received as compensation for the deterioration or injury to the managing agency by reason of the release of its rights to get higher remuneration and was, therefore, a capital receipt. The Commissioner of Income tax vs Vazir Sultan and Sons ; Hunter vs Dewhuyst, (1932) 16 Tax Cas. 605 and Glenboig Union Fiyeclay Co. Ltd. vs The Commissioners of Inland Revenue, , relied on. Assam Bengal Cement Co. Ltd. vs Commissioner of Income tax, [1955] i S.C.R. 972 ; The Commissioner of Income tax and Excess Profits Tax vs The South India Pictures Ltd., ; ; The Commissioner of Income tax vs Jairam Valji, and The Commissioner of Income tax vs Shaw Wallace and CO. (1932) L.R. 59 I.A. 206, considered.

N: Criminal Appeal No. 158 of 1972. Appeal by special leave from the Judgment and order dated the 12th November, 1971 of the Gujarat High Court at Ahmedabad in Criminal Appeal No. 219 of 1970. H.S. Patel, S.S. Khanduja and Lalita Kohli, for the appellant. section K. Zauri, Amaresh Kumar and M. V. Goswami, for the respondents 1 2. H. R. Khanna and M. N. Shroff, for respondent No. 3. The Judgment of the Court was delivered by CHANDRACHUD, J. This is an appeal by special leave from the judgment of the Gujarat High Court convicting the appellant under section 36 read with section 8 of the Gujarat Agricultural Produce Markets Act, 20 of 1964 (referred to herein as "the Act"), and sentencing him to pay a fine of Rs. 10/ . The judgment of conviction was recorded by the High Court in an appeal from an order of acquittal passed by the learned Judicial Magistrate, First Class, Godhra. An Inspector of Godhra Agricultural Produce Market Committee filed a complaint against the appellant charging him with having purchased a certain quantity of ginger in January and February, 1969 without obtaining a licence as required by the Act. The learned Magistrate accepted the factum of purchase but he acquitted the appellant on the ground that the relevant notification in regard to the inclusion of ginger was not shown to have been promulgated and published as required by the Act. The case was tried by the learned Magistrate by the application of procedure appointed for summary trials. That circumstance together with the token sentence of fine imposed by the High Court gives to the case a petty appearance. But occasionally, matters apparently petty seem on closer thought to contain points of importance though, regretfully, such importance comes to be realized by stages as the matter travels slowly from one court to another. As before the Magistrate so in the High Court, the matter failed to receive due attention: a fundamental premise on which the judgment of the High Court is based contains an assumption contrary to the record. Evidently, the attention of the High Court was not drawn either to the error of that assumption or to some of the more important aspects of the case which the parties have now perceived. It is necessary, in order to understand the controversy, to notice some of the relevant statutory provisions. In the erstwhile composite State of Bombay there was in operation an Act called the Bombay Agricultural Produce Markets Act, 22 of 1939. On the bifurcation of that State on May 1, 1960 the new State of Gujarat was formed. The Bombay Act of 1939 was extended by 454 an appropriate order to the State of Gujarat by the Government of that State. That Act remained in operation in Gujarat till September 1, 1964 on which date the Gujarat Agricultural Produce Markets Act, 20 of 1964, came into force. The Act was passed "to consolidate and amend the law relating to the regulation of buying and selling of agricultural produce and the establishment of markets for agricultural produce in the State of Gujarat". Section 4 of the Act empowers the State Government to appoint an officer to be the Director of Agricultural Marketing and Rural Finance. Sections 5, 6(1) and 6(5) of the Act read thus: "5. Declaration of intention of regulating purchase and sale of agricultural produce in specified area. (1) The Director may, by notification in the Official Gazette, declare his intention of regulating the purchase and sale of such agricultural produce and in such area, as may be specified therein. Such notification shall also be published in Gujarati in a newspaper having circulation in the area and in such other manner as may be prescribed. (2) Such notification shall state that any objection or suggestion received by the Director within the period specified in the notification which shall not be less than one month from the date of the publication of the notification, shall be considered by the Director. (3) The Director shall also send a copy of the notification to each of the local authorities functioning in the area specified in the notification with a request to submit its objections and suggestions if any, in writing to the Director within the period specified in the notification. Declaration of market areas. (1) After the expiry of the period specified in the notification issued under section 5 (hereinafter referred to in this section as 'the said notification '), and after considering the objections and suggestions received before its expiry and holding such inquiry as may be necessary, the Director may, by notification in the Official Gazette, declare the area specified in the said notification or any portion thereof to be a market area for the purposes of this Act in respect of all or any of the kinds of agricultural produce specified in the said notification. A notification under this section shall also be published in Gujarati in a newspaper having circulation in the said area and in such other manner, as may be prescribed. (5) After declaring in the manner specified in section 5 his intention of so doing, and following the procedure there in, the Director may, at any time by notification in the Official Gazette. exclude any area from a market area specified in a notification issued under sub section (1), or include any area therein and exclude from or add to the kinds of agricultural produce so specified any kind of agricultural produce. " 455 By section 8, no person can operate in the market area or any part thereof except under and in accordance with the conditions of a licence granted under the Act. Section 36 of the Act provides, to the extent material, that whoever without holding a licence uses any place in a market area for the purchase or sale of any agricultural produce and thereby contravenes section 8 shall on conviction be punished with the sentence mentioned therein. Rule 3 of the Gujarat Agricultural Produce Markets Rules, 1965 provides that a notification under section 5 (1) or section 6(1) shall also be published by affixing a copy thereof at some conspicuous place in the office of each of the local authorities functioning in the area specified in the notification. The simple question, though important, is whether the notification issued under section 6(5) of the Act, covering additional varieties of agricultural produce like ginger and onion, must not only be published in the official gazette but must also be published in Gujarati in a newspaper. The concluding sentence of section 6(1) says that a notification under "this section" "shall also be published in Gujarati in a newspaper" having circulation in the particular area. The argument of the appellant is twofold: Firstly, that "this section" means this subsection so that the procedure in regard to publication which is laid down in subsection (1) of section 6 must be restricted to notifications issued under that subsection and cannot be extended to those issued under subsection (5) of section 6; and secondly, assuming that the words "this section" are wide enough to cover every sub section of section 6 the word "shall" ought to be read as "may". First, as to the meaning of the provision contained in section 6 (1) of the Act. It means what it says. That is the normal rule of construction of statutes, a rule not certainly absolute and unqualified, but the conditions which bring into play the exceptions to that rule do not exist here. Far from it; because, the scheme of the Act and the purpose of the particular provision in section 6(1) underline the need to give to the provision its plain, natural meaning. It is not reasonable to assume in the legislature an ignorance of the distinction between a "section" of the statute and the "subsections" of that section. Therefore, the requirement laid down by section 6(1) that a notification under "this section" shall also be published in Gujarati in a newspaper would govern any and every notification issued under any part of section 6, that is to say, under any of the sub sections of section 6. If this requirement was to govern notifications issued under sub section (1) of section 6 only. the legislature would have said so. But the little complexity that there is in this matter arises out of a known phenomenon, judicially noticed but otherwise disputed, that sometimes the legislature does not say what it means. That has given rise to a series of technical rules of interpretation devised or designed to unravel the mind of the law makers. If the words used in a statute are ambiguous, it is said, consider the object of the statute, have regard to the purpose for which the particular provision is put on the statute book 456 and then decide what interpretation best carries out that object and purpose. The words of the concluding portion of section 6(1) are plain and unambiguous rendering superfluous the aid of artificial guide lines to interpretation. But the matter does not rest there. The appellant has made an alternative argument that the requirement regarding the publication in Gujarati in a newspaper is directory and not mandatory, despite the use of the word "shall". That word, according to the appellant, really means "may". Maxwell, Crawford and Craies abound in illustrations where the words "shall" and "may" are treated as interchangeable, "Shall be liable to pay interest" does not mean "must be made liable to pay interest", and "may not drive on the wrong side of the road" must mean "shall not drive on the wrong side of the road". But the problem which the use of the language of command poses is: Does the legislature intend that its command shall at all events be performed ? Or is it enough to comply with the command in substance ? In other words, the question is : is the provision mandatory or directory ? Plainly, "shall" must normally be construed to mean "shall" and not "may", for the distinction between the two is fundamental. Granting the application of mind, there is little or no chance that one who intends to leave a lee way will use the language of command in the performance of an act. But since, even lesser directions are occasionally clothed in words of authority, it becomes necessary to delve deeper and ascertain the true meaning lying behind mere words. Crawford on 'Statutory Construction ' (Ed. 1940, article 261, p. 516) sets out the following passage from an American case approvingly: "The question as to whether a statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which the intent is clothed. The meaning and intention of the legislature must govern, and these are to be ascertained, not only from the phraseology of the provision, but also by considering its nature, its design, and the consequences which would follow from construing it the one way or the other. " Thus, the governing factor is the meaning and intent of the legislature, which should be gathered not merely from the words used by the legislature but from a variety of other circumstances and considerations. In other words, the use of the word 'shall ' or 'may ' is not conclusive on the question whether the particular requirement of law is mandatory or directory. But the circumstance that the legislature has used a language of compulsive force is always of great relevance and in the absence of anything contrary in the context indicating that a permissive interpretation is permissible, the statute ought to be construed as pre emptory. One of the fundamental rules of interpretation is that if the words of a statute are themselves precise and unambiguous, no more is necessary than to expound those words in their natural and ordinary sense, the words themselves in such case best declaring the intention of the legislature(1). Section 6(1) of the Act provides in terms, plain and precise that a notification issued under the section "shall also" be published in Gujarati in a newspaper. The word 'also ' provides an 457 important clue to the intention of the legislature because having provided that the notification shall be published in the Official Gazette, section 6(1) goes on to say that the notification shall also be published in Gujarati in a newspaper. The additional mode of publication prescribed by law must, in the absence of anything to the contrary appearing from the context of the provision or its object, be assumed to have a meaning and a purpose. In Khub Chand vs State of Rajasthan, it was observed that "the term 'shall ' in its ordinary significance is mandatory and the court shall ordinarily give that interpretation to that term unless such an interpretation leads to some absurd or inconvenient consequence or be at variance with the intent of the Legislature, to be collected from other parts of the Act. The construction of the said expression depends on the provisions of a particular Act, the setting in which the expression appears, the object for which the direction is given, the consequences that would flow from the infringement of the direction and such other considerations". The same principle was expressed thus in Haridwar Singh vs Begum Sumbrui. "Several tests have been propounded in decided cases for determining the question whether a provision in a statute, or a rule is mandatory or directory. No universal rule can be laid down on this matter. In each case one must look to the subject matter and consider the importance of the provision disregarded and the relation of that provision to the general object intended to be secured. " Recently in the Presidential Election Case(3), the learned Chief Justice speaking on behalf of a seven Judge Bench observed: "In determining the question whether a provision is mandatory or directory, the subject matter, the importance of the provision, the relation of that provision to the general object intended to be secured by the Act will decide whether the provision is directory or mandatory. It is the duty of the courts to get at the real intention of the legislature by carefully attending to the whole scope of the provision to be construed. 'The Key to the opening of every law is the reason and spirit of the law, it is the animus imponentis, the intention of the law maker expressed in the law itself, taken as a whole '. " The scheme of the Act is like this: Under section 5(1) the Director of Marketing and Rural Finance may by a notification in the Official Gazette declare his intention of regulating purchase and sale of agricultural produce in the specified area. Such notification is also required to be published in Gujarati in a newspaper having circulation in the particular area. By the notification, the Director under section 5(2) has to invite objections and suggestions and the notification has to be stated that any such objections or suggestions received by the Director within the specified period, which shall not be less than one month from the date of the publication of the notification, shall be considered by the Director. After the expiry of the aforesaid period the Director, under section 6(1), has the power to declare an area as the market area in respect of the particular kinds of agricultural produce. This power is not absolute because by the terms of section 6(1) it can only be exercised after considering the objections and suggestions received by the Director within the stipulated period. The notification under section 6(1) is also required to be published in Gujarati in a newspaper. The 458 power conferred by section 5(1) or 6(1) is not exhausted by the issuance of the initial notification covering a particular area or relating to a particular agricultural produce. An area initially included in the market area may later be excluded, a new area may be added and likewise an agricultural produce included in the notification may be excluded or a new variety of agricultural produce may be added. This is a salutary power because experience gained by working the Act may show the necessity for amending the notification issued under section 6(1). This power is conferred by section 6(5). By section 6(5), if the Director intends to add or exclude an area or an agricultural produce, he is to declare his intention of doing so in the manner specified in section 5 and after following the procedure prescribed therein. Thus, an amendment to the section 6(1) notification in regard to matters described therein is equated with a fresh declaration of intention in regard to those matters, rendering it obligatory to follow afresh the whole of the procedure prescribed by section 5. That is to say, if the Director intends to add or exclude an area or an agricultural produce, he must declare his intention by notification in the Official Gazette and such notification must also be published in Gujarati in a newspaper. Secondly, the Director must invite objections or suggestions by such notification and the notification must state that any objections or suggestions received within the stipulated time shall be considered by him. The Director must also comply with the requirement of sub section (5) of section 3 by sending a copy of the notification to each of the local authorities functioning in the particular area with a request that they may submit their objections and suggestions within the specified period. After the expiry of the period aforesaid and after considering the objections or suggestions received within that period, the Director may declare that the particular area or agricultural produce be added or excluded to or from the previous notification. This declaration has to be by a notification in the Official Gazette and the notification has to be published in Gujarati in a newspaper having circulation in the particular area. The last of these obligations arises out of the mandate contained in the concluding sentence of section 6(1). The object of these requirements is quite clear. The fresh notification can be issued only after considering the objections and suggestions which the Director receives within the specified time. In fact, the initial notification has to state expressly that the Director shall consider the objections and suggestions received by him within the stated period. Publication of the notification in the Official Gazette was evidently thought by the legislature not an adequate means of communicating the Director 's intention to those who would be vitally affected by the proposed declaration and who would therefore be interested in offering their objections and suggestions. It is a matter of common knowledge that publication in a newspaper attracts greater public attention than publication in the Official Gazette. That is why the legislature has taken care to direct that the notification shall also be published in Gujarati in a newspaper. A violation of this requirement is likely to affect valuable rights of traders and agriculturists because in the absence of proper and adequate publicity, their right of trade and business shall have been hampered without affording to them an opportunity to offer objections and suggestions, an opportunity which the statute clearly deems so 459 desirable. By section 6(2), once an area is declared to be a market area, no place in the said area can be used for the purchase or sale of any agricultural produce specified in the notification except in accordance with the provisions of the Act. By section 8 no person can operate in the market area or any part thereof except under and in accordance with the conditions of a licence granted under the Act. A violation of these provisions attracts penal consequences under section 36 of the Act. It is therefore vital from the point of view of the citizens ' right to carry on trade or business, no less than for the consideration that violation of the Act leads to penal consequences, that the notification must receive due publicity. As the statute itself has devised an adequate means of such publicity, there is no reason to permit a departure from that mode. There is something in the very nature of the duty imposed by sections 5 and 6, something in the very object for which that duty is cast, that the duty must be performed. "Some Rules", as said in Thakur Pratap Singh vs Sri Krishna, "are vital and go to the root of the matter: they cannot be broken". The words of the statute here must therefore be followed punctiliously. The legislative history of the Act reinforces this conclusion. As stated before, the Bombay Agricultural Produce Markets Act, 1939 was in force in Gujarat till September 1, 1964 on which date the present Act replaced it. Section 3(1) of the Bombay Act corresponding to section 5(1) of the Act provided that the notification `may ' also be published in the regional languages of the area. Section 4(1) of the Bombay Act which corresponds to section 6(1) of the Act provided that "A notification under this section may also be published in the regional languages of the area in a newspaper circulated in the said area". Section 4(4) of the Bombay Act corresponding to section 6(5) of the Act provided that exclusion or inclusion of an area of an agricultural produce may be made by the Commissioner by notification in the Official Gazette, "subject to the provisions of section 3". Section 4(4) did not provide in terms as section 6(5) does, that the procedure prescribed in regard to the original notification shall be followed if an area or an agricultural produce is to be excluded or included. The Gujarat legislature, having before it the model of the Bombay Act, made a conscious departure from it by providing for the publication of the notification in a newspaper and by substituting the word `shall ' for the word `may '. These are significant modifications in the statute which was in force in Gujarat for over 4 years from the date of reorganisation till September 1, 1964. These modifications bespeak the mind of the legislature that what was optional must be made obligatory. We are therefore of the opinion that the notification issued under section 6(5) of the Act, like that under section 6(1), must also be published in Gujarati in a newspaper having circulation in the particular area. This requirement is mandatory and must be fulfilled. Admittedly the notification (exhibit 10) issued under section 6(5) on February 16, 1968 was not published in a newspaper at all, much less in Gujarati, Accordingly, the inclusion of new varieties of agricultural produce in that notification lacks legal validity and no prosecution can be founded upon its breach. 460 Rule 3 of the Gujarat Agricultural Produce Markets Rules, 1965 relates specifically and exclusively to notifications "issued under subsection (1) of section 5 or under sub section (1) of section 6. " As we are concerned with a notification issued under sub section (5) of section 6, we need not go into the question whether Rule 3 is complied with. We may however indicate that the authorities concerned must comply with Rule 3 also in regard to notifications issued under sections 5(1) and 6(1) of the Act. After all, the rule is calculated to cause no inconvenience to the authorities charged with the duty of administering the Act. It only requires publication by affixing a copy of the notification at some conspicuous place in the office of each of the local authorities functioning in the area specified in the notification. The prosecution was conducted before the learned Magistrate in an indifferent manner. That is not surprising because the beneficent purpose of summary trials is almost always defeated by a summary approach. Bhailalbhai Chaturbhai Patel, an Inspector in the Godhra Agricultural Produce Market Committee, who was a material witness for proving the offence, said in his evidence that he did not know whether or not the notifications were published in any newspaper or on the notice board of the Godhra Municipality. The learned Magistrate acquitted the appellant holding that the prosecution had failed to prove beyond a reasonable doubt that the notifications were published and promulgated as required by law. In appeal, the High Court of Gujarat began the operative part of its judgment with a wrong assumption that exhibit 9 dated April 19, 1962 was a "notification constituting the Godhra Market area." In fact exhibit 9 was issued under section 4 A(3) of the Bombay Act as amended by Gujarat Act XXXI of 1961 declaring certain areas as "market proper" within the Godhra Market area. The High Court was really concerned with the notification, exhibit 10, dated February 16, 1968 which was issued under section 6(5) of the Act and by which new varieties of agricultural produce like onion, ginger, sunhemp and jowar were added to the old list. The High Court set aside the acquittal by following the judgment dated February 12, 1971 rendered by A. D. Desai, J. in Cr. Appeal 695 of 1969. That judgment has no application because it arose out of the Bombay Act and the question before Desai, J. was whether section 4(1) of the Bombay Act was mandatory or directory. That section, as noticed earlier, provided that the notification "may" also be published in the regional language of the area in a newspaper circulated in that area. The High Court, in the instant case, was concerned with section 6(5) of the Act which has made a conscious departure from the Bombay Act in important respect. The High Court did not even refer to the provisions of the Act and it is doubtful whether those provisions were at all brought to its notice. Everyone concerned assumed that the matter was concluded by the earlier judgment of Desai, J. For these reasons we set aside the judgment of the High Court and restore that of the learned Judicial Magistrate, First Class, Godhra. Fine, if paid, shall be refunded to the appellant. P.H.P. Appeal allowed.

The appellant was prosecuted for having purchased a certain quantity of ginger without obtaining a licence as required by the Gujarat Agricultural Produce Markets Act. The trial court accepted the factum of purchase but it acquitted the appellant on the ground that the relevant notification in regard to the inclusion of ginger was not shown to have been promulgated and published as required by the Act. On appeal, the High Court reversed the acquittal and sentenced the appellant to a fine of Rs. 10/ . The High Court proceeded on the assumption that the notifications were property made. In the erstwhile composite State of Bombay there was in operation The Bombay Agricultural Produce Markets Act of 1939. On the bifurcation of the State in 1960 the said 1939 Act was extended by an appropriate order to the State of Gujarat. That Act remained in operation in Gujarat till the year 1964 in which year the present Act came into force. Section 5 of the Act requires the Director to notify in the Official Gazette his intention to regulate the purchase and sale of agricultural produce. The section also requires the publication in Gujarati in a newspaper having circulation in the area. The section further requires that the objections should be invited from the public. Section 6(1) provides that after the expiry of the period for making objections and after considering the objections and suggestions received and after holding necessary inquiry, the Director may, by notification in the Official Gazette, declare the area specified in the said notification to be a market area in respect of the agricultural produce to be specified in the notification. Sub section (1) of section 6 further requires that the notification under the said section shall be published in Gujarati in a newspaper having circulation in the said area. Sub section (5) of section 6 provides that the Director may, at any time by notification in the official gazette, exclude any area from a market area specified in a notification issued under sub section (1) or include any area therein and exclude from or add to the kinds of agricultural produce so specified. The sale or purchase of the agricultural produce concerned without a licence is made an offence by section 36 of the Act. On appeal by special leave, the appellant contended that the notification under section 6(5) of the Act, covering additional varieties of agricultural produce, must not only be published in the Official gazette but must also be published in Gujarati in a newspaper. The respondent contended that (1) the procedure in regard to the publication which is laid down in sub section (1) of section 6 must be restricted to notifications issued under that sub section and cannot be extended to those issued under sub section (5) of section 6; (2) Assuming that the words "this section" are wide enough to cover every sub section of section 6. the word 'shall ' ought to be read as 'may '. ^ HELD: (1) Section 6(1) means what it says. That is the normal rule of construction of statutes, a rule not certainly absolute and unqualified, but the conditions which bring into play the exceptions to that rule did not exist. It is not reasonable to assume in the legislature an ignorance of the distinction between a "section" of the statute and the "sub section" of that section. The requirement 452 laid down by section 6(1) that a notification under "this section" shall also be published in Gujarati in a newspaper would govern any and every notification issued under any par of section 6, that is to say, under any of the sub sections of section 6. [455E G] (2) Sometimes the legislature does not say what it means. That has given rise to a series of technical rules of interpretation devised or designed to unraval the mind of the law makers. The words of the concluding portion of section 6(1) are plain and unambiguous rendering superfluous the aid of artificial guide lines to interpretation. [455H 456A] (3) "Shall" must normally be construed to mean "shall" and not "may", for the distinction between the two is fundamental. The use of the word "shall" or "may" is not conclusive on the question whether the particular requirement of law is mandatory or directory. In each case one must look to the subject matter and consider the importance of the provision disregarded and the relation of that provision to the general object intended to be secured. It is the duty of courts to get at the real intention of the legislature by carefully attending to the whole scope of the provision to be construed. The amendment to section 6(1) notification in regard to matters described therein is equated with a fresh declaration of intention in regard to those matters, rendering it obligatory to follow afresh the whole of the procedure prescribed by section 5. The object of these requirements is quite clear. The fresh notification can be issued only after considering the objections and suggestions which the Director receives within the specified time. In fact, the initial notification has to state expressly that the Director shall consider the objections and suggestions received by him within the stated period. The publication of the notification in the Official Gazette was evidently thought by the legislature not an adequate means of communicating the Director 's intention to those who would be vitally affected by the proposed declaration and who would therefore be interested in offering their objections and suggestions. It is a matter of common knowledge that publication in a newspaper attracts greater public attention than publication in the official gazette. That is why the legislature has taken care to direct that the notification shall also be published in Gujarati in a newspaper. A violation of this requirement is likely to affect valuable rights of traders and agriculturists because in the absence of proper and adequate publicity their right of trade and business shall have been hampered without affording to them an opportunity to offer objections and suggestions. Once an area is declared to be a market area. no place in the said area can be used for the purchase or sale of any agricultural produce specified in the notification without the necessary licence. A violation of the said provisions attracts penal consequences under section 36. It is. therefore, vital from the point of view of the citizens ' right to carry on trade or business, no less than for the consideration that violation of the Act leads to penal consequences, that the notification must receive due publicity. There is something in the very nature of the duty imposed by sections 5 and 6. something in the very object for which the duty is cast. that the duty must be performed. [456C, 458B, F H, 459A B] (4) The legislative history of the Act reinforces this conclusion. In the Bombay Act, which was made applicable to Gujarat till 1964, it was not necessary to publish in the newspaper notifications corresponding to section 6(5) notifications under the new Act. The Gujarat Legislature, having before it the model of the Bombay Act. made a conscious departure from it by providing for the publication of the notification in a newspaper and by substituting the word 'shall ' for the word 'may '. [459D F] (5) A notification under section 6 must be published in Gujarati in a newspaper. This requirement is mandatory and must be fulfilled. Admittedly, the notification in question was not published in a newspaper at all, much less in Gujarati. Accordingly, the inclusion of new varieties of agricultural produce in that notification lacks legal validity and no prosecution can be founded upon its breach. [459E H] (6) The High Court took into consideration a wrong notification. Reliance on the earlier judgment of Gujarat High Court on the construction of the Bombay Act was also wrong since the language there was wholly different. [460E G] 453

N: Criminal Appeal No. 239 of 1979. Appeal by Special Leave from the Judgment and Order dated 3 11 78 of the Allahabad High Court in Criminal Revision Nos. 1064 and 1065/75. section K. Sabharwal for the Appellants. O. P. Rana for the Respondent. The following Judgments were delivered: KRISHNA IYER, J. Concurrent convictions by both the courts below have, by a rule of restriction and circumspection which this Court often adopts under article 136, persuaded me to circumscribe the leave to appeal to the critical question of punishment, usually answered by courts untouched by current humane criteria and drowned in the superstition that the gravity of the crime and the tariff prescribed in the Penal Code have a monopolistic hold on the sentencing court. Quackery in criminology is a deficiency in forensic justicing especially disastrous is sensitive areas like juvenile sentencing when unlettered punishment becomes unwitting crime. The present case is an illustration of judicial habituation to prescribing sentences conditioned by the offence and its milieu, forgetting the fundamental fact that the human delinquent, not the criminal deviance, is the cynosure of punitive processing. The further Gandhian axiom follows that crime is like disease, and correction, not cruelty, has dominance in the sentencing calculus. The sadistic appeal to severity of infliction takes on a sublimated form in the judicial process, as has happened in the instant case. The court has rightly been horrified by the crime of rape here but wrongly bid farewell to the reform of the vernal criminals. 770 Three boys. between the ages of ten and fourteen with simmering sex urges amidst societal inhibitions, and infatuating stimulations, came by an eleven year old girl tending cattle in a village, and this, by happen stance, was near a neglected brick kiln which temptingly offered protective privacy for carnal assault. This lascivious opportunity excited the three juveniles, otherwise engaged in cutting grass, into erotic experimentalism. They advanced aggressively towards the artless victim, tied up by way of preventive detention a young cowherd who chanced to be near the scene and forcibly went through the adolescent exercise of rape. The courts below have held the three petitioners guilty of an offence under s.376 I.P.C. and we do not feel it right to nibble at probabilities and disturb that conclusion. Current Indian ethos and standards of punitive deterrence make rape a heinous offence. The offenders, however, are children and the dilemmatic issue is to fix the sentencing guidelines when juvenile delinquents come before the court. 'Justice and the Child ' is a distinct jurisprudential criminological branch of socio legal speciality which is still in its infant status in India and many other countries. the Children Act is a preliminary exercise, the Borstal School is an experiment in reformation and even s.360 Cr. P.C. tends in the same direction. Correction informed by compassion, not incarceration leading to degeneration, is the primary aim of this field of criminal justice. Juvenile justice has constitutional roots in Articles 15(3) and 39(e) and the pervasive humanism which bespeaks the superparental concern of the State for its child citizens including juvenile delinquents. The penal pharmacopeia of India, in tune with the reformatory strategy currently prevalent in civilised criminology, has to approach the child offender not as a target of harsh punishment but of humane nourishment. This is the central problem of sentencing policy when juveniles are found guilty of delinquency. A scientific approach may insist on a search for fuller material sufficient to individuate the therapy to suit the criminal malady. As the United States Supreme Court stated in Williams vs New York,(1) present the reports: "have been given a high value by conscientious judges who want to sentence persons on the best available information rather than on guess work and inadequate information. To deprive sentencing judges of this kind of information would undermine modern penological procedural policies that have been cautiously adopted throughout the nation after careful consideration and experimentation. " 771 Judge F. Rayan Duffy has written: "If the judge has before him a complete and accurate presentence investigation report which sets forth the conditions, circumstances, background, and surroundings of the defendant, and the circumstances underlying the offence which has been committed, the judge can then impose sentence with greater assurance that he has adopted the proper course. He can do so with much greater peace of mind." "Regrettably, our juvenile justice system still thinks in terms of terror, not cure, of wounding, not healing, and a sort of blind man 's buff is the result. This negative approach converts even the culture of juvenile homes into junior jails. From the reformatory angle, the detainees are left to drift, there being no constructive programmes for the detainees nor correctional orientation and training for the institutional staff. I highlight these drawbacks largely because the State 's response to punitive issues relating to juveniles has been stricken with 'illiteracy ' and must awaken to a new 'enlightenment ', at least prompted by the international year of the Child. Patricia M. Wald has strengthened this perspective in a recent book on "Pursuing Justice for the Child".(1). "Juvenile detention needs a new focus and a new rationale. The detention period ought to be used to begin to draw together resources necessary for constructive change, whether or not the juvenile is adjudicated. There is abundant evidence that detention has failed as an isolated interlude between those more dramatic parts of the juvenile justice system arrest and trial or disposition. The Juvenile judge still has a vital function to fulfil in detention. The judge is charged with the solemn determination whether to deprive juveniles of liberty or whether they can be released in their parents ' custody or to a third party and, if so, what conditions should apply to the release. In making such a decision the judge should follow due process hearing procedures and the legal presumption should favour release. If the decision is to detain, the judge must make a record to support that decision. The legality of preventive detention in the juvenile court needs to be tested. If the power is upheld, the procedural safeguards should be as precise as they are for adults. We should abandon the notion that secure detention is good for the child. 772 Some legal absolutes seem imperative; jail for juveniles should be outlawed; status offenders should not be put into secure detention; finite limits should be set on how long a child can be detained before or after adjudication; minimum standards for physical structure, staff, and program should be enforced by the courts. Even then, we should not cease inquiring whether there are yet better and more enlightened ways to use the interlude after arrest to help juveniles so that, unless they are innocent, or so blighted that removal from the community before or after trial is an almost indisputable necessity, there may be no need for the rest of the progress at all." These general observations of futuristic import apart, we have to concretise the measures to be taken in the present case under the available law and the available facilities. The mainstream of criminal justice has not been refined by restorative legislations. We have the Uttar Pradesh Children Act, 1952 and 'approved schools ' of sorts under it. We have provision for juvenile courts (section 60), Reformation Officers (section 34), and a flexible cluster of factors, social and personal, to be taken into consideration in passing orders when a tender aged delinquent is to be taken into custodial care by the court (section 68). Reports by Reformation Officers have a helpful role in the sentencing process. The finer focus of sentencing is not furious reaction to the offence but habilitative rescue of the youthful offender from moral material abandonment and careful reformation by kindling his creative potential. Judicial responsibility is not mechanistic but humanistic, and the ritualistic magistrate is a misfit. Section 70 of the U.P. Children Act highlights it: 70. Principles to be observed by Courts in dealing with children and young persons. Every Court in dealing with a child who is brought before it, either as needing care or as an offender or otherwise shall have regard to the welfare of the child and shall in a proper case take steps for removing him from undesirable surroundings and for securing that proper provision is made for his education and training. Functionally, a judicial order on a child must be guided by this legislative value judgment. Non custodial disposition of the young offender is permissible under section 30 of the Act which reads: 773 30. Power to discharge youthful offender or to commit him to suitable custody. (1) A court may, if it thinks fit, instead of directing any youthful offender to be detained in an approved school, order him to be (a) discharged after due admonition; or (b) released on probation of good conduct and committed to the care of his parent or guardian or other adult relative or other fit person, on such parent, guardian, relative or person executing a bond, with or without sureties, as the Court may require, to be responsible for the good behaviour of the youthful offender for any period not exceeding three years and for the observance of such other conditions as the Court may impose for securing that the youthful offender may lead an honest and industrious life. The Court may order that the youthful offender released under this clause may be placed under the supervision of a Reformation Officer or of some other person appointed for the purpose by the Court. (2) If it appears to the Court on receiving a report from the Reformation Officer or otherwise that the offender has not been of good behaviour during the period of the probation, it may, after making such inquiry as it thinks fit, order the offender to be detained in an approved school. Indeed, a conscientious judge may consider it of better service to society : "If the criminal 's past history gives good reason to believe that he is not of the naturally criminal type, that he is capable of real reform and of becoming a useful citizen, there is no doubt that probation, viewed from the selfish standpoint of protection to society alone, is the most efficient method that we have. And yet it is the least understood, the least developed, the least appreciated of all our efforts to rid society of the criminal." "The basic idea underlying a sentence to probation is very simple. Sentencing is in large part concerned with avoiding future crimes by helping the defendant learn to live productively in the community which he has offended against. Probation proceeds on the theory that the best way to pursue 774 this goal is to orient the criminal sanction toward the community setting in those cases where it is compatible with the other objectives of sentencing. Other things being equal, the odds are that a given defendant will learn how to live successfully in the general community if he is dealt with in that community rather than shipped off to the artificial and a typical environment of an institution of confinement. Banishment from society, in a word, is not the way to integrate someone into society. Yet imprisonment involves just such banishment albeit for a temporary sojourn in most cases. This is of course not to say that probation should be used in all cases, or that it will always produce better results. There are many goals of sentencing, some of which in a given case may require the imposition of a sentence to imprisonment even in the face of a conclusion that probation is more likely to assure the public that the particular defendant will not offend again. And there are defendants as to whom forced removal from the environment which may in some part have contributed to their offence may be the best beginning to a constructive and useful life. "(1) Appeal and revision provided under section 79 of the Act involve the higher courts in the process. We are sad that this crucial judicial task has been discharged with lesser awareness of its seriousness and complexity than necessary. For instance the Sessions Court, oblivious of the offender and obsessed with the offence, in brief confirmation, spent one sentence on sentence. "Due to seriousness of the crime there is no justification to release the appellants on probation. " The High Court devoted a paragraph but was upset by the Criminal act and closed its mind to salvaging the sentence : "Lastly, it is urged that the sentence awarded to the revisionists be reduced in view of their ages. I am reluctant to do so because they committed a crime which repels against moral conscience. They chose a girl of 11 years to satisfy their lust. They spoiled her life by committing this offence as her father would experience considerable difficulty in arranging her marriage. They were so cruel that all the three committed rape on that minor child. Such an act deserves to be deprecated. The sentence awarded by the 775 learned lower courts does not at all err on the side of severity. Moreover, the learned lower courts have already shown sympathy by keeping them in an approved school at Etawah. " While the victim needs reparation, failure to pay heed to, which is a blind spot in our criminal justice system, the offender 's circumstances are material in sentencing, omission to notice which is a systemic, though traditional failing. We find no emphasis on the age antecedents, parental and social circumstances and curative possibilities or Reformation Officer 's report bearing on the three children punished. The Children Act makes meticulous provisions which slumber on the statute book and seek no visa into the court room. We hope this elaborate discussion will activate sentencing wisdom vested in the criminal courts. At this late stage, without prolonging the process, we can only direct some pragmatic steps. No report from a Reformation Officer is available. No consideration of the social milieu, personal antecedents, parental influences, educational status and other material factors is apparent in the judgments. Nor, indeed, is there any serious advertence to the advantages of community oriented reformation or the disadvantages of institutional inter mix and quasi incarceration. The juvenile detention system, it must be noted, has not fulfilled itself even in countries where it is heavily funded like in the U.S.A. where the young delinquents are "penned like cattle, demoralized by lack of activities and trained staff, often brutalized. Over half the facilities in which juveniles are held have no psychiatric or social work staff. A fourth have no school program. The median age of detainees is fourteen; the novice may be sodomized within a matter of hours. Many have not been charged with a crime at all. From New York to California, the field reports repeat themselves depressingly.(1) Our `approved schools ' like our adult prisons sometimes remind us of animal farms, if only judges care to visit jails. These blemishes, in far worse measure, have blighted our Homes and Schools and approved custodial institutions, although our correctional repertory, augmented by meditational, recreational and oriented Gandhian tools, may inexpensively expand and deepen the rehabi 776 litative potency of our sentencing strategies in this area. Be that as it may, the U.P. Children Act appears to have been virtually given a go bye in the courts below, a phenomenon which frequently happens because practising lawyers and judicial officers have not yet given the deeper reflection that welfare oriented rehabilitative legislations of the mentally and morally retarded in the criminal justice field deserve. The Criminal Procedure Code, 1973, has made provision in s.360 to deal with persons under 21 years of age convicted of offences, punishable with imprisonment for a term of seven years or less and section 376 I.P.C., cannot come within its purview. But the U.P. Children Act defines a `youthful offender ' to mean "any child who has been found a to have committed an offence punishable with transportation or imprisonment". Thus, life imprisonment for the offence does not take the delinquent out of the category of youthful offender as defined in section 2(13) of the said Act. Section 30 authorises the Court, if it thinks fit, instead of directing any youthful offender to be detained in an approved school, order him to be released conditionally, as earlier indicated. We think that the present case deserves action under section 30. Rape is horrific True. The victim is a pathetic child and deserves not merely commiseration but also compensation, an aspect which the State will take note of when a proper application is made to it. Our immediate problem is the disposition of the appellants who are also very young. They have served out some term in an `approved school ' which, making a realistic appraisal, is a `junior jail '. It is not as if these little lads are incorrigible rapists or violent toughs running amok. Parental neglect, tempting opportunity, sex perversionslibadences (sic) libidinous environs and a host of other factors where state in action is contributory to exciting adolescent erotica, count for vulgar, vicious or violent delinquency. These boys can and should be rehabilitated, and that is done best by obligating the parent to take care of the children concerned and not by institutionalised custody. Section 30 of the Act is attracted by the facts of this case to the extent we are able to glean from the meagre material on record. We hope that when children are brought before court, the provisions of the Children Act will be remembered by the Bench and the Bar and its rehabilitative engineering set in motion. In the present case, we direct the appellants to be released on probation of good conduct and committed to the care of their respective parents and if no surviving parent then their guardian executing a bond each, without sureties, to be responsible for the good behaviour 777 of the youthful offender for a period of two years from the date of release and for the observance of a condition, namely, that the child shall be put to school or continue its studies if it is already at school and attend any recreational or meditational centre if any, of the parent 's choice regularly. Many systematic experiments, acknowledged in prison reports and judgments of trial courts have proved the therapeutic value of transcendental Meditation viz a viz juvenile delinquents.(1) The Reformation Officer having jurisdiction over the locality shall have supervision over each of the appellants and shall make a report once in three months to the trial court. If the report shows laps into bad behaviour, the court may direct detention of the deviant appellant or appellants in an approved school. The Reformation Officer will explain to the parents of the delinquents and the appellants the import of this order so that they may appreciate the necessity for compliance therewith and cooperate in the rehabiliatory process. I may venture a view in conclusion that the revolutionary contribution Indian culture may make to criminology is apt to be the focus on human consciousness whose mutilation leads to sickness, crime and sorrow and whose restoration, collective and individual, is the insurance against psychic stress and its off shoots crime and related maladies. The technology of sentencing must release man from distortions and pressures on lines ancient and modern. This parenthesis, in a sense, argues for the new orientation in juvenile justice. A copy of this order will be sent to the approved school, Etawah, and to the trial Judge for immediate compliance. A copy of the order will also be served on the Advocate for the appellants for communication to and compliance by his clients and to the Home Department for correctional actions. PATHAK, J. The petitioners were convicted by the learned Assistant Sessions Judge, Aligarh for the offence under section 376 of the Indian Penal Code and sentenced to two years rigorous imprisonment. He 778 directed their detention for the period of their sentence in an approved school at Etawah. Their appeal was dismissed by the learned Additional Sessions Judge, Aligarh. The High Court declined to interfere in revision, From the material on the record it is not possible to say that the finding of the courts below that the petitioners committed the offence is not substantiated by the evidence on the record and, in my opinion, no case has been made out for interfering with the conviction. But so far as the sentence is concerned, I think that the High Court and the courts below have not sufficiently appreciated the need for a proper order. Special leave granted on the question of sentence only. Order on the appeal. The appellants are children. At the time of the offence the age of the three appellants ranged between 10 years and 14 years, the youngest, Satto, being 10 and the eldest, Bucha, being 14. They were cutting Rizka in their village fields when Kumari Bismillah, who was then about 12 years old, passed by grazing her cattle. Apparently, the three youngsters were seized with the temptation of having sex with her and borne on that impulse they forced the girl inside a brick kiln and committed rape on her, after securing a bystander, Baboo, who was also grazing his goats at the spot, to a tree. There can be no doubt that the act cannot possibly be condoned. It calls for severe condemnation by the plainest moral standards. But on the question of sentence, the High Court and the courts below have, almost mechanically, affirmed a sentence of two years imprisonment to be served out by detention in an approved school. They have failed to apply their mind to considerations which are relevant when a youthful offender is sentenced. The U.P. Children Act, 1951 contains two provisions in that regard. Section 29 provides that where a child is found to have committed an offence punishable with transportation or imprisonment, the court, if satisfied an inquiry that it is expedient so to deal with the child, may order him to be sent to an approved school for a stated period. Section 30 provides. "30. Power to discharge youthful offender or to Commit him to suitable custody. (1) A court may, if it think fit, instead of directing any youthful offender to be detained in an approved school, order him to be (a) discharged after due admonition; or (b) released on probation of good conduct and committed to the 779 care of his parent, guardian or other adult relative or other fit person on such parent, guardian, relative or person executing a bond, with or without sureties, as the court may require, to be responsible for the good behaviour of the youthful offender for any period not exceeding three years and for the observance of such other conditions as the court may impose for securing that the youthful offender may lead an honest and industrious life. The Court may order that the youthful offender released under this clause may be placed under the supervision of a Reformation Officer or of some other person appointed for the purpose by the Court. (2) If it appears to the Court on receiving a report from the Reformation Officer or otherwise that the offender has not been of good behavior during the period of the probation, it may after making such inquiry as it thinks fit order the offender to be detained in an approved school. " Almost invariably the question will arise whether the youthful offender should be proceeded against under section 29 or section 30 The answer to the question lies in the judgment of the Court, which judgment must be made in the sound exercise of its discretion. Among the considerations to which the court must apply its mind are the age of the child his family background, his general past conduct and antecedents, the circumstances in which he committed the offence, and which of the measures provided by the statute, section 29 or section 30, will more effectively and yet not harshly enable the child to develop into a responsible member of society. It must be remembered that the U.P. Children Act deals with children, and a "child" is defined by s.2(4) as a person under the age of sixteen years. The Statute is concerned with a person whose personality, judgment and discretion has not yet attained maturity. The primary object then must be to place the child in an environment conducive to his rehabilitation and providing scope for corrective action. That appears to be the basic criterion for determining the choice between section 29 and section 30. In a case where the child has acted on impulse in committing an offence, and there is nothing to show the presence of any vicious streak of character, it would be more appropriate to leave him to the care and attention of parental authority rather than to send him to an approved school. That will depend, however on whether parental attention is possible and forthcoming and whether it does not suffer from want 780 of sufficient effectiveness in moulding the proper moral development of the child. In my opinion, having regard to the facts and circumstances of the present case the order contemplated by section 30(1) (b) of the Act would more appropriately meet the ends of justice and serve the object of the statute. Accordingly, the appeal is allowed on the question of sentence. The sentence imposed by the learned Assistant Sessions Judge and affirmed by the learned Additional Sessions Judge and the High Court, is set aside. The appellants are ordered to be released on probation of good conduct and to be committed to the care of their respective parents, and if there are no surviving parents then their guardian, on such parents or guardian executing a bond each without sureties, to be responsible for the good behaviour of the youthful offender for period of two years from the date of the release and for the observance of a condition that the child should be put to school or continue his studies if he is already in school, and regularly attend any recreational centre or meditational centre (if any) of the parent 's choice. The Reformation Officer enjoying jurisdiction in the locality will have supervision over each of the appellants and shall make a report once every three months to the trial court. The Reformation Officer will explain to the appellants and their parents the import of this order. A copy of this order will be sent to the approved school, Etawah, and to the trial court for immediate compliance. A copy of the order will also be served on counsel for the appellants for communication to, and compliance by, the appellants. N.K.A. Appeal allowed.

Three Petitioners between the ages of 10 & 14 came by an eleven year old girl, tending cattle in a village, near a neglected brick kiln which temptingly offered protective privacy for committing rape. They advanced towards the victim and tied her up. They forcibly went through the exercise of rape. The courts below have held the three petitioners guilty of an offence under section 376 J.P.C. and sentenced each to two years ' rigorous imprisonment. The offenders being children the dilemmatic issue is to fix the sentencing guide lines for juvenile delinquents. It was argued that "Justice and the Child" is a distinct jurisprudential criminological branch of socio legal speciality which is still in its infant status in India and many other countries. The children Act is a preliminary exercise, the Borstal School is an experiment in reformation and even Section 360 Criminal Procedure Code tends in the same direction. In the absence of any report from the Reformation Officer nor any consideration of the social milieu, personal antecedents, parental influence, educational status and other material factors bearing on the three petitioners, the Court while accepting the appeal, ^ HELD: The appellants should be released on probation of good conduct and committed to the care of their respective parents and if no surviving parents, then their guardian, executing a bond each without sureties to be responsible for the good behaviour of the youthful offender for a period of two years from the date of release and for the observance of a condition namely that the child shall be put to school or continue its studies if it is already at school and attend any recreational or meditational centre, if any, of the parents ' choice regularly. The Reformation Officer enjoying jurisdiction in the locality will have supervision over each of the appellants and shall make a report once every three months to the Trial Court. The Reformation Officer will explain to the appellants and their parents the import of this order. [776H, 777A C] Pathak, J. (concurring) On the question whether the youthful offender should be proceeded against under section 29 or Section 30 of the U.P. Children Act 1951, the court must apply its mind to certain considerations like the age of the child, his family background, his general past conduct and antecedents, the circumstances in which he committed the offence and which of the measures provided by section 29 or section 30 would more effectively and yet not harshly enable the child to develop into a responsible member of society. The statute is concerned with a person whose personality, judgment and discretion had not yet attained maturity. A "child" has been defined under Sec. 2(4) of the Act as a person under the age of sixteen years. Therefore the primary object must be to place the child in an environment conducive to his rehabilita 769 tion and providing scope for corrective action which is the basic criteria for determining the choice between section 29 and section 30 of the Act. Where a child has acted on an impulse in committing an offence and there is nothing to show the presence of any vicious streak of character, it would be more appropriate to leave him to the care and attention of parental authority under section 30(1) (b) of the Act rather than send him to an approved school. On the facts of the present case, such an order would meet the ends of justice and serve the object of the statute. [779E H, 780A B] William vs New York, ; , 249, Sentencing and probation National Collage of the State Judiciary Reno, Nevada, page 258 relied upon.

cellaneous Petition No, 641 of 1954, 72 562 Application for review of the Judgment of this Court in Civil Appeal No. 152 of 1954. N. C. Chatterjee (G. C. Mathur, with him) for the petitioner. Veda Vyas (section K. Kapoor and Naunit Lal, with him) for the respondent. October 18. The Judgment of the Court was delivered by VENKATARAMA AYYAR J. This is an application for review of the judgment of this Court in Civil Appeal No. 52 of 1954. That was an appeal against an order of the Election Tribunal, Himachal Pradesh (Simla), dismissing a petition to set aside the election of the respondent to the Legislative Assembly, Himachal Pradesh, from the Rohru Constituency. Two points were raised at the hearing of the appeal before us: One was that the respondent was disqualified for election to the Assembly under section 17 of Act No. XLIX of 1951, read with section 7(d) of Act No. XLIII of 195 1, by reason of the fact that he was interested in contracts for the supply of Ayurvedic Medicines to the Himachal Pradesh Government, and the other, that he had appointed Government servants as polling agents, and had thereby contravened section 123(8) of Act No. XLIII of 1951. On the first question, we held that, on a true construction of section 17, what would be a disqualification for election to either House of Parliament under article 102 would, under that section, be disqualification for election to the Legislatures of States, and that the disqualification under section 7 (d) of Act No. XLIII of 1951 would accordingly be a disqualification under section 17 of Act No. XLIX of 195 1. A further contention was then raised on behalf of the respondent that even if section 7(d) were to be imported into section 17, that would not disqualify him, because under that section, the disqualification must be to being elected to either House of Parliament, and that under sections 7 and 9 of Act No. XLIII of 1951, a contract to operate as a disqualification to the election to either House of Parliament must be, with the Central Government, whereas 563 the contracts of the respondent were with the Government of Himachal Pradesh. The answer of the petitioner to this contention was that under article 239 the administration of States was vested in the President acting through the Chief Commissioner or the Lieutenant Governor, and that the contracts of the respondent with the Chief Commissioner, Himachal Pradesh, must be held to be contracts with the Central Government. We, however, disagreed with this con tention, and held that article 239 had not the effect of merging States with the Central Government, and converting contracts with the States into those with the Central Government. In this application, Mr. Chatterjee appearing for the petitioner invites our attention to the definition of " Central Government " in section 3(8)(b)(ii) of the . It is as follows: "Central Governmnet" shall in relation to anything done or to be done after the commencement of the Constitution, mean the President; and shall include in relation to the administration of a Part C State, the Chief Commissioner or Lieutenant Governor or Government of a neighbouring State or other authority acting within the scope of the authority given to him or it under article 239 or article 243 of the Constitution, as the case may be." He argues that by force of this definition, contracts with the Chief Commissioner of Himachal Pradesh must be treated as contracts with the Central Government, and that in consequence, the respondent was disqualified for election under section 17 of Act No. XLIX of 1951, read along with section 7(d) of Act No. XLIII of 1951. As against this, Mr. Veda Vyas for the respondent relies on the definition of " State " in section 3(60)(b) of the , which runs as follows: " State Government " as respects anything done or to be done after the commencement of the Constitution, shall mean, in a Part A State, the Governor, in a Part B State the Rajpramukh, and in a Part C State the Central Government. " 564 His contention is that there being in the Constitution a fundamental distinction between the Government of the Union and Government of the States, section 3(8) of the should be so construed as not to destroy that distinction, and that having regard to the definition of " State " in section 3(60), it must be held that to the extent the Central Government administers States under article 239, its character is that of the State Governments. We are unable to agree that section 3(8) has the effect of putting an end to the status of States as independent units, distinct from the Union Government under the Constitution. It merely recognies that those States are centrally administered through the President under article 239, and enacts that the expression " Central Government " should include the Chief Commissioner administering a Part C State under the authority given to him under article 239. Section 3(8) does not affect the status of Part C States as distinct entities having their own Legislature and judiciary, as provided in articles 239 and 240. Its true scope will be clear if, adapting it, we substitute for the words " Central Government" in section 9 of Act No. XLIII of 195 1, the words " the Chief commissioner acting within the scope of the authority given to him under article 239. " A contract with the Chief Commissioner would, therefore, under section 9 read with section 3(8) of the , be a contract with the Central Government, and would operate as a disqualification for election to either House of Parliament under sections 7(d) and 9 of Act No. XLIII of 1951, 'and it would be a disqualification under section 17 of Act No. XLIX of 1951, for election to the Legislative Assembly of the State. It is argued for the respondent that this construction would lead to this anomaly that whereas in the States in Part A or Part B a contract with the State would operate as disqualification only for election to the State Legislatures, such a contract would in States operate as a disqualification to be chosen, both to the State Legislature and to either House of Parliament. That anomaly is undoubtedly 565 there. But the contrary conclusion also involves the anomaly already pointed out, that in States a contract with the State Government is not a disqualification for election even to the State Legislature, as it is in Parts A and B States. Whatever the anomaly, in our view, the proper course is to give effect to the plain language of the statute. We must accordingly hold that in view of section 3(8) of the , a contract with the Chief Commissioner in a State is a contract with the Central Government, and that would be a disqualification for election to the Legislative Assembly under section 17 of Act No. XLIX of 1951 read with section 7(8) of Act No. XLIII of 1951. This conclusion, however, can result in no advantage to the petitioner, as the further finding of the Election Tribunal is that no contracts of the respondent with the Himachal Pradesh Government were proved to have been subsisting at the material period. That finding is, for the reasons already given, not open to attack in this appeal, and is sufficient answer to the objection that the respondent was disqualified under section 17. The second point that was argued before us in appeal was that the respondent had appointed certain Government servants to act as polling agents, and had thereby committed a major corrupt practice under section 123(8) of Act No. XLIII of 1951. In rejecting this contention we observed that, "as an abstract proposition of law, the mere appointment of a Government servant as a polling agent in itself and without more" is not an infringement of section 123(8). The correctness of this conclusion is now challenged by Mr. Chatterjee. His contention is that having regard to the nature of the duties of a polling agent as laid down by the Rules and furtfier elucidated by the instructions contained in the Election Manual issued by the Government, the polling agent must be held to be interested in the candidate for whom he acts as polling agent, and that his employment would therefore be hit by section 123(8). Examining closely the duties of a polling agent under the Rules and under the Election Manual, they 566 can be grouped under three categories. The first category relates to the period of time antecedent to the recording of votes. The duties of the polling agent at this stage are to see that the ballot boxes are, to start with, empty, that the names of the candidates and their symbols are correctly set out thereon, that the slits in the boxes are in an open position, that the knobs of the slits are properly secured, and that the boxes are properly bolted and sealed. These are duties which are cast on the presiding officer and the polling officers as well, and as these are matters to be attended to before any recording or votes begins, it is difficult to see how they can be said to assist in the furtherance of the election prospects of any one candidate more than of any other. The second stage is when the polling is actually in progress. The duty of the polling agent at this stage is to identify the voters. Rule 27 provides that when there is a doubt as to the identity of a voter, the presiding officer may interrogate the voter and that be should do so, if so required by a polling agent. Under rule 30, it is open to the polling agent to challenge any voter on the ground that he is not the person whose name is entered in the voters ' list, and when such objection is taken, it is the duty of the presiding officer to hold an enquiry and pass an order. The object of these Rules is to prevent personation, and that is a matter in which the duty is cast equally on the presiding officer. Rule 24 provides that, "The presiding officer may employ at the polling station such persons as he thinks fit to assist him or any polling officer in identifying the electors. The work of the polling agent under rules 27 and 30 is of the same character, and it cannot in itself be said to further the election prospects of any particular candidate. The third stage is reached after the polling is over '. Then the boxes are to be examined with. a view to find out whether the slits are open and the seals intact, the object of these provisions being to ensure that the ballot boxes had not been tampered with during the time of actual polling. Then the unused ballot papers, the tendered ballot papers and other material documents are required to be put in separate 567 packages, and the polling agents have the right to seal all of them. It cannot be said that in carrying out these duties the polling agent advances the election prospects of the candidate, as they admittedly relate to a stage after the completion of the polling. Indeed, the work of the polling agent both in the first stage and in the last stage is similar in character, and neither can be said to contravene section 123(8). As regards the second stage, as already stated in our judgment, the duty of polling agent is merely to identify a voter, and that could not by itself and without more be said to further the election prospects of the candidate. Reliance was placed by Mr. Chatterjee on the following passage in Parker 's Election Agent and Returning Officer, Fifth Edition, at page 20: "The polling agents appointed for the same candidate to attend the several polling stations at any election, are engaged on the same duty and in the same interest, and it is generally very desirable that they should meet, under the presidency of the candidate or his election agent, before the opening of the poll for the purpose of mutual discussion and co operation. " What that passage means is that as the duty to be performed by the polling agents at the several booths is of the same character, it would be desirable that they should all be assembled and their duties explained to them. This has no bearing on the question whether those duties are such as must inherently promote the election prospects of the candidate. A passage which is more in point is the one at page 18, mentioning who could be appointed as polling agents. It is as follows: "Any competent person, whether an elector or not, may be appointed as polling agent, provided he be not the returning officer, the acting or deputy acting returning officer, or an officer or clerk appointed under P.E.R., r. 27, or a partner or clerk of any of them. " In this connection, it must be noted that while section 41 of Act No. XLIII of 1951 contains a prohibition against the appointment of certain persons as election agents, there is none such with, reference to the appointment of polling agents under section 46 of the 568 Act. To hold that Government servants are, as such and as a class, disqualified to act as polling agents would be to engraft an exception to the statute, which is not there. Accordingly, we reaffirm the view taken by us that the appointment of a Government servant as polling agent does not, without more, contravene section 123(8). It is scarcely necessary to repeat our observation in the original judgment that "if it is made out that the candidate or his agent had abused the right to appoint a Government servant as polling agent by exploiting the situation for furthering his election prospects, then the matter can be dealt with as an infringement of section 123(8). " In the result, this petition is dismissed; but under the circumstances, without costs. Petition dismissed.

Held, (modifying the view of law taken in Civil Appeal No. 52 of 1954) that in view of section 3(8) of the , a contract with the Chief Commissioner in a State (in this case Himachal Pradesh Chief Commissioner) is a contract with the Central Government and that would be a disqualification for election to the Legislative Assembly of the State under section 17 of Act XLIX of 1951, read with section 7(d) of Act XLIII of 1951.

Civil Appeal No. 893 of 1980. From the Judgment and Order dated the 10th April, 1980 of the Patna High Court in Election Petition No. 20 of 1977. R.K. Garg and V.J. Francis for the Appellant. L.R. Singh and A. Sharan for the Respondent. The Judgment of the Court was delivered by FAZAL ALI, J. The election appeal is directed against a judgment dated April 10, 1980 of the Patna High Court setting aside the appellant mainly on the ground that he had been found guilty of indulging in corrupt practice in the election held on 10.6.77 to the Bihar Legislative Assembly from '241 Goh Assembly constituency '. The result was announced on 16.6.77 in which Ram Sharan Yadav (appellant), a candidate sponsored by the Communist Party of India, was declared elected after polling 28,783 votes as against 16,458 votes polled by Thakur Muneshwar Nath Singh (the first respondent herein). An election petition was filed by the respondent in the High Court for setting aside the election of the appellant on the ground that he had indulged in corrupt practices as envisaged in section 123 (2) of the Representation of the People Act, 1951 (hereinafter referred to as the 'Act '). The plea of the respondent found with the High Court which set aside the election of the appellant. Hence, this appeal to this Court. Serveral decisions of this Court have laid down various tests 1092 to determine a corrupt practice and the standard of proof required to establish such corrupt practices and it is not necessary for us to repeat the dictum laid down by this Court and the approach to be made in detail because the matter is no longer res integra and is concluded by a large number of authorities. To quote a few recent ones: Daulat Ram Chauhan vs Anand Sharma,(1) Manmohan Kalia vs Yash & Ors. ,(2) A. Younus Kunju vs R.S. Unni and Ors.(3) as also an earlier decision of this Court in Samant N. Balakrishna etc. vs George Fernandez and Ors. etc.(4) The sum and substance of these decisions is that a charge of corrupt practice has to be proved by convincing evidence and not merely by preponderance of probabilities. As the charge of a corrupt practice is in the nature of criminal charge, it is for the party who sets up the plea of 'undue influence ' to prove it to the hilt beyond reasonable doubt and the manner of proof should be the same as for an offence in a criminal case. This is more so because once it is proved to the satisfaction of a court that a candidate has been guilty of 'undue influence ' than he is likely to be disqualified for a period of six years or such other period as the authority concerned under section 8A of the Act may think fit. Therefore, as the charge, if proved, entails a very heavy penalty in the form of disqualification, this Court has held that a very cautious approach must be made in order to prove the charge of undue influence levelled by the defeated candidate. Another well settled principle is that before the allegation of 'undue influence ' can be proved, it must be shown that 'undue influence ' proceeds either from the candidate himself or through his agent or by any other person either with his consent or with the consent of his election agent so as to prevent or cloud the very exercise of any electoral right. We have heard counsel for the parties at great length and have also gone through the very well considered judgment of the High Court which has dwelt on various aspects of the matter and has held that the charge levelled by the respondent has been fully proved. Normally, this Court in appeal does not interfere on a finding of 1093 this type unless there are prima facie good grounds to show that the High Court has gravely erred, resulting in serious prejudice to the returned candidate. The facts of the case lie within a very narrow compass and have been fully narrated in the judgment of the High Court and it is not necessary for us to repeat the same all over again. Even so, we would like to point out just a few clinching facts which fully fortify the conclusions of the High Court. The main allegation against the appellant is that he had through his agents, supporters and other people, duly instructed by him, made an attempt to set at naught the electoral process by putting the voters in serious fear as they were threatened, assaulted and even firing was resorted to. On the finding of the High Court, it is further proved that the acts mentioned above, which undoubtedly amount to 'undue influence ', had been committed not only at the instance but in the presence of the appellant. There is no ritualistic formula nor a cut and dried test to lay down as to how a charge of undue influence can be proved but if all the circumstances taken together lead to the irresistible inference that the voters were pressurised, threatened or assaulted at the instance of either the candidate or his supporters or agents with his consent or with his agents ' consent that should be sufficient to vitiate the election of the returned candidate. We would, however, like to add a word of caution regarding the nature of approach to be made in cases where allegations of fraud or undue influence are made. While insisting on standard of strict proof, the Court should not extend or stretch this doctrine to such an extreme extent as to make it well nigh impossible to prove an allegation on corrupt practice. Such an approach would defeat and frustrate the very laudable and sacrosanct object of the Act in maintaining purity of the electoral process. By and large, the Court in such cases while appreciating or analysing the evidence must be guided by the following considerations: (1) the nature, character, respectability and credibility of the evidence, (2) the surrounding circumstances and the improbabilities appearing in the case, 1094 (3) the slowness of the appellate court to disturb a finding of fact arrived at by the trial court who had the initial advantage of observing the behaviour, character and demeanor of the witnesses appearing before it, and (4) the totality of the effect of the entire evidence which leaves a lasting impression regarding the corrupt practices alleged. More than this we would not like to say anything at this stage. We have already pointed out that the learned High Court Judge has very carefully marshalled the evidence and in doing so has faithfully followed the aforesaid principles enunciated by us. The state of evidence in the present case appears to be both complete and conclusive. All the witnesses who appeared to proved the allegation of undue influence have in one voice categorically state that the voters were threatened, assaulted and even a bomb was hurled so that they may not cast their votes. The witnesses have also said that all this was done in the presence of the appellant. In rebuttal, the appellant has produced himself and two witnesses to support his case that he did not indulge in any corrupt practice. In other words, his evidence is just a bare denial of the allegations made against him. The High Court has very thoroughly scanned and weighed the evidence and pointed out that the respondent has produced independent witnesses to show that undue influence was practised with the direct connivance of the appellant. Without, therefore, going into further details we would just indicate the dominant features of the findings of the High Court with which we entirely agree. The evidence led by the respondent consists mainly of PWs 1, 27, 32, 35, 39 and 41. Out of these witnesses, PWs 27, 32, 35, 39 and 41 are independent voters, not belonging to any party. Their evidence stands corroborated by the FIR lodged in the police station soon after the occurrence as a result of which the police reached the spot of occurrence and found that there was a lot of trouble in the Bhurkunda booth where the voters were pressurised and intimidated. As a sample, PW 39 (Kamta Prasad Singh), who was a voter in the aforesaid election, has stated that he had gone to cast his vote at about 11.30 a.m. and was standing in the queue alongwith 20 25 other voters. He further testifies that he saw the respondent at the booth and that he also knew the appellant (Ram Sharan Yadav). He goes on to narrate that he saw one Ram Prasad Yadav of Ibrahimpur at the booth; the 1095 appellant appeared on the scene and asked Ram Prasad Yadav as to how the polling was going on, to which he was informed that the polling did not appear to be favourable to him. Thereupon, the appellant ordered Ram Prasad Yadav to capture the booth and after giving this instruction he left the place. It is clear from the evidence of this independent witness that the threatening and obstructing of the voters was done at the orders of the appellant himself which amply proves the allegation of undue influence. The witness goes on to state that after the appellant had left the place, about 300 400 men of the appellant surrounded the booth and removed the voters, including the witness, from the queue and therefore they could not cast their votes. Among the persons who had acted in such a fashion, the witness identified, Babu Chand, Ram Chandra Mahto, Bisheshwar Yadav, Ram Prasad Yadav and Surajdeo Yadav. In cross examination, the witness clarified that he made an oral complaint to the Presiding Officer that he was not allowed to cast vote and a written complaint was given by the sarpanch of the village. He could not inform the respondent because he was himself surrounded by the mob. After perusing his evidence, it seems that the witness (PW 39) has given a very straightforward evidence which bears a ring of truth and does not appear to have been shaken in cross examination on any vital point. The witness being an independent voter had no axe to grind against the appellant and there is no reason why he should have come forward to depose falsely. Similar is the evidence of PWs 27, 32 and 35 which has been fully scanned and considered by the High Court. Another independent witness, PW 41, has also fully corroborated the evidence of other independent witnesses indicated above. To the same effect is the evidence of PW 62, Ramdeo Singh, who has also stated that he was informed that men of Ram Sharan Yadav had snatched away the ballot papers and torn them and created all sorts of disturbance. He further stated that Mukhlal Singh, Advocate, who was the polling agent of Ram Sharan Yadav, had led the mob of miscreants at the booth. Similar is the evidence of other witnesses who have not been in any way broken of shattered in cross examination. The High Court has rightly pointed out that the FIR clearly gives the details of the incidents soon after they had happened. As against the overwhelming evidence adduced by the respondent, the evidence of Ram Sharan Yadav (appellant) himself is one of a plea of alibi who stated that he did not go to Bhurkunda polling booth at all and that on the date of poll he was at his village 1096 Haspura in his party 's election office. It is difficult to believe that being a candidate himself why did he choose to impose a self made restriction not to leave the village and find out what was happening in his constituency. Such a conduct is both unnatural and improbable and speaks volumes against the defence of the appellant. It is interesting to note that this plea of alibi, viz., that he did not go to the polling booth was not taken in his written statement. He seems to have given a very lame explanation for his absence from the polling booths and the High Court has rightly pointed out that this is an afterthought. In this connection, the High Court observed thus: "I am, therefore, of the opinion, that the aforesaid alibi has been invented by respondent No. 6 for the first time when he came in the witness box with a view to controvert the evidence adduced on behalf of the petitioner that on the date of poll he had gone to Bhurkunda Booth at about 11.30 a.m. In his cross examination he has pleaded ignorance if his workers had surrounded the petitioner on the date of poll at Bhurkunda Booth, and he has further pleaded ignorance if any criminal case concerning the incident at the Bhurkunda Booth was instituted by Shri Ramesh Chandra Raman, the Magistrate in charge of the striking force, or if any weapon like lathi, garasa, etc. was recovered from the arrested persons at Bhurkunda Booth. " Having regard to his evidence, the High Court concludes as follows: "In view of the overwhelming evidence adduced on behalf of the petitioner, which I have already discussed above, I am also not prepared to place any reliance on the aforesaid feigned ignorance of respondent No. 6. " As regards the evidence of Kailash Yadav (RW 12), he has merely stated that when he reached the Bhurkunda booth at 11.30 a.m. he found the poll to be peaceful. In order to explain away the exact happenings at the said booth he stated that after casting his vote, he left his village at about 3.00 p.m. and remained out for about a month. After a close scrutiny of the evidence we are fully satisfied that the appellant was undoubtedly present at the Bhurkunda polling 1097 booth at the time when the voters were going to cast their votes and his agents or supporters indulged in acts of assault, hurling of bombs, etc., in his presence and he did not stop them from doing so from which a conclusive inference can be drawn that the acts of assault, arson, etc. were committed with the positive knowledge and consent of the appellant himself or his agents. As the High Court has very carefully considered the evidence of each witness, it is not necessary for us to tread the some ground all over again. The final finding arrived at by the High Court may be extrated thus: "Thus I have examined and discussed above the oral and documentary evidence adduced by the parties with regard to 79 Bhurkunda booth, from which it is clear that there is abundance of reliable evidence on the record to prove the petitioner 's case that on the date of poll at about 11.30. a.m. Respondent No. 6 Ram Sharan Yadav, had arrived at Bhurkunda Booth in his jeep and enquired about the trend of the poll from his man, Ram Prasad Yadav of village Ibrahimpur, who told him that the poll at the booth was poor in his favour and thereupon Respondent No. 6, Ram Sharan Yadav, ordered his men and supporters, who were standing at the polling booth, to capture the booth by caring away the voters and also to surround the both and the petitioner, and, after giving the said order, he left both and, thereafter his workers and supporters surrounded the booth and scared away the voters and prevented them from exercising their right of franchise and also surrounded the petitioner and held him up there, and the same is nowhere shaken by the merger and unbelievable evidence adduced on behalf of Respondent No. 6 in this regard. Therefore, it is held that respondent No. 6 and his workers, with consent, did commit that corrupt practice of undue influence at Bhurkunda booth by interfering with the free exercise of the electoral rights of the voters to cast their votes according to their choice. " We might mention here that the High Court has rejected all the allegations regarding other grounds and his confined its attention only to Bhurkunda booth which, if proved, is by itself sufficient to prove that the appellant was guilty of indulging in the corrupt practice of 'undue influence '. Mr. Garg, appearing for the appellant, submitted that the allegation of attacking or harassing the voters or driving them out 1098 is a make believe story but he has not been able to show as to why the allegation deposed to by the witnesses should be disbelieved particularly when the independent witnesses examined by the respondent have positively proved the presence of the appellant. After a careful perusal and discussion of the evidence we entirely agree with the conclusions arrived at by the High Court and hold that there is no reason to interfere with the judgment of the High Court so as to take a different view. In our opinion, it is not a case where two views were possible so that the appellant could be given benefit of doubt. For the reasons given above, the judgment of the High Court is upheld and the appeal is dismissed but in the circumstances without any order as to costs. S.R Appeal dismissed.

Ram Sharan Yadav, the appellant and a candidate sponsored by the Communist Party of India, was declared elected on 16.6.1977, to the Bihar Legislative Assembly from 241 Goh Assembly constituency, after polling 28,783 votes as against 16,458 votes polled by respondent No. 1 Thakur Muneshwar Nath Singh. An election petition was filed by the respondent No.1 in the High Court for setting aside the election of the appellant on the ground that he had indulged in corrupt practices as envisaged in sec. 123(2) of the Representation of the People Act, 1951. It was alleged that the appellant through his agents, supporters and other people, duly instructed by him made an attempt to set at naught the electoral process by putting the voters in serious fear as they were threatened, assaulted and even firing was resorted to. The High Court found that the said acts which undoubtedly amount to undue influence had been committed not only at the instance but in the presence of the appellant and therefore allowed the petition and set aside the election of the people. Hence the appeal by Special Leave of the Court. Dismissing the appeal, the Court ^ HELD: 1 :1. A charge of corrupt practice has to be proved by convincing evidence and not merely by preponderance of probabilities. As the charge of corrupt practice is in the nature of a criminal charge it is for the party who sets up the plea of undue influence to prove it to the hilt beyond reasonable doubt and the manner of proof should be the same as for an offence in a criminal case. This is more so because once it is proved to the satisfaction of a Court that a candidate has been guilty of undue influence them he is likely to be disqualified for a period of 6 years or such other period as the authority concerned under section 8A of the Act may think fit. Therefore, as the charge, if proved, entails a very heavy penalty in the form of disqualification the Supreme Court has held that a very cautious approach must be made in order to prove the charge of undue influence levelled by the defeated candidate. [1092C E] 1: 2. Another well settled principle is that before the allegation 1090 of undue influence can be proved, it must be shown that undue influence proceeds either from the candidate himself or through his agent or by any other person either with his consent or with the consent of his election agent so as to prevent or cloud the very exercise of any electoral right. [1092F] 1: 3. Where allegations of fraud or undue influence are made while insisting on standard of strict proof, the Court should not extend or stretch the doctrine to such an extent to make it well nigh impossible to prove an allegation of corrupt practice. Such an approach would defeat and frustrate the very laudable and sacrosanct object of the Act in maintaining purity of the electoral process. [1093F] 1: 4. By and large, the Court in such cases while appreciating or analyzing the evidence must be guided by the following considerations:[1093G] (1) the nature, character, respectability and credibility of the evidence; [1093H] (2) the surrounding circumstances and the improbabilities appearing in the case; [1093H] (3) the slowness of the appellate court to disturb a finding of fact arrived at by the trial court who had the initial advantage of observing the behavior, character and demeanor of the witnesses appearing before it, and [1094A] (4) the totality of the effect of the entire evidence which leaves a lasting impression regarding the corrupt practices alleged. [1094] 1:5. There is no ritualistic formula nor a cut and dried test to lay down as to how a charge of undue influence can be proved but if all the circumstances taken together lead to the irresistible inference that the voters were pressurized, threatened or assaulted at the instance of either the candidate or his supporters or agents with his consent or with his agents consent that should be sufficient to vitiate the election of the returned candidate. The state of evidence in the present case, is both complete and conclusive. All the witnesses who appeared to prove the allegation of undue influence have in one voice categorically stated that voters were threatened, assaulted and even a bomb was hurled so that they may not cast their votes. The witnesses have also said that all this was done in the presence of the appellant. [1093D E; 1094C D] 1:6. The plea of alibi, to the effect that the appellant did not go to the polling booth cannot be accepted inasmuch as (a) such a plea was not taken in the written statement and (b) such a self imposed restriction not to leave the village and find out what was happening in his constituency is both unnatural and improbable. A close scrutiny of the evidence makes it clear that the appellant was undoubtedly present at the Bhurkunda Polling booth at the time when the voters were going to cast their votes and his agents or supporters indulged in acts of assault, hurling of bombs 1091 etc. in his presence and he did not stop them from doing so from which a conclusive inference can be drawn that the acts of assault, arosen, etc. were committed with the positive knowledge and consent of the party himself or his agents. Clearly it is not a case where two views were possible so that the appellant could be given the benefit of doubt. [1096A B, 1097A B, 1098B] Daulat Ram Chauhan vs Anand Sharma , (p. 73 para 18); Manmohan Kalia vs Yash and Ors. ; (p. 502 para 7); A. Younus Kunju vs R. section Unni ond Ors.[1984] 3 S.C C. 346 (p. 349); and Samant N. Balakrishna etc. vs George Fernandez and Ors. ; (pp. 618 619); followed. Normally, the Supreme Court in appeal does not interfere on a finding of this type unless there are prima facie good grounds to show that the High Court has gravely erred, resulting in serious prejudice to the returned candidate. [1092H; 1093A]

minal Appeals Nos. 34 to 36 of 1956. Appeal by special leave from the judgment and order dated July 1, 1955, of the Bombay High Court in Criminal Revision Applications Nos. 351 to 353 of 1955 arising out of the judgment and order dated November 5, 1954, of the Court of the Presidency Magistrate 14th Court at Girgaum, Bombay in Cases Nos. 328 to 330/P of 1954. H. J. Umrigar and A. G. Ratnaparkhi, for the appellant. M. section K. Sastri and R. H. Dhebar, for the respondent. March 24. The following Judgment of the Court was delivered by SUBBA RAO J. These appeals by special leave are directed against the judgment of the High Court of 252 Judicature at Bombay made in three connected Criminal Revision applications and raise the question of the maintainability of prosecution of a person for an offence committed under section 24(1)(b) of the Bombay Sales Tax Act, 1946 (Bom. V of 1946) (hereinafter referred to as the repealed Act). The facts that give rise to the appeals may be briefly stated: The appellant, Sri Kapur Chand Pokhraj, was the proprietor of Messrs. N. Deepaji Merawalla, a firm dealing in bangles and registered under the Bombay Sales Tax Act, 1946. He did not disclose the correct turnover of his sales to the Sales Tax Department in the three quarterly returns furnished by him to the said Department on September 30, 1950, December 31, 1950, and March 31, 1951, respectively. He maintained double sets of books of accounts and knowingly furnished false returns for the said three quarters to the Sales Tax Officer and thereby committed an offence under section 24(1)(b) of the repealed Act. Under that Act, sanction of the Collector was a condition precedent for launching of prosecution in respect of an offence committed under section 24(1) of the said Act. The said Act was repealed by the Bombay Sales Tax Act, 1952 (Bom. XXIV of 1952), which was published on October 9, 1952. On December 11, 1952, the Bombay High Court declared the Act of 1952 ultra vires and the State .of Bombay preferred an appeal against the judgment of the Bombay High Court to the Supreme Court. On December 22, 1952, the State Government, in order to get over the dislocation caused by the Bombay judgment, issued the Bombay Sales Tax Ordinance II of 1952, where under it was provided that the 1946 Act was to be deemed to have been in existence up to November 1, 1952. On December 24, 1952, another Ordinance, Ordinance III of 1952, was promulgated extending the life of the Act of 1946. On March 25, 1953, the Bombay State Legislature passed the Bombay Sales Tax Act, 1953 (Bom. III of 1953), (hereinafter referred to as the repealing Act), repealing the Act of 1946 and the Ordinance III of 1952. The material fact to be noticed is that the Act III of 1953, though it repealed the earlier Act and the Ordinance extending 253 the life of that Act, made provision for an offence similar to that covered by section 24(1) of the repealed Act, prescribed a similar procedure for prosecuting persons committing the said offence and saved the liabilities incurred under the repealed Act. During the period when the Ordinance III of 1952 was in force, the State Government issued a notification under section 3 of that Ordinance appointing the Additional Collector of Bombay to be a Collector under the said Ordinance. On July 4, 1953, i.e., after Act III of 1953 came into force, Mr. Joshi, the Additional Collector of Bombay, granted sanction for the prosecution of the appellant in respect of the offence committed by him under section 24(1)(b) of the repealed Act. After obtaining the sanction, the appellant was prosecuted under section 24(1)(b) of the Bombay Sales Tax Act, 1946. Before the Presidency Magistrate the appellant pleaded guilty to the charge. The learned Magistrate accepted his plea and convicted him for the offence for which he was charged and sentenced him to pay a fine of Rs. 200, in default to suffer one month 's rigorous imprisonment. The State of Bombay preferred a Revision against the said Order to the High Court of judicature at Bombay praying that the sentence imposed on the appellant be enhanced on the ground that as the appellant kept double sets of accounts and intentionally furnished false information, the interest of justice required that substantive and heavy sentence should be imposed on him. Before the High Court, the appellant pleaded that by the repeal of the Sales Tax Act, 1946, the offence, if any, committed by him was effaced and that in any view the prosecution was defective inasmuch as sanction had been given by the Additional Collector and not by the Collector of Sales Tax. The contentions did not find favour with the learned Judge of the High Court. In rejecting them, the learned Judge enhanced the sentence passed upon the appellant to rigorous imprisonment for a period of one month in each of the three cases in addition to the fine already imposed by the Magistrate. He directed the substantive sentence of imprisonment in all the three cases to be concurrent. The appellant obtained special leave 254 from this Court to prefer the above appeals against the judgment of the High Court. The learned Counsel for the appellant raised before us the same contentions which his client unsuccessfully raised before the High Court. We shall now proceed to deal with them seriatim. The main argument of the learned Counsel was that the Bombay Sales Tax Act, 1953 (Bom. III of 1953) in repealing the Act of 1946 did not save penalties in respect of offences committed under that Act and therefore no prosecution was maintainable in respect of an offence committed under the Act of 1946. A clearer conception of the argument can be had by looking at the relevant saving provisions enacted in Act III of 1953 and also the relevant sections of the Bombay General Clauses Act. Section 48(2) of the Bombay Sales Tax Act, 1953 reads: " Notwithstanding the repeal of the said Act and the said entries, the said repeal shall not affect or be deemed to affect (i) any right, title, obligation or liability already acquired, accrued or incurred; (ii) any legal proceeding pending on the 1st day of November, 1952 in respect of any right, title, obligation or liability or anything done or suffered before the Raid date; and any such proceeding shall be continued and disposed of, as if this Act had not been passed; (iii)the recovery of any tax or penalty which may have become payable under the said Act and the said entries before the said date; and all such taxes or penalties or arrears thereof shall be assessed, imposed and recovered, so far as may be, in accordance with the provisions of this Act; ". Section 7 of the Bombay General Clauses Act says: " Where this Act, or any Bombay Act made after the commencement of this Act, repeals any enactment hitherto made or thereafter to be made, then, unless a different intention appears, the repeal shall not (a) revive anything not in force or existing at the time at which the repeal takes effect; or (b) affect the previous operation of any enactment 255 so repealed or anything duly done or suffered thereunder; or (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any such investigation,, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed, as if the repealing Act had not been passed." A comparative study of the aforesaid provisions indicates that while under section 7 of the Bombay General Clauses Act, there is a specific saving of any penalty, forfeiture or punishment incurred in respect of any offence committed under the enactment repealed, as distinct from civil rights and liabilities, under section 48 of Act III of 1953, there is no separate treatment of Civil and Criminal matters; while under the former provisions legal proceedings are saved, under the latter provisions legal proceedings pending on November 1, 1952, in respect of rights acquired or liabilities incurred under the repealed Act are saved. By such a study of the two provisions, the argument proceeds, it is clear that the enactment of a specific saving clause in the repealing Act indicates a " different intention " excluding the operation of section 7 of the General Clauses Act and the omission under section 48 of the repealing Act of a clause similar to el. (d) of section 7 of the General Clauses Act, demonstrates that the liability saved excludes criminal liability. In our view the consideration of the provisions of section 7 of the General Clauses Act need not detain us, for section 48(2)(i) of the repealing Act affords a complete answer to the question raised. Under that clause, the repeal did not affect any right, title or obligation or liability already acquired, accrued or I incurred, The words liability 256 incurred " are very general and comprehensive and ordinarily take in both civil and criminal liability. In Criminal Law the term " liability covers every form of punishment to which a man subjects himself by violating the law of the land. There is no reason why the all comprehensive word should not carry its full import but be restricted to civil liability alone ? The context does not compel any such limitation. Indeed, there is no conceivable ground to impute to the Legislature the intention to wipe out the offences committed under the repealed Act, when it expressly retained the same offences under the repealing Act. If there was any justification for preserving Civil liabilities incurred under the repealed Act, there was an equal justification to save criminal liabilities incurred under that repealed Act. The fact that section 7 of the Bombay General Clauses Act provided separately in different clauses for Criminal and Civil liabilities, while section 48(2) of the repealing Act clubbed them together in one clause is not decisive of the question raised, as, for ought we know, section 48 might be an attempt by the Legislature at precise drafting by omitting unnecessary words and clauses. Nor the circumstance that a special provision is made under section 48(2) of the repealing Act for pending proceedings is indicative of any conscious departure by the Legislature from the established practice embodied in section 7 of the General Clauses Act indicating an intention to save only offences under the repealed Act in respect of which legal proceedings were pending on a specified date. It is more likely, as the learned Judge of the Bombay High Court pointed out, that el. 2 was enacted to obviate the argument that once a case is sent up the liability merges in the proceedings launched and has to be saved specially. On a fair reading of the terms of the saving clause in section 48(2) of the repealing Act, we cannot give a restricted meaning to the words" liability incurred", especially when the scheme of the Act does not imply that the Legislature had any intention to exclude from the saving clause criminal liability incurred under the repealed Act. We, therefore, hold that the liability incurred 257 i.e. the offence committed, under the repealed Act, is covered by the saving clause embodied in section 48 of the repealing Act. In this view it is not necessary to express our view whether, by reason of the saving clause enacted in section 48 of the repealing Act, the Legislature indicated a different intention within the meaning of section 7 of the Bombay General Clauses Act so as to exclude its operation in construing the provisions of the repealing Act. Even so, the learned Counsel contended that the appellant, who committed the offence under the repealed Act, should be prosecuted only with the previous sanction of the Collector as provided by that Act, but as the sanction in the present case was given by the Additional Collector, the Magistrate had no jurisdiction to take cognizance of the offence. To appreciate this argument it would be necessary to notice the provisions relating to sanction in the repealing Act and in the Acts and Ordinances that preceded it. " BOMBAY SALES TAX ACT, 1946. " Section 24 (1)(b): Whoever fails,without sufficient cause, to submit any return as required by, section 10 or know ingly submits a false return,. . . . . . shall, in addition to the recovery of any tax that may be due from him be punishable with simple imprisonment which may extend to six months or with fine not exceeding one thousand rupees or with both; and when the offence is a continuing one, with a daily fine not exceeding fifty rupees during the period of the continuance of the offence." Section 24(2): No Court shall take cognizance of any offence under this Act, or under the rules made thereunder, except with the previous sanction of the Collector and no Court inferior to that of a Magistrate of the Second Class shall try any such offence." " Section 2(a) : " Collector " means the Collector of Sales Tax appointed under sub section (1) of Section 3." " Section 3(1) : For carrying out the purposes of 33 258 this Act, the State Government may appoint any person to be a Collector of Sales Tax and such other persons to assist him as the State Government thinks fit. " ORDINANCE No. II of 1952: Under this Ordinance, Bombay Act V of 1946 and the entries relating to the said Act in the third schedule to the Bombay Merged States (Laws) Act, 1950 were deemed to have continued to be in force up to and inclusive of November 1, 1952. ORDINANCE III OF 1952: "Section 36. Offences and Penalties: whoever (b) fails without sufficient cause, to furnish any return or statement as required by section 13 or 18 or knowingly furnishes a false return or statement,. . . in addition to the recovery of any tax that may be due from him, be punishable with simple imprisonment which may extend to six months or with fine not exceeding two thousand rupees or with both; and when the offence is a continuing one, with a daily fine not exceeding one hundred rupees during the period of the continuance of the offence." " Section 37. Cognizance of offences. No Court shall take cognizance of any offence punishable under section 36 or under any rules made under this Ordinance except with the previous sanction of the Collector and no Court inferior to that of a Magistrate of the Second Class shall try any such offence." " Section 2(6): " Collector " means the Collector of Sales Tax appointed under section 3." " Section 3(1): For carrying out the purposes of this Ordinance, the State Government may appoint any person to be a Collector of Sales Tax, and such other persons to assist him as the State Government thinks fit. " BOMBAY SALES TAX ACT, 1953 (Act III of 1953): " Section 36: Whoever (b) fails without sufficient cause, to furnish any return or statement as required by Section 13 or 18 or 259 knowingly furnishes a false return or statement. . shall, in addition to the recovery of any tax that may be due from him, be punishable with simple imprisonment which may extent to six months or with fine not exceeding two thousand rupees or with both; and when the offence is a continuing one, with a daily fine not exceeding one hundred rupees during the period of the continuance of the offence." "Section 49(2): Any appointment, notification, notice, order, rule, regulation or form made or issued or deemed to have been made or issued under the Ordinance hereby repealed shall continue in force and be deemed to have been made or issued under the provisions of this Act. in so far as such appointment, notification, notice, order, rule, regulation or form is not inconsistent with the provision of this Act, unless it has been already, or until it is superseded by an appointment, notification, notice, order, rule, regulation or form made or issued under this Act." THE BOMBAY SALES TAX (AMENDMENT) ACT, 1956. (BOMBAY ACT NO. XXXIX OF 1956) Section 3. Amendment to section 3 of Bom. III of 1953 : In section 3 of the said Act, for sub section (1), the following sub section shall be and shall be deemed ever to have been substituted, namely: (1) for carrying out the purpose of this Act, the State Government may appoint (a) a person to be the Collector of Sales Tax, and (b) one or more persons to be Additional Collectors of Sales Tax, and (c) such other persons to assist the Collector as the State Government thinks fit." NOTIFICATION ISSUED BY THE STATE GOVERNMENT UNDER SECTION (3) OF THE ORDINANCE III OF 1952: "Government of Bombay is pleased to declare the Additional Collector of Sales Tax, Bombay State, Bombay, as " Collector of Sales Tax, Bombay State, Bombay " for purposes of the Bombay Sales 260 Tax (No. 2) Ordinance, 1952 (Bombay Ordinance No. III of 1952). " It will be seen from the aforesaid provisions that under the Acts as well as under the Ordinances, knowingly furnishing a false return or statement is made an offence punishable with simple imprisonment or fine or with both. The only difference is that under the Ordinance and the Act of 1953, the maximum amount of fine is increased from Rs. 1,000 to Rs. 2,000. Under the Ordinance as well as under the Acts, no Court can take cognizance of the said offence except with the previous sanction of the Collector. The term Collector " is defined in similar terms in the Ordi nance as well as in the Acts, i e., a person appointed as ,"Collector " by the State Government. The notification issued by the State Government under Ordinance 11I of 1952, appointing the Additional Collector as Collector of Sales Tax must be deemed to have continued to be in force under the Bombay Sales Tax Act, 1953, by reason of section 49 (2) of that Act, as it is common case that no fresh notification was made under that Act repealing that made under that Ordinance. Shortly stated, the Bombay Act III of 1953, introduced the same offence and provided for the same machinery that its predecessors contained. On the basis of the aforesaid provisions, the argument of the learned Counsel for the appellant is that as the State Government appointed the Additional Collector as Collector of Sales Tax in exercise of the power conferred on it under the Ordinance III of 1952 and not under the power conferred on it by the repealed Act, the sanction given by the Additional Collector to prosecute the appellant is invalid. The first answer to this contention is that, as the State Government had the power to appoint any person including ' an Additional Collector as Collector of Sales Tax both under the repealed Act as well as the Ordinance III of 1952, the appointment may reasonably be construed to have been made in exercise of the relevant power in respect of the offence saved under the Ordinance. The second answer is more fundamental. There is an essential distinction between an offence and the 261 prosecution for an offence. The former forms part of the substantive law and the latter of procedural law. An offence is. an aggregate of acts or omissions punishable by law while prosecution signified the procedure for obtaining an adjudication of Court in respect of such acts or omissions. Sanction or prior approval of an authority is made a condition precedent to prosecute in regard to specified offences. Prosecution without the requisite sanction makes the entire proceeding ab initio void. It is intended to be a safeguard against frivolous prosecutions and also to give an opportunity to the authority concerned to decide in the circumstances of a particular case whether prosecution is necessary. Sanction to prosecute for an offence is not, therefore, an ingredient of the offence, but it really pertains to procedure. In Maxwell 's Interpretation of Statutes, the following passage appears at page 225: " Although to make a law punish that which, at the time when it was done, was not punishable, is contrary to sound principle, a law which merely alters the procedure may, with perfect propriety, be made applicable to past as well as future transactions. " In the instant case when the repealing Act did not make any change either in the offence or in the procedure prescribed to prosecute for that offence and expressly saved the offence committed under the repealed Act, the intention can be legitimately imputed to the Legislature that the procedure prescribed ' under the new Act should be followed, even in respect of offences committed under the repealed Act. If so, it follows that, as sanction pertains to the domain of procedure, the sanction given by the Additional Collector appointed by the State as Collector of Sales Tax was valid. Even so, it was contended that the notification appointing the Additional Collector as Collector of Sales Tax issued under Ordinance No. 11 of 1952 would not enure to the prosecution launched under Act III of 1953. This argument ignored the express provisions of section 49 (2) of the said Act (already extracted supra), which in clear and express terms laid down 262 that notifications issued or orders made under the repealed Ordinance would be deemed to have been made or issued under the provisions of the Act and would continue to be in force until superseded by appropriate orders or notifications under the new Act. It was not suggested that any fresh notification revoking that made under the Ordinance was issued under the repealing Act. If so, it follows that the notification issued under the Ordinance appointing the Additional Collector as Collector of Sales Tax continued to be in force when the said Collector gave sanction to pro secute the appellant. In this view it is not necessary to consider the scope of the Bombay Sales Tax (Amendment) Act, 1956. Lastly, a strong plea was made for reducing the sentence of imprisonment given by the High Court to that of fine. It was said that the Magistrate in exercise of his discretion gave the sentence of fine and the High Court was not justified in enhancing the same to imprisonment without giving any reasons which compelled them to do so. Reliance was placed in this context on two decisions of this Court Dalip Singh vs State of Punjab (1) and Bed Raj vs The State of Uttar Pradesh (2). In the former case, the Sessions Judge convicted each of the 7 accused under section 302, Indian Penal Code read with section 149, Indian Penal Code. As the fatal injuries could not be attributed to any one of the accused, he refrained from passing a sentence of death, but instead he convicted them to imprisonment for life. The High Court, without giving any reasons, changed their sentences from transportation to death. Bose J. who delivered. the judgment of the Court, in holding that the High Court should not have interfered with the discretion exercised by the Sessions Judge, made the following observation at page 156: " But the discretion is his and if he gives reasons on which a judicial mind could properly found, and appellate Court should not interfere. The power to enhance a sentence from transportation to death should very rarely be exercised and only for the strongest (1) ; (2) ; 263 possible reasons. It is not enough for an appellate Court to say, or think, that if left to itself it would have awarded the greater penalty because the discretion does not belong to the appellate Court but to the trial Judge and the only ground on which an appellate Court can interfere is that the discretion has been improperly exercised, as for example, where no reasons are given and none can be inferred from the circumstances of the case, or where the facts are so gross that no normal Judicial mind would have awarded the lesser penalty. " In the latter case, the appellant along with another was convicted by the Sessions Judge under section 304 Indian Penal Code and sentenced to three years ' rigorous imprisonment. On appeal the High Court enhanced the sentence to ten years. In enhancing the sentence, the learned Judges gave the reason that the deceased was unarmed and the attack was made with a knife and it could not be said that the appellant did not act in a cruel or unusual manner. This Court, in allowing the appeal on the question of sentence, made the following observation at page 588: " A question of a sentence is a matter of discretion and it is well settled that when discretion has been properly exercised along accepted judicial lines, an appellate Court should not interfere to the detriment of an accused person except for very strong reasons which must be disclosed on the face of the judgment. . . In a matter of enhancement there should not be interference when the sentence passed imposes substantial punishment. Interference is only called for when it is manifestly inadequate. " These observations are entitled to great weight. But it is impossible to lay down a hard and fast rule, for each case must depend upon its own facts. Whether in a given case there was proper exercise of judicial discretion by the trial Judge depends upon the circumstances of that case. In the present case, the appellant kept double sets of account books and submitted false returns for successive quarters, omitting from the turn over shown by him in the returns substantial amounts. Under section 24(1) of the Act, infringement of 264 the provisions of the Act is made punishable. The offences under that section are of different degrees of moral turpitude. They range from a mere infringement of a rule to conscious and deliberate making of false returns. For all the offences, the section fixes the maximum punishment of simple imprisonment which may extend to six months. The magistrate, who tries the offenders under that section, is given a wide discretion to could the punishment in such a way as to make it commensurate with the nature of the offence committed. Though the appellant adopted a syste matic scheme to defraud the State by keeping double sets of account books and therefore deserved deterrent punishment, the learned Magistrate, presumably because the appellant pleaded guilty, without giving any reasons, gave him the lenient punishment of fine of Rs. 200. It is obvious that the sentence should depend upon the gravity of the offence committed and not upon the fact that the accused pleaded guilty or made an attempt to defend the case. In the circumstances the High Court was certainly justified in enhancing the sentence from fine to imprisonment and fine and it had given good reasons for doing so. The High Court thought and, in our view, rightly that as the appellant had kept double sets of account books, it was eminently a case in which a substantive sentence ought to have been imposed. The Magistrate has improperly exercised his discretion within the meaning of the aforesaid observations of this Court and therefore, the High Court was certainly within its right to enhance the sentence. But the High Court committed a mistake in awarding a sentence of rigorous imprisonment for a period of one month, which it is not entitled to do under the provisions of section 24(1) of the Act. Under that section the Court had jurisdiction only to give a maximum sentence of simple imprisonment extending to 6 months but had no power to impose a sentence of rigorous imprisonment. This mistake, if any, should go to the benefit of the appellant, for the High Court might have imposed a sentence of longer period of simple imprisonment if it had realised that it had, no power to sentence 265 the appellant to rigorous imprisonment. Be it as it may, as the High Court had no power to impose a sentence of rigorous imprisonment we change the sentence from rigorous imprisonment to simple imprisonment for a period of one month in each case. With this modification the appeals are dismissed. Appeals dismissed.

The appellant was registered under the Bombay Sales Tax Act, 1946. He maintained double sets of account books and knowingly furnished, for the period September 30, 1950 to March 31, 1951, false returns to the Sales Tax Officer and thereby committed an offence under section 24(1)(b) of the Act. Under the Act sanction of the Collector was necessary before cognizance of the offence could be taken by a Court. The I946 Act was repealed by the Bombay Sales Tax Act, 1952, but the 1952 Act was declared ultra vires by the Bombay High Court. Thereupon the Bombay Sales Tax Ordinance 11 Of 1952 was promulgated which provided that the 1946 Act was to be deemed to have been in existence up to November 1, 1952. This was followed by Ordinance 111 of 1952 which further extended the life of the 1946 Act. Thereafter, the Bombay Sales Tax Act, 1953 was passed which repealed both the 1946 Act and Ordinance III of 1952. The 1953 Act made provision for an offence similar to that covered by section 24(1)(b) of the Act, prescribed a similar procedure for prosecuting persons committing the said offence and saved liabilities incurred under the 1946 Act. During the period when Ordinance III of 1952 was in force the State Government issued a notification appointing the Additional Collector to be a Collector under the Ordinance, and the Additional Collector granted sanction for the prosecution of the appellant. The appellant was tried by the Presidency Magistrate before whom he pleaded guilty. The Magistrate accepted the plea, convicted him under section 24(1)(b) of the 1946 Act and sentenced him to a fine of Rs. 200, in default to suffer one month 's rigorous imprisonment. The State preferred a revision to the High Court for enhancement of the sentence. The appellant contended that by the repeal of the 1946 Act the offence was effaced and that the prosecution was defective inasmuch as sanction was given by the Additional Collector and not by the Collector as required by the 1946 Act. The High Court repelled both these contentions and enhanced the sentence to rigorous imprisonment for one month in addition to the fine already imposed 251 Held, that the offence under section 24(1)(b) of the 1946 Act was covered by the saving clause in section 48 of 953 Act and the appellant could be convicted of that offence. The saving by section 48 of the 1953 Act of " any liability incurred " under the 1946 Act saved both civil and criminal liability. Held, that the sanction given by the Additional Collector was a valid sanction for the prosecution of the appellant. The notification issued under Ordinance III of 1952 appointing the Additional Collector as Collector must be deemed to have been made in exercise of the relevant power in respect of the offence saved by the Ordinance. Further, the notification must be deemed to have continued in force under the 1953 Act by reason of section 49(2) of that Act. Sanction pertains to the domain of procedure and the procedure prescribed under the new 1953 Act must be followed even in respect of offences committed under the repealed 1946 Act. Held further, that in the circumstances of the case the High Court was justified in enhancing the sentence. The sentence should depend upon the gravity of the offence and not upon the fact that the accused pleaded guilty or attempted to defend the case. As the appellant had kept double sets of account books, it was eminently a case in which a substantive sentence ought to have been imposed, and the Magistrate improperly exercised his discretion in awarding a sentence of fine only. But the High Court was wrong in awarding rigorous imprisonment as section 24(1)(b) provided only for simple imprisonment.

Civil Appeal No. 104 of 1975 Appeal by special leave from the judgment and order dated the 12th December, 1974 of the Allahabad High Court in Application Paper No. A 53 in Election Petition No. 30 of 1974. Yogeshwar Prasad and Rani Arora, for the appellant K C. Agarwala and K. M. L. Srivastava, for respondent No. 1. The Judgment of the Court was delivered by FAZAL ALI, J. This appeal by special leave involves an interpretation of the scope and ambit of section 87 of the Representation of the People Act, 1951, as amended by Act 47 of 1966. The short point that fails for determination in this appeal is as to whether or not the provision of O. XI of the Code of Civil Procedure can be applied to the trial of election petitions in the High Court by force section 87 of the said Act. For the purpose of brevity, the Representation of the People Act, 1951 shall be referred to as the Act of 1951 shall the Representation of the People Act as amended by Act 47 of 1966 as 'the Act '. The circumstances under which this appeal arises may be succinctly stated as follows. An election for the U.P. Legislative Assembly for 275 Allahabad North Assembly Constituency was held on February 6, 1974 In this election the appellant was a candidate put up by the Congress Ruling party and his election was contested by the first respondent Ram Adhar Yadav who was set up by the Samukta Socialist party. The appellant was declared duly elected in the said election and the respondent No. 1 was defeated. The respondent No. 1 filed an election petition being Election Petition No. 30 of 1974 in the High Court of Allahabad some time in April 1974 challenging the election of the appellant on various grounds. The appellant filed a detailed written statement denying all the allegations made by the first respondent in his petition. The election petition was assigned to J. M. L,. Sinha, J. who framed a number of issues on October 4, 1974. In October 1974 respondent No. 1 filed all application being Paper No. A/53 under O. XI, r. 1 of the Code of Civil Procedure for grant of leave to respondent No. 1 to deliver interrogatories in writing for the examination of the appellant and filed certain interrogatories along with his application. The appellant filed her objections being Paper No. A/54 to the said application contending, inter alia, that the procedure prescribed under O.XI relating to interrogatories was not applicable to the trial of election petitions in the High Court and was not covered by section 87 of the Act. The application filed by the first respondent and the objections of the appellant came up for consideration before the learned Single Judge who by his order dated December 12, 1974, held that the provisions of O.XI fully applied to the election petitions and accordingly rejected the objections filed by the appellant. Hence this appeal by special leave. 257 It appeals that under the Act of 1951 the power to try election petitions was conferred on the Tribunal and section 92 of that Act expressly conferred powers under O.XI of the Code of Civil Procedure on the Tribunal. The relevant portions of section 92 of the Act of 1951 may be extracted thus: The Tribunal shall have the powers which are vested in a court under the Code of Civil Procedure, 1908 (Act V of 1908), when trying a suit in respect of the following matters: (a) discovery and inspection; x x x x (g) issuing commissions for the examination or witnesses, and may summon and examine suo motu any person whose evidence appears to it to be material; and shall be deemed to be a civil court within the meaning of sections 480 and 482 of the Code of Criminal Procedure, 1898 (Act V of 1898). " By the Amendment Act 47 of 1966 this section was, however, deleted and section 90 of the Act of 1951 was replaced by section 87 of the Act which was the same as section 90 of the Act of 1951. Mr. Yogeshwar Prasad counsel appearing for the appellant has submitted two points before us. In the first place he contended that the provisions regarding inspection and discovery and interrogatories as contained in O.XI of the Code of Civil Procedure are not an integral part of the procedure in a civil suit but are special powers contained in the Code and cannot, therefore, be made applicable to election petitions which are proceedings of a special nature. In simplification of this argument it was argued that the history of the English Law as also the Election Law of our country before independence would show that the procedure contained in O.XI of the Code of Civil Procedure was not made applicable to the trial of election petitions. It is, however, not necessary for us to examine the history of this matter because the Act of 1951 settles the issue. When the Parliament expressly conferred powers contained in O.XI on the Tribunal under the statutory provision of section 92 of the Act of 1951, it must he presumed to have made a drastic departure from the old law on the subject and particularly the English Law. In view of this enactment, therefore, it cannot be said that the provisions of our Election Law, particularly in regard to section 92 of the Act of 1951 were in pari materia with the provisions of the English Law on the subject. In fact section 92 incorporating the entire provisions of O.XI of the Code of Civil Procedure was expressly enacted so that the elected representatives also may be subjected to the same law of the land such as the Code of Civil Procedure as any other citizen. In these circumstances, we are unable to apply the English Law to the Act in order to hold that the principles contained in O. XI of the Code of Civil Procedure are excluded from the trial of election petitions. The first contention put forward by counsel for the appellant must, therefore, fail. 258 It was then contended that even though express powers for inspection and discovery were conferred on the Tribunal under section 92 of the Act of 1951, yet by virtue of the amendment under Act 47 of 1956 this express provision was deliberately deleted, which shows that the Parliament intended to give special protection to the elected representatives so as not to compel them to answer interrogatories. This is no doubt an attractive argument, but on closer scrutiny it does not appear to be tenable. The argument completely overlooks the object of the Amendment Act 47 of 1966. By virtue of this enactment a basic change in the trial of election petitions was sought to be introduced. Before 1966 the power to try election petitions was conferred on the Tribunal which was not a civil court and, therefore, special powers had to be conferred on it. fact clause (g) of section 92 of the Act of 1951 extracted above clearly shows that the Tribunal was deemed to be a civil court hence there was the necessity of conferring special powers contained in O.XI of the Code of Civil Procedure on the Tribunal to avoid further doubts. After the amendment of 1966 as the election petitions were to be tried by the High Court, section 87 of the Act which is based on section 90 of the Act of 1951 was considered sufficient to contain the entire procedure to be adopted by the High Court in trying the election petitions which were to be in accordance with the Code of Civil Procedure as far as applicable. Since the High Court is a court of record and a civil court is not, it was not at all necessary for the Parliament to have enacted a separate section like section 92 of the Act of 1951 and that is why section 92 was considered to be unnecessary in view of the change of forum and was deleted under the amended Act. From this it cannot be contended that the Parliament intended that the provisions of O. XI of the Code of Civil Procedure 1 should not apply to the election petitions tried by the High Court under the Act. Counsel for the appellant was unable to cite any authority directly in point. On the other hand, the view which we have taken in this case, is amply supported by number of authorities of this Court as well as other High Courts. To begin with, this Court as far back as 1951, while considering sections 90 and 92 of the Act of 1951 observed in Harish Chandra Bajpai vs Triloki Singh(1) thus: "The second contention urged on behalf of the appellants is that if the provisions of the Civil Procedure Code are held to be applicable in their entirely to the trial of election petitions, then there was no need to provide under section 92 that the Tribunal was to have the powers of courts under the Code of Civil Procedure in respect of the matters mentioned therein, as those powers would pass to it under section 90(2). But this argument overlooks that the scope of section 90(2) is in a material particular different from that of section 92. While under section 90(2) the provisions of the Civil Procedure Code are applicable only subject to the provisions of the Act and the rules made thereunder, there is no such limitation as regards the powers conferred by section 92. It was obviously the intention of the legislature to put the powers of the Tribunal in respect of 259 the matters mentioned in section 92 as distinguished from the other provisions of the Code on a higher pedestal, and as observed in Sitaram vs Yograjsingh (A.I.R. , they are the irreducible minimum which the Tribunal is to possess. (3) It is then argued that section 92 confers powers on the Tribunal in respect of certain matters, while section 90(2) applies the Civil Procedure Code in respect of matters relating to procedure, that there is a distinction between power and procedure, and that the granting of amendment being a power and not a matter of procedure, it can be claimed only under section 92 and not under section 90(2). We do not see any antithesis between 'procedure ' in section 90(2) and 'powers ' under section 92. When the respondent applied to the Tribunal for amendment, he took a procedural step, and that, he was clearly entitled to do under section 90(2). The question of power arises only with reference to the order to be passed on the petition by the Tribunal. Is it to be held that the presentation of a petition is competent, but the passing of any order thereon is not ? We are of opinion that there is no substance in this contention either. " The Court pointed out that the object of section 92 was merely to secure powers of the Court in respect of the matters mentioned therein and that there was no antithesis between sections 90(2) and section 92 of the Act of 1951. Similarly in Sitaram Hirachand Birla vs Yograjsingh Shankarsingh Parihar and others,(1) Chagla, C.J., clearly pointed out that the distinction between the power and procedure was completely artificial and a distinction without any difference. The learned Chief Justice speaking for the Court observed as follows: "In our opinion, Mr. Kotwal is right, because on principle it is difficult to make a distinction between procedure and the powers of a Court as suggested by Mr. Patwardhan. The whole of the Civil Procedure Code, as its very name implies, deals with procedure. In the course of procedure the Court always exercises powers and when the Court is exercising its powers, it is exercising them in order to carry out the procedure laid down in the Code. Therefore procedure and powers in this sense are really interchangeable terms and it is difficult to draw a line between procedure and powers. The powers conferred under section 92 is not any substantive power, it is procedural power, a power Intended for the purposes of carrying out the procedure before the Tribunal. " In a recent decision of the Full Bench of the Allahabad High Court in Duryodhan vs Sitaram and others(2) the Court held that the matters mentioned in section 92 appertain to the procedure for trial, and are also attracted by virtue of section 90(l). The Court observed as follows: 260 "In my opinion, the matters mentioned in Section 92 appertain to the procedure for trial, and are also attracted by virtue of Section 90(1). They were separately stated in Section 92 to make them operate inspite of any provision to the contrary in the Act or the Rules, and not with a view to curtail the amplitude of Sec. 90(1). The provisions of O.9, Rr. 8 and 9, Civil P.C. even if they deal with powers, would be procedural powers and be attracted by virtue of Section 90( 1 ) . " While dealing with the scope and ambit of s.90 of the Act 1951 this Court in Dr. Jagjit Singh vs Giani Kartar Singh and others(1) observed as follows . "The true legal position in this matter is no longer in doubt. Section 92 of the Act which defines the powers of the Tribunal, in terms, confers on it, by Cl. (a), the powers which are vested in a Court under the Code of Civil Procedure when trying a suit, inter alia, in respect of discovery and inspection. " A Full in Bench of the Punjab High Court in Jugal Kishore vs Dr. Baldev Prakash,(2) while construing the provisions of section 87 of the Act clearly pointed out that the High Court was a Court of record and possessed all inherent powers of a Court while trying election petitions. In this connection, Grover, J., observed as follows: "It is quite clear that there is no distinct provision in the Act laying down any particular or special procedure which is to be followed when the petitioner chooses to commit default either in appearance or in production of evidence or generally in prosecuting the petition. The provisions of the Code of Civil Procedure would, therefore, be applicable under Section 87 of the Act. I am further of the opinion that any argument which could be pressed and adopted for saying that the inherent powers of the Court could not be exercised in such circumstances would be of no avail now as the High Court is a Court of record and possesses all inherent powers of a Court while trying election petitions. " We fuly approve of the line of reasoning adopted by the High Court in that case. The Rajasthan High Court in Keshari Lal Kavi and another vs Narain Prakash and others(3) followed the Punjab case and has taken the same view. Some reliance was placed by the learned counsel for the appellant on the decision in Inamati Mallappa Basappa vs Desai Basavarai Ayyappa and others,(4) where this Court held that the procedure contained in O. 23, r. 1 of the Code of Civil Procedure did not apply to election petitions and, therefore, on a parity of reasoning O. C.P.C. also could not be applicable to the trial of election petitions. 261 We are, however, unable to agree with this argument. The provision contained in O. 23 r. 1 cannot be equated with the provisions of o. XI because the election petition being a matter of moment and concerning the entire costituency there could be no question of the election petition being withdrawn by the petitioner who had filed the same. This was highlighted by this Court in that case when the Court observed as follows: "Order 23, r.1, sub rule (2), provides for liberty being given by the Court to a party withdrawing or abandoning a part of his claim to file a fresh suit on the same cause of action, if so advised. in the very nature of things such liberty could not be reserved to a petitioner in an election petition. x x x x x x On a due consideration of all these provisions, we are opinion that the provisions of o. 23, r. 1, do not apply to the election petitions and it would not be open to a petitioner to withdraw or abandon a part of his claim once an election petition was presented to the Election Commission. " Having regard to the nature of the election Petition, the notion of abandonment of the claim or withdrawal is absolutely foreign to the scope of such proceedings and must, therefore, be held to be excluded by necessary intendment of section 87 of the Act itself. This authority therefor, does not appear to be of any assistance to counsel for the appellant. The matter, however, seams to be concluded by a recent decision of this Court in Virendra Kumar Saklecha vs Jagjivan and others(1) where the Chief Justice speaking for the Court interpreted section 87 of the Act and observed as follows: "Under Section 87 of the Act every election petition should be tried by the High Court as nearly as may be in accordance with the procedure applicable under the Code of Civil Procedure to the trial of suits. Under Section 102 of the Code the High Court may make rules regulating their own procedure and the procedure of the Civil Courts subject to their super vision and may by such rules vary, alter or add to any of the rules in the First Schedule to the Code. " The relevant part of section 87 runs thus : "(1) Subject to the provisions of this Act and of any rules made thereunder, every election petition shall be tried by the High Court, as nearly as may be, in accordance with the procedure applicable under the Code of Civil Procedure, 1908 to the trial of suits :" A bare perusal of this section leads to the irresistible conclusion that election petitions shall have to be tried in accordance with the proce 262 dure applicable under the code of Civil Procedure to the trial of suits. In other words, election petitions would be tried like ordinary civil suits. We are unable to agree with counsel for the appellant that O. XI does not form part of the trial of suits but is a special procedure. This is repelled by a oreference to O. XI of the Code of Civil Procedure itself. It will appear that O. X relates to the procedure for examination of parties by the Court and O. XI is a part of that procedure, because it provides that where witnesses are not able to appear before the Court personally they are examined through interrogatories. In these circumstances, therefore, O. XI is as much a part of the procedure as O. X relating to trial of suits in matters regarding summoning of witnesses, documents etc. In these circumstances it cannot be said that section 87 of the Act either expressly or impliedly excludes the application of O. XI of the Code of Civil Procedure. In fact we are clearly of opinion that section 87 of the Act is of the widest amplitude so as to cover the entire procedure mentioned in the Code of Civil Procedure with only two exceptions (i) where the Act contains express provision for certain matters which are inconsistent with the procedure prescribed by the Code; and (ii) where a particular provision of the Code of Civil Procedure is either expressly or any necessary intendment excluded by the Act. Subject to these two exceptions, section 87 is very wide in its connotation We, therefore, agree with the learned Single Judge who was trying the election petition that the application for interrogatories was one of the logical steps in aid of the prosecution of the petition and was fully covered by section 87 of the Act. The second contention raised by counsel for the appellant thus fails. For the reasons given above, there is no merit in this appeal which fails and is accordingly dismissed with costs. V.P.S. Appeal Dismissed.

An application for delivery of interrogatories is one of the logical steps in aid of the prosecution of an election petition and is fully covered by section 87 of the Representation of the People Act, 1951. C(1) (1) Order XI, C.P.C., forms part of the trial of suits and is not a special procedure. Order X relates to the procedure for examination of parties by the Court and o. XI, is a part of it, because, it provides for examination through interrogatories, when personal appearance is not possible. [262A B] (2) Before Act 47 of 1966 amended the Representation of the People Act, 1951, the power to try election petitions was conferred on the Erection Tribunal. That Tribunal was not a Civil Court but was deemed to be a Civil Court. Though section 90, as it then stood, provided that every election petition shall be tried, as nearly as may be, in accordance with the procedure under the C.P.C., in order to avoid doubts, the special powers under O. Xl, C.P.C., were conferred on the Tribunal by section 92. When Parliament has expressly conferred the powers contained in O.XI on the Tribunal, it could not be contended that the principles contained therein are excluded from the trial of election petitions, on the basis of English Law. [257F H] (3) After the amendment of 1966, as election petitions are to be tried by the High Court, a Court of Record, section 87, which is based on the repealed section 90, is sufficient to contain the entire procedure to be adopted by the High Court in trying election petitions. Section 87 is of widest amplitude so as to cover the entire procedure mentioned in the Code of Civil Procedure with only two exceptions, (a) when the Act contains express provision for certain matters which are inconsistent with the procedure prescribed by the Code; and (b) when a particular provision of the Code is either expressly or by necessary intendment excluded by the Act. That is why a provision like the repealed section 92 is unnecessary; and it cannot be contended that since Parliament repealed that section, Parliament intended that the provisions of O. XI, C.P.C., should not apply to election petitions tried by the High Court. [258A E; 269C D] Sitaram Hirachand Birla vs Yograisingh Shankarsingh Parihar and others, AIR 1953 Bom. 293, Durvodhan vs Sitaram and others AIR 1970 All. 1; Jugal Kishore vs Dr. Baldev Prakash AIR 1968 Punj. 152 (F.B.) and Keshari Lal Kavi and another vs Narain Prakash and others, AIR 1969 Raj. 75, referred to. Dr. Jagjit Singh vs Giani Kartar Singh and others A.I.R. 1966 S.C. 773, and V. K. Sakleha vs Jagjiwan ; , followed. (4) Merely because in Inamati Mallappa Basappa vs Desai Basavaraj Ayyappu and others ; it was held that the procedure contained in O. 23, r. 1 C.P.C. does not apply to election petitions it could not be contended that O. XI: C.P.C., would not also be applicable to election petitions. Order 23, r. 1 cannot be equated with the provisions of O. XI. Having regard to the nature of an election petition which is a matter of moment and concern to the entire constituency the notion of abandonment of the claim or withdrawal is absolutely foreign to the scope of such proceedings and must, therefore, be held to be excluded by the necessary intendment of section 87 itself. [260H 261 B, D E] 256 ^

Civil Appeal No. 722 of 1968. Appeal by Special Leave from the Judgment and order dated the 17th July, 1967 of the Mysore High Court in Writ Petition No. 989 of 1965. Narayan Nettar and K. R. Nagaraja for the Appellant. Mrs. Shyamla Pappu and Vineet Kumar for the Respondent. The Judgment of the Court was delivered by SARKARIA, J. The circumstances leading to this appeal, directed against a judgment of the High Court of Mysore, are as follows: The respondent herein entered the service of the Princely State of Mysore in 1935 as Instructor of Tailoring in the Department of Public Instructions. In 1949, three occupational Institutes (Polytechnics) at Hassan, Devangere and Chintamani were started in the State. The respondent was sent on deputation to serve in the Polytechnic at Devangere as Instructor in Tailoring and he joined the new post on November 28, 1949. One Shri K. Narayanaswamy Chetty who was also an Instructor in Tailoring in the Department of Public instruction was also deputed to the occupational Institute at Hassan and joined duty there on December 1, 1949. This K. N. Chetty was . far junior to the respondent in service. Special officer in Charge of the three occupational Institutes considered the names of the respondent and K. N. Chetty for absorption as Instructors in Tailoring and recommended for their absorption with effect from the respective dates of their joining duty, after deputation, in the Institutes. Accordingly K. N. Chetty was absorbed with effect from December 1, 1949, but no order was passed in the case of the respondent despite repeated representations made by the latter. In 1953, the then State of Mysore set up the Department of Technical Education and the Polytechnic at Devangere became part of that Department. The respondent continued tp serve on deputation in that Department. In 1955, for no fault of the respondent, the Government passed orders reverting him to his parent Department. On June 11, 1956, the respondent was again posted on deputation as Instructor in Tailoring in the Polytechnic at Bellary "on provisional basis". The intervening period between his reversion and reposting to the Polytechnic was treated as leave. On the re organization of States with effect from November 1, 1956, his services were allotted to the new State of Mysore. The respondent continued to make representations to the effect that like other employees who were taken on deputation from other Departments, he should also be absorbed in the Department of Technical Education with effect from November 28, 1949, which was the date on which he initially came on deputation. 257 His specific grievance was that in any case, he could not be discriminated against and treated differently from K. N. Chetty who was junior to him in the parent Department and came on deputation to the Polytechnic establishment subsequently. The State Government referred the respondent 's case to the Public Service Commission who examined it and by a communication, dated February 2, 1960, made these recommendations in favour of the respondent: "It is stated in the Government letter dated 26 10 1959 that the Director who was the Unit officer for both the departments ordered the transfer of Sri Srinivasa Murthy who was fully qualified as Tailoring Instructor in the Technical Education Department and there was no need to classify the vacancy post to which he was transferred under the then existing rules. Along with him Sri K. Narayanaswamy C: Chetty who was his junior and possessing similar qualifications was transferred as Tailoring Instructor in the Technical Education Department and was absorbed in the same department by Government in consultation with the Public Service Commission. The case of Sri Srinivasamurthy is on all fours with that of Sri Narayanaswamy Chetty and he is deserving of similar treatment. D ' In view of the above, and since Sri Srinivasa Murthy, who was fully qualified was transferred in 1949 by the Director and appointed as Tailoring Instructor under the rules then in force, and as his reversion at this distance of time for no fault of his would cause a great hardship to him, the Commission are of the opinion that he may be absorbed as Tailoring Instructor from the date of his appointment as such as has been ordered in the case of Sri K. Narayanaswamy Chetty." In the opinion of the Commission, the temporary reversion of the respondent to his parent department in 1955 56, was not justified. Ultimately, the Government by order, dated February 19, 1964, ordered the absorption of the respondent in the Department of Technical Education in the grade of Rs. 150 with effect from the date of the order, in the vacancy in which he was working, subject to these conditions. (a) that he would not be entitled to the benefit of revision of scales of pay that had been effected in 1957 & 1961 by way of increments or weightage benefit accruing . thereunder, (b) that he would not be given any more financial benefit or revision of pay or additional increments for his previous service. Against this order the respondent made representations to the Government praying that his absorption should be related back to 1949 and he be given the benefit of the revisions of pay scale, including weightage benefit. The Government did not accept the representation. 258 On April 21, 1965, the respondent filed a writ petition under Article 226 of the Constitution in the High Court, for the issue of a writ of mandamus directing his absorption in the Department of Technical Education from the date of his initial appointment therein, namely, November 28, 1949, and to give him benefits of the revisions of pay scales effected in 1957 and 1961 and weightage benefits thereunder. The order dated February 19, 1964, was impugned on the ground that he had been invidiously discriminated against in the matter of absorption and appointment, while his junior K. Narayanaswamy Chetty, whose case was identical in all respects, and six other officers who were similarly situated, were absorbed in the Department of Technical Education with effect from the initial date of joining duty on deputation. It was contended that in making the impugned order, contrary to the recommendations of the State Public Service Commission, the State Government had acted arbitrarily and in violation of Articles 14 and 16 of the Constitution. The petition was opposed by the appellant, who in its counter affidavit. contended that the respondent had no legal right to be absorbed in the service of the Department of Technical Education from a particular anterior date, or to be given the revised pay scales applicable to those borne permanently in the service of that Department. It was further contended that the case of the respondent did not stand on the same footing as that of Narayanaswamy Chetty because the order of Chetty 's absorption was passed in 1951 and that of the respondent 's absorption in 1964, and there was a break in the service of the respondent in the Department of Technical Education, in 1955 56. It was stated that the absorption of the employees which came on : deputation from a particular date, was a concession which could not be claimed as of right, and consequently, a writ of mandamus, as prayed for by the respondent, should not be issued. The High Court allowed the writ petition and issued a direction that the absorption of the respondent in the Department of Technical Education, be given effect from November 28, 1949 when he initially resumed duty on deputation to the Polytechnic at Devangere. The High Court further declared that he will be entitled to all consequential benefits from such absorption including the benefit of revision of pay scales in the years 1957 and 1961 and also weightage benefits. Hence this appeal by the State. Mr. Nettar appearing for the appellant contends that this case is fully covered by this Court 's decision in K. V. Rajalakshmiah Setty and Anr. vs State of Mysore and Anr. The point canvassed by the Counsel is, that the absorption of K. N. Chetty and five others, with effect from particular anterior dates, was not made in pursuance of any principle of policy or statutory rule, but was done as a matter of concession. It is urged that Articles 14 and 16 of the Constitution cannot be invoked to enforce a mere concession. Counsel has further made an attempt to show that the respondent and K. N. Chetty were not similarly situated because there was a break in the respondent 's service with the Department of Technical Education. (1) ; 259 As against this, Mrs. Shyamla Pappu submits that in Rajalakshmiah Setty 's case (supra), the facts were entirely different. It is emphasised that in the present case, seven employees had come on deputation from other Departments to the Polytechnics and all of them, excepting the respondent, were absorbed permanently in the Department of Technical Education with effect from the dates on which they came on deputation. Even Narayanaswamy Chetty, who was admittedly junior to the respondent, and was identically situated, was accorded the same treatment. It is urged that this principle of policy r was ignored in the case of the respondent, and he was without reason singled out for unfair discriminatory treatment. It is pointed out that his so called "reversion" to the parent Department in 1958 for a short period, was a misnomer. It was not a reduction in rank, nor a break in the continuity of his service. Moreover, it was, as the Public Service Commission found, undeserved and could not, by any stretch of reasoning, be considered a ground for meting out discriminatory treatment to the respondent. We find a good deal of force in the arguments of the learned Counsel for the respondent. Rajalakshmiah Setty vs State of Mysore (supra) is clearly distinguishable from the facts of the present case. In that case, the Government of the then State of Mysore, by a notification dated December 12, 1949, directed that the promotions of 63 petitioners therein, from the post of Surveyors as Assistant Engineers were to take effect from that date irrespective of the dates on which they were put in charge of sub divisions. But by a notification dated May 17, 1950, the Government showed a concession to a different batch of 41 Surveyors, who had been placed in charge of different sub divisions between March 1944 and January 1946, by promoting them as Assistant Engineers, with effect from the dates of occurrence of vacancies, according to seniority. In November 1958, another batch of 107 persons were similarly promoted as Assistant Engineers with retrospective effect from 1st November 1956, when the new State of Mysore emerged under the States Reorganization Act. The petitioners therein filed a writ petition praying for the issue of mandamus directing the State to fix their seniority, also, on the basis that they had become Assistant Engineers from the dates on which the vacancies to which they had been posted had occurred. ' The High Court dismissed petition. On appeal, this Court ; held that the concession shown to the batch of 41 persons who had been appointed before the petitioners and to the batch of 107 persons who had been appointed thereafter, were mere ad hoc concessions and not something which they could. claim as of right. It was observed that there was no service rule which the State Government had transgressed, nor the State had evolved any principle to be followed in respect of persons who were promoted to the rank of Assistant Engineers from surveyors. It may be noted that the grant of the relief prayed for by the 63 petitioners, would have unsettled and caused wholesale alterations of 260 the seniority list with regard to the entire cadre of Engineers thus affecting persons who were not before the Court and who would have been r condemned unheard. Further, acceptance of the petitioners ' contentions would have unsettled pre Constitution matters, and it would have been directly productive of results going against section 115(7) of the States Re organization Act. Furthermore, the petitioners in that case . claimed to be promoted with ' effect from past dates. There was no , principle of policy or service rule on the basis of which they could ` claim such promotions as of right. ' Lastly, the petitioners in that case were found guilty of serious laches. Such impediments in the way of the relief claimed by the respondent, do not exist in the present case. It appears to us that the acceptance of the respondent 's contentions in the present case cannot lead to any untoward results such as were apprehended in Rajalakshmiah 's case (supra). Indeed, it has not been shown that the absorption of the respondent with effect from November, 1949, would adversely affect even Narayanaswamy Chetty, who was admittedly junior to him in the parent Department. On the` other hand, it is an undisputed fact that sit other employees, who were similarly situated, were absorbed from the dates on which they initially joined duty, after deputation to the Polytechnics. It is not the case of the appellant that this principle whereby the absorption in the Department of Technical Education was related back to the date on which a person initially came on deputation, was ever departed from, excepting in the case of the respondent. This being the case, the High Court was right in holding that the State Government had evolved a principle "that if a person was deputed to the Department of Technical Education from another department and he stayed on in that other department for a reasonable long time his absorption in that department should be made to relate back to the date on which he was initially sent". There was no justification whatever to depart from this principle of policy in the case of the respondent, who was, in all material respects, in the same situation as K. N. Chetty. very rightly, the High Court has held that his "impermissible reversion" for a short while in 1955 to the parent department was no ground to hold that he was not similarly situated as K. Nariayanaswamy Chetty. This so called reversion to the parent Department for a short period in 1955 56, could not by any reckoning, be treated as a break in his service, this period having been treated as leave. Nor did it amount u ' to reduction in rank. In any case, this 'reversion ' was not ordered owing to any fault of the respondent. It is not the appellant 's case " that the respondent 's work in the Department of Technical Education 261 was found unsatisfactory or that he was not otherwise suitable or qualified to hold the post of Tailoring Instructor in that Department. That he was suitable to be absorbed in that post, is manifest from the recommendation of the Public Service Commission and is implicit in the impugned order, itself. For the reasons aforesaid, we are of opinion that in the special circumstances of this case, the High Court was fully justified in granting the relief, it did, to the respondent. The appeal fails and is dismissed with costs. P.H.P. Appeal dismissed.

The respondent entered service of the State of Mysore in 1935 as instructor of Tailoring in the Department of Public Instruction. In 1949 he went on deputation in the Polytechnic Institute at Devangere. One K. N. Chetty who was far junior to respondent was also sent on deputation to another similar institution in 1949. K. N. Chetty was absorbed from the date he went or deputation in the new post but respondent was not so absorbed. In 1955, for no fault of the respondent, Government passed orders reverting him to his parent department. In 1956, respondent, was again posted on deputation. The intervening period between his reversion and re posting was treated as leave. On reorganisation of State respondent 's services were allotted to the new State of Mysore. The respondent made several representations and stated that he was discriminated against and treated differently from K. N. Chetty who was junior to him in the parent department. The Public Service Commission found that respondent 's case was on all fours with that of Chetty and that he deserved similar treatment. The Commission found that the temporary reversion of the respondent lo his parent department was not justified. The Government in 1964 ordered the absorption of the respondent in the Department of Technical Education from the date of the order subject to the conditions that he would not be entitled to the benefit of revision of scales of pay that had been effected in 1957 and 1961 and that he would not be given any more financial benefit or revision of pay or addition increment for his previous service. The respondent filed a Writ Petition challenging these condition and praying for a direction that he should be absorbed in the Department of Technical Education from the date of his initial appointment in 1949, and granted consequential benefits or the revision of pay scales etc. The appellant opposed the Writ Petition on the grounds that the respondent had no legal right to be absorbed in the Department of Technical, Education with effect from. a particular interior date or to be given the revised pay scales applicable to those borne permanently in the service of that department. Chetty 's case was sought to be distinguished on the ground that he was absorbed in the year 1951 as against the respondent 's absorption in 1964 and that there was a break in the service of the respondent. The High Court allowed the Writ Petition and issued a direction that absorption of the respondent in the Department of Technical Education be given effect from 1949 when he initially assumed duty on deputation. The High Court also declared that he would be entitled to all consequential benefits. The appellant in an appeal by Special Leave relied on the judgment of this Hon 'ble Court in the case of K. V. Rajalakshmiah Setty vs State of Mysore [1967] 2 S.C.I. 70. Dismissing the appeal, ^ HELD: In the present case it appears that the State had evolved a principle pursuant to which all the employees who came on deputation from the departments to the Polytechnic excepting the respondent, were absorbed permanently in the Department of Technical Education with effect from the dates on which they came on deputation. Even Chetty who was admittedly junior to the respondent and was identically situated was accorded the same treatment. It is an undisputed fact that 6 other employees who were similarly situated were absorbed from the date on which they initially joined duty after deputation to the Polytechnic. [259 A C, 260 D] 256 There was no justification whatever to depart from this principle of policy in the case of the respondent. His reversion was not ordered owing to any fault on his part. The said reversion could not be treated as a break in service since it was treated as leave, nor did it amount to reduction in rank. 60 F H] The High Court was therefore, justified in granting the relief, it did to the respondent. 261 Bl 'Rajalakshmiah Setty vs State of Mysore, ; , distinguished.

ivil Appeal No. 3577 of 1988. From the Judgment and Order dated 19.9.1986 of the Madras High Court in C.R.P. No. 3210 of 1985. section Padmanabhan, Mr. T.A. Subramaniyam, R.N. Keshwani and section Balakrishnan for the Appellants. G. Ramaswamy, Additional Solicitor General, K. Swami, section Srinivasan, Rajyappa, section Murlidhar, Diwan Balak Ram and M.K.D. Namboodari for the Respondents. The Judgment of the Court was delivered by KULDIP SINGH, J. Venkatarayulu Naidu Charities is a public trust V.P. Venkatakrishna Naidu and V.P. Rajagopala Naidu, filed an original suit No. 28 of 1909 (hereinafter called original suit) in the court of Subordinate Judge, Mayavaram under Section 92 of the Code of Civil Procedure praying inter alia that the defendant trustee be 763 removed from the said office and a new trustee be appointed with directions to recover trust properties improperly and fraudulently alienated by the defendant. The subordinate court permitted the trustee to continue and framed a scheme decree dated September 9, 1910 for the future manage ment and administration of the trust. Clauses 13 and 14 of the scheme are as under: "13 The trustee shall not effect any altera tions or additions to the existing buildings except with the permission of the Tanjore Sub Court." "14 Liberty is given to the parties to apply to the Tanjore Sub Court for further direc tions if any from time to time as regards the administration of the trusts. " The question for consideration in this Appeal is whether "parties" mentioned in Clause 14 of the scheme decree repro duced above mean only the named plaintiffs and defendant in the suit title and their successors in interest or the suit being representative it includes all those who are interest ed in the trust. Further necessary facts are as under: The trust owns several items of proper ties. We are concerned with the following two properties alone of the trust. Property situate at Muthukumara Moopannaar Road in T.S. No. 2936 to an extent of 11484 sq. ft. 2. Property situate at ward No. 6 Gandhiji Road, in T.S. No. 2937 to an extent of 4429 sq. The trustees filed interim application No. 453 of 1984 in the Original Suit before the subordinate court for per mission to sell the first property which was granted by the order dated October 27, 1984 and the property was sold for Rs.11,000. Similarly the second property was sold for Rs.69,328 with the permission of the court dated January 23, 1985. R. Venugopala Naidu and three others who are the present appellants filed interim application No. 175 of 1985 in the original suit before the subordinate judge, Thanjavur for setting aside the orders dated October 27, 1984 and January 23, 1985 granting permission to 764 the trust to sell the above mentioned two properties. It was alleged that the negotiated sale was at a price which was almost 20% of the market price. There was no publication in any newspapers or even in the court notice board inviting the general public. The learned subordinate judge dismissed the application on the ground that the applicants have no locus sandi to file the application under clauses 13 and 14 of the scheme decree as they were not parties to the original suit. A further revision before the Madras High Court was dismissed. The High Court also came to the conclusion that the applica tion was not maintainable. It was also held by the High Court that two of the four applicants who are muslims cannot have any interest in the administration of the trust. Against the High Court judgment the present appeal by way of special leave has been filed. Mr. section Padmanabhan, learned counsel for the appellants has vehemently argued that though the appellants were not shown as parties in suit title but the suit under Section 92 of Civil Procedure Code being a representative suit the scheme decree binds not only the parties thereto but all those who are interested in the trust. According to him "parties" in clause 14 of the scheme decree would include appellants and all those who are interested in the trust. He has relied on Raje Anandrao vs Shamrao and Others, ; wherein this Court held as under: " . . It is true that the pujaris were not parties to the suit under section 92 but the deci sion in that suit binds the pujaris as wor shipers so far as the administration of the temple is concerned, even though they were not parties to it, for a suit under section 92 is a representative suit and binds not only the parties thereto but all those who are inter ested in the trust." The learned counsel further relied on Ahmed Adam Sait and Others vs Inayathullah Mekhri and Others, ; wherein this Court observed as under: "A suit under section 92, it is urged, is a repre sentative suit, and so, whether or not the present respondents actually appeared in that suit, they would be bound by the decree, which had framed a scheme for the proper administra tion of the Trust. In support of this argu ment, reliance is placed on the decision of this Court in Raja Anandrao vs Shamrao, 765 where it is observed that though the Pujaris were not parties to the suit under section 92, the decision in that suit binds the pujaris as worshipers so far as the administration of the temple is concerned, because a suit under section 92 is a representative suit and binds not only the parties thereto, but all those who are interested in the Trust . . " " . . In assessing the validity of this argument, it is necessary to consider the basis of the decisions that a decree passed in a suit under section 92 binds all parties. The basis of this view is that a suit under section 92 is a representative suit and is brought with the necessary sanction required by it on behalf of all the beneficiaries interested in the Trust. The said section authorises two or more persons having an interest in the Trust to file a suit for claiming one or more of the reliefs specified in clauses (a) to (h) of sub section (1) after consent in writing there prescribed has been obtained. Thus, when a suit is brought under section 92, it is brought by two or more persons interested in the Trust who have taken upon themselves the responsi bility of representing all the beneficiaries of the Trust. In such a suit, though all the beneficiaries may not be expressly impleaded, the action is instituted on their behalf and relief is claimed in a representative charac ter. This position immediately attracts the provisions of explanation VI to section 11 of the Code. Explanation VI provides that where persons litigate bona fide in respect of a public right or of a private right claimed in common for themselves and others, all persons interested in such right shall, for the pur poses of this section, be deemed to claim under the persons so litigating. It is clear that section 11 read with its explanation VI leads to the result that a decree passed in a suit instituted by persons to which explanation VI applies will bar further claims by persons interested in the same right in respect of which the prior suit had been instituted. Explanation VI thus illustrates one aspect of constructive res judicata. Where a representa tive suit is brought under section 92 and a decree is passed in such a suit, law assumes that all persons who have the same interest as the plaintiffs in the representative suit were represented by the said plaintiffs and, there fore, are constructively barred by res judica ta from reagitating the matters directly and substantially in issue in the said earlier suit. A similar result follows if a suit is either brought or 766 defended under 0.1. , r. 8. In that case per sons either suing or defending an action are doing so in a representative character, and so the decree passed in such a suit binds all those whose interests were represented either by the plaintiffs or by the defendants . . " The legal position which emerges is that a suit under Section 92 of the Code is a suit of a special nature for the protection of Public rights in the Public Trusts and chari ties. The suit is fundamentally on behalf of the entire body of persons who are interested in the trust. It is for the vindication of public rights. The beneficiaries of the trust, which may consist of public at large, may choose two or more persons amongst themselves for the purpose of filing a suit under Section 92 of the Code and the suit title in that event would show only their names as plaintiffs. Can we say that the persons whose names are on the suit title are the only parties to the suit? The answer would be in the negative. The named plaintiffs being the representatives of the public at large which is interested in the trust all such interested persons would be considered in the eyes of law to be parties to the suit. A suit under Section 92 of the Code is thus a representative suit and as such binds only the parties named in the suit title but all those who are interested in the trust. It is for that reason that explanation VI to Section II of the Code constructively bar by res judicata the entire body of interested persons from reagitating the matters directly and substantially in issue in an earlier suit under Section 92 of the Code. Mr. G. Ramaswamy, learned counsel appearing for the respondent trust has argued that only the two persons who filed the original suit can be considered as "parties" in terms of clause 14 of the scheme decree and according to him since the appellants were not the plaintiffs they have no locus standi to file any application under clause 13 and 14 of the scheme decree. According to the learned counsel Section 92 of the Code brings out a dichotomy in the sense that there are "parties to the suit" and "persons interested in the trust." According to him persons interested in the trust cannot be considered parties to the suit although the judgment/decree in the suit in binding on them. He has also argued that a suit under Section 92 of Civil Procedure Code is different from a suit filed under Order 1 Rule 8 of Civil Procedure Code. We do not agree with the learned counsel. A suit whether under Section 92 of Civil Procedure Code or under Order 1 Rule 8 of Civil Procedure Code is by the representatives of large number of persons who have a common interest. The very nature of a representative suit makes all those who have common interest in the suit as parties. We, 767 therefore, conclude that all persons who are interested in Venkatarayulu Naidu Charities which is admittedly a public trust are parties to the original suit and as such can exercise their rights under clauses 13 and 14 of scheme decree dated September 9, 19 10. It is not necessary to go into the finding of the High Court that two of the appellants being muslims can have no interest in the trust as the other two appellants claim to be the beneficiaries of the trust and their claim has not been negatived. Moreover, the trust has been constituted to perform not only charities of a religious nature but also charities of a secular nature such as providing for drinking water and food for the general public without reference to caste or religion. In view of our findings above the subordinate court and the High Court were in error in holding that the appellants had no locus standi to file the application for setting aside the order permitting the sale of the properties. We, therefore, allow the appeal and set aside the order of the subordinate court and that of the High Court. The subordinate court and the High Court did not go into the merits of the case as the appellants were non suited on the ground of locus standi. We would have normally remanded the case for decision on merits but in the facts and circum stances of this case we are satisfied that the value of the property which the trust got was not the market value. Two persons namely S.M. Mohamed Yaaseen ad S.N.M. Ubayadully have filed affidavit offering Rs.9.00 lacs and Rs. 10.00 lacs respectively for these properties. In support of their bona fide they have deposited 10% of the offer in this Court. This Court in Chenchu Ram Reddy and another vs Gov ernment of Andhra Pradesh and Others, [1986] 3 SCC 391 has held that the property of religious and charitable endow ments or institutions must be jealously protected because large segment of the community has beneficial interest therein. Sale by private negotiations which is not visible to the public eye and may, even give rise to public suspi cion should not, therefore, be permitted unless there are special reasons to justify the same. It has further been held that care must be taken to fix the reserve price after ascertaining the market value for safeguarding the interest of the endowment. We, therefore, set aside the orders of subordinate court dated October 27, 1984 and January 23, 1985 permitting the sale of the two properties and also set aside the consequent sale in favour of the respondents. We direct that the properties in question may be sold by 768 public auction by giving wide publicity regarding the date, time and place of public auction. The offer of Rs. 10 lacs made in this Court will be treated as minimum bid of the person who has given the offer and deposited ten percent of the amount in this Court. It will also be open to the re spondents/purchasers to participate in the auction and compete with others for purchasing the properties. The respondents vendees from the trust shall be enti tled to refund of the price paid by them with 10% interest from the date of payment of the amount till the date of auction of the property. They will also be entitled to compensation for any super structure put up by them in the properties including compensation for any additions or improvements made by them to the building and the property. The value of such super structure and the improvements and additions shall be ascertained by the subordinate court through a qualified engineer and by Such other method as the court may deem fit. The court shall fix the value and com pensation amount after affording opportunity to the respond ents and the trust to make their representation in that respect. There shall be no order as to costs. G.N. Appeal al lowed.

Respondent No. 1 is a public trust. The trust owns several properties. On the ground that the trust properties were improperly and fraudulently alienated, a suit was fried under Section 92 CPC for removing the trustee and appointing a new trustee and to recover trust properties alienated by the said trustee. The sub judge permitted the trustees to continue and framed a scheme decree for the future manage ment and administration of trust. The scheme also granted liberty to the parties to apply to the sub court for further directions as regards the administration of the trust. The trustees filed an interim application before the sub court and obtained permission to sell two properties. The appellants filed an interim application for setting aside the order granting permission to the trust for selling the two properties, alleging that the negotiated price was only about 20% of the market price. The sub judge dismissed the application on the ground that the applicants had no locus standi to file the application under clauses 13 and 14 of the Scheme decree as they were not parties to the Origi nal suit. On revision the High Court also came to the conclusion that the application was not maintainable. This appeal, by special leave, is against the said judgment of the High Court. On behalf of the appellants, it was contended that since the suit under section 92 CPC being a representative suit, the scheme decree binds not only the parties thereto, but all those who are interested in the trust. The contention of the Respondents was that only the two persons 761 who filed the original suit can be considered as "parties" in terms of clause 14 of the scheme decree and since the appellants were not plaintiffs in the suit, they have no locus standi to file an application under clauses 13 and 14 of the scheme decree. Allowing the appeals, this Court, HELD: 1.1 A suit under Section 92 of the Code is a suit of a special nature for the protection of Public rights in the Public Trusts and charities. The suit is fundamentally on behalf of the entire body of persons who are interested in the trust. It is for the vindication of public rights. The beneficiaries of the trust, which may consist of public at large, may choose two or more persons amongst themselves for the purpose of filing a suit under Section 92 of the Code and the suit title in that event would show only their names as plaintiffs. The named plaintiffs being the repre sentatives of the public at large which is interested in the trust all such interested persons would be considered in the eyes of law to be parties to the suit. A suit under Section 92 of the Code is thus a representative suit and as such binds not only the parties named in the suit title but all those who are interested in the trust. It is for that reason that explanation VI to Section 11 of Code constructively bar by res judicata the entire body of interested persons from reagitating the matters directly and substantially in issue in an earlier suit under Section 92 of the Code. [766B C] 1.2 A suit whether under Section 92 of the Civil Proce dure Code or under Order 1 Rule 8 of Civil Procedure Code is by the representatives of large number of persons who have a common interest. The very nature of a representative suit makes all those who have common interest in the suit as parties. In the instant case all persons who are interested in the respondent trust are parties to the original suit and as such can exercise their rights under clauses 13 and 14 of scheme decree. [766H; 767A] Raje Anandrao vs Shamrao and Ors., ; ; Ahmed Adam Sait and Ors. vs Inayatullah Mekhri and Ors., ; relied on. 2.1 The property of religious and charitable endowments or institutions must be jealously protected because large segment of the community has beneficial interest therein. Sale by private negotiations which is not visible to the public eye and may even give rise to public suspicion should not, therefore, be permitted unless there are special 762 reasons to justify the same. Care must be taken to fix the reserve price after ascertaining the market value for safe guarding the interest of the endowment. [767F G] 2.2 The orders of subordinate court dated October 27, 1984 and January 23, 1985 permitting the sale of the two properties and consequent sale in favour of the respondents, are set aside. The properties in question may be sold by public auction by giving wide publicity regarding the date, time and place of public auction. The offer of Rs. 10 lacs made in this Court will be treated as minimum bid of the person who has given the offer and deposited ten percent of the amount in this Court. It will also be open to the re spondents/purchasers to participate in the auction and compete with others for purchasing the properties. The respondents vendees from the trust shall be entitled to refund of the price paid by them with 10% interest from the date of payment of the amount till the date of auction of the property. They will also be entitled to compensation for any superstructure put up by them in the properties includ ing compensation for any additions or improvements made by them to the building and the property. [767H; 768A C] Chenchu Ram Reddy and Anr. vs Govt. of Andhra Pradesh and Ors. , [1986] 3 SCC 391, relied on.

iminal Appeals Nos. 62 and 63 of 1958. Appeals from the judgment and order dated April 15, of the Allahabad High Court in Criminal Appeals Nos. 1332 and 1476 of 1954. A. N. Mulla, B. B. Tawakley, J. P. Goyal, A. Banerji and K. P. Gupta, for the appellants. G. C. Mathur and C. P. Lal, for the respondents. September. The judgment of the Court was delivered by MUDHOLKAR, J. These are appeals by a certificate granted by the High Court of Allahabad. They arise out of the same trial. : The appellants in both the appeals except Chandrika Singh were convicted by the Second Additional District & Sessions judge, Kanpur, of offences under section 471, Indian Penal Code read with sections 467 and 468, I.P.C. and sentenced variously. Tulsi Ram, Beni Gopal and Babu Lal were each convicted of offences under section 417 read with section 420 and Moti Lal of, offences under section 417, I.P.C. and Lachhimi Narain of offences under section 420, I.P.C. Separate sentences were awarded to each of them in respect of these offences. All the six appellants 384 were, in addition, convicted under section 120 B, I.P.C. and sentenced separately in respect of that offence. In appeal the High Court set aside the 'conviction and sentences passed on Tulsi Ram, Beni,, Gopal, Babu Lal and Moti Lal of offences under, section 471 read with sections 467 and 468, I.P.C. and also fitted Moti Lal of the offence under section 417, I.P.C.It however, upheld the conviction of all the appellants under section 120B, I.P.C. as well as the conviction of Tulsi Ram, Beni Gopal and Babu Lal of offences under section 417 read with section 420, I.P.C. As regards Lachhimi Narain it maintained the conviction and sentences passed by the Additional Sessions judge in all, respects and dismissed the appeal in toto. The relevant facts arc as follows : The appellants, other than Chandrika Singh, are members of a Marwari trading family belonging to Rae Bareli and Chandrika Singh was their employee. The relationship amongst Lachhimi Narain and the first four appellants in Crl. A. 62 of 1958 would be clear from the following genealogical table Bhairo Prasad Sri Niwas (accused) Sagar Mal : : : Lachhimi Tulsi Gobardhan Pahlad Narain Gopal Ram das Rai : Babu Lal : (Suraj Mal minor) Nand Lal (deceased) Moti Lal Parshottamdas (died during pendency of the case). 385 It is common ground that Lachhimi Narain was the Karta of the family and the entire business of the family was done under his directions and supervision. This fact is material in view of the defence taken by the first four appellants in Crl. A. 62 of 1958. It is common ground that the family carried on business in the names and styles of (1) firm Beni Gopal Mohan Lal with head office at Rae Bareli, (2) Tulsi Ram Sohan Lal with head office at Lalgunj in the district of Rae Bareli, (3) firm Bhairon Prasad Srinivas with head office at Rae Bareli, (4) firm Gobardhan Das Moti Lal with head office at Madhoganj in the district of Partapgarh and (5) firm Sagarmal Surajmal with head office at Unchahar in the district of Rae Bareli. Though different members of the family were shown as partners in these five firms, one thing is not disputed and that is that the business of each and every one of these firms was being conducted by and under the orders and directions of Lachhimi Narain though in point of fact he was shown as partner along with his father Sri Niwas and brother Pahlad only in the firm of Bhairo Prasad Srinivas. It is common ground that in May, 1949, the firm Bhairo Prasad Srinivas was appointed the sole importer of cloth for distribution amongst wholesalers in the Rae Bareli district. Prior to the appointment of this firm as sole importer a syndicate consisting of four firms of Rae Bareli was the sole importer of cloth in that district. It would, however, appear that this syndicate failed to take delivery of large consignments of cloth with the result that the Deputy Commissioner discovered that cloth bales valued at about Rs. 2,25,000/ were lying at the railway station and demurrage on the consignment was mounting every day. It is not disputed either that it was at the instance of the Deputy Commissioner that the firm Bhairo Prasad Srinivas agreed to act as sole importers take delivery of the cloth and distribute it 386 amongst wholesalers. They were also required to take delivery subsequently of cloth worth 'over Rs. 23 lakhs. This firm and one other allied firm were also importers and distributors of foodgrains and salt in the district. Both the courts below have held that in order to obtain short term credits the appellants hit upon an ingenious device and succeeded in securing credits to the tune of Rs. 80 lakhs between May, 1949, and December, 1949. While the appellant Lachhimi Narain has throughout admitted that such a device was resorted to, the other appellants denied any knowledge of the aforesaid device. The particulars of the device adopted are these: A partner or an employee of one of the firms booked small consignments of say two or three bags of rape seed, poppy seed or mustard seed from various stations in Rae Bareli and Partapgarh districts to various stations in West Bengal, including the city of Calcutta. The person concerned used to execute for warding notes and obtain railway receipts in respect of such consignments. These receipts were prepared by the railway authorities in triplicate, one being given to the consignor, one sent to the destination station and one kept on the record of the forwarding station. The consignor 's foil of the railway receipt was then taken to Rae Bareli and there it was tampered with by altering the number of bags, the weight of the consignment and the freight charges. All this was admittedly done by minims under the direction of Lachhimi Narain himself. These forged railway receipts were then endorsed by the consignor in favour of one or other of the firms Beni Gopal Mohan Lal, Tulsi Ram Sohan Lal, Sagarmal Soorajmal or Bhairo Prasad Srinivas and thereafter these firms drew large sums of money commensurate with the huge quantities of goods specified in the forged railway receipts and on the security of these railway receipts drew demand drafts or hundis in 387 favour of variour banks and two firms in Kanpur as payees on a firm styled as Murarka Brothers, Calcutta, as drawee. It may be mentioned that this firm was established by the family in Calcutta about a year or so before the transactions in question were entered into. After this firm was established in Calcutta Lachhimi Narain opened an account in the name of the firm in the Calcutta Branch of the Allahabad Bank and authorised Babu Lal and Chandrika Singh, who was originally an employee of the firm Bhairo Prasad Srinivas and was transferred to Calcutta, to operate on the account. The banks which discounted the hundis and the drafts were the Kanpur branches of the Bank of Bikaner, the Bank of Bihar, the Bank of Baroda and the Central Bank of India and the firms were Matadin Bhagwandas and Nand Kishore Sitaram, both of Kanpur. These payees realised the amounts by presentation of the hundis and railway receipts to Murarka Brothers at Calcutta. The banks obtained payment through their branches in Calcutta while the two firms obtained payments through certain banks. To enable Murarka brothers at Calcutta to honour the hundis on presentation Lachhimi Narain and Tulsi Ram, the _acquitted accused Srinivas and a munim of theirs named Hanuman Prasad, who was also an accused but died during investigation, used to get money transmitted from the firms ' account in the Rae Bareli, Lucknow and Kanpur branches of the Allahabad Bank to the ac count of Murarka Brothers at Calcutta by telegraphic transfers. Delivery of the consignments despatched by the partners or the employees of the various family firms could obviously not be taken with the help of forged railway receipts because had that been done the fraud would have ' been immediately discovered. Instead, delivery was taken through commission agents on indemnity bonds on the allegation that the railway receipts had been lost. Such bonds were executed either by one of the partners or by an employee and after getting them verified by the station masters and 388, goods clerks of the booking stations they were endorsed in favour of the consignees. It has been established by evidence and it is not disputed before us that these consignees in fact took delivery of the small consignments at the special request of Lachhimi Narain, disposed of the consignments and credited the sale proceeds to the account of Bhairo Prasad Srinivas or Murarka Brothers at Calcutta. The bulk of these forged railway receipts is not forth coming, presumably because, they have been destroyed after the hundis supported by them were honoured and the receipts received from the banks or the firms which were payees under the hundis. It is the prosecution case that the banks and the firms obtained discount charges of one or two annas per cent for the amounts paid by them, although had the family firms obtained these amounts by way of loan they would have been charged interest at 6 to 9 per cent on these amounts. Towards the end of December, 1949, the Kanpur branch of the Bank of Bikaner and the Bank of Bihar received back a number of hundis unhonoured along with corresponding forged railway receipts. The Bank of Bikaner received five hundis for an amount of Rs. 3,52,000/ out of which hundis worth Rs. 1,82,000/ had been negotiated by the bank directly with the firm Bhairo Prasad Srinivas and hundis worth Rs. 1,70,000/ through Nand Kishore Sitaram. Six hundis were received back by the Bank of Bihar, Kanpur, valued at Rs. 1,92,000/ . These were negotiated through Matadin Bhagwandas. The bank adjusted the account by debiting Matadin Bhagwandas with the amount. These unpaid payees instituted inquiries from the consignees and the railways and came to know that the railway receipts offered as security to them were forged. These railway receipts have been exhibited in this case in order to prove the charge of forgery. 389 After the cheating practised by the family firms and forgeries committed by them came to light, Daya Ram, P. W. 62, a partner in the firm Matadin Bhagwandas filed a complaint before the City Magistrate, Kanpur on January 4, 1950, and B. N. Kaul, Manager of the Bank of Bihar, lodged a report the police station, Colonelganj, Kanpur, on January 18, 1950. The appellants, except Chandrika Singh executed a mortgage deed on January 5, 1950, in favour of the Bank of Bikaner for Rs. 3,62,000/which included Rs. 3,52,000/ due on unpaid hundis interest and other charges. According to the prosecution, Bhairo Prasad Srinivas paid the firm Matadin Bhagwandas Rs. 1,00,000/ and that Lachhimi Narain executed a promissory note for the balance of Rs. 92,000/_ in their favour. According to the defence, however, the criminal case filed by Matadin Bhagwandas was compounded by payment of the amount settled between the parties and that as a result they stood acquitted of the charge contained in the complaint of Matadin Bhagwandas. The appellant, Lachhimi Narain, has taken all the blame upon himself He not only admitted that he had obtained credit to the tune of Rs. 80 lakhs on the security of railway receipts in which the quantities of goods consigned had been increased, but also admitted that he had got the quantities inflated by his munims, Raj Bahadur and Hanuman Prasad, both of whom are dead. According to him, except for the complicity of the two munims the whole thing was kept a secret from everybody else. His defence further was that he had committed ' no offence as he intended to pity, off and did pay off the entire amount raised. The other appellants 'admitted that each of them had played some part or other in these transactions but denied having been a member of the conspiracy and contended what each of them did was ,it the bidding of Lachhimi Narain, 390 The first point raised by Mr. A. N. Mulla on behalf of the appellants was that no sanction as required by section 196A of the Code of Criminal Procedure was on the record of the case and, therefore, the entire proceedings are void ab initio. He admitted that there is a document on record, exhibit P 1560, which is a letter addressed by Mr, Dave, Under Secretary to the Government of U. P., Home Department to the District Magistrate, Kanpur informing him that the Governor has been pleased to grant sanction to the initiation of proceedings against the persons mentioned in that order. But according to Mr. Mulla, this communication cannot be treated "either as a valid sanction or its equivalent". He points out that for a sanction to be valid it must be by a written order signed by the sanctioning authority and that no one can function as a substitute for the sanctioning authority nor can oral consent, even if it was given, be deemed in law to be valid. He further contended that the document on record does not show on its face that the facts 'of the case were considered by the Governor. His argument is that had the true facts of this case been placed before the Governor, that is, that the firm Bhairo Prasad Srinivas never sought its appointment as sole importer of cloth for Rae Bareli district, that the firm was in fact prevailed upon by the Deputy Commissioner to take up the work and help the Government in a critical situation, that though large credits were undoubtedly obtained by making fraudulent representations and committing forgeries it was never the intention of Lachhimi Narain to cause loss to anyone, that in fact everyone has been paid in full, and that the prosecution was launched not at the instance of any of these persons but at the instance of the railway authorities and that, therefore, no useful purpose would be served by launching a prosecution, sanction would not have been given. We did not permit Mr. Mulla to raise this point because it is not a pure question of law but requires 391 for its decision investigation of facts. It is not his contention that there was no sanction at all but the gravamen of his complaint is that there is no proper proof of the fact that sanction was given by the authority concerned after considering all the relevant facts and by following the procedure as laid down in article 166 of the Constitution. Had the point been raised by the appellant in the trial court, the prosecution would have been able to lead evidence to establish that the Governor had in fact before him all the relevant material, that he considered the material and after considering it he accorded the sanction and that that sanction was expressed in the manner in which an act of the Governor is required to be expressed. Mr. Mulla, however, says that section 196A of the Code of Criminal Procedure is a sort of brake on the power. , of the criminal court to enquire into the charge of conspiracy, that the court does not get jurisdiction to enquire into that charge unless the brake is removed and that it is, therefore, essential for the prosecution to establish that the brake was removed by reason of the fact that the appropriate authority had accorded its sanction to the prosecution after complying with the provisions of law and that it was not obligatory on the defence to raise an objection that there was no proper sanction. There would have been good deal of force in the argument of learned counsel had exhibit P. 1560 not been placed on record. Though that document is not the original order made by the Governor or even its copy, it recites a fact and that fact is that the Governor has been pleased to grant sanction to the prosecution of the appellants for certain offences as required by section 196A of the Code of Criminal Procedure. The document is an official communication emanating from the Home Department and addressed to the District 'Magistrate at Kanpur, A presumption would, therefore, arise that sanction to which reference has been made in the document, had in fact been accorded. Further, since the communication is an official one, a presumption would also arise 392 that the official act to which reference has been made in the document was regularly performed. In our opinion, therefore, the document placed on record prima facie meets the requirements of section 196A of the Code of Criminal Procedure and, therefore, it is not now open to the appellants to contend that there was no evidence of the grant of valid sanction. We, therefore, overrule the contention raised by learned counsel . The next point urged by Mr. Mulla is that the charge as framed jumbles up several offences and, therefore, has led to miscarriage of justice. This also is not a point which had been taken up in the courts below. That apart, we do. not think that there is any substance in this point. The objection is with respect to the first charge which reads as follows: " 'That between the months of May 1949 and December 1949 both months inclusive, in the district of Rae Bareli, Pratabgarh and Kanpur, Sri Niwas, Lachhimi Narain, Tulsi Ram, Beni Gopal, Babulal, Moti Lal, Brij Lal Coenka, Chajju Lal and Chandrika Singh agreed to do amongst themselves and the deceased Hanuman Prasad and Purshottom Dass or caused to be done illegal acts viz. the act of cheating the (1) Bank of Bikaner, Kanpur, (2) Bank of Baroda, Kanpur (3) Bank of Bihar, Kanpur, (4) Central Bank of India, Kanpur, (5) M/s. Matadin Bhagwan Dass, Kanpur and (6) M/s. Nand Kishore Sitaram of Kanpur by dishonestly inducing them to part with huge sums of money on the basis of hundis drawn on Murarka Bros., Calcutta covered with securities knowing such R/Rs. to be forged and cheated the aforesaid Banks and Bankers by using forged documents as genuine knowing them to be forged in pursuance of a common agreement amongst them all and thereby committed an offence punishable under section 120B read with sections 467/468/ 393 471 and 420 of 'the Indian Penal Code and within the cognizance of the court of Sessions. " It is the concluding portion of the charge to which learned counsel has taken objection. We do not think that there has at all been any jumbling up of the charges. The charge is just one and that is of conspiracy. A reference is made to other sections of the Code to 'indicate the objects of the conspiracy that is, to cheat and to commit forgery. The charge by referring to Various sections of the Indian Penal Code merely makes it cleat that the object of the conspiracy was to forge railway receipts '. which were valuable securities to commit forgeries for the purpose of cheating, to use forged documents as genuine. What was meant by the charge Was apparently fully under stood by the appellants because they never complained at the appropriate stage that they were confused or bewildered by the charge. In the circumstances, therefore, we overrule this objection also ' of learned counsel. Since the commission of forgeries by Lachhimi Narain could not be denied what we have next to acertain is whether Lachhimi Narain is guilty of cheating and if so whether section 420, I.P.C. As held by the learned Additional Sessions Judge and the High Court or under section 417, I. P.C. as contended before us. Learned counsel points out and rightly, that for a person to be convicted under section 420, I. P.C. it has to be established not only that he has cheated someone but also that by doing so. he has dishonestly induced the person who was cheated to deliver any Property etc. A person can be said to have done a thing dishonestly if he does so with the intention of causing wrongful 'gain to one person or wrongful loss to another person. Wrongful loss is the loss by unlawful means of property to which a person is entitled while wrongful gain to a person means a gain to him by unlawful means of property to which 394 the person gaining is not legally entitled. Learned counsel contended that there has been no wrongful loss whatsoever to the banks and the two firms which discounted the hundis drawn by one or the other of the firms owned by the family . The High Court has held that these firms did sustain a wrongful loss inasmuch as they got very meagre amounts for discounting the hundis whereas had the true facts been known to them, they would not have discounted the hundis though they may have advanced loans and charged interest at between 6 and 9% on the amounts advanced. It was because of the fraudulent misrepresentation made to the banks and the firms that they lost what they could have otherwise been able to obtain and thus wrongful loss has been caused to them. We, have been taken through a large number of documents on the record and it is clear from these documents that those who discounted the hundis in question were entitled to charge, apart from the discount charges, interest at 6% or above in case of non payment within 24 hours of presentation. A reference to some of the exhibits 1440 to 1454 which are the debit vouchers of the Bank of Bikaner and Exs. 1330 to 1345 which are debit vouchers of the Bank of Bihar clearly show that in fact interest in the case of the first Bank at 6% and in the case of the second at 9% was charged, debited and realised by these banks from the firms in question for the entire, period during which the hundis though presented, remained unpaid. These documents are only illustrative but they do indicate that in fact the banks were not deprived of interest. Learned counsel pointed out that the Managers and officers of the Banks and the firms were examined and they do not say that any loss of interest was caused to them in these transactions. Mr. Mathur who appears for the State, however,, pointed out that in the nature of things the hundis could not be presented for payment in less than ten days and in this connection he referred to Exs. P. 1106 and 1055. These are records of bills purchased by the Central Bank of 395 India, Kanpur. He referred us to the penultimate columns of these exhibits headed 'date enquired on" and contended that this column contained the date of presentation. As an illustration he referred us to the first entry dated June 10. It was the date on which the hundi was discounted by the Central Bank of India and then he said that the date in the penultimate column is June 20 which means that the hundi was presented on June 20. According to him, therefore, for this period of ten days and for 24 hours thereafter the bank would have got only the discount charges and no interest. The hundi in question was realised on June 25 and, therefore, according to him all that the bank must have got was interest for four days. But it may be pointed out that the heading of the penultimate column has not been correctly reproduced in the paper book. We have been referred to the original and there the heading is "Date enquired". Bearing in mind this fact as well as the entry in the last column which is headed "non payment advice sent" we think that what is stated in the penultimate column is not the date of presentation at all but some other date. Unfortunately there is no column in either of the documents to show the date of presentation. Therefore, these documents do not help the State at all. Apart from that we may mention that it was for the Bank to take care to see that there was no delay in the presentation of hundis and if they themselves delayed they had to take the consequences. Further, we may point out that if the Bank was not able to earn interest or earn only very little interest in these transactions for as long as ten days that would have been so in all the transactions, that is, not merely transactions which were supported by forged railway receipts but also transactions which were supported by genuine railway receipts. There is, therefore, no substance in the contention of Mr. Mathur. Mr. Mathur then contends that the fact that the banks stood the risk of losing their moneys 396 because the railway receipts which supported the bills were forged documents, wrongful loss must be deemed to have been caused to the banks by the action of the firms. There is considerable force in this argument but we do not wish to express any final opinion thereon, because in our opinion the firms of the appellant have undoubtedly made an unlawful gain. No doubt, Mr. Mulla contended that because the firms were able to obtain temporary credits on the basis of their hundis, it cannot be said that they have made any wrongful gain to themselves. His contention is that the firms had good credit in the market and for obtaining credit in the transactions in question they gave good equivalents in the shape of hundis. He also pointed out that out of the 180 odd hundis drawn by the firms only a very few were dishonoured and that this happened only in the month of December, 1949. It was not shown. , he proceeded, that Murarka Brothers on whom the hundis were drawn were not throughout the period of nine months when the transactions were entered into, in a position to meet the hundis. Out ' of hundis worth Rs. 80 lakhs those 'worth Rs. 74 lakhs were in fact honoured and even the remaining hundis is would have been honoured but for the fact that there was slump in the market and cotton, bales, worth Rs.12 lakhs belonging to the appellants were lying pledged in, the godowns of the Central Bank of India for securing an amount of Rs. 9 lakhs. Had these bales been sold in the normal course there would have been no crisis in December of the kind which occurred and ' led 'to the dishonourment of certain hundis, in which the Bank of Bikanet and Matadin Bhagandas were payees: Bearing in mind all these facts, learned counsel wants us to draw he inference that the obtaining of credit was not on the security of forged railway receipts but oh the security of hundis themselves which were drawn by parties who had credit in the market and drawn on a party ;which has not been shown not to be possessed 397 of adequate funds to meet the hundis throughout period covered by the transaction& We do riot think that the argument of learned counsel has much force. B. N. Kaul, (P.W. 32), the Manager of the Kanpur branch of the Bank of Bihar, has said that he purchased hundis because the railway receipts; showed that the consignments were large and their value, was commensurate with the amount for which the bills had been drawn. He added that he would not have purchased these hundis if the consignments, were for very small quantities, apparently meaning thereby that if the value of the consignments was not commensurate with, the amount to be advanced he would not have purchased the hundis. Apart from the evidence of Kaul there is also other evidence to ' show that the real basis of discounting bills was not merely the credit of the appellant or the security, afforded by, these bills. Thus evidence is in consonance with, the normal banking practice of discounting hundis, only when they are supported by railway receipts, of, consingnments despatched by the drawer to, outside parties. No doubt, bills or hundis are themselves securities and taking into consideration the credit of the drawer of a hundi a bank may conceivably discount such hundis but where the, hundis are themselves supported by railway receipts it would be futile to say that the railway receipts were not intended by the parties to be regarded as further security for discounting the bills. Where a consignor of goods draws a hundi for the price of the consignment on some bank or firm and supports that hundi with the railway receipt obtained by him, in respect of the consignment, the party in fact pledges the consignment to the bank discounting the hundi and, there fore, in such a transaction the railway receipt cannot be regarded as anything else than a security for that transaction. If that security turns out to be worthless or practically worthless because the value of the consignment is only a fraction of what it was represented to be, the discounting of the hundi by, the party 398 drawing it must necessarily be regarded as unlawful. It would thus follow that the firms in question made a gain by obtaining credits and that these credits were obtained by them by resorting to unlawful means. The gain they made was, therefore, unlawful. Mr. Mulla contended that for an act to be regarded as dishonest it is not enough to show that one person deceived another and thereby made a wrongful gain but it is further necessary to show that as a result of the deception the other person sustained wrongful loss. In support of his contention he has relied upon the decision in Sanjiv Ratanappa Ronad vs Emperor (1). That was a case where the first accused who was a police Sub Inspector was found to have made a false document by altering a certain entry made by him in his diary with a view to create evidence. It was argued before the Court that in order to constitute an offence of forgery under sections 463 and 464 the document must be made dishonestly or fraudulently and those words must be read in the sense in which they are defined in the Indian Penal Code and that it was not enough to show that the deception was intended to secure an advantage to the deceiver. Dealing with this argument Baker, J., who was one of the judges constituting the Bench observed at p. 493 : "The definition of 'dishonestly ' in section 24 of the Indian Penal Code. applies only to wrongful gain or wrongful loss and although there are conflicting rulings on the question of the definition of the word 'fraudulently ', the concensus of opinion of this Court has been that there must be some advantage on the one side with a corresponding loss on the other. " Section 463, which defines forgery, runs thus "Whoever makes any false document or part of a document with intent to cause damage or injury, to the public or to any person, or to (1) (1932) 1. L. R. LVI Bom. 399 support any claim or title, or to cause person to part with property, or to enter any express or implied contract, or with intent to commit fraud or that fraud may be committed, commits forgery. " The intention to cause damage or injury to the public or to any person is thus an clement which has to be established before a fabricated document can be held to be a false document or a forgery. In view of the terms of section 463 what the learned judge has observed is understandable and may be right. Here, however, we are concerned with the offence under section 420, I.P.C. which speaks of dishonest inducement as a necessary ingredient. As Baker, J., has rightly pointed out: "As dishonesty involves a wrongful gain or wrongful loss, obviously it does not apply to the present case where no pecuniary question arises. " But, in an offence under section 420, I.P.C. a pecuniary question necessarily arises. The first part of section 464, I.P.C. provides that a person is said to make a false document who dishonestly or fraudulently makes ' signs etc., a document with a particular intention and covers cases both of acts which are dishonest and acts which are fraudulent. Where no pecuniary question arises the element of dishonesty need not be established and it would be sufficient to establish that the act was fraudulent and, therefore, it may be, as the learned judge has held, that where an act is fraudulent the intention to cause injury to the person defrauded must be established. But where the allegation is that a person has dishonestly induced another to part with property something different has to be considered and that is whether he has thereby caused a wrongful loss to the person who parted with property or has made a wrongful gain to himself. These are the two facets of the definition of 400 dishonesty and it is enough to establish the existence of one ' of them. The law ' does not require that both should be established. The decision relied upon by learned counsel is, therefore, distinguishable. Learned counsel then referred to the dissenting judgment of Subrahmania Ayyar, J., in Kotamraju "Venkatarayudu vs Emperor (1) to the effect that in regard to offences failing under section 465 and 461 it must be established that the deception involved some loss or risk of loss to the individual and to the public and that it was not enough to show that the deception was intended to secure advantage to the deceived. This decision as well as some other decisions referred to by learned counsel 'are therefore distinguishable for the same reason which distinguishes Sanjiv Ratanappa Ronad 's ' case (2) from the one before us. We are, therefore,/ of the view, that the offence of cheating has been established. The High Court has found that dishonesty has been established against Lachhimi Narain because it was he who drew and negotiated the various hundis. According to learned counsel the prosecution has not established that the other appellants had either drawn any hundi or discounted any hundi, this contention, however, does not appear to be sound because there is a finding of the learned Additional Sessions judge that the appellant Tulsi Ram had sold to the Central Bank of India certain hundis covered by forged rail " way receipts. He has also found that the appellant Beni Gopal had admittedly booked a consignment of two bags of rape seed from Rae Bareli to Raniganj and drawn a hundi of Rs. 40.000/ on the basis of the railway receipt which was tampered with and subsequently got verified the stamped indemnity bond for this very consignment which was sent to the firm Chiranji Lal Ram Niwas for taking delivery. Another consignment of two bags, this time containing poppy seeds, was booked by the firm of Beni Gopal and Beni Gopal drew a hundi for Rs 38,000/ on Murarka (1) Mad. (2) (1932) I. L. R. LVI Bom. 401 Brothers and sold that hundi to the Central Bank of India. This hundi was supported by a railway receipt which had been tampered with. It is on the basis of those findings that the learned Additional Sessions judge convicted both these appellants for an offence under section 417/420, I.P.C. The learned Additional Sessions judge has also held that the appellants, Babu Lal and Moti Lal, were likewise guilty of offences under section 417/420, I.P.C. The conviction and sentence passed on Moti Lal was set aside by the High Court. In our opinion the prosecution has failed to establish that Babu Lal had 'either drawn or negotiated hundis supported by forged railway receipts. The material upon which the learned Additional Sessions judge has relied and, apparently, on which the High Court has relied, does not touch these matters at all. Whatever other part Babu Lal might have played in these transactions his actions do not bring home to him the charge under section 420, I.P.C. For this reason his conviction and sentence for the offence of cheating must be set aside and we accordingly do so. The High Court has affirmed the conviction of Tulsi Ram and Beni Gopal for offences under section 417/ 420, 1. As already indicated there is evidence to show that both these persons had taken part either in the drawing or in the negotiation of hundis which were supported by forged railway receipts. The evidence adverted to by the learned Additional Sessions judge has not been challenged before us. We must, therefore, confirm the conviction of the appellants, Tulsi Ram and Beni Gopal, for the offence of cheating. We would, however, like to make it clear that having found that the acts fall under section 420, I. P. C. it was not appropriate for the High Court to affirm the conviction under "section 417/420", 1. P. C. thus indicating that if the offence is not one it is the other. 402 The only other question which needs to be considered is regarding conspiracy. Mr. Mulla fairly admitted that in any case Lachhimi Narain cannot escape the conviction under section 120B even if all the other appellants are held not to have been parties to the conspiracy because two other persons were admittedly associated with Lachhimi Narain. These per sons would have been made co accused in the case but for the fact that they died in the meanwhile. Regarding the other appellants before us, Mr. Mulla strongly contends that there is no evidence of conspiracy. He concedes that he cannot challenge the correctness of the findings of the Additional Sessions judge and the High Court regarding the commission of certain acts by the appellants but his contention is that those acts are not sufficient to show their complicity of the other appellants in the conspi racy. According to him, the other appellants were made to do these acts by Lachhimi Narain and that they were not in the know of the deception which Lachhimi Narain had systematically practised in all the transactions. We cannot accept the argument. At least in so far as two of the appellants are concerned, Tulsi Ram and Beni Gopal, they are guilty of cheating itself. That fact coupled with the other evidence referred to in the concluding portion of the judgment of the High Court, and the circumstances established against each of the appellants are sufficient to warrant the conclusion that they were in the know of the conspiracy. In so far as Babu Lal is concerned the acts established are: (1) signing four forwarding notes; (2) presenting a cheque at the Bank of Bikaner, Kanpur; (3) cashing a cheque; (4) paying off certain hundis accompanied by forged railway receipts; and (5) signing 32 indemnity bonds. The forwarding notes related to certain consignments on the security of which hundis had been discounted by certain banks, By presenting a cheque to the Bank of Bikaner Kanpur, and by cashing another cheque, Babu La. 403 had operated on the bank account to which the proceeds of certain hundis supported by forged railway receipts had been credited. These facts, taken in conjunction with the acts of payment of hundis accompanied by forged railway receipts would be sufficient to establish his connection with the conspiracy. In addition to this circumstance, he also signed or endorsed 32 indemnity bonds on the strength of which delivery of a large number of consignments, railway receipts in respect of which had been forged, was ultimately taken. Similarly as regards Moti Lal the following acts have been established: (1) signing of 23 forwarding notes in connection with consignments, the railway receipts of which were tampered but which supported certain hundis drawn by the firm; (2) he signed or endorsed 52 indemnity bonds on the strength of which delivery was taken of the consignments, the railway receipts in respect of which were tampered with and yet were offered as security to banks or firms which discounted hundis for the value of these consignments. These circumstances are sufficient to justify the conclusion drawn by the Additional Sessions judge and upheld by the High Court. In addition to these circumstances, we must bear in mind the fact that these four appellants are closely related to Lachhimi Narain, that their family business is joint and, therefore, they have a common interest. It is inconceivable that they could not have been in the know of what was being done by Lachhimi Narain. In the circumstances we uphold their conviction under section 120B, 1. As regards Chandrika Singh, the matter stands on a different footing. He was originally an employee of the firm Bhairo Prasad Srinivas and was transferred to Calcutta when a year before the transactions in question commenced, when the firm of Murarka Brothers was established. He was in charge of paying hundis presented to Murarka 404 Brothers. The High Court has held him to be a party to the conspiracy on the basis of the following facts: 1. He signed the letter of authority, exhibit P 1388 dated July 22, 1948, by which Lachhimi Narain authorised him to operate the account of Murarka Brothers in the Calcutta branch of the Allahabad Bank, as proved by Chandrika Chaubey, P. W. 44, and, admitted by the appellant; 2. he paid Rs. 25,000/ to the Hindustan Commercial Bank and received the hundis and railway receipts concerned,, as admitted by him and proved by G. N. Ghosh, P. W. 57, and the voucher exhibit P 1232; 3. he made payments to the Bank of Bihar at Calcutta on behalf of Murarka Brothers and obtained the hundis and railway receipts concerned, signing vouchers, Exs. P1342, 1343, 1346 and 1348 to 1353 about the same, as admitted by him; and 4. he made similar payments to the Calcutta Branches of the Central Bank of India, the Punjab National Bank and the Allahabad Bank, as admitted by him and, so far as the Punjab National Bank is concerned, proved by the receipt exhibit P.1375 and, so far as the Allahabad Bank is concerned, by the vouchers, Exs. P.1440 to 1446 and 1448 to 1457, as admitted by him: The first circumstance relied upon by the High Court is really this that he appended his specimen signatures to the letter of authority signed by Lachhimi Narain to the Allahabad Bank Calcutta wherein he (Chandrika Singh) was authorised to operate on the account of Murarka Brothers. This was done long before 405 the conspiracy and, therefore, has no bearing on the question before us. The remaining three reasons would merely indicate that Chandrika Singh had paid the hundis which it was his duty to do. It may be that along with those hundis forged railway receipts were also submitted to him but from this one circumstance it would not be legitimate to infer that he had any hand in the conspiracy. At worst what could be said is that his suspicion could have been aroused but nothing more. Therefore, in our opinion, none of the reasons given by the High Court supports the conclusion that Chandrika Singh was a party to the conspiracy. Our attention was, however, drawn to a further reason given by the learned Additional Sessions judge. That reason is as follows : "Chandrika Singh was asked to explain as to what he did with the forged R/Rs. and why lie did not take delivery on them at Calcutta when they were endorsed in favour of Murarka Brothers. To this he replied that he gave the R/Rs. of Calcutta to Calcutta Commission agents, and he sent other R /Rs to Raj Bahadur Singh munim of Bhairo Prasad Sri Niwas. But we find (sic) is that delivery in all these cases have (sic) been taken by the Calcutta merchants and the merchants of other West Bengal stations on indemnity bonds. No question has ever been put to any of these witnesses even suggesting this plea. Therefore, the explanation of Chandrika Singh appears to be altogether false and it is evident that he destroyed the R/Rs. and did not use them as it was in his knowledge that they were forged and if he presented them at the railway station for delivery then the Station Master would compare the number of bags in the corresponding invoices and fraud would be detected. This shows the common assent of mind of Chandrika Singh conspirator 406 which is usual in conspiracy for the secrecy of the crime. " It seems to us that the reasoning of the learned Additional Sessions Judge is faulty. The reasoning is entirely based upon the assumption that the railway receipts which were endorsed in favour of Murarka Brothers were forged or tampered with. It has been brought out in evidence that in point of fact the appellants, firms used to send genuine consignments of food grains etc. to West Bengal. The possibility of railway receipts covering such consignments begin endorsed in favour of Murarka Brothers has not been ruled out. The answer given by Chandrika Singh that he gave the railway receipts to the Calcutta Commission agents may well have related to the railway receipts in respect of the genuine consignments. There was, therefore, no risk as envisaged by the learned Additional Sessions judge in Chandrika Singh handing over the railway receipts of such consignments to Commission Agents for obtaining delivery. Apart from that, bearing in mind the general outline of the device employed by the appellants ' firms it would not be reasonable to assume that consignments, the railway receipts had been tampered with were endorsed in favour of Murarka Brothers. On the whole, therefore, we think that the expla nation given by Chandrika Singh is reasonable and he is at least entitled to the benefit of doubt. III the circumstances, therefore, we set aside the conviction under section 120 B, I. P. C. as well as the sentences passed on him. As regards the sentences, bearing in mind the fact that the offences were committed 13 years ago, that the appeal was pending in the High Court for about four years and thereafter it took almost three years for the High Court to prepare the paper book, we think that grave though the crimes of Lachhimi Narain are, we should reduce the sentence. He was 407 52 years of age when these transactions were commenced and today he is 65 years of age. If we affirm the sentence of imprisonment for a period of 7 years it will mean that he will be in jail till he is 72 years of age and perhaps in failing health. No actual loss has resulted to anyone by reason of the fraud practised by him and by the family. He and other members of the family. have suffered a great deal monetarily during all these years and have also suffered in their reputation. We, therefore, think that it would be sufficient if we sentence him to imprisonment for three years and raise the fine imposed upon him by the learned Additional Sessions judge from Rs. 5,000/ to Rs. 10,000/ or in default to undergo rigorous imprisonment for one year. We modify the sentences passed on him accordingly. We would make it clear that these sentences are in respect of all the various offences of which Lachhimi Narain has been convicted and that we are not imposing separate sentence or sentences in respect of each offence for which he has been convicted. In so far as the remaining four appellants are concerned we think that no useful purpose would be served by sending them to jail at this distance of time. Each of them had undergone a few weeks ' imprisonment before being released on bail and in our opinion instead of sending them to jail now to serve out the remaining sentence it would be just and fair to reduce the substantive sentence of imprisonment awarded to each of them to the period already undergone and add to it a fine of Rs. 3,000/ each or in default to undergo rigorous imprisonment for a period of six months. In doing so we have borne in mind three circumstances, one of which we have already indicated. The second is the extreme youth of these persons when the alleged transactions took place and the third is that though they knew what was going wrong and hoped to benefit by it, they acted under the influence of the dominating personality of 408 Lachhimi Narain who was the karta of the family. We modify the sentences accordingly. Appeals, partly allowed.

The appellants were tried and convicted for conspiracy to cheat certain banks. The prosecution had put on record a letter from the Under Secretry to Government which stated that the Governor had been pleased to grant sanction for the prosecution of the appellants. The sanction was not challenged before the trial court or the High Court, but before the Supreme Court the appellants contended that no sanction as required by section 196A, Code of Criminal Procedure was on record and that the document on record did not show on its face that the facts of the case had been considered by the Governor. The appellant further contended that for conviction for cheating the prosecution had to establish both that the appellants had caused wrongful gain to themselves and caused wrongful loss to the banks and that as no wrongful loss to the banks had been established, the appellants could not be convicted of cheating or of conspiracy to cheat. Held, that the appellants were not entitled to raise the question of sanction for the first time in the Supreme Court as it required for its decision investigation of facts. The document on record was an official communication which recited the fact that the Governor had granted the sanction. A presumption arose ,that the sanction had in fact been accorded. A further presumption arose that the official act of granting sanction to which reference was made in the communication had been regularly performed. The document on record prima facie satisfied the requirements of section 196A. Held, further, that to establish that the accused had disho nestly induced another to part with property within the meaning of section 420, Indian Penal Code, it was not necessary to prove both wrongful gain and wrongful loss. Wrongful gain and wrongful 383 loss were two facets of the definition of dishonesty and it was enough to establish the existence of one of them. In the present case, the appellants had made wrongful gain to themselves by obtaining credits by unlawful means and even if no wrongful loss was caused to the banks, the appellants were guilty of cheating. Sanjiv Ratanappa Bonad vs Emperor, (1932) I. L. B, LVI Bom. 488, and Kotamraju Venkatarayudu vs Emperor, , distinguished. The sentences of imprisonment imposed on four of the appellants were reduced to the period already undergone and a fine of Rs. 3,000/ was imposed on each on the grounds that no useful purpose would be served by sending these appellants to jail after a long interval of time, that these appellants were very young at the time of the commission of the offences and that they had acted under the influence of the dominating personality of the main accused.

Civil Appeal No. 848 of 1991 etc etc. From the Judgment and Order dated 14.12.1990 of Madhya Pradesh High Court in M.A. No. 227 of 1990. Kapil Sibal, H.N. Salve, J.B. Dadachanji, Mrs A.K. Verma and section K. Mehta for the Appellants. K.K. Venugopal, P. Chidambaram, S.S. Ray and P.P. Tripathi for the Respondents. The Judgment of the Court was delivered by RANGANATH MISRA, CJ. The Olympic games are ancient in origin. According to the Encyclopaedia Britannica they commenced some 3,500 years ago and the name came from its association with the place known as Olympia in Greece. These games were played once in every four years and were abolished in 393 AD by the Roman Emperor Theodosius I. In recent times, they were revived in 1896 and have until now been held at the turn of every four years excepting during the first and the second world wars. The Olympic games are one of the biggest international events and provide great opportunities to amateur sportsmen in the different classifications. Indian participation in the Olympic games dates back to 1900 when a single representative had joined the Olympics at Paris. Gradually, such participation became more systematic and broad based. While the Ministry of Youth Affairs and Sports of the Union Government looks after development of sports within the country, the management of the Olympic participation has been entrusted to a society registered under the Societies Registration Act (21 of 1860) known by the name 'Indian Olympic Association ' (for short IOA ') The Memorandum of Association of this society indicates that the principal objects of the society, inter alia, are: (i) to develop and promote the Olympic movement and amateur sport, (2) to promote and encourage the physical, moral and cultural education of the youth of the nation for the development of character, good heath and good 662 citizenship, (3) to enforce all rules and regulations of the International Olympic Committee (hereinafter referred to as 'IOC ') and the IOA; (4) to be the official organisation in complete and sole charge of all Olympic matters in the country, (5) to educate the public of the country as to the value of amateurism in sports; (6) to maintain the highest ideals of amateurism and to promote interest therein, particularly in connection with the Olympic games and other games under the patronage of the IOC as well as the IOA, (7) to have full and complete jurisdiction over all matters pertaining to the participation of India in the Olympic games and other games under the patronage of the IOC as well as the IOA, (8) to assist in cooperation with National Sports Federations/Associations the selection, training and coaching of the teams that will represent Indian in the Asian, Commonwealth, Olympic and other international competitions and tournaments, under the patronage of the teams in the said competitions and tournaments after selection, (9) to undertake with the assistance of National Sports Federations/Associations the financing, management, transportation, maintenance and welfare of teams from India taking part in the Olympic games and other games under the patronage of the IOC as well as the IOA; and (10) to timulate the interest of the people of the country in the promotion of sports and games in the Olympic programme, and to that end the formation of State Olympic Association for the development of sports and games within a State and National Sports Federations for games and sports in the Olympic programme. We have quoted most of the important objectives to bring it to the forefront that the I.O.A. has been brought into existence to sponsor, supervise, finance, regulate and control all aspects of sports activity in relation to the Asian, Commonwealth, Olympic and international competitions and tournaments under the patronage of the IOC. While its funding is partially out of membership fee, bulk of it comes from Government contribution. The society has a set of rules and regulations. There are five categories of members as described in rule 3. The management of the affairs of the Association is entrusted to an Executive Council defined in rule 1(v). Rule 8 provides that the Executive Council shall have (i) a President (ii) 9 Vice Presidents (iii) a Secretary General (iv) 6 Joint Secretaries (v) a Treasurer (vi) 7 Members elected from among representatives of State Olympic Associations and (vii) 12 members elected from among the representatives of National Sports Federation/Association/ SSCB. Rule 8 provides the manner of elections to be held 663 for the Executive Council. The term of the Executive Council is 4 years. Rule 11 provides the voting procedure. Clause (b) of that rule requires that voting if necessary in the IOA Executive Council, IOA Emergency Executive Council and/or at the annual general or special general meetings of the IOA shall be by show of hand. However, if in a particular case the procedure has to be changed, the same will be done by a resolution of the concerned body passed by majority vote. The very rule provides as to the voting power of the different units composing the IOA. Rule 12 deals with the office bearers like the President, the Vice President, the Secretary General, the Joint Secretaries, the Treasurer etc. For the resolution of the dispute before us perhaps reference to the other rules is not necessary. The IOA was reconstituted with effect from 28th of October, 1984, with appellant Shri V.C. Shukla as the President. K. Murugan, appellant in C.A. No. 848 of 1991 (arising out of SLP 1064/91) was one of the 6 Joint Secretaries. In November, 1988, Shri B.S. Adityan, one of the vice President of the 1984 Executive Council was elected as President for a term of four years. On 16th of May, 1990, there was a requisition of 17 Members for a special general meeting for considering the move of a no confidence motion against Shri Adityan and his Executive Council. With this started a period of confrontation between the two groups in the Association. In May, 1990, the Executive Council overruled the requisition as invalid and President Adityan called a meeting of the General assembly at Madras for 15th of June, 1990. For the same day the other group summoned a meeting of the general assembly at New Delhi. This led to Court proceeding and the Delhi High Court restrained the requisitionists from holding their meeting at New Delhi and appointed a retired Judge of the Delhi High Court as an observer for the meeting to be held at Madras. In the convened meeting of 15th of June, minutes of the proceedings whereof have been seriously disputed Shri Shukla claimed to have been elected. A little before the meeting of the 15th of June at Madras, further proceedings were taken in Court which have been labelled as collusive and manipulations for obtaining an order for the manner of voting. The warring factions lost sight of the laudable goals of the IOA and the purpose for which the Association had been set up and put their entire attention on winning control over the affairs of the IOA in their grip through litigation. 664 A Single Judge of the Madras High Court having decided in favour of Shri Adityan, the matter ultimately came before a Full Bench which by its order dated 3rd of January, 1991, remitted the matter to the learned Single Judge and appointed Justice Natarajan, a retired Judge of this Court, to discharge the functions of the President of the IOA as an interim measure. This order is challenged in the appeal by Shri Murguan and Shri V.C. Shukla by two different appeals being Civil Appeals Nos. 852.853 of 1991 (arising SLPs 1599 and 1787/91). Not content with the litigation in the Delhi and Madras High Courts, the Fencing Association of India filed a civil suit at Jabalpur asking for declaration that Shri Shukla had been duly elected as President. An application for injunction in support of Shri Shukla having been rejected by the trial Judge an appeal had been taken before the High Court where a learned Single Judge made a status quo order. The other two appeals arise out of proceedings including contempt taken therein. Long arguments have been advanced before us by Mr. Venugopal for Shri Adityan and by Mr. Sibal for Shri Shukla. The main contention of Mr. Venugopal is that under the rules the terms of the President and the Executive Council is four years and in the absence of a clear provision for a vote of No. confidence, which would curtail the period, there could be no reduction of the period of office. It has also been contended that the entire Executive Council could not be voted out of office by a motion of no confidence and, therefore, Shri Adityan had rightly overruled the requisition. Serious challenge has been advanced by Mr. Sibal against the proceedings taken before the Madras High Court and particularly, the learned Judge making an order changing the manner of voting from show of hands to one by ballot in what is stated to be a collusive proceeding. This does not appear to us to be a matter where individual rights in terms of the rules and regulations of the Society should engage our attention. Sports in modern times has been considered to be a matter of great importance to the community. International sports has assumed greater importance and has been in the focus for over a few decades. In some of the recent Olympic games the performance of small States has indeed been excellent and laudable while the performance of a great country like India with world 's second highest populations has been miserable. It is unfortunate that the highest body in charge of monitoring all aspects of such sports has got involved in group fight leading to litigation and the objectives of the Society have been lost sight of. The representation of India in the IOA has been in jeopardy. 665 The grooming of amateurs has been thrown to the winds and the responsibility placed on the Society has not been responded. This, therefore, does not appear to us to be a situation where rights to office will have to be worked out by referring to the provisions of the law relating to meetings, injunction and rights appurtenant to elective office. What seems to be of paramount importance is the healthy conditions must be restored as early as possible into the working of the Society and a fresh election has to be held as that seems to be the only way to get out of the malady. The entire nation is looking up to the results of the competitions at the international games when they are held. As we have already pointed out, IOA has great responsibities to discharge in organising and streamlining the national sport activities intended for international events. The monitoring has to be a continuous one and unless the scheme is ongoing and is made result oriented, the international performance cannot be up to any appreciable level. The question for consideration, therefore, is not as to which of the two factions should succeed. On the other hand, it is appropriate that all the litigations now pending should abate. In the interest of the appropriate functioning of the Society the litigation outside the headquarters of the Society should not be permitted. We accordingly direct that any litigation, if at all, should only be within the jurisdiction of the Delhi High Court and no Court in India would entertain litigations relating to the functioning of IOA in any aspect. A fresh Executive Council should be set up and for that purpose elections should be held within two months hence. The general assembly should be convened to meet at Calcutta on 28th of April, 1991. We appoint Mr. Justice A.D. Koshal, a retired Judge of this Court to conduct the elections keeping the provisions of the rules and regulations of the IOA in view. Voting shall be by secret ballot. The list of voters should be finally settled within four weeks from now and if it is necessary to have any hearing in the matter we authorise such hearing to be undertaken by Mr. Justice Koshal. Until then, Mr. Justice Natarajan will continue to exercise his powers as conferred by the order of the Madras High Court. Once the results of the elections are announced, Mr. Justice Natarajan would cease to be in office and the Association would take over. To enable Mr. Justice Koshal to discharge the obligations cast upon him by this decision, the Ministry of Youth Affairs and Sports is directed to place at his disposal a sum of Rs.25,000 (Twenty five thousand) within two weeks and a small group of assistants as he may need. Payment of remuneration for the work done shall be fixed by the Court later. 666 All the proceedings in the different High Courts abate; the suit in the Jabalpur High Court shall stand dismissed. The contempt proceedings now pending shall not be proceeded with. In the course of arguments some criticism was advanced against the order of the High Court providing monthly remuneration to Mr. Justice Natarajan. We leave this aspect to be considered by Mr. Justice Natarajan himself and do not propose to deal with it in our order. Before we leave this matter we would like to point that the Union of India should take greater interest in organising sports both for national and international purposes. Sports have a role to play in building up good citizens. That aspect should be kept in view. We have a feeling that while a lot of money is allotted for the purpose of improvement of sports, the result has been considerably poor and deceptive. We hope and trust that this aspect of the criticism heard from everywhere in this country shall also be given due consideration. V.P.R. Appeals disposed of.

The Indian Olympic Association was a society registered under the Societies Registration Act, with the principal object to sponsor, supervise, finance, regulate and control all aspects of sports activity in relation to the Asian, Commonwealth, Olympic and International competitions. The Society had a set of rules and regulations. There are five categories of members described in Rule 3. The management of the affairs of the Association is entrusted to an Executive Council defined in Rule 1(v). Rule 8 provided that the Executive Council shall have (i) a President, (ii) 9 Vice Presidents, (iii) a Secretary General, (iv) 6 Joint Secretaries, (v) a Treasurer and (vi) 19 Members. The terms of the Executive Council was to be 4 years, while Rule 11 provides the voting procedure. The Indian Olympic Association was reconstituted with effect from 28 of October, 1984, with the appellant in C.A. No. 852 of 1991, Shri V. C. Shukla as the President, K. Murugan, the appellant in C.A. No. 848 of 1991 as one of the 6 Joint Secretaries. In November, 1988, one of the Vice President of the 1984 Executive Council, Shri B.S. Adityan, the appellant in C.A. No. 849/91 was elected as President for a term of four years. On 16th of May, 1990, there was a requisition of 17 Members for a special general meeting for considering the move of a no confidence 659 motion against the aforesaid Shri B.S. Adityan and his Executive Council. This initiated a period of confrontation between the two groups in the Association. In May 1990, the Executive Council overruled the aforesaid requisition as invalid and President Adityan called a metting of the General Assembly at Madras for 15th of June, 1990. For the same day the other group summoned a meeting at New Delhi. This aforesaid situation led to Court proceedings, and the Delhi High Court restrained the requisitionists from holding their meeting at New Delhi and appointed a retired Judge of the Delhi High Court as an observer for the meeting to be held at Madras. At this meeting Shri V.C. Shukla, the appellant in C.A. No. 852/91 claimed to have been elected. The matter was taken to Court and a Single Judge decided in favour of Shri B.S. Adityan, the appellant C.A.No. 8549/91, but when the matter came up before the Full Bench of the High Court, it remitted the matter to a Single Judge who appointed a retired Judge of this Court to discharge the function of the President of the Association as an interim measure. This Order has been challenged by the appellants in Civil Appeals Nos. 852 853/91. The Fencing Association of India filed a civil suit at Jabalpur for the declaration that Shri V. C. Shukla had been duly elected. The application for injunction from having been rejected by the Trial Judge, an appeal had been taken to the High Court where the Single Judge ordered status quo. Two Civil Appeals were also filed against this order. It was contended on behalf of the appellants that under the rules the term of the President and the Executive Council was four years and in the absence of a clear provision for a vote of no confidence which would curtail the period, there could be no reduction of the period of office, and that the entire Executive Council could not be voted out of office by a motion of no confidence. Disposing of the appeals, this Court, HELD: 1. Sports in modern times has been considered to be a matter of great importance to the community. International sports has assumed greater importance and has been in the focus for over a few decades. [664D E] 660 2. It is unfortunate that the highest body incharge of monitoring all aspects of such sports has got involved in group fight leading to litigation and the objectives of the I.O.A. have been lost sight of. The representation of India in the I.O.A. has been in jeopardy. [664E F] 3. The grooming of amateurs has been thrown to the winds and the responsibility placed on the Society has not been responded. This, therefore, does not appear to be a situation where rights to office will have to be worked out by referring to the provisions of the law relating to meetings, injunction and rights appurtenant to elective offices. [664F G] 4. What seems to be of paramount importance is that healthy conditions must be restored as early as possible into the working of the Society and a fresh election has to be held as that seems to be the only way to get out of the malady. [644G H] 5. The entire nation is looking up to the results of the competitions at the international games when they are held. I.O.A. has great responsibilities to discharge in organising and streamlining the national sport activities intended for international events. The monitoring has to be a continuous one and unless the scheme is ongoing and is made result oriented, the international performance cannot be up to any appreciable level. [664G 665B] 6. This does not appear to be a matter where individual rights in terms of the rules and regulations of the Society should engage attention. [664D E] 7. It is appropriate that all the litigations now pending should abate, and for appropriate functioning of the Society the litigation outside the headquarters of the Society should not be permitted. [665B C] 8. A fresh Executive Council should be set up and for that purpose, elections should be held within two months hence; a retired Judge of this Court is appointed to conduct the elections keeping the provisions of the rules and regulations of the I.O.A. in view. All the proceedings in the different High Courts abate. [665C D, G] 9. It is directed that the Union of India should take greater interest in organising sports both for national and international purposes. Sports have a role to play in building up good citizens. That 661 aspect should be kept in view, while a lot of money is allotted for the purpose of improvement of sports, the result has been considerably poor and deceptive. This aspect of the criticism hear from everywhere in this country shall also be given due consideration. [666A B]

Civil Appeal No. 4650 of 1992. From the Judgment and Order dated 18.2.1991 of the Patna High Court in C.W.J.C 6581 of 1990. Ranjit Kumar for the Petitioners. Ms. Sangeeta Aggarwal for the Respondent. The Judgment of the Court was delivered by SHARMA, J. 1. Heard the learned Counsel for the parties. Special Leave is granted. This appeal by the State of Bihar and its Officers is directed against the order of the High Court dated 18.2.91 passed on a Writ Petition claiming to have been filed as a Public Interest Litigation for certain reliefs to be made available to a doctor who was earlier in the State service and whose services had been terminated in 1987. The beneficiary of the impugned judgment Dr. Ms. Sandhya Das was appointed as a Medical Officer in the Bihar State Health Services in 1961 and worked as such till 1971. She left India for higher studies in 1971 after obtaining leave for a period of two years. After the expiry of the leave period, she neither returned to India nor made any further application for extension of her leave. Nothing was heard from her thereafter. She was not the only one to do so. A large number of doctors employed in the Bihar Health Services were acting in similar manner, causing considerable hardship to the public. As this trend persisted, the State authorities could not ignore the problem and the relevant rules were examined, legal opinion was obtained and it was decided to take appropriate corrective measures. The absentee doctors, presumably placed in more lucrative jobs, did not care to inform the department of their addresses, and personal service of notice on such doctors could not be effected. In the circumstances, acting on the opinion of the Advocate General, general notice was published and press communique was issued in newspapers in India and abroad calling upon them to offer their explanations for remaining absent from service for more than five years (this period is mentioned in the Rules), within the time indicated. Dr. Ms. Sandhya Das was also one of such doctors and was called upon to join her duty in India by such a communique issued in 1982 telling her that on her failing to do so, her services would be terminated in accordance with the Service Code. Nothing was heard from her. The matter of termination of services of such doctors was referred to Bihar Public Service Commission, and the Commission gave its concurrence in 1986. Accordingly, the services of 320 doctors including that of Dr. Das was terminated in 1987. This had the approval of the Bihar Cabinet. The Writ Petition out of which the present appeal arises was filed in 1990 by one Ms. Kamlesh Jain as a Public Interest Litigation, stating that Dr. Das was unwell and was in need of financial help. Some details as to how Dr. Das was taken ill and admitted in a hospital in Glasgow and then came back here for further treatment have been given. She was, it is stated, staying with her brother for sometime on her return to India and eminent doctors of Bihar who were consulted could not get her substantial relief and ultimately she had to be admitted in the P.M.C.H. hospital of Bihar in Patna. In this background the writ application was filed. The High Court 's judgment under appeal is very perfunctory. The entire Order reads thus : "18.2.91. Learned G.P.I. hands over a cheque of Rs. 2000 drawn in the name of Dr. Sandhya Das, to Miss Kamlesh Jain, who had filed this writ application as public interest litigation on behalf of Dr. Sandhya Das. This has been accepted by Miss Kamlesh Jain. The Payment has been made in compliance with the order dated 18.1.91. We dispose of this writ application with a direction to the respondents to pay the post retirement benefits to Dr. Sandhya Das within a period of three months from today. We make it clear that this order will not be construed to mean that Dr. Sandhya Das accepts her date of retirement to be 21.7.1987. If so advised, she may agitate the matter through a fresh writ application. " We have not been able to discover as to how the writ petitioner became so interested in Dr. Das who was being taken care of in the P.M.C.H. hospital of Bihar and receiving attention of eminent doctors and who has atleast a brother with whom she was staying for sometime. The learned Counsel for the writ petitioner, respondent before us, could not tell us about the other family members and relations of Dr. Das, or how and why in this background the writ petitioner Ms. Kamlesh Jain chose Dr. Das for showering her benevolence in preference over the far more needy old and sick persons who are, unfortunately, in large number in Bihar. The impugned judgment also does not indicate any reason. There is no doubt that the State should strive to promote the welfare of its people so that at least the bare necessities of life are met and the needy and the sick are properly looked after. This can be done only by adopting a welfare scheme in the interest of the general public; and since the resources of the State are not unlimited, the State is not expected, in absence of relevant reasons, to choose an individual for special treatment at the cost of the others. Ordinarily, therefore, it is desirable for the State authorities to take up the individual cases coming to their notice and do their best in accordance with the policy decision of general application. This will ensure equal treatment to all of course in accordance with the individual needs. Unless all relevant materials are placed by an applicant, it will be an onerous task for the Court to take upon itself to determine the extent of help a particular individual has to get. The circumstance that a particular person is smart enough to approach the Court or is so fortunate to get somebody to do that on his or her behalf, cannot be a valid ground to divert the State funds to his or her advantage at the cost of corresponding disadvantage to others. A judicial process should not be allowed to be used for the satisfaction of an individual 's whims, pious, though, they may apparently look. Since we do not find any reason in the impugned order or in the writ petition which may justify the relief granted in the present case, we are of the view that the writ petition should have been dismissed. The learned Counsel for the respondent made a grievance before us that the cheque for Rs. 2000 mentioned in the first paragraph of the High Court 's orders has been drawn in the name of Dr. Das whose fingers have become stiff and the money, therefore, could not be encashed. It was suggested that a cheque may be directed to be drawn in the name of the writ petitioner Ms. Kamlesh Jain. We do not see any reason for acceding to this prayer as it is not suggested that Dr. Das has no relation of her own, who can look after her needs. For the reasons indicated above the appeal is allowed, the impugned judgment of the High Court is set aside and the writ petition (C.W.J.C. No. 6581/1990) filed in the High Court is dismissed. There will be no order as to costs. N P V Appeal allowed.

A large number of doctors employed in the State Health Services of the appellant State were leaving India for higher studies, after obtaining leave for a couple of years, and thereafter, they were neither returning to India, nor were sending any further applications for extension of leave. This was causing considerable hardship to the public. As this trend persisted, the state authorities wanted to take appropriate corrective steps. Since the absentee doctors had not informed the department of their addresses, personal service of notice on such doctors could not be effected. A general notice was published and press communique was issued in newspapers in India and abroad calling upon them to offer their explanations for remaining absent from service for more than five years, within the specified time and indicating that on their failure to do so, the services of 320 doctors would be terminated with the concurrence of the State Public Service Commission and the approval of the State Cabinet. Services of doctors were, accordingly, terminated. The respondent filed a Public Interest Litigation before the High Court stating that the particular doctor was unwell and was in need of financial help. The services of this doctor had also been terminated along with others. The details as to how she was taken ill and admitted in a hospital outside the country and then brought back to India for further treatment in the State, were given. The High Court directed the appellants to pay the post retirement benefits to the medical officer doctor concerned. Earlier the High Court had also directed payment of Rs.2,000 to the respondent writ petitioner as relief to the doctor concerned. Allowing the appeal of the State, this Court, HELD: 1.1. It is not known how the respondent writ petitioner became so interested in the beneficiary, who was being taken care of in the hospital and receiving attention of eminent doctors, and who had atleast a brother with whom she was staying for sometime. The respondent writ petitioner could not tell about the other family members and relations of the beneficiary or how and why in this background the respondent chose the beneficiary for showering her benevolence in preference over the far more needy old and sick persons who are, unfortunately, in large number in the appellant State. The judgment under challenge also does not indicate any reason. [360 B D] 1.2. Since there is no reason at all in the order under challenge or in the writ petitioner which may justify the relief granted in the present case, the writ petition should have been dismissed. [360 H; 361 A] 1.3. There is also no reason to accede to the request made on behalf of the respondent that the cheque for Rs. 2000, mentioned in the first paragraph of the High Court 's orders, drawn in the name of the beneficiary, may be directed to be drawn in the name of the respondent writ petitioner for the beneficiary 's fingers had since become stiff and hence the cheque could not be encashed. There is no suggestion to the effect that the beneficiary has no relation of her own, who can look after her needs. [361 B] 2. There is no doubt that the State should strive to promote the welfare of its people so that at least the bare necessities of life are met and the needy and the sick are properly looked after. This can be done only by adopting a welfare scheme in the interest of the general public; and since the resources of the State are not unlimited, the State is not expected, in absence of relevant reasons, to choose an individual for special treatment at the cost of the others. Ordinarily, therefore, it is desirable for the State authorities to take up the individual cases coming to their notice and do their best in accordance with the policy decision of general application. This will ensure equal treatment to all of course in accordance with the individual needs. Unless all relevant materials are placed by an applicant, it will be onerous task for the Court to take upon itself to determine the extent of help a particular individual has to get. The circumstance that a particular person is smart enough to approach the Court or is so fortunate to get somebody to do that on his or her behalf, cannot be a valid ground to divert the State funds to his or her advantage at the cost to corresponding disadvantage to others. A judicial process should not be allowed to be used for the satisfaction of an individual 's whims, pious, though, they may apparently look. [360 E, F, G]

ISDICTION: Writ Petition (Criminal) No. 136 of 1986. Under Article 32 of the Constitution of India with Special Leave Petition (Criminal) No. 630 of 1986 From the Judgment and Order dated 17.1.1986 of the Patna High Court in Crl. No. 367 of 1986. and Writ Petition (Criminal) No. 137 of 1986 Under Article 32 of the Constitution of India. with Special Leave Petition (Criminal) No. 577 of 1986. From the Judgment and Order dated 7.2.1986 of the Special Judge (Vigilance) Bihar, Patna in S.C. No. 6 of 1986. Ram Jethmalani, Miss Rani Jethmalani, K.N. Madhusoodhanan and Ashok Sharma for the Petitioners. A.N. Mulla, D.Goburdhan and Basudeo Prasad for the Respondents. 810 The Judgment of the Court was delivered by CHINNAPPA REDDY, J. On the intervening night of November 29/30, 1984, the Security Police Petrol on duty near Jogbani Checkpost noticed a jeep speeding towards the Indo Nepal border. The jeep was stopped. There were five occupants in the jeep. One of them was Simranjit Singh Mann who had been dismissed from the Indian Police Service. An order of preventive detention under the National Security Act had been made against him on August 28, 1986. He was wanted in that connection but had gone 'underground '. On being questioned by the police petrol party, they first refused to disclose their names and identity. This aroused the suspicions of the police party. One of the officers was able to identify Simranjit Singh Mann. The five occupants in the jeep were searched as also their baggage. A sum of Rs.62,722 was found with one of the occupants, who it is alleged offered the police party a large amount as bribe if they were allowed to cross the Indo Nepal Border. As a result of the search, a number of documents and other articles were seized. From the person of Simranjit Singh Mann were seized, a copy of a letter dated June 2, 1984 from Simranjit Singh Mann to the Chief Secretary, Punjab, a copy of the letter of resignation dated June 18, 1984 of Simranjit Singh Mann, the Passport of Simranjit Singh Mann, two photographs of Jarnail Singh Bhindrawala, a letter from Simranjit Singh Mann to Birbal Nath, a letter addressed to one Arun Kumar Agarwal asking him to help the bearer in all possible ways and Raghubir Singh. Kamikar Singh was the person who had made the offer of bribe. A First Information Report was then registered at the Jogbani Police Station for references under secs. 121 A, 124 A, 123, 153 A, 505 and 120 B of the Indian Penal Code and section 5(iii) of the Prevention of Corruption Act. Investigation started. On December 11, 1985 a charge sheet was submitted before the Judicial Magistrate First Class Araria against the five accused persons for offences under secs. 121 A, 123, 124 A, 153 A, 165 A, 505 and 120 B of Indian Penal Code. Before the charge sheet was filed, on December 4, 1984 Simranjit Singh Mann was served with the order of detention under the National Security Act and sent to Bhagalpur Jail. The other four accused were also detained under the National Security Act at Bhagalpur. On March 1, 1985 the four accused other than Simranjit Singh Mann moved the Judicial Magistrate First Class Araria for bail in the criminal case which was then being investigated claiming to be released under the proviso (a) of section 167(2) of the Code of Criminal Procedure. The learned Magistrate directed their release on bail, but imposed a 811 condition that the sureties should be residents of Araria town. The four accused persons filed a petition requesting the Magistrate to accept sureties from Purnea or cash. Anonymous letter warning Simranjit Singh Mann of likely attempts to liquidate him and advertising him to leave the country. Simranjit Singh Mann refused to sign the seizure memo. From Kamikar Singh 's person, currency notes of the value of Rs.62,722 were seized. An amount of Rs.25,000, it is said, was offered as bribe to the Police Officers. From Jagpal Singh 's suitcase was seized a booklet in English entitled 'Sikhs and Foreign Affairs ' and a combined road map of India, Pakistan, Bangladesh, Sri Lanka and Nepal. Among other articles seized were a booklet in English written by Narinder Singh Bhuller said to contain anti Government and Sikh separatist propaganda, a notebook containing meterial about the world 's leading underground organisations said to be in Mann 's hand writing, a register in which Mann was said to be writing the history of Amritsar in which the Indian Army is said to have been described as the enemy, consequent on operation Blue Star, extremist Sikhs are said to be described as nationalists and defendars of the motherland and Mrs. Gandhi, the then Prime Minister is described in a derogatory fashion. At the check post, a photograph of Simranjit Singh Mann was available and it was varified that the person suspected to be Simranjit Singh Mann was actually Simranjit Singh Mann. The other persons gave their names as Kamikar Singh, Charan Singh, Jagpal Singh. The petition was rejected. Ultimately the four accused were able to get sureties from Araria, but even so they could not be released as they were under detention under the National Security Act. Simranjit Singh Mann was also directed to be released under the proviso to sec. 167(2) on his application on October 28, 1985. The same condition was imposed that the sureties should be from Araria. He furnished necessary sureties on October 29, 1985, but could not be released as he was under detention under the National Security Act. While so Gauri Shankar Jha who was a surety for all the five accused filed a petition and personally appeared in court praying that he may be discharged from suretyship as he did not want to continue to be a surety of the accused persons. On December 5, 1985 the learned Magistrate made an order discharging the surety and issuing formal warrants of arrest under section 444(2) of the Code of Criminal Procedure. It was at that stage that the order of detention against Simranjit Singh Mann was quashed by the High Court of Punjab and Haryana on December 9, 1985. The charge sheet in the court of the Judicial Magistrate First Class Araria was filed on December 14, 1985. The learned Magistrate took cognizance of the case under sec 812 tions 121A, 123, 124A, 153A, 165A and 120 B Indian Penal Code on December 18, 1985. On the same day he also made an order that Simranjit Singh Mann should be kept in the Central Jail at Bhagalpur in the interests of security. On December 19, 1985, the Investigating Officer filed a petition requesting expeditious trial of the case as it was one of special importance. On December 20, 1985, fresh bail bonds were filed on behalf of the accused Raghubir Singh, Jagpal Singh, Kamikar Singh and Charan Singh. However the bail bonds were rejected as the surety, Kirtyanand Mishra could not name either the accused persons or their fathers. On January 2, 1986 all the accused persons were produced from custody before the Magistrate who further remanded them to custody till January 13, 1986. The learned Magistrate took up for hearing a petition which had been previously filed on behalf of the accused persons requesting that Kirtyanand Mishra may be accepted as a surety as he had once previously been accepted as surety. It was prayed that the order dated December 20, 1985 might be recalled. The petition was rejected on the ground that the earlier order could not be reviewed. Later, on the same day, two sureties, Mir Majid and Kirtyanand Mishra filed petitions requesting that they should be discharged from suretyship as they did not want to continue as sureties for the accused persons. On January 7, 1986 the Session Judge, Purnea transferred the case from the file of Shri R.B. Roy, Joint Magistrate, First Class, Araria to the Court of Shri U.N. Yadav, Joint Magistrate, First Class, Araria. On January 10, 1986, the learned Magistrate made an order fixing January 11, 1986 for the supply of 'police papers and necessary orders '. On January 11, 1986 the five accused persons were produced before the Magistrate. A petition was filed on behalf of the State to commit the case to the Court of session after delivering the police papers to the accused persons and thereafter to cancel the bail of the accused persons and remand them to custody. Another petition was filed on behalf of the accused to transfer the case to the Special Judge, Purnea. The accused persons also filed a petition to adjourn the case. The Magistrate requested the accused to receive the documents furnished under section 207 Criminal Penal Code but the accused refused to receive the same claiming that their petition should be disposed of first so that if necessary they may go to the higher court in revision. The Public Prosecutor objected to the petition of the accused on the ground that the accused persons were merely trying to delay the disposal of the commitment proceedings. The advocate for the accused persons appears to have made a submission that the case was triable by the Court of Special Judge and therefore it should be transferred to him. The learned Magistrate held that cognizance had already been taken of the case by his court and the 813 order taking cognizance could not be recalled. The question whether the case should be transferred to the court of Special Judge could be considered at the stage when the question whether there was a prima facie case was to be considered. The learned Magistrate then fixed January 18, 1986 as the date for furnishing copies of documents to the accused persons. On January 16, 1986 the learned Magistrate rejected an application by the accused other than Simranjit Singh for acceptance of cash deposit or in the alternative sureties from outside Araria town. The learned Magistrate held that he had no power to review his earlier order. They then moved to the High Court for Bail but that application was also rejected. On January 18, 1986, the learned Magistrate purported to transfer the record of the case to the Special Judge (Vigilance), North Bihar, Patna and directed the accused to be produced before the Special Judge on January 31, 1986. On January 31, 1986 Simranjit Singh Mann offered cash security and that the joint trial was not permissible. The learned Special Judge upheld that submissions and held that the offences were not committed in the course of the same transaction and therefore the trial for the offences under secs. 165A and section 165A read with section 34 should be separated from the other offences. The learned judge further held that he was not competent to try the accused for the offences under secs. 121A, 124A etc. as the case had not been committed to the court of Session by the Magistrate of Araria. In regard to those offences the learned special Judge directed the record to be sent back to the District and Sessions Judge, Purnea for proceeding further in accordance with law. Alleging that the Special Public Prosecutor had never been instructed to file a petition before the special Judge suggesting that the offences under secs. 165 and 165A read with section 34 and the remaining offences under section 121A, 124A etc. were not committed in the course of the same transaction and that they should be tried separately, the State of Bihar filed a writ petition in the High Court of Patna and obtained a stay of further proceedings before the Special Judge. The question of the link between the offences under secs. 165A and 165A read with section 34 and the offences under secs. 121A, 124A etc. and the question of the jurisdiction of the Special Judge to try the offences under secs. 121A, 124A etc. were also raised before us but we refrain from expressing any opinion on these questions as these questions are to be considered by the High Court in the Revision Petition before it. In the two writ petitions filed by the accused persons, Shri Ram 814 Jethmalani made a forceful and passionate plea that the fundamental right of his clients under article 21 of the Constitution has been frustrated by the tactics of the State of Bihar whose only object was to somehow keep the petitioners in prison. He submitted that the case of bribery rested on what took place on the night of 29/30 November, 1984 and that investigation into that part of the case was complete in the course of a few days. The offences of waging war etc. rested primarily on the letters said to have been written by Simranjit Singh Mann to the President of India and others and investigation into these offences could not possibly take very long as all that was necessary was to examine the recipients of the letters. Yet the chargesheet was filed only in December, 1985 and even thereafter various tactics were adopted by the prosecution to prevent the trial of the case. According to Shri Jethmalani, the prosecution being fully aware that there was no merit in the allegations was merely trying to prolong the case as long as possible to harass the accused and to keep them in prison. He submitted that there was no material whatever to substantiate the offences of waging war etc. and that the proceedings deserved to be quashed on that ground also. He argued that if the offences of waging war etc. rested on the letters written by Simranjit Singh Mann to the President of India and the Chief Secretary, as indeed they were, then the prosecution could have been launched as soon as the letters were received. There was no need to launch the prosecution now and link it with the offence of bribery where the letters had been published in the daily press long ago. It was also submitted the proceedings before the Special Judge, Purnea were without jurisdiction both for the reason that he was not competent to try the offences under section 121A, section 124A etc. and also for the reason that he came to be seised of the case at the instance of the Executive Government, who had no authority to transfer the case from the court of the Special Judge, Patna to the court of the Special Judge, Purnea. Shri Jethmalani submitted that the very principle of rule of law would be defeated if the Executive Government were to be permitted to have cases decided by judges of their choice. In the Special leave petitions, Shri Jethmalani submitted that the High Court and the Special Judge were wrong in not permitting the accused to offer fresh sureties or cash security. He submitted that the High Court and the Special Judge were wrong in holding that the order of the Magistrate directing them to be released on bail under section 167(2) had come to an end by the passage of time, particularly after cognizance had been taken of the case. 815 The constitutional position is now well settled that the right to a speedy trial is one of the dimensions of the fundamental right to life and liberty guaranteed by article 21 of the Constitution: Vide Hussainara Khatton (I) vs State of Bihar, (per Bhagwati and Koshal, JJ), Kadra Pehdiya (I) vs State of Bihar, AIR 1981 SC 939 (per Bhagwati and Sen, JJ.), Kadra Pehdiya (II) vs State of Bihar, AIR 1982 SC 1167 (per Bhagwati and Eradi, JJ) and State of Maharashtra vs Champa Lal Punjaji Shah, (per Chinnappa Reddy, Sen and Baharul Islam, JJ). In foreign jurisdictions also, where the right to a fair trial within a reasonable time is a constitutionally protected right, the infringement of that right has been held in appropriate cases sufficient to quash a conviction or to stop further proceedings: Strunk vs United States, 37 Law Ed. 2d 56 and Barkar vs Wingo, ; two cases decided by the United States Supreme Court and Bell vs Director of Public Prosecutions. Jamaica, [1985] (II) All ER 585 a case from Jamaica decided by the Privy Council. Several questions arise for consideration. Was there delay? How long was the delay? Was the delay inevitable having regard to the nature of the case, the sparse availability of legal services and other relevant circumstances? Was the delay unreasonable? Was any part of the delay caused by the wilfulness or the negligence of the prosecuting agency? Was any part of the delay caused by the tactics of the defence? Was the delay due to causes beyond the control of the prosecuting and defending agencies? Did the accused have the ability and the opportunity to assert his right to a speedy trial? Was there a likelihood of the accused being prejudiced in his defence? Irrespective of any likelihood of prejudice in the conduct of his defence, was the very length of the delay sufficiently prejudicial to the accused? Some of these factors have been identified in Barker vs Wingo (supra). A host of other questions may arise which we may not be able to readily visualise just now. The question whether the right to a speedy trial which forms part of the fundamental right to life and liberty guaranteed by article 21 has been infringed is ultimately a question of fairness in the administration of criminal justice even as 'acting fairly ' is of the essence of the principles of natural justice (In re H.K. 1967(1) All ER 226) and a 'fair and reasonable procedure ' is what is contemplated by the expression 'procedure established by law ' in article 21(Maneka Gandhi). What do we have here? Five persons were seen in a jeep going towards the Indo Nepal border, obviously in an attempt to cross the border. The border patrol thought that their movements were suspicious. Their answers to questions regarding their names and parentage were not satisfactory. One of them was identified as a police officer, 816 who had been dismissed from service and who was wanted in connection with an offer of detention under the National Security Act. In the light of contemporary history and in the light of the documents lound in the possession of the accused, (to the contents of one of which we will presently refer), the police party suspected that they were crossing the border and going to Nepal in the course of a conspiracy to commit the offences of waging war, etc. Their suspicion must have been strengthened by the offer of a bribe to be allowed to cross the border. The police officer whom they apprehended, though apparently a Punjabi, had previously served in the State of Maharashtra while the others were from Calcutta. That several persons from different parts of the country with no apparent connection with each other except that they appeared to belong to the same Community were together trying to cross the country 's frontier, apparently made the police suspect, in the context of the political situation in the country, that they belonged to some group of persons of that community who were campaigning against the Government, call it what you will, agitating or waging war, a suspicion which must have been further influenced by the letters found in their possession. It may be that these circumstances may lead to no more than suspicion but the suspicion was enough to justify an investigation by the Police. We may digress here and consider a submission of Mr. Jethmalani that the letter addressed to the President showed that Simranjit Singh Mann wanted to devote himself to the rehabilitation of those who had suffered during the army action and the letter could never possibly be evidence of a conspiracy to wage war against the Government. It is true that in this long letter, there is a sentence. "In future, I will devote myself to the rehabilitation of those who have suffered during the army action. " It is sufficient for us to mention that there is in the letter enough incendiary material to ignite the combustible. We do not want to refer to the various other statements made in the letter. It is possible that the effect of some of those statements on the minds and actions of the susceptible could be disastrous. Simranjit Singh Mann, as a highly educated person and as a highly placed officer, was bound to emerge, on his dismissal from service, as a hero and martyr in the eyes of a certain section of the people. His statements would be accepted by them as gospel truths and pronouncements of the oracle on the basis of which they should act. If the letter remained addressed to the President and not publicised, it would cause little or no harm. But the letter though addressed to the president was clearly meant to be what is called an 'open letter ', to be given wide publicity. Indeed its full text had been published in the daily press and the accused them 817 selves had such a copy in their possession when they were stopped and searched. We do not know whether any of the accused ' was responsible for the publicity and whether it was in pursuance of the conspiracy. It may be that Simranjit Singh Mann meant no harm and that the contents of the letter were no more than the vehement outpourings of a bitter, and distressed but honest mind in the zealot 's jargon. On the other hand it is possible that the letter was designed to become or became an instrument of faith and used as such. All these are matters for evidence at the trial. Reverting to what we were saying earlier, if the police officers had some justification for suspecting a conspiracy, they would be well justified in suspecting ramifications of the conspiracy elsewhere in the country necessitating investigation into the conspiracy in Punjab, Delhi, Maharashtra, Calcutta and other parts of the country. If the Investigating agency suspected a conspiracy to wage war, it was its bounden duty to search for evidence wherever it could be found and not content itself by reading the letters and examining the recipients of the letters. It is not again correct to say that the case of waging war is founded entirely on the letters addressed to the President of India, etc. and that all that was necessary for the investigating agency to do was to examine the recipients of the letters. The letters are only items of evidence and not the totality of the evidence. From the affidavits filed on behalf of the State of Bihar and from the records produced before us, we find that the investigating agency conducted enquiries not only at Jogbani(Purnea), but also at Delhi, Calcutta and Bombay and in Punjab, Maharashtra and Nepal. It is one thing to analyse and arrange the facts and plan an orderly course of action when all the facts are known, it is quite another thing to do when the facts are to be discovered or unearthed, particularly in cases of suspected conspiracies bristling with all manner of complexities and complications including those of a sensitive, political nature, where the investigating agency has to tread warily and with circumspection. The investigating agency cannot, therefore, be blamed for the slow progress that they made in investigating a case of this nature. It is true that there were what appeared to be lulls in investigation for fairly long spells but we are unable to see anything sinister in the lulls. We have to remember that investigation of this case was not the only task of the investigating agency. There must have been other cases and tasks. In our country, the police are not only incharge of the investigation into crimes, but they are also incharge of Law and Order. We have to take into account the extraordinary law and order situation obtaining in various parts of the country necessitating the placing of a great addi 818 tional burden on the police. We are satisfied that such delay as there was in the investigation of this case was not wanton and that it was the outcome of the nature of the case and the general situation prevailing in the country. We may also note in passing that the accused in the present case do not belong to the category of persons who are not well able to take care of themselves. They are persons who are capable of asserting their rights whenever and wherever necessary and who did in fact asserts their rights as and when necessary, as is evident from the number of petitions filed before the Magistrate, and the special judge, from time to time. We do not suggest that the ability of the accused to assert their rights should penalise them and still the voice of protest against the delay. But, as pointed out by Powell, J. in Barker vs Wingo (supra) and by Lord Templeman in Bell vs DPP of Jamaica, (supra) one of the factors to be considered in determining whether an accused person has been deprived of his right is the responsibility of the accused for asserting his rights. It was said: "Whether, and how, a defendant asserts his right is closely related to the other factors we have mentioned. The strength of his efforts will be affected by the length of the delay, to some extent by the reason for the delay, and most particularly by the personal prejudice, which is not always readily identifiable, that he experiences. The more serious the deprivation, the more likely a defendant is to complain. " Until the filing of the present writ petitions we find that there was no serious protest by the accused about any delay. After the charge sheet was filed, we notice that at least on two occasions the prosecuting agency expressed an anxiety to have the case disposed of as expeditiously as possible. We find from the order sheet of the learned Special Judge that on December 19, 1985 the Public Prosecutor filed a petition before him requesting expeditious trial of the case as it was a case of a special importance. From the order sheet we find that on January 9, 1986, another petition was filed by the Public Prosecutor again requesting that an early date may be fixed for the speedy disposal of the case. Having regard to all the circumstances of the case, we do not think that the delay in the investigation and in the trial of the case is so unfair as to warrant our quashing the proceedings on the ground of infringement of the right of the accused to a speedy trial, a part of their fundamental right under article 21 of the Constitution. We think that a direction by us that the trial should start soon and proceed from day to day is all that is called for in the present case. 819 It was strenuously contended by Shri Jethmalani that there was no material whatsoever to warrant the framing of charges for any of the offences mentioned in the charge sheet other than sec. We desire to express no opinion on this question. It is not a matter to be investigated by us in a petition under article 32 of the Constitution. We wish to emphasise that this Court cannot convert itself into the court of a Magistrate or a Special Judge to consider whether there is evidence or not justifying the framing of charges. Two other questions, one relating to the jurisdiction of the Special Judge to try the accused for the offences under secs. 121, 121A, etc. and the other the question of the link between the offences under secs. 165 A and 165 A read with sec. 34 on the one hand and the offences under secs. 121 and 121A etc. on the other are questions which are awaiting the decision of the High Court of Patna and we leave those questions to be decided by the High Court. Another question which was raised before us was that the Special Judge, Purnea was chosen by the Executive Government to try the present case. The submission was that it was destructive of the very principle of Rule of law and Equality before the Law if the Prosecutor is to be permitted to have the Judge of his choice to try the case. Nothing as drastic as that suggested by Mr. Jethmalani has happened. All that has in fact happened is that a Special Judge 's court was created for Purnea Division under sec. 6 of the Criminal Law Amendment Act and Shri Bindeshwari Prasad Verma, Additional District Judge, West Champaran, who was under orders of transfer as Additional District Judge, Bhagalpur was designated as the Special Judge. The case, Jogbani P.S. No. 110/84, was mentioned within brackets as that was apparently the only case awaiting trial in Purnea Division under the Criminal Law Amendment Act. A Special Judge 's court was created for Purnea Division as it was thought that it would be more convenient for the accused and also in the interests of security if the case was tried at Bhagalpur where the accused were imprisoned rather than to have the trial of the case at Patna to which place the accused would have to be taken from Bhagalpur for every hearing. The accused had to be imprisoned at Bhagalpur, as already mentioned by us, in the interests of security. We are unable to see any evil design in the creation of a Special Judge 's court for Purnea Division at Bhagalpur under the Criminal Law Amendment Act and the designation of a Judge to preside over that court. Shri Jethmalani urged that in the case of the accused persons 820 other than Simranjit Singh Mann, there was nothing whatever to connect them with the offences under secs. 121 A, 124 A, etc. It was said that they were not even the authors of any of the letters which were found in the course of the search. We do not want to express any opinion except to say that authorship of seditious material alone is not the gist of any of the offences. Distribution or circulation of seditious material may also be sufficient on the facts and circumstances of a case. To act as a courier is sometimes enough in a case of conspiracy. It is also not necessary that a person should be a participant in a conspiracy from start to finish. Conspirators may appear and disappear from stage to stage in the course of a conspiracy. We wish to say no more on the submission of the learned Counsel. Whether such evidence as may now be available in the record to justify the framing of charges is a matter for the trial court and not for us. We refrain from expressing any opinion. Having regard to the subsequent events that have taken place, we think that the only appropriate direction that we can give is to request the Patna High Court to dispose of the criminal revision petition before it as expeditiously as possible preferably within three or four weeks. Whatever be the outcome of the criminal revision petition, the High Court should also direct the Special Judge or other Judge who may have to try the case, or the one or the other of the cases as the case may be, to try the cases expeditiously, setting a near date for the trial of the case or cases and to proceed with the trial from day to day. We then come to the two special leave petitions filed by the accused persons. We may recapitulate that the five accused persons were directed to be released on bail under the proviso(a) to section 167(2) for the default of the prosecution in not completing the investigation within 60 days. It may be remembered that there was no provision corresponding to the proviso to sec. 167(2) in the old Code of Criminal Procedure. The proviso was introduced for the first time in the new Code of 1973. The reason for the introduction of the proviso was stated in the Statement of Objects and Reasons as follows: "At present section 167 enables the Magistrate to authorise detention of an accused in custody for a term not exceeding 15 days on the whole. There is a complaint that this provision is honoured more in the breach than in the observance and that the police investigation takes a much longer period in practice. The practice of doubtful legality has grown 821 whereby the police file a "preliminary" or incomplete chargesheet and move the court for a remand under section 344 which is not intended to apply to the stage of investigation. While in some cases, the delay in the investigation may be due to the fault of the police, it cannot be denied that there may be genuine cases where it may not be practicable to complete investigation in 15 days. The Commission recommended that the period should be extended to 60 days, but if this is done, 60 days would become the rule and there is no guarantee that the illegal practice referred to above would not continue. It is considered that the most satisfactory solution to the problem would be to extend the period of detention beyond 15 days whenever he is satisfied that adequate grounds exist for granting such detention." (section 344 of the Old Code Corresponded to section 309 of the present Code.) The effect of the new proviso is to entitle an accused person to be released on bail if the investigating agency fails to complete the investigation within 60 days. A person released on bail under the proviso to section 167(2) for the default of the investigating agency is statutorily deemed to be released under the provisions of Chapter 33 of the Code for the purposes of that chapter. That is provided by the proviso to section 167(2) itself. This means, first, the provisions relating to bonds and sureties are attracted. section 441 provides for the execution of bonds, with or without sureties, by persons ordered to be released on bail. One of the provisions relating to bonds is section 445 which enables the court to accept the deposit of a sum of money in lieu of execution of a bond by the person required to execute it with or without sureties. If the bond is executed (or the deposit of cash is accepted), the court admitting an accused person to bail is required by section 442(1) to issue an order of release to the officer in charge of the jail in which such accused person is incarcerated. Sections 441 and 442, to borrow the language of the Civil Procedure Code, are in the nature of provisions for the execution of orders for the release on bail of accused persons. What is of importance is that there is no limit of time within which the bond may be executed after the order for release on bail is made. Very often accused persons find it difficult to furnish bail soon after the making of an order for release on bail. This frequently happens because of the poverty of the accused persons. It also happens frequently that for various reasons the sureties produced on behalf of accused persons may not be acceptable to the court and fresh sureties will have to be 822 produced in such an event. The accused persons are not to be deprived of the benefit of the order for release on bail in their favour because of their inability to furnish bail straight away. Orders for release on bail are effective until an order is made under section 437(5) or section 439(2). These two provisions enable the Magistrate who has released an accused on bail or the court of Session or the High Court to direct the arrest of the person released on bail and to commit him to custody. The two provisions deal with what is known in ordinary parlance as cancellation of bail. Since release on bail under the proviso to section 167(2) is deemed to be release on bail under the provisions of Chapter XXXIII, an order for release under the proviso to section 167(2) is also subject to the provisions of section 437(5) and 439(2) and may be extinguished by an order under either of these provisions. It may happen that a person who has been accepted as a surety may later desire not to continue as a surety. Section 444 enables such a person, at any time, to apply to a Magistrate to discharge a bond either wholly or so far as it relates to the surety. On such an application being made, the Magistrate is required to issue a warrant of arrest directing the person released on bail to be brought before him. On the appearance of such person or on his voluntary surrender, the Magistrate shall direct the bond to be discharged either wholly or so far as it relates to the surety, and shall call upon such person to find other sufficient surety and if he fails to do so, he may commit him to jail. (sec. 444). On the discharge of the bond, the responsibility of the surety ceases and the accused person is put back in the position where he was immediately before the execution of the bond. The order for release on bail is not extinguished and is not to be defeated by the discharge of the surety and the inability of the accused to straight away produce a fresh surety. The accused person may yet take advantage of the order for release on bail by producing a fresh, acceptable surety. The argument of the learned counsel for the State of Bihar was that the order for release on bail stood extinguished on the remand of the accused to custody under section 309(2) of the Code of Criminal Procedure. There is no substance whatever in this submission. Section 309(2) merely enables the Court to 'remand the accused if in custody. ' It does not empower the Court to remand the accused if he is on bail. It does not enable the Court to 'cancel bail ' as it were. That can only be done under section 437(5) and section 439(2). When an accused person is granted bail, whether under the proviso to section 167(2) or under the provisions of Chapter XXXIII the only way the bail may be cancelled is to proceed under section 437(5) or section 439(2). In Natabar Parida vs State of Orissa, ; the Court 823 explained the mandatory character of the requirement of the proviso to section 167(2) that an accused person is entitled to be released on bail if the investigation is not completed within sixty days. The Court said, "But then the command of the Legislature in proviso (a) is that the accused person has got to be released on bail if he is prepared to and does furnish bail and cannot be kept in detention beyond the period of 60 days even if the investigation may still be proceeding. In serious offences of criminal conspiracy murders dacoities, robberies by interstate gangs or the like, it may not be possible for the police, in the circumstances as they do exist in the various parts of our country, to complete the investigation within the period of 60 days. Yet the intention of the Legislature seems to be to grant no descretion to the court and to make it obligatory for it to release the accused on bail. Of course, it has been provided in proviso (a) that the accused released on bail under section 167 will be deemed to be so released under the provisions of Chapter XXXIII and for the purposes of that Chapter. That may empower the court releasing him on bail, if it considers necessary so to do to direct that such person be arrested and committed to custody as provided in sub section (5) of section 437 occuring in Chapter XXXIII. It is also clear that after the taking of the cognizance the power of remand is to be exercised under section 309 of the New Code. But if it is not possible to complete, the investigation within a period of 60 days then even in serious and ghastly types of crimes the accused will be entitled to be released on bail. Such a law may be a "paradise for the criminals," but surely it would not be so, as sometimes it is supposed to be because of the courts. It would be so under the command of the Legislature. " In Bashir vs State of Haryana, ; , the question arose whether a person who has been released under the proviso to section 167(2) could later be committed to custody merely because a challan was subsequently filed. The court held that he could not be so committed to custody. But, the bail could be cancelled under section 437(5) if the court came to the conclusion that there were sufficient grounds, after the filing of the challan to believe that the accused had committed a nonbailable offence and that it was necessary to arrest him and commit him to custody. The court said, 824 "Sub section (2) of Section 167 and proviso (a) thereto make it clear that no Magistrate shall authorise the retention of the accused person in custody under this section for a total period exceeding sixty days. On the expiry of sixty days the accused person shall be released on bail if he is prepared to and does furnish bail. So far there is no controversy. The question arises as to what is the position of the person so released when a challan is subsequently filed by the police." * * * * "Sub section (5) to section 437 is important. It provides that any court which has released a person on bail under sub section (1) or sub section (2), may, if it considers it necessary so to do, direct that such person be arrested and commit him to custody. As under Section 167(2) a person who has been released on the ground that he had been in custody for a period of over sixty days is deemed to be released under the provisions of Chapter XXXIII, his release should be considered as one under section 437(1) or (2). Section 437(5) empowers the court to direct that the person so released may be arrested if it considers it necessary to do so. The power of the court to cancel bail if it considers it necessary is preserved in cases where a person has been released on bail under section 437(1) or (2) and these provisions are applicable to a person who has been released under Section 167(2). Under Section 437(2) when a person is released pending inquiry on the ground that there are not sufficient grounds to believe that he has committed a nonbailable offence may be committed to custody by court which released him on bail if it is satisfied that there are sufficient grounds for so doing after inquiry is completed. As the provisions of Section 437(1), (2) and (5) are applicable to a person who has been released under section 167(2) the mere fact that subsequent to his release a challan has been filed, is not sufficient to commit him to custody. In this case the bail was cancelled and the appellants were ordered to be arrested and committed to custody on the ground that subsequently a chargesheet had been filed and that before the appellants were directed to be released under Section 167(2) their bail petitions were dismissed on 825 merits by the Session Court and the High Court. The fact that before an order was passed under Section 167(2) the bail petitions of the accused were dismissed on merits is not relevant for the purpose of taking action under Section 437(5). Neither is it a valid ground that subsequent to release of the appellants a challan was filed by the police. The Court before directing the arrest of the accused and committing them to custody should consider it necessary to do so under Section 437(5). This may be done by the Court coming to the conclusion that after the challan had been filed there are sufficient grounds that the accused had committed a non bailable offence and that it is necessary that he should be arrested and committed to custody. It may also order arrest and committal to custody on other grounds such as tampering of the evidence or that his being at large is not in the interests of justice. But it is necessary that the Court should proceed on the basis that he has been deemed to have released under Section 437(1) and (2). " In Talab Hazi Hussain vs Mondkar, ; a case arising under the old code, the court considered the grounds on which bail might be cancelled. It was said. "There can be no more important requirement of the ends of justice than the uninterrupted progress of a fair trial; and it is for the continuance of such a fair trial that the (inherent) powers of the High Courts are sought to be invoked by the prosecution in cases where it is alleged that accused persons, either by suborning or intimidating witnesses, are obstructing the smooth progress of a fair trial. Similarly, if an accused person who is released on bail jumps bail and attempts to run to a foreign country to escape the trial, that again would be a case where the exercise of the (inherent) power would be justified in order to compel the accused to submit to a fair trial and not to escape its consequences by taking advantage of the fact that he has been released on bail and by absconding to another country. In other words, if the conduct of the accused person subsequent to his release on bail puts in jeopardy the progress of a fair trial itself and if there is no other remedy which can be effectively used against the accused person, in such a case the (inherent) power of the High Court can be legitimately 826 invoked. In regard to non bailable offences there is no need to invoke such power because section 497(5) specifically deals with such cases. " The result of our discussion and the case law in this: An order for release on bail made under the proviso to section 167(2) is not defeated by lapse of time, the filing of the chargesheet or by remand to custody under section 309(2). The order for release on bail may however be cancelled under section 437(5) or section 439(2). Generally the grounds for cancellation of bail, broadly, are, interference or attempt to interfere with the due course of administration of justice, or evasion or attempt to evade the course of justice, or abuse of the liberty granted to him. The due administration of justice may be interfered with by intimidating or suborning witnesses, by interfering with investigation, by creating or causing disappearance of evidence etc. The course of justice may be evaded or attempted to be evaded by leaving the country or going underground or otherwise placing himself beyond the reach of the sureties. He may abuse the liberty granted to him by indulging in similar or other unlawful acts. Where bail has been granted under the proviso to section 167(2) for the default of the prosecution in not completing the investigation in sixty days, after the defect is cured by the filing of a chargesheet, the prosecution may seek to have the bail cancelled on the ground that there are reasonable grounds to believe that the accused has committed a non bailable offence and that it is necessary to arrest him and commit him to custody. In the last mentioned case, one would expect very strong grounds indeed. In the present case, the High Court and following the High Court, the Special Judge have held that the order for release on bail came to an end with the passage of time on the filing of the chargesheet. That we have explained is not a correct view. The question now is what is the appropriate order to make? The order for release on bail was not an order on merits but was what one may call an order on default, an order that could be rectified for special reasons after the defect was cured. The order was made long ago but for one reason or the other, the accused failed to take advantage of the order for several months. Probably for that reason, the prosecuting agency did not move in the matter and seems to have proceeded on the assumption that the order had lapsed with the filing of the chargesheet. The question is should we now send the matter down to the High Court to give an opportunity to the prosecution to move that court for cancellation of bail? Having regard to the entirety of the 827 circumstances, the long lapse of time since the original order for bail was made, the consequent change in circumstances and situation, and the directions that we have now given for the expeditious disposal of the case, we do not think that we will be justified in exercising our discretion to interfere under article 136 of the Constitution in these matters at this stage. The special leave petitions are, therefore, dismissed. Nothing that we have said is to be construed as an expression of opinion on the merits of the case. M.L.A. Petitions dismissed.

The petitioners accused were arrested by the Security Police Patrol Party in the State of Bihar while attempting to cross Indo Nepal border. One of them was identified Simranjit Singh Mann a dismissed Police Officer who had gone underground after an order of detention under the National Security Act was passed against him. As a result of 803 the search, currency notes and a number of documents and other articles were seized from the petitioners. It is alleged that one of the accused also offered a bribe to the police officers. The police registered a first information report and commenced investigation. A chargesheet was filed on 11th December, 1985 before judicial Magistrate First Class against the five accused petitioners for offences under sections 121 A, 123, 124 A, 153A, 165 A, 505 and 120 B of the Indian Penal Code. However, before the chargesheet was filed, the accused petitioner, Simranjit Singh Mann was served with an order of detention under the National Security Act and sent to Bhagalpur jail. The other four accused were also detained under the National Security Act at Bhagalpur. All the petitioners moved the Judicial Magistrate for bail in the aforesaid criminal case claiming to be released under proviso (a) of section 167(2) of the Code of Criminal Procedure. They were granted bail but, they could not be released because of their detention under the National Security Act. While so, the surety for all the five accused filed a petition requesting the Magistrate to discharge him from suretyship as he did not want to continue to be the surety of the accused persons. The Magistrate discharged the surety from suretyship and issued formal warrants of arrest under section 444(2) of the Code of Criminal Procedure. At this stage, the High Court of Punjab and Haryana made an order quashing the detention of Simranjit Singh Mann. The Magistrate took cognizance of the case under sections 121A, 123, 124A, 153A, 165A and 120B of the Indian Penal Code on December 18, 1985. Thereafter the investigating Officer filed a petition requesting expeditious trial as the case was one of special importance. All the petitioners except Simranjit Singh Mann filed fresh bail bonds. The said bail bonds were rejected on December 20, 1985 as the surety could not name either the accused persons or their fathers. The accused moved another petition for recalling the order dated December 20, 1985 and accepting the same person as surety. This petition was rejected on the ground that the earlier order could not be reviewed. The High Court also rejected the bail applications of these accused persons. The case was thereafter, transferred to the Special Judge (Vigilance) North Bihar, Patna. The accused Simranjit Singh Mann moved an application before the Special Judge offering cash security and asking for bail but it was rejected on the ground that the High Court had alread rejected the application of the other four accused. The case was later transferred to the Court of Special Judge, Bhagalpur and was 804 finally adjourned to August 8, 1986 for arguments on the question of charges to be framed and on the question of jurisdiction. At this stage, the Special Public Prosecutor filed a petition stating that the offences under section 165 and sections 165A read with section 34 were not committed in the course of the same transaction as the offences under sections 124 A etc., and therefore it was necessary that the offences under sections 165 and 165A read with section 34 should be tried separately from the offences under secs. 124A etc. The accused also filed a petition to the same effect. The Special Judge allowed the aforesaid petition holding that the offences were not committed in the course of the same transaction and therefore the trial for the offences under sections 165 and 165A read with section 34 should be separated from the other offences. It was further held that he was not competent to try the accused for the offences under secs. 121A, 124A etc. as the case had not been committed to the court of Sessions by the Trial Magistrate and directed that in regard to those offences the record be sent back to the District and Sessions Judge, Purnea for proceeding further in accordance with law. Alleging that the Special Public Prosecutor had never been instructed to file such a petition before the Special Judge, the respondent State of Bihar filed a writ petition in the High Court and obtained a stay of further proceedings before the Special Judge. The accused petitioners filed special leave petitions and writ petitions before the Supreme Court against the rejection of their bail applications and for quashing the proceedings before the Special Judge. It was contended on behalf of the petitioners (a) that the fundamental right of the petitioners under article 21 of the Constitution had been frustrated by the tactics of the State whose only object was to somehow keep the petitioners in prison; (b) that there was no material whatever to substantiate the offences of waging war etc. and that the proceedings deserved to be quashed on that ground also; (c) that the proceedings before the Special Judge, Purnea were without jurisdiction both for the reason that he was not competent to try the offences under section 121A and section 124A etc. and also for the reason that he came to be seised of the case at the instance of the Executive Government, who had no authority to transfer the case from the court of the Special Judge, Patna to the Court of the Special Judge, Purnea, since the rule of law would be defeated if the Executive Government were to be permitted to have cases decided by Judges of their choice; (d) that the High Court and the Special Judge were wrong in not permitting the accused to offer fresh sureties or cash security; (e) that the High Court and the Special 805 Judge were wrong in holding that the order of the Magistrate directing them to be released on bail under section 167(2) had come to an end by the passage of time, particularly after cognizance had been taken of the case; (f) that there was no material whatsoever to warrant the framing of charges for any of the offences mentioned in the charge sheet other than sec. 165A; (g) that in the case of the accused persons other than Simranjit Singh Mann, there was nothing whatever to connect them with the offences under sections 121A and 124A. On behalf of the respondent State it was argued that the order for release on bail stood extinguished on the remand of the accused to custody under section 309(2) of the Code of Criminal Procedure. Dismissing the petitions, ^ HELD: 1.1 The delay in the investigation and in the trial of the case is not so unfair as to warrant quashing the proceedings on the ground of infringement of the right of the accused to a speedy trial, a part of their fundamental right under article 21 of the Constitution. Having regard to the entirety of the circumstances, the long lapse of time since the original order for bail was made, the consequent change in circumstances and situation, and the directions that were now given for the expeditious disposal of the case, there would be no justification for exercising the court 's discretion to interfere under article 136 of the Constitution at this stage. [818G H; 827A B] 1.2 The High Court is directed to dispose of the criminal revision petition before it as expeditiously as possible preferably within three or four weeks. Whatever be its outcome the High Court should also direct the Special Judge or other Judge who may have to try the case, or the cases as the case may be, to try the cases expeditiously setting a near date for the trial and to proceed with the trial from day to day. [820D ] 2. The right to a speedy trial is one of the dimensions of the fundamental right to life and liberty guaranteed by article 21 of the Constitution. The question whether this right has been infringed is ultimately a question of fairness in the administration of criminal justice even as "acting fairly" is of the essence of the principles of natural justice. A "fair and reasonable procedure" is what is contemplated by the expression "procedure established by law" in article 21.[815F G] Hussainara Khatoon (I) vs State of Bihar, [1979] 3 SCR 169, Kadra Pehadiya (I) vs State of Bihar, AIR 1981 SC 939, Kadra Pehdiya(II) vs State of Bihar, AIR 1982 SC 1167, State of Maharashtra 806 vs Champa Lal Punjaji Shah; , and Menaka Gandhi 's case followed. Strunk vs United States, 56, Barkar vs Wingo; , and Boll vs Director of Public Prosecutions, Jamaica, [1985] (II) All ER 585, referred to. 3.1 The question whether there was any material whatsoever to warrant the framing of charges for any of the offences mentioned in the charge sheet other than sec. 165A is not a matter to be investigated by the Supreme Court in a petition under article 32 of the Constitution. This Court cannot convert itself into the court of a Magistrate or a Special Judge to consider whether there is evidence or not justifying the framing of charges. [819A B] 3.2 The questions relating to the jurisdiction of the Special Judge to try the accused for the offences under secs. 121, 121A, etc. and the link between the offences under secs. 165A and 165A read with sec. 34 on the one hand and the offences under secs. 121 and 121A etc. on the other are questions which are awaiting the decision of the High Court. These questions are left to be decided by the High Court. [819C] 4. There was no evil design in the creation of a Special Judge 's court for Purnea Division at Bhagalpur under the Criminal Law Amendment Act and the designation of a Judge to preside over that court. All that has, in fact happened is that a Special Judge 's court was created for Purnea Division under section 6 of the Criminal Law Amendment Act and Shri Bindeshwari Prasad Verma, Additional District Judge West Champaran, who was under orders of transfer as Additional District Judge Bhagalpur was designated as the Special Judge. The case Jogbani P.S. No. 110/84, was mentioned within brackets as that was apparently the only case awaiting trial in Purnea Division under the Criminal Law Amendment Act. The Special Judge 's court was created for Purnea Division as it was thought that it would be more convenient for the accused and also in the interests of security if the case was tried at Bhagalpur where the accused were imprisoned rather than to have the trial of the case at Patna to which place the accused would have to be taken from Bhagalpur for every hearing. [819E ] 5. The authorship of seditious material alone is not the gist of any of the offences. Distribution or circulation of seditious material may also be sufficient on the facts and circumstances of a case. To act as a courier is sometimes enough in a case of conspiracy. It is also not 807 necessary that a person should be a participant in a conspiracy from start to finish. Conspirators may appear and disappear from stage to stage in the course of a conspiracy. [820B C] In the instant case, whether such evidence as may now be available in the record to justify the framing of charges is a matter for the trial court and not for the Supreme Court.[820C] 6.1 The effect of the proviso to section 167(2) of the Code of Criminal Procedure, 1973, is to entitle an accused person to be released on bail if the investigating agency fails to complete the investigation within 60 days. A person released on bail under the proviso to section 167(2) for the default of the investigating agency is statutorily deemed to be released under the provisions of Chapter 33 of the Code for the purposes of that Chapter. That is provided by the proviso to section 167(2) itself. This means, first, the provisions relating to bonds and sureties are attracted. Section 441 provides for the execution of bonds, with or without sureties, by persons ordered to be released on bail. One of the provisions relating to bonds is section 445 which enables the court to accept the deposit of a sum of money in lieu of execution of a bond by the person required to execute it with or without sureties. If the bond is executed (or the deposit of cash is accepted), the court admitting an accused person to bail is required by section 442(1) to issue an order of release to the officer in charge of the jail in which such accused person is incarcerated. Sections 441 and 442 are in the nature of provisions for the execution of orders for the release on bail of accused persons. [821D G] 6.2 There is no limit of time within which the bond may be executed after the order for release on bail is made. Very often accused persons find it difficult to furnish bail soon after the making of an order for release on bail. This frequently happens because of the poverty of the accused persons. It also happens frequently that for various reasons the sureties produced on behalf of accused persons may not be acceptable to the court and fresh sureties will have to be produced in such an event. The accused persons are not to be deprived of the benefit of the order for release on bail in their favour because of their inability to furnish bail straight away. [821G H; 822A] 6.3 Orders for release on bail are effective until an order is made under section 437(5) or section 439(2). These two provisions enable the Magistrate who has released an accused on bail or the court of Session or the High Court to direct the arrest of the person released on bail and to commit him to custody. The two provisions deal with what is known as cancella 808 tion of bail. Since release on bail under the proviso to section 167(2) is deemed to be release on bail under the provisions of Chapter XXXIII, an order for release under the proviso to section 167(2) is also subject to the provisions of section 437(3) and 439(2) and may be extinguished by an order under either of these provisions. [822A C] 6.4 The order for release on bail is not extinguished and is not to be defeated by the discharge of the surety and the inability of the accused to straight away produce a fresh surety. The accused person may yet take advantage of the order for release on bail by producing a fresh, acceptable surety. [822E F] 6.5 Section 309(2) merely enables the court to "remand the accused if in custody". It does not empower the court to remand the accused if he is on bail. It does not enable the court to "cancel bail" as it were. That can only be done under section 437(5) and section 439(2). When an accused person is granted bail, whether under the proviso to section 167(2) or under the provision of Chapter XXXIII the only way the bail may be cancelled is to proceed under section 437(5) or section 439(2). [822F H] 7.1 An order for release on bail made under the proviso to section 167(2) is not defeated by lapse of time, the filing of the chargesheet or by remand to custody under section 309(2). The order for release on bail may however be cancelled under section 437(5) or section 439(2). Generally the grounds for cancellation of bail, broadly, are interference or attempt to interfere with the due course of administration of justice, or evasion or attempt to evade the course of justice, or abuse of the liberty granted to him. [826B C] 7.2 Where bail has been granted under the proviso to section 167(2) for the default of the prosecution is not completing the investigation in sixty days, after the defect is cured by the filing of a chargesheet, the prosecution may seek to have the bail cancelled on the ground that there are reasonable grounds to believe that the accused has committed a non bailable offence and that it is necessary to arrest him and commit him to custody. In the last mentioned case, one would expect very strong grounds indeed. [826D E] In the instant case, the High Court and following the High Court, the Special Judge have held that the order for release on bail came to an end with the passage of time on the filing of the chargesheet. That is not a correct view. The order for release on bail was not an order on merits but was, what one may call an order on default, an order that could be 809 rectified for special reasons after the defect was cured. The order was made long ago but for one reason or the other, the accused failed to take advantage of the order for several months. Probably for that reason, the prosecuting agency did not move in the matter and seems to have proceeded on the assumption that the order had lapsed with the filing of the chargesheet. Having regard to the entirety of circumstances the Court did not exercise its discretion under article 136 of the Constitution. [826F H] Natabar Parida vs State of Orissa, ; , Bashir vs State of Haryana, ; and Talab Hazi Hussain vs Mondkar, ; , referred to.

Nos. 661, 1380, 1885 & 1886 of 1967. 209 Appeal from the judgment and order dated February 25, 1965 of the Patna High Court in First Appeals Nos. 437 and 438 of 1959. section V. Gupte, B. P. Rajgarhia and U. P. Singh, for the appellants in C.A. Nos. 661 and 1380 of 1967) and for respondent No. 1 C.A. Nos. 1885 and 1886 of 1967). D. Goburdhun, for the respondent (in C.A. Nos. 661 and 1380 if 1967 and for the appellant (in C.A. Nos. 1885 and 1886 of 1967). The Judgment of the Court was delivered by P. laganmohan Reddy, J. These appeals are by certificate against the judgment of the Patna High Court in land acquisition appeals. Two notifications dated 7 7 1954 under section 4 of the. Land Acquisition Act 1894 (Act 1 of 1894) (hereinafter called 'the Act '), were issued one in respect of a portion of Plot Nos. 178 and 1784 admeasuring 2.65 acres and the other in respect of the whole of the plot No. 1783 admeasuring 2 acres situated in Ward No. 3 of Ranchi Municipality. Section 6 notification in respect of these lands was published on 7 9 1954 and possession was taken on 23 9 1954 under section 17(1) after making a declaration under section 17(4) that the provisions of section 5A shall not apply. The Collector awarded compensation of Rs. 1,20,419 6 11 in respect of the first acquisition and Rs. 47,648 13 6 in respect of the second. Thereafter, at the instance of the claimant, a reference under section 18 of the Act was made to the Judicial Commissioner of Chhota Nagpur, Ranchi who. while maintaining the market value, of the land, awarded by the Collector, gave further compensation for severance at the rate of 5% and 10% in respect of potential value of the land. The Judicial Commissioner, however, did not grant the 15% solatium under section 23(2) of the Act. Being dissatisfied, the claimants preferred appeals to the High Court. The High Court revised the compensation and awarded Rs. 90,000/ per acre and 15% as solatium on the market value under section 23(2) of the Act but did not grant them the 5% towards severance. Interest at 6% per annum on the amount of enhanced compensation from 23 9 1954 together with costs was also decreed. Against the judgment and decree, the claimants have filed Civil Appeals 661 & 1380/67 while the State has filed Civil Appeals 1885 86/67. The lands in question which have been acquired were earlier leased on 22 9 1944 to the Military authorities on a rent of Rs. 600/ per month for a period of 6 months under a registered deed with option Lo renew for a maximum period of 10 years 2lO which period expired on 21 9 1954. One of the conditions of the lease was that on the termination of the lease, the lessor would exercise the option given under the lease to purchase all buildings, structures, gardens and any other structures constructed by the lessee during their occupation of the leased property, at 75 per cent of the valuation that would be determined by the Superintending Engineer, Chhota Nagpur Circle, and in case the lessors refused to purchase, the lessee was entitled to dismantle and take away the materials. Towards the end of the lease period, the Govern ment of Bihar decided to acquire the property for the State Soldiers, Sailors and Airmen 's Board and initiated proceedings as aforesaid. In these appeals the only question that has to be determined is : What is the market value of the property as on the date of section 4 notification ? In the valuation report given by the Land Acquisition Officer, Ranchi, Ex 1, the principle of capitalisation on the basis of 20 times the annual rental of Rs. 7,200/ at the rate of Rs. 600/ p.m. was adopted as the price of the lands. In that report it was also pointed out that the sale price of 1.08.5 acres out of the premises of the Ranchi Club as per registered sale deed, exhibit C 1 dated 1 4 1953, was Rs. 41,470/ per acre. which was not fair. Apart from these 25 other sale transactions in respect of portions of Plot No. 1789 between 1952 and 1953 were also referred in that report. Some of these lands were situated opposite to the Ranchi Club and the sale price came to Rs. 1092/ per katha, which is about Rs. 60,000/ per acre. He was further pointed out that some other lands a little further away from the main road but belonging to the same Plot No. 1789 were sold at the rates between Rs. 250 / / to Rs. 800/ per katha. This report formed the basis of the award made by the Collector. The High Court took judicial notice, and in our view rightly so, that after the termination of the Second World War in 1945 there was a rise in land values due to the increased demand of homestead lands for building purposes. It also considered various sale deeds produced and proved on behalf of the claimants along with the oral evidence to determine the market value of the land. The objections from both the appellant and the respondent were taken into account in respect of each of these and most of them were considered as not furnishing a proper or adequate valuation either having regard to the distance of the lands which were the subject matter of the sale or the inadequacy of the information pertaining thereto. The High Court, however, adopted the price in the sale deed Ex C 1 executed on 6 5 1953 by the Ranchi Club Ltd., in favour of the President of India in respect of 1.085 acres 3 bighas 5 kathas 10 chhataks in Plot No. 1221 for Rs. 45,000/:as the basis for arriving at the market value of the acquired land. 211 Though the land in question was situated on the main Ranchi Chaibasa Road, a strong objection was taken against adopting the price as a basis because it was not only 1/2 mile away from the land under acquisition but what was sold was only the leasehold right in the land. These objections were rejected on the ground that for all,practical purposes the interest that was held or sold by the Ranchi Club under Ex. C 1 was not inferior to an absolute title. The area of the land, the subject matter of the sale, was considered to be fairly large being more than 1 acre and the situation was also the same as the land under acquisition except that it was farther away from it. In these circumstances, the High Court thought, after a proper allowance is made for the difference in distance, the transaction yields a more acceptable guide for determining the market value of the land under acquisition and accordingly, it adopted twice the price. as charged for the land in Ext. C 1 as indicating a fair market value of the land in question. The High Court further added Rs. 7060/ per acre as the difference between tenure rights and lease hold rights that were held by the President of India and awarded Rs. 90,00O./ per acre. it did notwithstanding the fact that it was conscious that there was no definite data for the two additions that have been made, because in its view, in cases of this nature a certain amount of estimate has to be made which may even be arbitrary. Accordingly, it awarded compensation for the 4.65 acres of land which was acquired by the Government at Rs. 90,000/ per acre together with 15% solatium Payable under clause (2) of section 23 of the Act. 5% compensation for severance of land from the claimants ' other portion of the land that remained with them after acquisition, which was awarded by the Judicial Commissioner, Chhota Nagpur, was disallowed on the ground that there was an entrance to the back portion of the land which was left with the #owners and also because there was no evidence to show that in fact there had been any depreciation in he value of the remaining area and if so, to what extent. On the other hand, it main tained the 10% on the market value of the land awarded by the Land Acquisition Court on account of the increase in the potentialities of the land. The basis adopted by the High Court is challenged on the ground that they are contrary to the well established principles applicable for determining the value of lands acquired under the Act. The general principles for determining compensation have, been set out in sections 23 & 24 of the Act. The compensation payable to the owner of the land is the market value which is determined by reference to the price which a seller might reasonably expect to obtain from a willing purchaser, bat as this may not be possible to ascertain with any amount of precision, the authority charged with the duty to award compensation is bound to 212 make an estimate judged by an objective standard. The land acqui red has, therefore, to be valued not only with reference to its condition at the time of the declaration under section 4 of the Act but its potential value also must be taken into account. The sale deeds of the lands situated in the vicinity and the comparable benefits and advantages which they have, furnish a rough and ready method of computing the market value. This, however, is not the only method. The rent which an owner was actually receiving at the relevant point of time or the rent which the neighbouring lands of similar nature are fetching can be taken into account by capitalising the rent which according to the present prevailing rate of interest is 20 times the annual rent. But this also is not a conclusive method. This Court had in Special Land Acquisition Officer, Bangalore vs T. Adinarayan Setty(1), indicated at page 412 the methods of valuation to be adopted in ascertaining the market value of the land on the date of the notificatioa under section 4(1) which are : (i) opinion of experts, (ii) the price paid within a reasonable time in bona fide transactions of purchase ,of the lands acquired or the lands adjacent to the lands acquired and possessing similar advantages; and (iii) a number of years ' purchase of the actual or immediately prospective profits of the lands acquired. These methods, however, do not preclude the Court from taking any other special circumstances into consideration, the requirement being always to arrive as near as possible an estimate of the market value. In arriving to a reasonably correct market value, it may be necessary to take even two or all of those methods into account inasmuch as the exact valuation is not always possible as no two lands may be the same either in respect of the situation or the extent or the potentially nor is it possible in all cases to have reliable material from which that valuation can be accurately determined. Bearing these principles in mind, we do not think that the High Court was justified in adopting the registered sale deed, Ex. C 1 executed by the Ranchi Club, in favour of the President of India, because that land is farther away not only from the, land acquired but from the town though it is on the main RanchiChaibasa Road. Even the High Court recognised that there was no definite data for the two additions that have been made and in our view it would not be a proper method of ascertaining the value of the land 'acquired. The only two documents that may be considered are Ex.10 and Ex 11 which are in respect of the lands situated in the vicinity and on either side of the land ac quired. The other sale deeds are of smaller areas and do not furnish a proper basis for ascertaining the market value and have been quite properly not relied upon by the learned Advocate for (1) (1959) (Supp1. 1) S.CR. 213 the claimants ' The annual rental value of the land acquired, namely, Rs. 7 200/ will also not furnish a proper method of computation because that was a rent fixed in 1944 when that land was not of such great value as it had acquired at the time when sec. 4 notification was issued. A perusal of the correspondence between the owners of the land and the Deputy Commissioner of Ranchi would show that the land owners had given it at consessional rate to ' the Military authorities having regard to the purpose for which it was being put to use. On behalf of the claimants great reliance is placed on Ex.11 which is a sale deed executed on 16 12 1946 by the claimants the Ranchi Automobiles of an area of 1 bigha 17 kathas equal to .617 acres for Rs. 1,45,000/. After deducting Rs. 15,403/ the price of the structures according ;to the Engineer 's report in 1959 (Ex 25), the net value of the land is Rs. 1,29,697/ . This value would work out to Rs. 2,08,135.70 per acre. The High Court rejected this computation on the ground that though the land was contiguous to the land under acquisition, neither the value of the pump and the other structures belonging to Burmah Shell nor the value of the structures that might have been on the land on the date of the sale which were built by the vendees as lessees could be ascertained either from the sale deed or the evidence. Ex.10 is a lease in respect of 1/3 acre granted by the owners to Thakur Chandra Bali Shah and others executed on 20 2 1950 on a monthly rent of Rs. 157/ . The High Court calculated the monthly rental of the land under acquisition at that rate to be not less than Rs. 2,000/ per month or Rs. 24,000/ per year. On the basis of 20 times the annual rent if computed Rs. 4,80,000/as the market value which works out at Rs. 1,03,226/per acre. It is, however, pointed out on behalf of the claimants that the High Court made a mistake in thinking that the rent for the land leased under Ex.10 was Rs. 157/ p.m. and on that basis it calculated the annual rental value of 4.65 acres of the ' acquired land. We have checked the figures from the original lease and find that in fact the rent is Rs. 175/ and not Rs. 157/ . On this basis the rate per acre of 20 times annual rental value would come to Rs. 1,26,000/ . Even if exhibit 11 is to be taken as, the basis and ,the value of the structures as given by the Engineer in Ex.25 is to be accepted that cannot furnish a proper basis because the land in question is a small area of .617 acres or just over 1 an acre. A smaller area such as this on a main road Would certainly fetch a higher price compared to a larger un developed area even though it may have a frontage on the main road. In order to develop that area atleast the value of 1/3 of the land will have to be deducted for roads, drainage and other amenities. On this basis, the value of the land at Rs. 2,08,135.70 per acre would, after deduction of 1/3 come to Rs. 1,38,757/per acre. On the basis of the rental of Rs. 175/ p.m. in Ex.10, 214 the value at 20 times the rental will work out as already seen at Rs. 1,26,000/ . Allowing for an increase in rents from 1950 to 1954, the date of section 4 notification, say at 5% the value per acre may be Rs. 1,33,000/ or thereabout. If we take the average of Ex.10 and Ex.11 as computed by us the value per acre would come to about Rs. 1,35,878/ . In our view, Rs. 1,35,000/ per acre would be a reasonable rate at which compensation could be awarded to the claimants. The High Court was not justified in giving 10% towards potential value because that element is inherent in the fixation of the market value of the land and could not be assessed separately. The High Court was also not justified in disallowing 5% awarded by the Judicial Commissioner, Chhotanagpur as compensation for severance merely because there was an entrance to the land. When a portion left out there would be a diminution in the value of ;the land that is left out for which some compensation has to be allowed. The 5% allowed by the Judicial Commissioner, Chhotanagpur is reasonable. In this view, the claimants would be entitled to a decree as follows in respect of the lands acquired : (1) At the rate of Rs. 1,35,000 per acre for 4.65 acres; (2) 5% severence and 15% solatium on the market value computed as in (1); (3) Interest at 6% from the date of taking possession. The appeals of the claimants are allowed to the extent of the variation and those by the Government are dismissed with costs. The claimants will be entitled to proportionate costs on the difference between the amounts decreed and those that are now awarded in each of the two appeals filed by them. K.B.N. 864SupCI/72 2500 12 4 73 GIPF.

According to the general principles set out in sections 23 and 24 of the Land Acquision Act, 1894, for determining compensation, the compensation payable to the owner of the land is the market value which is determined by reference to the price which a seller might reasonable expect to obtain from a willing purchaser; but since it may not be possible to ascertain this with any amount of precision the authority charged with the duty to award compensation is bound to make an estimate judged by an objective standard. The land acquired, has, therefore, to be valued not only with reference to its condition at the time of the declaration under section 4 of the Act, but its potential value also must be taken into account. This Court has laid down the methods of valuation to be adopted in ascertaining the market value of the land on the date of the notification under section 4, which are : (i) opinion of experts (ii) the price paid within a reasonable time in bona fide transactions of the purchase of the lands acquired or the lands adjacent to the lands acquired and possessing similar advantages and (iii) a number of years purchase of the actual or immediately prospective profits of the lands acquired. These methods, however, do not preclude the Court from taking any other special circumstance into consideration, the requirement being always to arrive as near as possible an estimate of the market value. In arriving at a reasonable correct market value it may be necessary to take even two or all these methods into account in as much as the exact valuation is not always possible as no two lands may be same either in respect of the situation or the extent or the potentiality, nor is it possible in all cases to have reliable material from which that valuation can be accurately determined. [211 H] Special Land Acquisition Officer Bangalore vs T. Adinarayan Setty, [1959] Supp. 1 S.C.R. 404, referred to. In the present case, the High Court was not justified in adopting the sale deed in respect of a land which was farther away not only from the land acquired, but from the town. The annual rental value of the land acquired, based on the rent fixed in 1944 when that land was not of such great value as , it had acquired at the time when section 4 notification was issued, would also not furnish a proper method of computation. The High Court was not justified in giving 10 per cent towards potential value, be. cause, that element was inherent in the fixation of market value of the land and could not be assessed separately. The High Court was also not justified in disallowing 5 per cent awarded by the Judicial Commissioner Is compensation for severance merely because there was an entrance to the land. When a portion of the land is acquired and a large portion left out there would be diminution. in the value of land that is left out for which some compensation has to be allowed. [214 B]

vil Appeals Nos. 883 to 892 of 1966. Appeals by special leave from the judgment and order dated December 3, 1964 of the Orissa High Court in Special Jurisdiction Cases Nos. 44 and 53 of 1963. C.K. Daphtary and D.N. Mukherjee, for the appellant (in all the appeals). D. Narsaraju and R.N. Sachthey, for the respondent (in all the appeals). C.J. M/s Hindustan Steel Ltd., a Company incorporated under the Indian Companies Act, 1913 is a Government of India undertaking in the public sector. The Company is registered as a dealer under the Orissa Sales Tax Act 14 of 1947, from the last quarter ending March 1959. Between 1954 and 1959 Company was erecting factory buildings for the steel plant, residential buildings for its employees and ancillary works such as roads, water supply, drainage. Some constructions were done departmentally and the rest through contractors. The Company supplied to the contractors for use in construction, bricks, coal, cement, steel etc. for consideration and adjusted the value of the goods supplied at the rates specified in the tender. In proceedings for assessment of tax under the Orissa Sales Tax Act, 1947, the Sales Tax Officer held that the Company was a dealer in building material, and had sold the material to contractors and was on that account liable to pay tax at the appropriate rates under the Orissa Sales Tax Act. The Sales Tax Officer directed the Company to pay tax due for ten quarters ending December 31, 1958 and penalty in addition to the tax for failure to register itself as a dealer. The Appellate Assistant Commissioner confirmed the order of the Sales Tax Officer. In second appeal the Tribunal agreed with the tax authorities and held that the Company was liable to pay tax on its turnover from 755 bricks, cement and steel supplied to the contractors. The Tribunal however substantially reduced the penalty imposed upon the Company. At the instance of the Company the Tribunal referred six questions to the High Court of Orissa under section 24(1) of the Orissa Sales Tax Act, 1947. The questions were: "A. Whether in the facts and circumstances of the case Messrs. Hindustan Steel Ltd. can be held to be a 'dealer ' within the meaning of section 2(c) of the Orissa Sales Tax Act ? B. Whether the sale of materials by the Company to different contractors working for the company for which sales tax is sought to be assessed amounts to 'sale ' within the meaning of section 2(g) of the Act ? C. Whether the accrual of some profit in the absence of any motive to make such profit can make the assessee a 'dealer ' under the Act and whether in the circumstances of the case, the Tribunal was justified in coming to a finding that there was profit making motive on the part of the Company ? D. Whether in view of the definition contained in section 2, cl. (h) as it stood prior to the amendment of the provision by Act 18 of 1959, the supplies of materials can be treated as 'sale price ' in the hands of the assessee ? E. Whether in the facts and circumstances of the case. the amount received by the assessee in respect of tender forms can be said to be 'sale price '? F. Whether the Tribunal is right in holding that penalties under section 12(5) of the Act had been:rightly levied and whether in view of the serious dispute of liability it cannot be said that there was sufficient cause for not applying for registration ?" The High Court answered the questions A, B, C, D and F in the affirmative and question E in the negative. In these appeals filed with special leave substantially three matters fall to be determined: 1. Whether the Company sold building material to the contractors during the quarters in question ? 756 2. Whether the Company was a dealer in respect of building material within the meaning of the Orissa Sales. Tax Act ? 3. Whether imposition of penalties for failure to register as a dealer was justified ? Solution of the first and third matters does not present much difficulty. At the relevant time 'sale ' was defined by section 2(g) of the Orissa Sales Tax Act as follows : "Sale ' means, with all its grammatical variations and cognate expressions, any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods involved in the execution of contract, but does not include a mortgage hypothecation charge or pledge: . . . . . . The Company supplied building material to the contractors at agreed rates. There was concurrence of the four elements which constitute a sale (1) the parties were competent to contract; (2) they had mutually assented to the terms of contract; (3) absolute property in building materials was agreed to be transferred to the contractors; and (4) price was agreed to be adjusted against the dues under the contract. No serious argument was advanced before us that the supply of building material belonging to the Company for an agreed price did not constitute a sale. Under the Act penalty may be imposed for failure to register as a dealer: section 9(1) read with section 25(1)(a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasicriminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Those in charge of the affairs of the Company in failing to register the Company as a dealer acted in the honest and 757 genuine belief that the Company was not a dealer. Granting that they erred, no case for imposing penalty was made out. Liability to pay sales tax is imposed by section 4 of the Act. Every dealer whose gross annual turn over exceeds Rs. 10,000/is liable to pay tax during the ten quarters in question. The expression "dealer" was defined at the relevant time as meaning: "Dealer ' means any person who executes any contract or carries on the business of selling or supplying goods in Orissa whether for commission, remuneration or otherwise and includes any firm or Hindu Joint family, and any society, club or association which sells or supplies goods to its members. Explanation . . . . " A person to be a dealer within the meaning of the Act must carry on the business of selling or supplying goods in Orissa. The expression "business" is not defined in the Act. But as observed by this Court in State of Andhra Pradesh vs Abdul Bakhi and Bros. (1) "The expression 'business ' though extensively used is a word of indefinite import, in taxing statutes. it is used in the sense of an occupation, or profession which occupies the time, attention and labour of a person, normally with the object of making profit. To regard an activity as business there must be a course of dealings, either actually continued or contemplated to be continued with a profit motive, and not for sport or pleasure . " The sales tax authorities and the Tribunal have held that the Company was carrying on business of selling or supplying materials to the contractors and with that view the High Court agreed. The Company purchased bricks manufactured by its own contractors and sold the bricks to the building contractors at a flat 30% premium over the purchase price in the case of "second class bricks" and 25% premium in the case of "First class bricks". Steel, cement and other materials were initially supplied at 3 1/2% premium over the purchase price paid by the Company. It was contended on behalf of the Company that merely because the price charged to the contractors exceeded the price paid by the Company for acquiring the materials, motive of the Company to carry on business in building materials for profit, cannot be inferred. The Company, it is true, maintained no separate accounts relating to the expenditure incurred by it for (1) ; 758 overhead and other charges in respect of those materials. Before the sales tax authorities counsel for the Company also conceded that the Company had not maintained separate accounts from which. it could be proved that the transactions of supply of bricks, cement, steel and other commodities resulted in no profit. The High Court observed: "It is the Stores Department of the company as a whole which deals with the purchase, storage and sale of all the goods required both for acquisition and issue of materials to be used for the construction and operation work of the Company . . the. Company had to construct not only the buildings but also roads, railways, etc., acquire machinery and perform other multifarious activities connected with the establishment of steel plants and construction of the township. There is nothing in the statement to show that the Company had at any time even contemplated the allocation of the total expenditure incurred for the maintenance of its Stores Department between the expenditure incurred in respect of the goods namely bricks, cement, steel etc. and other goods. If such allocation was not even contemplated, it will be unreasonable to say that when these goods were sold to the building contractors at the prices mentioned above, the intention of the Company was merely to utilise the difference in price to meet the overhead charges in respect of these articles and that there was no profit making motive. " It is unfortunate that in submitting the statement of case the Tribunal stated no facts at all, and merely submitted the question which was submitted by the Company and the question which, in the view of the Tribunal, arose out of the order. Even in the order deciding the appeal, the facts found on which the conclusion was based were not clearly set out. The Tribunal observed that though the primary object of the Company was to establish a steel plant, the Memorandum authorised the Company to carry on "any trade or business" that it thought would be conducive to its interest. Observed the Tribunal: "Judged in this light one cannot find anything wrong if in the initial stages when construction works were going on, the Company thought it prudent that instead of keeping its employees idle and bearing the cost of maintenance without any return, utilised them in some subsidiary business which would promote the interest of the Company and bring some return. With that end 759 in view the company could as well have brought contractors to manufacture bricks in its lands, purchased the same from them, purchased cement, coal and other materials from dealers, opened a stores department and kept those materials so procured in its stores and thereafter effected sales of the materials to outsiders including its contractors. The Company knew that for speedy construction of its buildings and factory the contractors would require these materials and so the Company would not lose if it entered into such business. Rather that business would be in the interest of the Company. If the Company had no idea to enter into any business. there was no reason why it should have brought contractors to manufacture bricks, purchased the entire stock from them, stocked the same and thereafter sell the same to its building contractors. " But in so observing a very important piece of evidence appears to have been ignored by the Tribunal. Annexed to the form of the tender submitted by the contractors there are certain "general rules. and directions for the guidance of contractors." Paragraph8 slated: "The memorandum of work tendered for, and the schedule of materials to be supplied by the H.S. Ltd. and their issue rates, shall be filled in and completed in the office of the Divisional Officer before the tender form is issued. If a form is issued to an intending tenderer without having been so filled in as completed he shall request the office to have this done before he completes and delivers his tender." Then follow the conditions of contract of which condition No. 10 is material; it states "If the specification or estimates of the work provides for the use of any special description of materials to be supplied from the Engineer in Charge 's store, or if it is required that the contractor shall use certain stores to be provided by the Engineer in Charge (such materials or stores, and the prices to be charged therefor as hereinafter mentioned being so far as practicable for the convenience of the contractor, but not so as in any way to control the meaning or effect of this contract specified in the schedule or memorandum hereto annexed), the contractor shall be supplied with such materials and stores as required from time to time to be used by him for the purpose of the contract only, and the value of the full quantity of materials and stores so 760 supplied at the rates specified in the said schedule or memorandum may be set off or deducted from any sums then due, or thereafter to become due to the contractor under the contract, or otherwise or against or from the security deposit. All materials supplied to the contractor shall remain the absolute property of the Company, and shall not on any account be removed from the site of the work, and shall at all times be open to inspection by the Engineer in Charge. Any such materials unused and in perfectly good condition at the time of the completion or determination of the contract shall be returned to the Engineer in Charge 's store, if by. a notice in writing under his hand he shall so. require;. . . " Attached to the tender form is the schedule which recites: "Recovery of rates of materials to be supplied by H.S.L., for the work of: (1) Construction of brick masonry compound wall around plant area. Northern section Length 2.4. miles. (2) Construction of brick masonry compound wall around plant area. Southern section Length 2.30 miles. (3) Construction of brick masonry compound wail around plant area. Marshalling yard section Length 4.15 miles . " It is followed by a table which sets out the Serial No. of the articles to be supplied, description of materials unit, rate and place of delivery. It is clear from the terms of the tender and the schedule annexed thereto that the Company was to charge certain rates for the materials to be supplied by it. One of the contracts which has been produced before this Court states under the head "Rate": Rs. 5.94+3 1/2% storage charges against "cement in bags," Rs. 800.00+3 1/2% storage charges against "structural steel and M.S. rods", and "Rs. 41.25 for 1000 bricks" against "first class bricks". Apparently 3 1/2% over the specified rate was agreed to be paid by the contractors as storage charges in respect of cement and structural steel and M.S. rods. No. specific percentage was set out in respect of the bricks and an inclusive price was made chargeable. Relying upon the terms of the schedule, counsel for the Company contends that the contractors and the Company expressly 761 agreed that 3 1/2% over the agreed price of the goods was chargeable as storage charges. It is common ground that the rate mentioned 'against cement and structural steel is the price at which the goods were purchased 'by the Company. If the Company was charging a fixed percentage on the price paid by it for procuring such goods for storage and other incidental charges, it would be difficult to resist the conclusion that the Company was not carrying" on the business o.f selling cement and structural steel. There is of course no statement in the schedule that the price charged by the Company in excess of the price paid by the Company to its contractors for bricks was in respect of storage charges. But neither the Tribunal nor the High Court has referred to this important piece of evidence and we are unable to decide these appeals unless we have an additional statement of facts in the light of the relevant evidence as to whether the excess charged over and above the price which the Company paid for procuring cement and steel (expressly called storage charge) and bricks was intended to be profit. If the Company agreed to charge a fixed percentage above the cost price, for storage, insurance and rental charges, it may be reasonably inferred that the Company did not carry on business of supplying materials as a part of business activity with a view to making profit. The Tribunal 's statement of case is bald and in recording its findings the Tribunal has ignored a very important piece of evidence. To enable us to answer the questions referred, it is. necessary that the Tribunal should be called upon to submit a supplementary statement of the case on the questions whether the Company charged any profit apart from the storage charges for supplying cement and structural steel, and whether the difference between the price charged to the contractors and the price paid by the Company to its suppliers for bricks was not m respect of storage and other incidental charges. The Tribunal to submit the supplementary statement of case to this Court, within three months from the date on which the papers reach the Tribunal. V.P.S, Directions given.

Between the years 1954 and 1959 the appellant company was erecting its factory buildings and other ancillary constructions through buildings contractors. The appellant arranged for the manufacture of bricks and sold those bricks to the building contractors for the purpose of the appellant 's constructions. The appellant also supplied for the same purpose steel, cement and other materials which it procured and stored. The difference between the sale price and the appellant 's cost price was a flat percentage of the cost price varying with the material. The sale price was agreed to be adjusted against the dues under the contract between the appellant and the building contractors. Treating the appellant as a dealer in the building materials the sales tax authorities under the Orissa Sales Tax Act. 1947, directed the appellant to pay sales tax for ten quarters ending with December 31, 1958, and a penalty. in addition to the tax, for failure to register itself as a dealer. The Tribunal agreed on the liability to pay tax, reduced the penalty, and the High Court, on reference, confirmed the Tribunal 's order. In appeal to this Court on the questions: (1) Whether the appellant sold building materials to the building contractors; (2) Whether the imposition of penalty for failure to register as a 'dealer ' was justified; and (3) Whether the appellant was a 'dealer ' in respect of the building material supplied by it, HELD: (1) The supply of building material belonging to the appellant for 'an agreed price constituted a 'sale ' as defined in section 2(g) of the Act as the definition stood at the relevant time. [756 E] (2) Under sections 9(1) and 25(1)(a) of the Act a penalty may be imposed for failure to register as a dealer. But the discretion to impose a penalty must be exercised judicially. A penalty will ordinarily be imposed in cases where the party acts deliberately in defiance of law, or is guilty of contumacious or dishonest conduct, or acts in conscious disregard of its obligation; but not, in cases where there is a technical o; venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. [756 E H] In the present case, those in charge of the affairs of the appellant, in failing to. register it as a dealer, acted in the honest and genuine belief that the company was not a dealer; and therefore, assuming the appellant to be a 'dealer ' no case for imposing penalty was made out. [757 A] (3) Under the terms of the tender submitted by the building contractors and the schedule annexed thereto, the appellant was to charge 754 certain rates for the materials supplied by it. The excess percentage over the specified rate in the case of building materials other than bricks was agreed to be paid by the contracto:rs as storage charges. There was nothing to show that the excess price charged by the appellant to its contractors for bricks was also for storage charges. But neither the Tribunal nor the High Court had referred to this aspect of the sale price namely whether the excess price was for storage or for profit with respect to any of the building materials. Therefore, merely because the price charged to the contractors exceeded the price paid by the appellant for procuring the building materials it cannot be inferred that the motive of the appellant was to carry on business in building materials for profit. [761 B E]

Appeal No. 559 of 1967. Appeal by special leave from the judgment and decree dated October 25, 1966 of the Allahabad High Court in Second Appeal No. 4275 of 1965. S.T. Desai, Naunit Lal and D.N. Misra, for the appellant. B.R.L. lyengar, S.K. Mehta, and K.L. Mehta, for the respondents. The Judgment of the Court was delivered by Vaidialingam, J. This appeal, by special leave, by the defendant appellant, is directed against the decree and judgment, dated October 25, 1966 of the Allahabad High Court in Second Appeal No. 4275 of 1965 holding that the order, dated March 10, 1964 passed against the respondent dismissing him from service, null and void and that he is entitled to. be reinstated with full pay and emoluments. The respondent plaintiff originally entered service with the appellant as a Technical Assistant in November 1958 and later he was promoted to the post of Warehouseman on October 15, 1959. He was confirmed in 1962 in the said post. Certain charges were framed against the respondent and pending the enquiry into those charges he was placed under suspension on 252 September 9, 1963. After an enquiry the respondent was found guilty and in consequence dismissed from service of the appellant by order dated March 10, 1964. The respondent instituted Civil Suit No. 201 of 1964 challenging the order of dismissal. According to him the various allegations made against him were vague and had not been established and there has been no proper enquiry conducted against him. The enquiry, according to him, was contrary to the principles of natural justice without giving him an opportunity to place his defence and it was also held in disregard of cl. 16 of the Regulations framed by the appellant. He also claimed that he was entitled to the protection under article 311 of the Constitution. On these allegations the plaintiff prayed for a declaration that the order, dated March 10, 1964 .dismissing him from service, was null and void and that he was entitled to be reinstated with full pay and other emoluments. The appellant defendant, in its written statement, pleaded that the enquiry into the charges leveled .against the plaintiff was made properly and in compliance with the provisions of the Regulations and the plaintiff respondent had been given full opportunity to participate. in the enquiry which he also did. The appellant pleaded that the ' respondent was no.t entitled to the protection of article 311 of the Constitution. It also pleaded that the order of dismissal passed against the respondent was perfectly justified and that the suit was false and had to be dismissed with costs. The trial Court held that the plaintiff was no.t entitled to the protection under article 311 of the Constitution. But it held that in conducting the enquiry, the Enquiry Officer did not comply with the provisions of sub cl. (3) of el. 16 of the Regulations framed by the appellant and that there had been a violation of the rules of natural justice. In consequence the trial Court held that the order dismissing the plaintiff was illegal; but in considering the question as to whether the plaintiff was also entitled to the further relief claimed by him, viz., of reinstatement with full pay and emoluments, the trial Court was of opinion that in view of section 21 of the the plaintiff was not entitled to that relief. Ultimately the Trial Court granted a declaration, by its judgment dated March 24, 1965 that the order of dismissal dated March 10, 1964 was void and ineffective and decreed the suit with costs. The appellant challenged this decision in appeal before the Civil Judge, Manipuri, in Civil Appeal No. 69 of 1965. The respondent filed a Memorandum of Cross Objections challenging the decree of the trial Court declining his relief for reinstatement with full pay. The learned Civil Judge, by his decree and judgment dated September 4, 1951 dismissed the appeal and 253 allowed the Memorandum of Cross Objections filed by the respondent. The result was that the plaintiff 's suit was decreed, granting both the reliefs as prayed for by him. The appellant again challenged the decrees of both the lower Courts before the Allahabad High Court in Second Appeal No. 4275 of 1965. The High Court has, by its judgment dated October 25, 1966 dismissed the appeal. It agreed with the findings recorded by the two Subordinate Courts that the enquiry proceedings are vitiated by a violation of the principles of natural justice and also not being in accordance with Regulation No. 16 ( 3 ). Regarding the declaration for reinstatement, the High Court was of the view that the rules and the; Regulations framed under the (Act 28 of 1956) (hereinafter called the Act) had statutory force and that as there had been a violation of Regulation No. 16 ( 3 ) , the plaintiff was entitled to the declaration. Mr. S.T. Desai, learned counsel for the appellant Corporation raised two contentions: (1 ) A full and fair opportunity was given to the respondent in the enquiry held against him and there has been no violation of Regulation No. 16(3). The finding on this point by the High Court and the Subordinate Courts is erroneous. (2) Even on the basis that the enquiry is vitiated by non complianCe with the provisions of Regulation No. 16(3) framed by the Corporation, the relief declaring that the plaintiff is entitled to be reinstated in service with full pay should not have been granted as by doing so the Courts have departed from the normal rule that the specific performance of a contract of personal service will not be enforced. In any event, counsel urged that there are No. special circumstances justifying the grant of that relief in this case. Mr. B.R.L.Iyengar, learned counsel for the respondent, pointed out that the findings that the enquiry held was not in accordance with Regulation No. 16(3) and that there has been a violation of the principles of natural justice, are concurrent findings recorded by all the Courts and those: findings are fully supported by the evidence on record. Regarding the second contention, Mr. Iyengar pointed out that when an order of dismissal has been passed in violation of a statutory provision as in this case the Regulations a declaration granted in favour of the respondent is justified. The first contention raised by Mr. Desai relates to the: question as to whether the enquiry held against the plaintiff was in accordance with sub el. ( 3 ) of Regulation 16 of the Regulations framed by the appellant and whether the enquiry is vitiated by 254 a violation of the principles of natural justice. All the Courts have held that the respondent is not entitled to the protection under article 311 of the Constitution. Therefore the only question for consideration is whether the enquiry has been properly conducted in accordance with Regulation No. 16(3). As pointed out by Mr. Iyengar, the findings on facts on this point have been recorded concurrently by all the Courts as against the appellant. It is now necessary to briefly refer to some of the provisions of the Act under which the appellant has been constituted and is functioning, as also the Regulations framed by the Board. The Act is one to provide for the incorporation and regulation of corporations for the purpose of development and warehousing of agricultural produce on cooperative principles and for matters connected therewith. Section 2 defines certain expressions, including 'appropriate Government ', 'Board ', 'Central Warehousing Corporation ', 'prescribed ', 'State Warehousing Corporation ' and 'Warehousing Corporation '. The expression 'Board ' means the National Co operative Development and Warehousing Board established under section 3. 'State Warehousing Corporation ' (the appellant is one such) means a Warehousing Corporation for a State established under section 28. Section 3 provides for the establishment by the Central Government of a Corporation by the name of National Co operative Development and Warehousing Board. Section 17 provides for the Central Government establishing a Corporation by the name of Central Warehousing Corporation. Section 28 provides for the State Government establishing a Warehousing Corporation for the State. As pointed out earlier, the appellant is the Warehousing Corporation for the State of Uttar Pradesh, established under this section. Section 34 lays down the functions of a State Warehousing Corporation. Section 35 provides for the; composition of the Executive Committee of a State Warehousing Corporation. Section 52 gives power to the appropriate Government to make rules to carry out the purposes of the Act and sub section (2) deals with the various matters in respect of which rules may be framed without prejudice to the generality of the power contained in sub section ( 1 ). Sub section (3 ) provides that all rules made by the appropriate Government under section 52 shall, as soon as may be after they are made, be laid before both Houses of Parliament or the Legislature of the State as the case may be. Section 53 gives power to the Board to make regulations not inconsistent with the Act and the rules made thereunder, and those regulations may provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of the Act. Apart from the generality of this power, sub section (2) specifies the various matters regarding which regulations may be 255 framed. Section 54 gives power to the Warehousing Corporations to make regulations. not inconsistent with the Act and the rules made thereunder, and those regulations may provide for a11 matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of the Act. Apart from this general power, sub section (2) enumerates the various matters in respect of which regulations can be framed. Under section 54 the appellant Corporation had framed regulations. Those regulations. are the Uttar Pradesh State Warehousing Corporation Regulations, 1961 (hereinafter called the Regulations). We shall now proceed to consider the provisions of the Regulations. Clause 1 (3) of the Regulations provides that the Regulations. shall apply to all employees of the Corporation and to the personnel employed on contract in respect of all matters not regulated by the contract. Clause 2 defines the various expressions. Chapter II of the Regulations deals with the appointing authority, probation and termination of service. Regulation 11 deals with termination of service. Chapter IV deals with discipline '. Subcl. ( 1 ) of regulation 16 provides for the imposition of penalties as against an employee found guilty of the various acts mentioned therein. Sub cl. (3) of regulation 16, which is relevant for the present purpose, is as follows: "(3) No punishment other than that specified in sub para (1)(a), (1)(b) or (1)(c) shall be imposed on any employee without giving him an opportunity for tendering an explanation in writing and cross examining the witnesses against him, if any, and of producing evidence in defence: Provided that punishment to an employee on deputation from the Central Government , a State Government or a Government Institution shall be imposed only in accordance with the procedure and rules laid down in this behalf in his parent service. " Sub paras (1)(a), (1) (b) and (1) (c) referred to therein are the penalties of (a) fine; (b) censure; and (c) postponment or stoppage of increments or promotion. In this case as the punishment imposed is one of dismissal of the appellant should have followed the procedure indicated in sub cl. (3) of regulation 16 extracted above. Under this sub clause, it has to be noted that an employee on whom a punishment other than that specified therein is to be imposed, has to. be given an opportunity of tendering his explanation in writing and cross examining witnesses against him, if any, and producing evidence in defence. The grievance of the respondent regarding the conduct of the 256 enquiry, apart from other objections, is 'that materials collected by the Enquiry Officer behind his back were not made: known to him and that information had been taken into account for holding him guilty. His further objection is that he did not get any opportunity to adduce evidence in his defence and that the various persons from whom information had been gathered by the Enquiry Officer were not tendered for cross examination by him. It is not necessary for us to go elaborately into the various proceedings connected with the giving of the charge sheet, the explanation offered by the appellant and the final conclusions arrived at by the Enquiry Officer on the basis of which the respondent has been dismissed from service. As pointed out by Mr. Iyengar, all the Courts have concurrently held that the enquiry is vitiated and has been held contrary to regulation 16(3 ). It is enough therefore, in the circumstances, to note that the Enquiry Officer Sri F.A. Abbasi who has given evidence has admitted that he did not take in evidence in respect of any charge and that he considered the records as sufficient for giving findings on the charges. He has also admitted that he met various persons and collected information and that information has been incorporated in his enquiry report. He has further admitted that the information so collected by him was not put to the plaintiff, and has stated that he based his findings in the report against the respondent on the basis of the enquiries made by him of the police and other persons. In the: face of these admissions, it is idle for Mr. Desai to urge before us, that the findings of the High Court and the Subordinate Courts that there has been a violation of regulation 16(3) in the enquiry proceedings cannot be sustained. IOn the other hand, we are of opinion that the finding is amply .justified by the evidence on record. Mr. Desai made a feeble: attempt to sustain the order dated March 10, 1964 as one passed under regulation 11 and not under regulation 16. We have no hesitation in rejecting this contention. Regulation 11, as we have already pointed out, is in Chapter II, and deals with termination of service simpliciter and, even in such circumstances, it provides in the case of a permanent employee that his services can be terminated only after apprising the employee of the reasons therefore and asking him to furnish explanation and after consideration of the explanation and then giving the employee a final notice to. show cause against the proposed termination of service. This clause, in our opinion, deals with a termination, other than by way of punishment, and the procedure indicated therein is quite simple. On the other hand, regulation 16 appears in Chapter IV dealing with discipline. An order of dismissal passed after following the procedure indicated therein, attaches a stigma on the employee concerned. Having issued a charge sheet and made a farce of 257 an enquiry and then dismissed the employee after holding him guilty, cannot certainly be considered to be termination of the employee 's service under regulation 11. That action was taken by way of disciplinary proceedings. is clear from the fact that an order suspending the respondent, pending the enquiry, was passed on November 9, 1963. The same order further directed that the respondent will receive only subsistence allowance during the period of suspension. The order of suspension must be related to regulation 17 and the grant of subsistence allowance must be referred to .regulation 18, both of which occur in Chapter IV relating to discipline. Therefore it follows that the first contention of Mr. S.T. Desai cannot be accepted. Mr. Desai next urged that even on the basis that the order of dismissal had been passed in violation of regulation 16(3), the decree granting a declaration for reinstatement of the respondent with full pay and emoluments is illegal as amounting to enforcing a contract of personal service. Alternatively Mr. Desai urged that in any event there are no special circumstances existing in this. case justifying the grant of such a declaration. Mr. Desai developed his contentions as follows: The relationship between the appellant and the respondent is that of a master and servant. A breach of regulation 16(3) will at the most result in the order of dismissal being wrongful. The remedy, if any, of the aggrieved party in such a case will only be a claim for damages for breach of contract. The counsel further urged that Courts have. jurisdiction to declare the decision of a statutory body given in violation of a mandatory statutory obligation relating to dismissal of a 'servant as ultra vires and void. Even in such circumstances, it was urged, the jurisdiction to grant a declaration which will result in continuity of service is granted only under very special circumstances which require the departure from the general rule that a contract of service will not be specifically enforced. According to the counsel, the rules framed under section 52 of the Act by the appropriate Government may have statutory force and effect if they are of such a nature as to require mandatory compliance; but, according to him, the regulations framed by a Warehousing Corporation do not create any such statutory obligation of a mandatory nature. Hence a termination of service by an employer even in breach of conditions of service laid down by the regulations would only attract the general law of master and servant and cannot result in a declaratory decree about continuity of service being granted. In any event, the counsel urged that a declaration should not have been granted as there are no special circumstances warranting the grant of such a relief in this case. Counsel pointed out that the 258 respondent entered service only in November 1958 and he has been removed from service in 1964 and it is not claimed by the respondent that he will not be able to take up service elsewhere. In short, according to Mr. Desai, the grant of the. relief of declaration by way of reinstatement is erroneous. Mr. B.R.L. Iyengar, learned counsel for the respondent, urged that the regulations have been framed by the Warehousing Corporation under section 54. One of the matters in respect of which regulations may be framed is in regard to the conditions of service of the employees of a Warehousing Corporation. It is by virtue of that power that the regulations called Staff regulations have been framed. By virtue of cl. (3) of regulation 1, they apply to all employees. of the Corporation and to the personnel employed on contract in respect of all matters not regulated by the contract. Those. regulations deal with various matters relating to the service conditions of the employees. Chapter IV deals with discipline and cl. (3) of regulation 16 makes it imperative and obligatory on the Corporation to comply with 'those provisions before punishment other than those punishments specified therein is imposed against an employee. The regulations, according to Mr. Iyengar, having been framed under the Act, have statutory effect and they impose statutory obligation of a mandatory nature on the appellant Corporation in respect of the procedure to be adopted for taking disciplinary action. On the findings recorded by all the ' Courts, it is clear that there has been a violation of cl. (3) of regulation 16, in which case it follows that the respondent was entitled to get a declaration that the order of dismissal is void and of no effect. Counsel also pointed out that the respondent 's services have been arbitrarily and mala fide terminated by the appellant and ;therefore, there are sufficient circumstances. for departing from the normal rule that a contract of personal service will not be specifically enforced. The question as to when and under what circumstances a relief by way of declaration regarding continuity of service, after holding that an order of dismissal is void or ultra vires, can be given, has been considered both m England and here. The leading decision of the House of Lords which is generally invoked in support of the view that such a declaration can be granted is the decision in Vine ' vs National Dock Labour Board(1). This decision has also been referred to by this Court in some of its decisions, to which we shall refer presently. The case before the House of Lords in the decision referred to above arose under the following circumstances. The plaintiff was a registered dock (1) 259 worker employed in the reserve pool by the National Dock Labour Board under a scheme set up under the Dock Workers (Regulation of Employment) Order, 1947. In 1948, the National Board, approved the delegation of powers to disciplinary committees set up by local boards. The plaintiff failed to obey a valid order to report for work with a company of stevedores and, in consequence, the local board instructed their disciplinary committee to hear the case. The disciplinary committee, having heard the case, gave notice in writing to the plaintiff terminating his employment. The plaintiff instituted the action claiming damages for wrongful dismissal and also prayed for a declaration that the order of dismissal was illegal, ultra vires and invalid. The Court of first instance granted both damages and declaration; but on appeal, by the National Board, the Court of Appeal struck out the declaration granted to the plaintiff. The plaintiff appealed to the House of Lords against the striking out of the declaration and the National Board cross appealed against the finding that the: dismissal was invalid and also against the award of damages. The House of Lords held that the declaration granted by the trial Judge was properly made as the order of dismissal was a nullity since the local board had no power to delegate its. disciplinary functions. The cross appeal filed by the National Board was dismissed. Viscount Kilmuir, L.C., in considering the question regarding the grant of declaration, observes at p. 943 that the discretion in ,,ranting a declaratory judgment should not be exercised save for good reason and then, summarising the reasons for granting the declaration, states at p. 944: "First, it follows from the fact that the plaintiff 's dismissal was invalid that his name was never validly removed from the register, and he continued in the employ of the National Board. This is an entirely different situation from the ordinary master and servant case. There, if the master wrongfully dismisses the servant, either summarily or by giving insufficient notice, the employment is effectively terminated, albeit in breach of contract. Here, the removal of the plaintiff 's name from the register being, in law, a nullity, he continued to have the fight to be treated as a registered dock worker with all the benefits which, by statute, that status conferred on him. It is, therefore, right that with the background of this scheme, the court should declare his rights." At p. 948, Lord Keith of Avonholm states: "This is not a straightforward relationship of master and servant. Normally, and apart from the interven 260 tion of statute, there would never be a nullity in terminating an ordinary contract of master and servant. Dismissal might be in breach of contract and so unlawful but could only sound in damages. Here we are concerned with a statutory scheme of employment . The scheme gives the dock worker a status. Unless registered, he is deprived of the opportunity of carrying on what may have been his lifelong employment as a dock worker, and he has a right and interest to challenge any unlawful act that interferes with this, status. If the actings here complained of were a nullity, Mr. Vine (hereinafter called 'the plaintiff '), in my opinion, has a clear right to have that fact declared by the court. " It will be noted that the House of Lords, in the decision referred to above, have emphasized that orders striking off the plaintiff from the: register was not considered a simple case of a master terminating the services of the servant, but, on the other hand, was treated as one affecting the status of the plaintiff and whose services have been terminated by an authority which had no power to so terminate and, as such, the order was treated as void. The House of Lords have also emphasised that due to the intervention o.f the statute which safeguards the right of the dock worker, the order not being in accordance with the statute, must be treated as a nullity. It was under those circumstances that the House of Lords restored the decree of the Court of first instance granting a declaration regarding the continuity of service of the plaintiff therein. It must again be emphasised that the order, the validity of which was considered by the House of Lords, was treated as a nullity. The question whether a dismissed employee can ask for a declaration that his. employment had never been validly terminated, again came up for consideration in Barber vs Manchester Hospital Board(1). In that case a Regional Hospital Board passed an order terminating the plaintiffs employment as a medical consultant in the hospital. The plaintiff brought an action against the Board claiming declaration that his employment had never been validly determined and he also claimed damages for breach of contract or wrongful dismissal. The Court held that the plaintiff 's contract with the Board was. one between master and servant and the order of termination of his services. could not be treated as a nullity. In this view the plaintiff 's claim for a declaration that his employment had never been validly determined was not granted; but the plaintiff was awarded damages (1) 261 for breach of contract. It was contended on behalf of the plaintiff that when passing the order terminating his services the procedure indicated in cl. 16 of the terms and conditions of service of hospital medical staff has been violated by :he original hospital Board and therefore the order of termination never became effective and the plaintiff continued to be still in service as the order was a nullity. On behalf of the plaintiff reliance was placed on the decision in Vine 's Case(1). Repelling this contention, Barry, J., observes, at p. 331: ". I am unable to equate this case to the circumstances which were being considered by the Court of Appeal and the House of Lords in Vine vs National Dock Labour Board(1). There the plaintiff was working under a code which had statutory powers, and, clearly, in those circumstances, all the lords of appeal who dealt with the case in the House of Lords took the view that the case could not be dealt with as though it were an ordinary master and servant claim in which the rights of the parties were regulated solely by contract. Here, despite the strong statutory flavor attaching to the plaintiff 's contract, I have reached the conclusion that in essence it was an ordinary contract between master and servant and nothing more. " In this view the Court finally held that the plaintiff 's only remedy was to recover damages as for breach of contract. A similar question regarding the right of a dismissed employee to get a declaration of his right to continue in employment came up for consideration before the Privy Council in Francis vs Municipal Councillors etc. (" '). The plaintiff in that case was in the service of the Municipal Councillors of Kuala Lumpur and, by section 16(5) of the Municipal Ordinance (Extended Application) Ordinance, 1948, the President had power to dismiss him. The plaintiff was dismissed. The Privy Council held that the plaintiff had been wrongly dismissed and that his remedy lay in a claim for damages. The plaintiff sought a further declaration that he had a right to continue in employment notwithstanding the order of dismissal. Rejecting this claim the Privy Council observed, at p. 637: "In their Lordships ' view, when there has been a purported termination of a contract of service a declaration to the effect that the contract of service still subsists will rarely be made. This is a consequence of the general principle of law that the courts will not grant (1)(1956) ; (2) CI/70 5 262 specific performance of contracts of service. Special circumstances will be required before such a declaration is made and its making will normally be in the discretion of the court. In their Lordships ' view there are no circumstances in the present case which would make it either just or proper to make such a declaration. " The Privy Council distinguished the particular circumstances that existed before the House of Lords in Vine 's case (1) and finally held at p. 638: "In their Lordships ' view the circumstances of the present case are not comparable with those in Vine 's case (1) and are not such as to make it appropriate to give a declaratory judgment in the manner contended for on behalf of the appellant. The appellant 's employment must be treated as having in fact come to and end on Oct. 1, 1957 'and the appellant 's remedy lay in a claim for damages. " From a review of the English decisions, referred to above, the position emerges as follows: The law relating to master and servant is clear. A contract for personal service will not be enforced by an order for specific performance nor will it be open for a servant to refuse to accept the repudiation of a contract of service by his master and say that the contract has never been terminated. The remedy of the employee is a claim for damages for wrongful dismissal or for breach of contract. This is the normal rule and that was applied in Barber 's case (2) and Francis ' case (2). But, when a statutory status is given to an employee and there has been a violation of the provisions of the statute while terminating the services of such an employee, the latter will be eligible to get the relief of a declaration that the order is null and void and that he continues to be in service, as it will not then be a mere case of a master terminating the services of a servant. This was the position in Vine 's case.(1) The question has also been considered by this Court in certain decisions, to which we will immediately refer. In Dr. S.B. Dutt vs University of Delhi(4) this Court had to consider the legality of an award directing that an order of dismissal was ultra vires, mala fide and of no effect and that the appellant in that case continued to be a Professor of the University. The appellant, Dr. Dutt, who was a Professor in the University of Delhi, was .dismissed from service by the latter. He referred the dispute regarding his dismissal and certain other disputes to arbitration, (1) (2) (3) (4) 263 under section 45 of the Delhi University Act. An award was made which decided that the appellant 's "dismissal was ultra vires, mala fide, and has no effect on his status. He still continues to be a professor of the University". The said award was made a rule of Court by the Subordinate Judge of Delhi. The University of Delhi challenged this decision on appeal and the Punjab High Court, which ultimately heard the appeal, set aside the award on the ground that such a declaration amounted to specific enforcement of a contract of personal service forbidden by section 21 of the and therefore disclosed an error on the face of the award. On appeal, this Court, agreeing with the reasoning of the High Court, observed at p. 1242: "There is no doubt that a contract of personal service cannot be specifically enforced. Section 21, cl. (b) of the , i 877, and the second illustration under this clause given in the section make it so clear that further elaboration of the point is not required. It seems to us that the present award does purport to enforce a contract of personal service when it states that the dismissal o.f the appellant 'has no effect on his status ', and 'he still continues to. be a Professor of the University '. When a decree is passed according to the award, which if the award is unexceptionable, has to be done under section 17 of the Arbitration Act after it has been flied in Court, that decree will direct that the award be carried out and hence direct that the appellant be treated as still in the service of the respondent. It would then enforce a contract Of personal service, for the appellant claimed to be a professor under a contract of personal service, and so offends. 21 (b)? ' On behalf of the appellant, reliance was placed on the decision of the Judicial Committee in The High Commissioner for India vs I. M. Lall (1) in support of the contention that a declaration that the appellant continued in service under the University of Delhi in spite of the order of dismissal was a declaration which the law permitted to be made and was not therefore erroneous. Dealing with this contention and referring to the decision of the Judicial Committee, this Court observed at p. 1244: "That was no.t a case based on a contract of personal service. The declaration did no.t enforce a contract of personal service but proceeded on the basis that the dismissal could only be eff ected in terms of the statute and as that had not been done, it was a nullity, from which the result followed that the respondent had continued in service. All that the Judicial Committee did (1) (1948) L.R. 75 I.A. 225. 264 in this case was to make a declaration of a statutory invalidity of an act, which is a thing entirely different from enforcing a contract of personal service. " Holding that 'it was not the appellant 's case before the arbitrator that the dismissal was ultra vires the statute or otherwise a nullity ', this Court ultimately confirmed the judgment of the High Court setting aside the award. The jurisdiction of the Courts to grant a declaration in a particular case that an order of dismissal is void and that the dismissed employee continues to remain in service, again came up for consideration before this Court in S.R. Tewari vs District Board, Agra(1). In that case, the appellant 's service as an Engineer under the District Board, Agra, was terminated by the latter, after giving salary for three months in lieu of notice. The appellant, after having unsuccessfully appealed against the order of termination to the State Government, initiated proceedings under article 226 before the Allahabad High Court for a writ of certiorari for quashing the order of the District Board dismissing him from service and also sought a writ in the nature of mandamus commanding the District Board and the State of Uttar Pradesh to treat him as the lawfully appointed engineer, and not to give effect to the order terminating his service. The High Court dismissed the writ petition holding that the employee had been properly dismissed from service. The employee came up to this Court in appeal. On behalf of the District Board, the respondent therein, it was contended that the remedy of the appellant, if any, was only to institute a suit for damages for wrongful termination of employment and that he was not entitled to pray for a declaration that the termination of employment was unlawful and a consequential order for restoration in service. The decision in Dr. Dutt 's case (2) among other decisions, was relied on in support of this contention. This Court negatived that contention and stated the position in law as follows: "Under the common law the Court will not ordinarily force an employer to retain the services of an employee whom he no longer wishes to employ. But this rule is subject to certain well recognized exceptions. It is open to the Courts in an appropriate case to declare that a public servant who is dismissed from service in contravention of article 311 continues to remain in service, even though by so doing the State is in effect forced to continue to employ (1) ; (2) ; 265 the servant whom it does. not desire to employ. Similarly under the industrial law, jurisdiction of the labour and industrial tribunals to. compel the employer to employ a worker, whom he does not desire to employ, is recognized. The Courts are also invested with the power to declare invalid the act of a statutory body, if by doing the act the body has acted in breach of a mandatory obligation imposed by statute, even if by making the declaration the body is compelled to do something which it does not desire to do. " Vine 's Case(1) which was relied on before the Court was distinguished on the ground that the purported order of dismissal therein which was set aside was a nullity since the local Board in that case had no power to delegate its disciplinary function. Again, the decision in Dr. Dutt 's Case(2) was stated to be not case in which the invalidity of an act done by the University on the ground that it infringed a statutory provision fell to be determined and the rights and obligations of the parties rested in contract and therefore the award was declared to be one contrary to the rule contained in section 21(b) of the and hence void. This Court, wound up the discussion in Tewari 's Case(3) as follows, at p. 62: "The jurisdiction to declare the decision of the Board as ultra vires exists, though it may be exercised only when the Court is satisfied that departure is called for from the rule that a contract of service will not ordinarily be specifically enforced." On facts, this Court held that the order of dismissal of the appellant before them was proper and justified. From the two. decisions of this Court, referred to above, the position in law is that no declaration to enforce a contract of personal service will be normally granted. But there are certain well recognized exceptions to this rule and they are: To grant such a declaration in appropriate cases regarding (1) A public servant, who has been dismissed from service in contravention of article 311. (2) Reinstatement of a dismissed worker under Industrial Law by Labour or Industrial Tribunals. (3) A statutory body when it has acted in breach of a mandatory obligation, imposed by statute. The case of the respondent before: us does not come under either the first or the second category. The question then is: Is he entitled to relief under the third category ? (2) (2) ; (3) ; 266 Mr. S.T. Desai pointed out that by the appellant conducting an enquiry and passing an order of dismissal in violation of regulation 16(3), it cannot be stated that it has acted in breach of any mandatory provision of the Act resulting in the order being declared as void or ultra vires. The non compliance with the regulations, at the most, will result in the order of dismissal being wrongful attracting the normal rule in such matters of making the appellant liable for damages. Even otherwise., this is not a proper case for grant of the declaration asked for by the plaintiff. In our opinion, the position taken up by Mr. Desai finds support in the decisions referred to above. Mr. B.R.L. Iyengar, learned counsel for the respondent, placed considerable reliance on the decision of this Court in Life Insurance Corporation of India vs Sunil Kumar Mukherjee(1). According to him, in that case, an order of termination of service passed by the Life Insurance Corporation of India, terminating the services of certain employees in breach of regulations framed by it under section 49 of the (Act XXXI of 1956) (hereinafter called the Insurance Act) has been held to be void. Therefore counsel urges that applying the same analogy, a breach of regulations in the case before us has the same effect as the breach of a statutory obligation and, if so, the High Court was justified in granting the declaration asked for. We are of opinion that the decision relied on by Mr. Iyengar does not lay down any such proposition. In that decision, in respect of certain officers governed by section 11 (1 ) and 11 (2) of the Insurance Act, certain orders terminating their services were passed by the Life Insurance Corporation of India. The orders were challenged by the employees on the ground that they were passed contrary to cls. 1O(a) and 10(b) of the: order passed by the Central Government under section 11 (2) of the Insurance Act, which is called the blue order. The contention on behalf of the Life Insurance Corporation was that the orders were passed in accordance with the regulations framed by the Life Insurance Corporation under section 49 of the Insurance Act, read with. 11 of the blue order. The High Court held that the orders of dismissal were in breach of cls. 10(a) and 10(b) of the blue order, and therefore the orders were invalid. The result of the grant of this relief was that the employees continued to be in service. This Court confirmed the decision of the High Court, and having considered the rights conferred by section 11 (1 ) and 11 (2) of the Insurance. Act, held that the employee:s of the Insurers whose controlled business had been taken over, became employees of the Life Insurance Corporation and that their terms. and conditions of service continued until they were altered (1) ; 267 by the Central Government and that if the alteration made by the Central Government was not acceptable, they were entitled to ' leave the employment of the Corporation and for payment of compensation as provided by section 11(2). In exercise of the powers conferred under section 11(2) of the Insurance Act, the Central Government issued an order, known as the Life Insurance Corporation Field Officers (Alteration of Remuneration and other Terms and Conditions of Service) Order, 1957 on December 30, 1957. In 1962, the designation 'Field Officer ' was changed into 'Development Officer '. Clauses 10(a) and 10(b) of this order have been set out by this Court in the above decision. 11 of this order prescribed that the pay and allowances of the officers concerned Was to be determined in . accordance with the principle.s that may be: laid down by the Life Insurance Corporation by regulations made under section 49 of the Insurance Act. The Life Insurance Corporation, as envisaged under el. 11 of the order, framed regulations under section 49 of the Insurance Act, dealing with various matters. also issued a circular which was made part of the regulations and it was the basis of this circular that the Life Insurance Corporation took action and terminated the services of the employees concerned. Tiffs Court held that the provisions contained in section 11(2) of the Insurance Act are paramount and over ride any contrary provisions contained in the order issued by the Central Government or the regulations framed by the Life Insurance Corporation. Next to the Insurance Act, the rules framed by the Central Government, which include the order issued under sections 11 (2) of the Insurance Act, will prevail, but the provisions of the Central Government Order will have to be subject to section 11 (2) of the Insurance Act. Next in order co.me the regulations of the Life Insurance Corporation under section 49 and those regulations must not be inconsistent with the Insurance Act or the rules framed thereunder. This Court held that the Circular issued by the Corporation, which had the effect of a regulation passed by it under section 49 of the Insurance Act, must be read along with the provisions of sections 11 ( 1 ) and 11 (2 ) of the Insurance Act and cl. 10 of the order issued by the Central Government; and so read, the conclusion reached by this Court was that a termination of service of an officer, contemplated under the circular issued by the Life Insurance Corporation can be effected only in the manner prescribed by cl. 10 of the order issued by the Central Government. In view of the fact that cl. 10 of the order issued by the Central Government had not been complied with, the order terminating the services of the employees was held to be invalid. It will be seen that the services, as pointed out by this Court, of the employees whose cases were under consideration, had been 268 crystallized by the statute the Insurance Act in section 11 (1 ) and 11 (2); By virtue of the powers conferred by section 11 (2), the Central Government issued the order on December 30, 1957. 10 of this order had clearly indicated the procedure to be adopted for terminating the services of such employees. Therefore, the employees had their rights safe guarded by the Insurance Act read with the order issued by the Central Government and it cast a statutory obligation on the Life Insurance Corporation to adopt a particular procedure if the services of those employees were to be terminated. By not complying with the provisions of el. 10 of the order of the Central Government, which is really related to section 11 of the Insurance Act, the Life Insurance Corporation must be considered to have acted in gross violation of the mandatory provisions of the statute. Therefore, it was not as if that the employees were there seeking to. enforce a contract of personal service, but their grievance which was accepted by the Court, was that the order terminating their services was a nullity as it had not been effected in terms of the statute. In our opinion, therefore, this decision does not support the contention of the respondent. Mr. Iyengar referred us also to the decision of this Court in The State of Uttar Pradesh vs Babu Ram Upadhya(1) but that decision need not detain us because that deals with a member of the public service who has been given protection under the Constitution. Such cases stand apart. Mr. Iyengar referred us to a decision of a learned Single Judge of the Gujarat High Court reported as Tata Chemicals Ltd. vs Kailash(2). The question that arose for consideration was regarding the validity of an order of dismissal by an employer of an employee contrary to ' the standing orders. The learned Judge has expressed the view that a breach of the standing orders constitutes a breach of a statutory provision and therefore the order of dismissal is a nullity. It is not necessary for us to consider the correctness of that decision because the dispute between the parties in that case arose under Industrial Law and we have already pointed out that one of the exceptions to the Common Law is under Industrial Law where Labour and Industrial Tribunals have jurisdiction to compel an employer to employ a worker whom he does not desire to employ. Having due regard to the principles discussed above. we are of opinion that the High Court was not justified in granting the declaration that the order dated March 10, 1964 dismissing the (I) ; (2) A.I.R. 1964 Gujarat 265. 269 respondent from service is null and void and that he is entitled to be reinstated in service with full pay and other emoluments. As pointed out by us, the regulations are made under the power reserved to. the Corporation under section 54 of the Act. No doubt they lay down the terms and conditions of relationship between the Corporation and its employees. An order made in breach of the regulations would be contrary to such terms and conditions, but would not be in breach of any statutory obligation, as was the position which this Court had to deal with in the Life Insurance Corporation Case(1). In the instant case, a breach has been committed by the appellant of regulation 16(3) when passing the said order of dismissal, inasmuch as the procedure indicated therein has not been followed. The Act does not guarantee any statutory status to the respondent, nor does it impose any obligation on the appellant in such matters. As to whether the rules framed under section 52 deal with any such matters, does not arise for consideration in this case as the respondent has not placed any reliance on the rules and he has rested his case only on regulation 16(3). It is not in dispute that, in this case, the authority who can pass an order of dismissal has passed the same. Under those circumstances a violation of regulation 16(3), as alleged and established in this case, can only result in the order of dismissal being held to be wrongful and, in consequence, making the appellant liable for damages. But the said order cannot be held to be one which has not terminated the service, albeit wrongfully, or which entitles the respondent to ignore it and ask for being treated as still in service. We are not concerned with the question of damages, because no such claim has been made by the respondent in these proceedings. In this view, the judgment and the decree of the High Court. in so far as they declare that the order dated March 10, 1964 is null and void and that the respondent continues to be in the service of the appellant, are set aside and this appeal allowed, to that extent. In the circumstances of the case, there will be no order as to costs. V.P.S. Appeal allowed.

Under section 28 of the Agricultural Produce (Development and Warehousing) Corporation Act, 1956, the appellant was established as the Warehousing Corporation of the State of U.P. Section 54 of the Act gives power to 'a Warehousing Corporation to make regulations not inconsistent with the Act and the Rules made thereunder and the regulations are to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of the Act. Regulation 11 deals with termination of the service of an employee other than by way of punishment, while regulation 16 deals with penalties. Under regulation 16(3) an employee, on whom the punishment of dismissal is to be imposed, has to be given an opportunity, of tendering his explanation in writing, for cross examining the witnesses against him, and for producing evidence in his defence. The respondent was a warehouseman in the employment of the appellant. Certain charges were framed against him and he was suspended pending enquiry into. the charges. After receiving his explanation, the Enquiry Officer did not take any evidence in respect of any charge. Instead, he met various persons and collected information, and gave his findings on the various charges on the basis of the enquiries made by him and the records. Even the information so collected was not put to the respondertl. On the basis of those findings of the Enquiry Officer the respondent was dismissed from service. He. filed a suit challenging the order of dismissal on the ground that there was a violation of regulation 16(3) and prayed for a declaration that the order 'was null and void and that he was entitled to be reinstated with full pay and other emoluments. On the questions whether: (1) the dismissal was not in accordance with regulation 16(3); and (2) the relationship being one of personal service the respondent was entitled to the declaration for reinstatement. HELD: (1) The termination of the respondents service was not under regulation 11, but under regulation 16; and the procedure prescribed by regulation 16(3) was not followed by the Enquiry Officer in the present case. (2) A declaration to enforce a contract of personal service will not normally be granted. The! exceptions are: (i) appropriate cases of public servants who have been dismissed from service in contravention of article 311; (ii) dismissed workers under industrial and labour law; and (iii) when a statutory body has acted in breach of a mandatory obligation imposed by a statue. [267 G] 251 In the present case, a breach has been committed by the appellant of regulation 16(3) as the procedure indicated therein was not followed. The order of dismissal however was passed by the authority who could pass the order. ' Such an order made in breach of the regulations would only be contrary to the terms and conditions of relationship between the appellant (employer) and the respondent (employee), but, it would not be in breach of any statutory obligation, because, the Act does not guarantee any statutory status to the respondent, nor does it impose any obligation on the appellant in such matters. Therefore, the violation of regulation 16(3) as alleged and established in this case, could only result in the order of dismissal being held to be wrongful, and in consequence making the appellant liable for damages, but could not have the effect of treating the respondent as still in service or entitling him to reinstatement. [271 B E] Dr. S, B. Dutt vs University of Delhi, [1959] S.C.R. 1235 and S.R. Tewari vs District Board, Agra, [1964]3 S.C.R. 55, followed. Life Insurance Corporation of India vs Sunil Kumar Mukherjee, ; , distinguished. Vine vs National Dock Labour Board, [1956] Barber vs Manchester Hospital Board, [1958] 1 All E.R.322 and Francis vs Municipal Councillors etc. [1962] 3 All E.R.633, referred to.

Appeals Nos. 521 523 of 1963. Appeals from the judgment dated April 5, 1960 of the Madras High Court in Case referred No. 80 of 1955. C. K. Daphtary, Attorney General, K. N. Rajagopal Sastri and R. N. Sachthey, for the appellant (in all the appeals). section Narayanaswamy and R. Gopalakrishnan, for the respondent (in all the appeals). April 28, 1964. The Judgment of the Court was delivered by SHAH, J. One Nageswara Rao Panthulu set up a business of manufacturing a "pain balm" which was marketed. in the trade name of "Amrutanjan". In September 1936 the respondent company was floated as a public limited company under the Indian Companies Act, 1913, to acquire and carry on the business of manufacture and sale of "Amrutanjan". The authorised capital of the company was 7,000 ordinary shares and 3,000 preference shares of Rs. 100/each, and the issued and paid up capital was 2,500 ordinary and 3,000 preference shares. The preference shareholders were under the Articles of Association entitled to a fixed dividend of 71 per cent on the face value of the shares, with no right in the balance of the profits. The respondent company took over the business conducted by Nageswara Rao Panthulu for Rs. 5,50,0001 paid in the form of 2,500 ordinary and 3,000 preference fully paid up shares. This company was managed by a firm which after the death of 12 Nageswara Rao Panthulu consisted of Ramayamma, widow of Nageswara Rao, Kamakashamma, his daughter, Ramayamma 's brother Ramchandra Rao and Kamaksham ma 's husband Sambu Prasad. Between April 1, 1946 to March 31, 1949 Ramayamma, widow of Nageswara Rao was holding 2,185 ordinary shares and her daughter Kamakhamma was holding 250 ordinary shares. Out of the preference shares only 385 were held by the directors including Ramayamma and Kamakshamma. Under the Articles of Association of the company, both preference and ordinary shareholders were entitled to vote at the meeting of the company each shareholder being entitled to exercise one vote for each share. In the course of assessment proceedings of the respondent company, the Income tax Officer found that for the three years ending March 31, 1947, March 31, 1948 and March 31, 1949 the company had declared each year a total dividend of Rs. 38,750/ at the rate of 71/2 per cent on the preference shares and 61 per cent on the ordinary shares which was considerably less than sixty per cent of the amount available for distribution as computed under section 23 A of the Income tax Act. as it stood at the material time. The Income tax Officer served a notice, after obtaining the approval of the Inspecting Assistant Commissioner of Income tax, reauiring the respondent company to show cause why an order under section 23 A of the Income tax Act, 1922, should not be passed against the company and after considering the objections raised by the company ordered on March 31, 1953, that the undistributed portion of the assessable income of the company as computed for income tax purposes and reduced by the amount of income tax and super tax payable by the company in respect thereof, shall be deemed to have been distributed as dividend amongst the shareholders as at the date of the respective general meetings. This order was confirmed in appeal by the Appellate Assistant Commissioner and the Income tax Appellate Tribunal. Several contentions were raised before the Revenue authorities and the Tribunal challenging the competence of the income tax officer to pass an order under section 23 A includ 13 ing the contention that the said provision was unconstitu tional or ultra vires. These have been negatived by the Tribunal and also by the High Court and it is unnecessary to refer to those contentions in these appeals as they do not survive for determination. To a reference made under section 66(1) of the Indian Incometax Act, the Tribunal referred three questions to the High ,Court of Judicature at Madras. The third question, which alone is material in these apeals, reads as follows: "Whether the provisions of section 23 A were correctly applied for the three relevant years?" The High Court held that the respondent company was one in which the public were substantially interested, and there fore the Income tax Officer had no jurisdiction to pass the order under section 23, A of the Income tax Act for any of the three years and on that footing answered the question in the negative. Against the order passed by the High Court, with certificate of fitness the Commissioner of Income tax has appealed to this Court. Section 23 A of the Indian Income tax Act, 1922 before it was amended by the Finance Act, 1955, stood as follows: "(1) Where the Income tax Officer is satisfied that in respect of any previous year the profits and gains distributed as dividends by any company up to the end of the sixth month after its accounts for that previous year are laid before the company in general meeting are less than sixty per cent of the assessable income of the company of that previous year, as reduced by the amount of income tax and super tax payable by the company in respect thereof he shall,. make with the previous approval of the Inspecting Assistant Commissioner an order in writing that the undistributed portion of the assessable income of the company of that previous year as computed for income tax purposes and reduced by the amount of income tax and super tax payable by the company in respect thereof 14 shall be deemed to have been distributed as dividends amongst the shareholders as at the date of the general meeting aforesaid Provided Provided further Provided further that this sub section shall not apply to any company in which the public are substantially interested or to a subsidiary company of such a company if the whole of the share capital of such subsidiary company is held by the parent company or by the nominees thereof. Explanation. For the purpose of this sub section, a company shall be deemed to be a company in which the public are substantially interested it shares of the company (not being shares entitled to a fixed rate of dividend, whether with or without a further right to participate in profits) carrying not less than twenty five per cent of the voting power have been allotted uncoiiditionally to, or acquired unconditionally by, and are at the end of the previous year beneficially held by the public (not including a company to which the provisions of this sub section apply) . . . The section was enacted with the object of preventing avoidance of super tax by shareholders controlling the affairs of a company in which the public are not substan tially interested, by the expedient of not distributing dividend out of the profits. Under the annual Finance Acts for many years the rates of super tax applicable to companies were much lower than the higher rates applicable to other assessees. That gave an inducement to persons controlling companies to avoid the higher incidence of super tax by transferring to limited companies their businesses. Thereby the sow ce of earning was secured, the profits of the business could be accumulated till they were distributed in the form of capital, and in the meanwhile accumula 15 tions of undistributed profits remained available to them for purposes of their other businesses. With a view to foil attempts made by persons holding controlling interests in companies to avoid payment of super tax applicable to non corporate assessees by refusing to agree to distribution of profits, section 23 A was enacted by the Legislature. The Incometax Officer was thereby authorised, if satisfied when less than sixty per cent of the assessable income of the company, subject to reductions permitted thereby, was not distributed, to pass an order under which the income was deemed to be distributed among the shareholders entitled thereto. By the order so made a fictional or notional income which was not in fact received by the shareholders was deemed to be distributed, and in the hands of the shareholders such deemed income was liable to tax as if it had arisen or accrued to them. But by the express provision contained in section 23 A, as it stood at the material time, no order could be passed in respect of any company in which the public were substantially interested and to a subsidiary company of such a company if the whole of the share capital of such subsidiary company was held by the parent company, or by the nominees thereof. The Act, however, did not define the expression "company in which the public are substantially interested". Normally a company would be deemed to be one in which the public are substantially interested, where more than half the voting power is vested in the public. Where the controlling, interest i.e. a minimum of fifty one per cent of the voting right is held by a single individual or a group of individuals acting in concert, the company would be regarded as one in which the public are not substantially interested. But the Legislature by the Explanation has raised a conclusive presumption in those cases where shares of the company carrying not less than twenty five per cent of the voting power are held by persons other than the controlling group. For the purpose of computing twenty five per cent of the voting power, however, rights of holders of shares entitled to a fixed dividend have to be excluded. It is now settled law that the distinction between the controlling group and the public is not along the line which distinguishes directors from the remaining members of the 16 company. If a director does not belong to the controlling group, he will be regarded as a member of the public for the purposes of the third proviso and the Explanation to section 23 A even though such director was directly entrusted with the management of the affairs of the company. The Commissioner contends that the Explanation to sub section (1) of section 23 A is in reality a clause which defines what a company, in which the public are substantially interested, is. In terms, however, the Explanation raises a presumption and does not purport to define a company in which the, public are substantially interested. On an analysis of the provisions of the third proviso to section 23 A and its explanation, the following position emerges: (1) Where there is no individual member or a group of members acting in concert holding fifty one per cent or more of the voting power, which controls the working of a company, it is from its very nature a company in which there is no controlling member or group and therefore the public are substantially interested; (2) Where a shareholder holds or a group of shareholders acting in concert hold fifty one per cent or more of the voting power, the question is one of fact to be determined in each case, whether it is a company in which the public are substantially interested, having regard to the purpose for which the holding of fifty one per cent or more is utilised; (3) Where not less than twenty five per cent of the voting power is allotted unconditionally to, or is acquired unconditionally by or is beneficially held by the public, it shall be presumed that the company is one in which the public are substantially interested. But in considering whether shares carrying not less than twenty five per cent of the voting right are held by the public, shares entitled to a fixed rate of dividend have to be excluded. 17 The reason of the rule which excludes from the computation of voting power holders of shares entitled to a fixed rate of dividend is that section 23 A is directed primarily against the accumulation of undistributed dividends to avoid payment of non corporate rates of super tax. But shareholders who are entitled to a fixed rate of dividend are not directly interested in such accumulation: it matters little to them whether the dividend is immediately distributed to the ordi nary shareholders or is accumulated, and therefore in assessing whether the twenty five per cent of the shares are vested in persons other than the controlling group, the shares yielding a fixed rate of dividend have to be ignored. But for the purpose of ascertaining the voting power, voting rights attached to all the shares must be taken into account. No investigation has been made by the Income tax Department whether there is any group of persons controlling the working of the company. It is true that Ramayamma was holding 87 40 per cent of the ordinary shares issued by the company, and there is obviously no person who could hold twenty five per cent or more of the ordinary shares. In the present case, as already observed, the preference shareholders were entitled to vote at the meeting, and the Articles of Association of the Company made no distinction between the preference and the ordinary shareholders in the matter of exercise, of voting rights. The total voting power was 5,500 one vote, for each share, ordinary and preference alike and twenty five per cent of that voting power is 1,375, but to invite the presumption under the Explanation this power must be exercisable only by the or dinary shareholders, and not by shareholders entitleci to a fixed rate of dividend. The presumption under the Ex planation could arise only, if twenty five percent of the voting power was held by persons entitled to ordinary shares outside the controlling group. It was suggested that the expression "twenty five per cent of the voting power" would mean not twenty five per cent of the total voting power, but power exercisable in respect of shares other than shares entitled to a fixed rate of dividend. Prima facie, such an interpretation is not war ranted if regard be had to the terms of the Explanation. 51 section C 2 18 But even that argument is of no value, for twenty five per cent of the voting power attached to the ordinary shares is not exercisable by the public. This, therefore, is a case in which shares not entitled to a fixed dividend carrying not less than twenty five per cent of the voting power are not shown to have been allotted unconditionally to, or acquired unconditionally by or beneficially held by the public. The Explanation, therefore, has no operation. Whether inview of the third proviso the company may be regarded asone in which the public are substantially interested, isa question to which no attention was paid by the Tribunal. Whether in fact there exists such a control ling interest inthe hands of one shareholder or a group of shareholders as would render the company one in which the public are not substantially interested is a question which therefore cannot be decided by this Court. The order of the High Court must therefore be continned, but on different grounds. The interpretation of the Explanation by the High Court, for reasons already set out, was incorrect. The Explanation had no application, because no presumption on the facts found could arise thereunder. The Revenue authorities have not made any investigation on the question whether there existed any controlling interest in a group of persons. so as to bring the case within the third proviso. The appeals must be dismissed with costs. One hearing fee. Appeals dismissed.

The Income tax Officer found that the respondent company had, declared during the three years ending March 31, 1947, March 31. 1948 (1) 10 and March 31, 1949, dividends which were considerably less than 60% of the amount available for distribution as computed under section 23 A of the Income tax Act, 1922. He served a notice on respondent company to show cause why an order under section 23 A be not passed against it. After hearing the respondent the Income tax Officer passed an order that the undistributed portion of the assessable income of the respondent as computed for income tax purposes and reduced by the amount of income tax and super tax payable by the company in respect thereof, shall be 'deemed to have been distributed as dividend among the share holders. The order of the Income tax Officer was upheld by the Appellate Assis tant Commissioner and the Income tax Appellate Tribunal. A reference was made to High Court and the relevant question referred was whether the provisions of section 23 A were correctly applied for the three relevant years. The High Court held that respondent company was one in which the public were substantially interested and, therefore, the Income tax Officer had no jurisdiction to pass the order under section 23 A for any of the three years. The appellant came to this Court with certificate of fitness from the High Court. Dismissing the appeal. HELD: The respondent company was one in which the public were substantially interested and therefore, the Income tax Officer had no jurisdiction to pass an order under section 23 A. The Indian Income tax Act, 1922 does not define the expression "company in which the Public are substantially interested". Normally, a company would be deemed to be one in which the public are substantially interested where more than half the voting power is vested in the public. Where the controlling interest i.e. a minimum of 51% of the voting right is held by a single individual or a group of individuals acting in concert, the company would be regarded as one in which the public are not substantially interested. The distinction between the controlling group and public is not along the line which distinguishes directors from the remaining members of the company. If a director does not belong to a controlling group, he will be regarded as a member of the public for purposes of the third proviso and explanation to section 23 A, even though such 'director was directly entrusted with the management of the affairs of the company. Section 23 A was enacted with the object of preventing avoidance of super tax by share holders controlling the affairs of a company in which the public are not substantially interested, by the expedient of not distri buting dividends out of the profits. For many years, the rates of super tax applicable to companies were much lower than the higher rates applicable to other assessees. That gave inducement to Persons controlling companies to avoid the higher incidence of super tax by transferring to imited companies the businesses. The profits of business could be accumulated till they were 'distributed in the form of capital and in 'the meanwhile accumulations of undistributed profits remained available to them for the purposes of their other businesses. Section 23 A was enacted with a view to full attempts made by persons holding cotnrolling 11 interests in companies to avoid payment of super tax applicable to noncorporate assessees by refusing to agree to distribution of profits. Under section 23 A an Income tax Officer was authorised to make an order by which .a fictional or notional income which was not in fact received by the ,share holders, was deemed to be distributed and was liable to tax as it had arisen or accrued to them. However, no such order could be passed in respect of a company in which the public were substantially interested and to a subsidiary company of such a company if the whole of the share capital of such subsidiary company was held by the parent company or by the nominee thereof

tition Nos. 356 361 of 1977 Under Article 32 of the Constitution of India. R.F. Nariman, J. Peres, Mrs. A.K. Verma and section I. Thakur for the Petitioners. B. Datta, Additional Solicitor General, T.V.S.N. Chari, Ms. V. Grover, Ms. Sunita Mudigarda and W. Quadri for the Respondents. The Judgment of the Court was delivered by DUTT, J. In these Writ Petitions under Article 32 of the Constitution of India the petitioners, including the petitioner Minerva Mills Ltd. and some of its creditors, have challenged the legality of the order dated October 19, 1971 passed under section 18A of the Industries (Development and Regulation) Act, 1951 (for short 'IDR Act ') taking over the management of the textile undertaking of the petitioner, Minerva Mills Ltd., and the constitutional validity of the Sick Textile Undertakings (Nationalisation) Act, 1974 (for short 'Nationalisation Act '). On August 20, 1970, the Central Government appointed a Committee section 15 of the IDR Act to make a full and complete investigation of the affairs of the Minerva Mills Ltd., hereinafter referred to as 'the Company '. After the investigation was made the Central Government by an order dated October 19, 1971, authorised the National Textile Corporation to take over the management of the undertaking of the Company. The petitioners did not challenge the order to take over the management before any court of law. During the pendency of the management of the undertaking by the National Textile Coporation, the Sick Textile Undertakings ordinance of 1974 was promulgated and it was replaced by the Nationalisation Act. Section 3(1) of the Nationalisation Act provides that on the appointed day, every sick textile undertak 722 ing and the right, title and interest of the owner in relation to every such sick textile undertaking shall stand transferred to, and shall vest absolutely in, the Central Government. 'Sick textile undertaking ' has been defined in section 2(j) of the Nationalisation Act as meaning, inter alia, a textile undertaking, specified in the First Schedule, the management of which has, before the appointed day, been taken over by the Central Government under the IDR Act. The textile undertaking of the Company has been specified in the First Schedule of the Nationalisation Act. So, in view of the said definition read with section 3(1) of the Act, the undertaking had vested in the Central Government. It has been urged by Mr. R.F. Nariman, learned Counsel appearing on behalf of the petitioners, that there was no justification for taking over the management of the undertaking of the Company under section 18A of the IDR Act. In support of the said contention, the learned Counsel has drawn our attention to certain facts which will be stated presently. It appears that the Company had been running at a loss during the years from 1956 to 1965. The condition of the mill further deteriorated on account of recession in 1965 coupled with labour problems, and that continued till 1970. On January 2, 1970, the mill had to be closed. It is the case of the petitioners that by dint of serious effort on the part of the management and labour, an amicable agreement was arrived at between them, and a phased programme for resumption of production in three stages was drawn up by the management. The then State Government of Mysore was requested to sanction the guarantee of a loan for Rs.20 lacs. By an order dated April 24, 1971 the Government sanctioned the guarantee to enable the Company to raise a loan of Rs.20 lacs from the State Bank of India. In the said order it was inter alia stated follows: "The Government have carefully considered the various factors leading to the present state of affairs of the Mills and also the various recommendations made by the Investigation Committee constituted by the Government of India to go into the affairs of this Mills and have come to the conclusion that the Mills should be assisted to raise finances required for working the Mills. " The said order was passed after the investigation under section 15 of the IDR Act. A few months thereafter, on October 19, 1971, the order under section 18A of the IDR Act was passed taking over the management of the undertaking of the Company on the ground that the 723 Central Government was of opinion that the undertaking was being managed in a manner highly detrimental to public interest. It is strenuously urged on behalf of the petitioners that the order under section 18A dated October 19, 1971 was passed without any application of mind, regard being had to the earlier order dated April 24, 1971 sanctioning the guarantee of a loan. It is submitted that there was no foundation for the finding of the Central Government that the undertaking of the Company was being managed in a manner highly detrimental to public interest, for, if that was the condition of management, the Government could not sanction a guarantee for incurring a loan of Rs.20 lacs. It is, accordingly, contended that the order under section 18A was illegal and invalid. It is submitted that on this ground the nationalisation of the undertaking of the Company should be held to have no basis whatsoever, for, the Nationalisation Act has been made applicable to the undertaking of the Company in view of section 2(j) of the Nationalisation Act defining 'Sick textile undertaking '. We are unable to accept the contention of the petitioners that the order under section 18A of the IDR Act was illegal. It is true that the Government sanctioned the guarantee of a loan for Rs.20 lacs on the recommendation of the Director of Industries and Commerce of the Government of Mysore. But, at the same time, we cannot ignore the investigation that was made under section 15 of the IDR Act and the consequent finding of the Government on the basis of which the management of the undertaking of the Company was taken over under section 18A of the IDR Act, namely, that the affairs of the undertaking of the Company were being managed in a manner highly detrimental to public interest. It has been already found that the undertaking had been running at a loss and had to be dosed down January 2, 1970. This miserable condition of the undertaking might be due to the mismanagement of its affiars. The Government might have thought of assisting the Company to raise a loan of Rs.20 lacs, but that fact or the fact that such proposal for assistance was made for special reasons as provided in the second proviso to section 4 of the Mysore State Aid to Industries Act, 1959 is not, in our opinion, sufficient to uphold the contention of the petitioners that there was no basis or foundation for the order under section 18A. Moreover, it does not appear that the petitioners were aggrieved by the order under section 18A inasmuch as the same was not challenged in any court of law. There is some force in the contention made 724 by the learned Additional Soliciter General that after the lapse of several years from the date of the take over of the management of the undertaking, the petitioners should not be allowed to challenge the validity of the order under section 18A. Apart from this technical objection, the Legislature had decided that the undertaking of the Company was a sick textile undertaking by including the same in the First Schedule to the Nationalisation Act. There can be no doubt that the legislative judgment should be looked upon with respect and it requires very strong grounds to set it at naught. In our opinion, there is no existence of any such ground. The next ground of attack of the petitioners to the validity of the order under section 18A is that it was vitiated as there was no direction by the Central Government under section 16 of the IDR Act. Section 16 authorises the Central Government to issue directions to the industrial undertaking concerned for certain purposes as are mentioned in clauses (a) to (d) of section 16 after an investigation under section 15 is made and the Central Government is satisfied that action under section 16 is desirable. It is apparent from section 16 that it is not obligatory on the Central Government to issue directions for all or any of the purposes as mentioned in the said section. One of the two grounds for taking over management of an industrial undertaking, as contained in clause (a) of section 18A, is that the industrial undertaking has failed to comply with the directions given under section 1.6. The other ground is that, as contained in clause (b) of section 18A, an industrial undertaking in respect of which an investigation has been made under section 15 (whether or not any directions have been issued to the undertaking in pursuance of section 16) is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest. In the instant case, the undertaking of the Company had been taken over under clause (b) of section 18A on the ground that it was being managed in a manner highly detrimental to public interest. There is, therefore, no substance in the contention made on behalf of the petitioners that the impugned order under section 18A was vitiated as no direction under section 16 was issued by the Central Government. It is urged on behalf of the petitioners that as the Company was not supplied with a copy of the report of investigation before the impugned order under section 18A was passed, the respondents acted illegally in violation of the principles of natural justice, and the impugned order is liable to be struck down on that ground. In our opinion, there is no substance in this contention. The Company was 725 given a hearing by the Investigation Committee and, therefore, it got ample opportunities to make representations against the proposed take over. It is difficult to lay down that non supply of a copy of the report of investigation under section 15 of the IDR Act will always occasion a failure of natural justice. Whether in a particular case there has been failure of natural justice or not will depend on the facts and circumstances of that case. As has been laid down by this Court in Keshav Mills Co. Ltd. vs Union of India, that in certain cases where, unless the report is given, the party concerned cannot make any effective representation about the action that Government takes or proposes to take on the basis of that report, the non supply of the report may invoke the application of the rules of natural justice. In that case, it was contented by the appellants that they should have been given further hearing by the Government before they took the final decision to take over their undertaking under section 18A of the IDR Act and that, in any event, they should have been supplied with a copy of the report of the Investigation Committee. One of the grounds that weighed with this Court for rejecting the contention was that since the appellants had received a fair treatment and also all reasonable opportunities to make out their own case before the Government they should not be allowed to make any grievance of the fact that they were not given a formal notice calling upon them to show cause why their undertaking should not be taken over or that they had not been furnished with a copy of the report. In the instant case also, as has been already noticed, the Company was given a reasonable opportunity of being heard by the Investigation Committee during the investigation under section 15 of the IDR Act. In our opinion, the petitioners were not in the least prejudiced for the non supply to them of a copy of the report. The view we take, finds support from some other facts stated hereafter. It does not appear that the petitioners ever asked for a copy of the report. They did not also move against the order under section 18A before the undertaking was nationalised under the Nationalisation Act. It is the case of the petitioners that they did not challenge the impugned order under section 18A because the take over of the management of the undertaking was for a limited period of five years and the petitioners were hopeful that they would get back the undertaking after the expiry of the said period as provided in sub section (2) of section 18A of the IDR Act. It shows that the petitioners were not aggrieved by the said order under section 18A, for they could not be as they had not the required minimum resources for running the mill. It is 726 stated in the counter affidavit of the respondents that the financial position of the Company was adverse in all respects. The accumulated losses as on 31.12.1969 was Rs.35.46 lakhs which did not include arrears of depreciation amounting to Rs.44.06 lakhs. The working capital and net wealth assumed negative values. The outstanding secured loans amounted to Rs.170.20 lakhs and unsecured loans to Rs.14.60 lakhs. There were defaults in payment of instalments and interest. It is further stated that according to the Investigation Committee, the reasons for this state of affairs was low capital base, heavy borrowings and consequent interest burden and paucity of working capital. In this connection, it may be pointed out that sometime in June 1975, after the nationalisation of the undertakings, the petitioners including the Company filed separate writ petitions under Article 226 of the Constitution in the High Court of Karnataka challenging the order dated October 19, 1971 under section 18A of the IDR Act, and also the constitutional validity of the Nationalisaiion Act. All these Writ Petitions were dismissed by a learned Single Judge of the Karnataka High Court on July 8, 1976. The appeals preferred by some of the petitioners including the Company were also summarily dismissed by the Division Bench of the said High Court. By an order dated March 25, 1977, the Division Bench also dismissed applications for leave to appeal to this Court under Article 133 of the Constitution of India. We are afraid, in view of the aforesaid facts the petitioners are not entitled to challenge the impugned order under section 18A. We may now consider the challenge of the petitioners to the constitutional validity of the Nationalisation Act. It is contended on behalf of the petitioners that the provisions of sections 5(1), 19(3), 2 1 read with the Second Schedule, 25 and 27 impose restrictions on the exercise by the petitioners of their fundamental right; such restrictions being arbitrary and excessive are not reasonable within the meaning of Article 19(6) and are violative of Articles 14 and 19(1)(g) of the Constitution. It is submitted that the Nationalisation Act containing the said provisions alters or damages the basic structure of the Constitution as reflected in Articles 14 and 19 of the Constitution. Further, it is submitted that though the Nationalisation Act has been included in the Ninth Schedule to the Constitution, yet, in view of the decision of this Court in Waman Rao vs Union of India, [1981] 2 SCR l, as the inclusion has been made after April 24, 1973, such challenge can be made. We fail to understand how the provisions of the Nationalisation 727 Act can alter or damage the basic structure of the Constitution. The basic structure of the Constitution can be altered or damaged by an amendment of the provisions of the Constitution. The decision in Waman Rao 's case (supra) does not at all support the contention of the petitioners. In that case. it has been observed as follows: "In Keshvananda Bharati ([1973] Suppl. SCR 1) decided on April 24, 1973 it was held by the majority that Parliament has no power to amend the Constitution so as to damage or destroy its basic or essential features or its basic structure. We hold that all amendments to the Constitution which were made before April 24, 1973 and by which the 9th Schedule to the Constitution was amended from time to time by the inclusion of various Acts and Regulations therein, are valid and constitutional. Amendment to the Constitution made on or after April 24, 1973 by which the 9th Schedule to the Constitution was amended from time to time by the inclusion of various Acts and Regulations therein, are open to challenge on the ground that they, or any one or more of them are beyond the constituent power of the Parliament since they damage the basic or essential features of the Constitution or its basic structure. We do not pronounce upon the validity of such subsequent constitutional amendments except to say that if any Act Regulation included in the 9th Schedule by a Constitutional amendment made on or after April 24, 1973 is saved by Article 31A, or by Article 31C as it stood prior to its amendment by the 42nd Amendment, the challenge to the validity of the relevant Constitutional Amendment by which that Act or Regulation is put in the 9th Schedule, on the ground that the Amendment damages or destroys a basic or essential feature of the Constitution or its basic structure as reflected in Articles 14, 19 or 31, will become otiose. (3) Article 31C of the Constitution, as it stood prior to its amendment by section 4 of the Constitution (42nd Amendment), Act, 1976, is valid to the extent to which its constitutionality was upheld in Keshvananda Bharati. Article 31C, as it stood prior to the Constitution (42nd Amendment) Act does not damage any of the basic or essential features of the Constitution or its basic structure. " 728 It is apparent from the above observation that only constitutional amendments made on or after April 24, 1973 by which Acts or Regulations were included in the Ninth Schedule can be challenged on the ground that they damage the basic or essential features of the Constitution or its basic structure. But if any of such Acts and Regulations is saved by Article 31A or by Article 31C as it stood prior to the amendment of the Constitution by the Forty Second Amendment. such challenge on the ground that the constitutional amendment damages or destroys a basic or essential feature of the Constitution or its basic structure as reflected in Article 14 or Article 19, will become otiose. The Nationalisation Act has been enacted to give effect to the policy of the State towards securing the principles specified in clause (b) of Article 39 of the Constitution. Indeed, a declaration in that regard has been made in section 39 of the Nationalisation Act. It was, however, open to the petitioners to challenge this declaration, for, in Keshvananda Bhartiv. State of Kerala, , this Court by a majority struck down the second part of Article 31C of the Constitution, namely, "and no law containing a declaration that it is for giving effect to such policy, shall be called in question in any court on the ground that it does not give effect to such policy. " No contention has, however, been advanced before us on behalf of the petitioners that the Nationalisation Act does not give effect to the policy of the State towards securing the principles specified in clause (b) of Article 39 of Constitution. The reason why no such contention has been made is obvious in view of the objectives the Nationalisation Act seeks to achieve. It cannot be gainsaid that textile industries constitute material resources of the community and any setback or fall in the production of textile goods will have adverse effect on the national economy and also cause hardship to the people. It is with a view to re organising and rehabilitating the sick textile undertakings so as to subserve the in terests of the general public by the augmentation of the production and distribution, at fair prices, of different varieties of cloth and yarn, and for matters connected therewith or incidental thereto, as stated in the preamble, that the Nationalisation Act has been enacted. We have considered the different provisions of the Nationalisation Act and are satisfied that it gives effect to the policy of the State towards securing the ownership and control of the material resources of the community, which are so distributed as best to subserve the common good. In the circumstances, as the Nationalisation Act comes under the protective umbrella of Article 31C, the petitioners are not entitled to challenge the constitutional validity thereof on the ground of violation of the provisions of Articles 14 and 19 of the Constitution. 729 The learned counsel for the petitioners, however, submits that in spite of the fact that the Nationalisation Act has been included in the Ninth Schedule, the petitioners are entitled to challenge the constitutional validity of the provisions of the Nationalisation Act as violative of Articles 14 and 19 of the Constitution. It has been already noticed that the Nationalisation Act fall squarely within the ambit of Article 31C and, consequently, none of its provisions can be challenged on the ground of violation of Article 14 or Article 19 of the Constitution. Much reliance has, however, been placed by the petitioners on a majority decision of this Court in Bhim Singhji vs Union of India. In that case, the question that has been considered relates to whether the Urban Land (Ceiling and Regulation) Act, 1976 furthers the Directive Principles of State Policy in clauses (b) and (c) of Article 39 of the Constitution. It has been held by the majority consisting of Chandrachud C.J., P.N. Bhagwati J. (as he then was) and Krishan Iyer J. that the said Act implements or achieves the purposes of clauses (b) and (c) of Article 39 and is valid except that section 27(1) of the said Act in so far as it imposes a restriction on transfer of any urban or urbanisable land with a building or a portion only of such building which is within the ceiling area, is invalid. It has been observed by Chandrachud C.J., with whom Bhagwati, J. concurs, that fuller reasons will follow later. Subsequently, a judgment has been delivered by Chandrachud C.J., for himself and Bhagwati J. ; wherein it has been inter alia observed as follows: "We have gone through Krishna Iyer J 's judgment closely and find that there is nothing that we can usefully add to it. " In other words the learned Chief Justice and Bhagwati J. have adopted the reasons given by Krishna Iyer J. The learned Counsel for the petitioners has drawn our attention to the fact that none of the Judges constituting the majority, including Krishna Iyer J. has given any reason for striking down the provision of section 27(1) of the said Act. It is submitted that the majority judgment is a precedent for the proposition that even though a statute comes within the purview of Article 31C of the Constitution, yet its validity can be challenged on the ground of its violation of Article 14 or Article 19 of the Constitution. It is contended that in view of Bhim Singhji 's case, we cannot take any view other than the view that such a challenge can be made 730 In support of the above contention, the learned Counsel for the petitioners has placed reliance upon the decision of the Court of Ap peal in Harper and others vs National Coal Board, In that case, the Court of Appeal had to consider the propriety of the judgment of the learned Trial Judge, who based his decision on the speeches in the House of Lords in Central Asbestos Co. Ltd vs Dodd. In Dodd 's case the House of Lords by a majority of 3 to 2 affirmed the majority decision of the Court of Appeal that time did not begin to run against the plaintiff under section 1(3) of the until he discovered that he had a worthwhile cause of action. Of the three Judges, who constituted the majority of the House of Lords, two took the same view of the law as that taken by the majority of the Court of Appeal, while the third took another view of the law which. in substance accorded with that of minority of the House, that is, that time began to run under section 1(3) as soon as the plaintiff knew of the facts on which his action was based. The question that had to be considered by the Court of Appeal was whether it was bound by the reasoning in the speeches of the House of Lords in Dodd 's case. In that contention, Lord Denning MR observed as follows: "How then do we stand on the law? We have listened to a most helpful discussion by counsel for the proposed plaintiffs on the doctrine of precedent. One thing is clear. We can only accept a line of reasoning which supports the actual decision of the House of Lords. By no possibility can we accept any reasoning which would show the decision itself to be wrong. The second proposition is that, if we can discover the reasoning on which the majority based their decision, then we should accept that as binding on us. The third proposition is that, if we can discover the reasoning on which the minority base their decision, we should reject it. It must be wrong be cause it led them to the wrong result. The fourth proposition is that if we cannot discover the reasoning on which the majority based their decision we are not bound by it. We are free to adopt any reasoning which appears to us to be correct, so long as it supports the actual decision of the House. " We fail to understand how the above observation lend any sup port to the contention of the petitioners. The Court of Appeal was considering the same point as was before the House of Lords in Dodd 's 731 case. The question was whether the Court of Appeal was bound to adopt the same reasoning as in Dodd 's case and it was held that since there was no discernible ratio decidendi common to the speeches in the House of Lords in Dodd 's case, the Court of Appeal was not bound by the reasoning in those speeches and was free to adopt any reasoning which appeared to the Court to be correct provided that it supported the actual decision of the House. In the instant case, we are not considering the question of the constitutional validity of section 27(1) of Urban Land (Ceiling and Regulation) Act and, therefore, it is quite irrelevant for our purpose whether any reason was given by the majority in Bhim Singhji 's case (supra) or not. In view of our decision that the Nationalisation Act comes within the purview of Article 31C of the Constitution, we do not think we are called upon to adjudicate upon the contention of the petitioners that some of the provisions of the Nationalisation Act are violative of Articles 14 and 19 of the Constitution. The only contention of the petitioners that remains to be considered is that the respondents have illegally taken over possession of the vacant land belonging to the Company. It is the case of the petitioners that out of the land, the mill premises comprises 34.78 acres and the rest of the land measuring 17.52 acres was and is vacant land. It is not in dispute that the said 17.52 acres of land is situate within the mill compound and except 4.37 acres thereof, the remaining 13.57 acres of land including the said 4.37 acres, is unrelated to and unconnected with the undertaking of the Company and, accordingly, it did not vest in the Central Government under the Nationalisation Act. It is also pointed out on behalf of the petitioners that the vacant land has not been utilised by the National Textile Corporation for any purpose of the undertaking. It is urged that as the vacant land was illegally and wrongfully taken possession of by the National Textile Corporation, although the same had not vested in the Central Government, the same should be released and given back to the Company. In any event, it is submitted on behalf of the petitioners that possession of the said 4.37 acres of land which does not form part of the compact block of the vacant land measuring 13.57 acres should be delivered back to the petitioners. The respondents in their affidavit in opposition have denied and disputed the contention of the petitioners that the said 17.52 acres or the said 4.37 acres of land does not form part of the sick textile under 732 taking. It is the case of the respondents that except the land measuring 4 acres 14 Gunthas (stated to be equivalent to 4.37 acres) the rest of the land forms one compact block in which the buildings, office and quarters of the undertaking are situate. Further it is said that the National Textile Corporation has a programme for locating an institution to train the technical personnel and to build quarters as a welfare measure and, necessarily, such a complex must have vacant land to implement the expansion programme. Accordingly, it is contended by the respondents that even the vacant land measuring 4 acres 14 Gunthas form an integral part of the textile undertaking. It has already been noticed that the whole of the said 17.52 acres of land including 4.37 acres thereof, is situate within the mill compound. We are unable to accept the contention of the petitioners that as the land is lying vacant since the take over, it does not form part of the undertaking. Under section 4(1) of the Nationalisation Act, the sick textile undertaking shall be deemed to include all properties, movable and immovable, including lands, buildings, workshops, stores, etc. in the ownership, possession, power or control of the owner of the sick textile undertaking. In view of the said provision, it is difficult to accept the contention of the petitioners that the vacant land is not a part of the undertaking. It may be that the said 17.52 acres of land or the said portion of it measuring 4.37 acres has not been put to any use, but that will not entitle the petitioners to claim that possession of the land should be delivered back to the Company. The question whether the vacant land has been in use, is not, in our opinion, relevant for the purpose of section 4(1). It is, therefore, difficult for us to accept the contention of the petitioners that the vacant land is unrelated to and unconnected with the textile undertaking. The learned counsel for the petitioners has placed reliance upon an observation of this Court in National Textile Corporation Ltd. and others etc. vs Sitaram Mills Ltd. and others; , The question that was involved in that case was whether surplus land in the precinct of the taken over undertaking was an asset in relation to the undertaking. It was observed "The test is whether it was held for the benefit of, and utilised for, the textile mill". Relying upon this observation, it is contended by the learned counsel for the petitioners that as the vacant land, in the instant case, has not been utilised for the undertaking, it is not an asset of the undertaking. We do not think that in Sitaram Mills case this Court really meant to lay down a proposition that in order that a piece of land to be considered as the asset of the textile undertaking, it must be held for the benefit of and utilised for 733 the undertaking in question. Can it be said that a piece of land which is held for the benefit of but not utilised for the textile undertaking, as in the instant case, is not an asset of the undertaking? The answer must be in the negative. In Sitaram Mills case that observation was made in the context of facts of that case, namely, that the surplus land was held for the benefit of and also utilised for the textile undertaking. We do not think that the said observation in the case of Sitaram Mills case is of any help to the petitioners. We hold that the whole of the said 17.52 acres of land forms part of the textile undertaking of the Company. No other point has been urged in these writ petitions. For the reasons aforesaid, all these writ petitions are dismissed. There will however. be no order for costs. M.L.A. Petitions dismissed.

The petitioner, Minerva Mills Ltd. a textile undertaking had been running at a loss and had to be closed down. The Central Government ordered an investigation into the affairs of the petitioner company under section 15 of the Industries (Development & Regulation) Act 1931. Thereafter, the State Government of Mysore sanctioned the guarantee to enable the petitioner company to raise a loan of Rs.20 lacs from the State Bank of India. After the investigation was made, the Central Government passed an order under section 18A of the IDR Act taking over the management of the undertaking of the Company on the ground that the Central Government was of opinion that the undertaking was being managed in a manner highly detrimental to public interest. During the pendency of the management of the undertaking by the National Textile Corporation, the Sick Textile Undertakings ordinance of 1974 was promulgated, and it was replaced later on by the Sick Textile Undertakings (Nationalisation) Act 1974. 719 The petitioners including the company unsuccessfully challenged before the High Court under article 227, the order dated October 18, 1371, passed by the Central Government under section 18A of the Industrial (Development and Regulation) Act as also the Nationalisation Act. Their appeals were also summarily dismissed by the Division Bench of the High Court. R The petitioner. Minerva Mills Ltd. and some of its creditors challenged before the Supreme Court under article 32 of the Constitution, the legality of the aforesaid order as also the constitutional validity of Sick Textile Undertakings (Nationalisation) Act 1974. Dismissing the writ petitions, ^ HELD: 1.1 The investigation that was made under section 15 of the Industrial (Development and Regulation) Act and the consequent findings of the Government on the basis of which the management of the undertaking of the Company was taken over under section 18A of the Industrial (Development and Regulation) Act, was that the affairs of the under taking of the Company were being managed in a manner highly detrimental to public interest. The undertaking had been running at a loss and had to be closed down on January 2, 1970. This miserable condition of the undertaking might be due to the mismanagement of its affairs. [723E F] 1.2 The Government might have thought of assisting the Company to raise a loan of Rs.20 lacs, but that fact or the fact that such proposal for assistance was made for special reasons as provided in the second proviso to section 4 of the Mysore State Aid to Industries Act, 1953 is not, sufficient to uphold the contention of the petitioners that there was no basis or foundation for the order under section 18A. [723F G] 1.3 The legislature had decided that the undertaking of the Company was a sick textile undertaking by including the same in the First Schedule to the Nationalisation Act. There can be no doubt that the legislative judgment should be looked upon with respect and it requires very strong grounds to set it at naught. In the instant case, there is no existence of any such ground. [724B C] 2. The petitioner company was given a hearing by the Investigation Committee and, therefore, it got ample opportunities to make representations against the proposed take over. It is difficult to lay down that non supply of a copy of the report of investigation under section 15 of the 720 Industrial (Development and Regulation) Act will always occasion a failure of natural justice. Whether in a particular case there has been failure of natural justice or not will depend on the facts and circumstances of that case. [725A B] In the instant case also, the petitioners were not in the least prejudiced for the non supply to them of a copy of the report. Moreover, they never asked for a copy of the report. They did not also move against the order under section 18A before the undertaking was nationalised under the Nationalisation Act. It shows that the petitioners were not aggrieved by the said order under section 18A for they could not be as they had not the required minimum resources for running the mill. [725F H] 3.1 The Nationalisation Act has been enacted to give effect to the policy of the State towards securing the principles specified in clause (b) of article 39 of the Constitution. Indeed a declaration in that regard has been made in section 39 of the Nationalisation Act. [728C D] 3.2 The Nationalisation Act gives effect to the policy of the State towards securing the ownership and control of the material resources of the community, which are so distributed as best to subserve the common good. In the circumstances, as the Nationalisation Act comes under the protective umbrella of Article 31C, the petitioners are not entitled to challenge the constitutional validity thereof on the ground of violation of the provisions of articles 14 and 19 of the Constitution. [728G H] 4. Only constitutional amendments made on or after April 24, 1973 by which Acts or Regulations were included in the Ninth Schedule can be challenged on the ground that they damage the basic or essential features of the Constitution or its basic structure. But if any of such Acts and Regulations is saved by article 31A or by article 31C as it stood prior to the amendment of the Constitution by the Forty second Amendment, such challenge on the ground that the constitutional amendment damages or destroy a basic or essential feature of the Constitution or its basic structure as reflected in article 14 or article 19, will become otiose. [728A C] 5. Under section 4(1) of the Nationalisation Act, the sick textile under taking shall be deemed to include all properties, movable and immovable, including lands, buildings, workshops, stores, etc., in the owner ship, possession, power or control of the owner of the sick textile under taking. The question whether the vacant land has been in use, is not, relevant for the purpose of section 4(1). In view of the said provision, it is 721 difficult to accept the contention of the petitioners that the vacant land is not a part of the undertaking. [732 D E] In the instant case, the whole of the said 17.52 acres of land including 4.37 acres thereof. is situate within the mill compound. The Court cannot accept the contention of the petitioners that as the land is Lying vacant since the take over it does not form part of the undertaking. [732 C D]

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

The , was enacted with the object of preventing undesirable transactions in securities by regulating the stock exchange business, and the Act conferred an effective controlling power on the Central Government over the stock exchange. In exercise of the power conferred on the Central Government to make rules the Central Government made rules described as the Securities Contracts (Regulation) Rules, 1957, providing, inter alia, for the qualification for membership of a stock exchange seeking recognition etc. After the Act came into force two Companies, namely, the Native Share and Stock Brokers ' Association and the Indian Stock Exchange Limited doing stock exchange business in Greater Bombay applied for recognition under the Act. The Government after considering the merits of the companies and the relevant circumstances issued a notification dated August 31, 1957, recognising the Native Share and Stock Brokers ' Association under the name " The Stock Exchange, Bombay " subject to certain conditions. One of the conditions was that the members of the other com pany, India Stock Exchange Limited, would be entitled to apply for membership of the Stock Exchange, Bombay, provided they were active members of the Indian Stock Exchange Limited for 12 months immediately preceding August 6, 1957, and they were also eligible under r. 8(i) of the Securities Contracts (Regulation) Rules, 1957, to be members of a recognised stock exchange. Within the time granted for applying for membership a number 'of active members of the Indian Stock Exchange Limited applied for membership and were admitted as members of the recognised Stock Exchange. Though three years had elapsed after this no member other than the petitioner questioned the validity of the notification which was accepted and the recognised Stock Exchange became established. The petitioner, however, filed a petition under article 32 Of the Constitution praying that the Union be directed to withdraw or cancel the notification dated August 31, 1957, recognising the Stock Exchange, Bombay, under section 4 Of the . Subsequently on November 30, 1957, the Central Government 192 issued another notification applying section 13 Of the Act to Greater Bombay with the result that thereafter every contract in shares between the members of any unrecognised stock exchange in that city would be illegal. The contentions of the petitioner in the petition for the issue of a writ of mandamus were that under article 19(i)(g) of the Constitution he had a fundamental right to carry on business in shares and the two notifications in question imposed unreasonable restrictions on his right, that the notification dated August 31, 1957, was void as it was not sanctioned by the provisions Of section 4 Of the ' Act, that the condition 2(i)(a) of the said notification classifying members of the Indian Stock Exchange Limited as active members and members who were not active infringed fundamental right granted under article 14 Of the Constitution and as the said condition was not severable the entire notification was bad. The respondent besides controverting the said contentions further contended that as the petitioner had not questioned the validity of the Act itself the notification issued thereunder could not be questioned. Held, that the validity of a notification could not be ques tioned if it was issued under a self contained Act and restated the provisions of the Act the validity of which was accepted. If, however, the Act conferred a power on the State in general terms and the notification issued thereunder infringed any of the fundamental rights it could be attacked even though the Act was valid. The Stock Exchange Rules did not operate as a bar against the petitioner becoming a member of the Stock Exchange sub ject to the rules governing such application. The restrictions and conditions imposed under the notifica tion in question were not unreasonable. The condition restricting membership to active members only is germane to the recognition of the Stock Exchange and is therefore, a condition within the meaning of " any other conditions " in cl. (b) of sub section (1) Of section 4 Of the Act. The classification between active members and others was justifiable and the period fixed by the Government as the standard for ascertaining the active membership was neither arbitrary nor unreasonable. There was a presumption in favour of the State that there was a reasonable basis for the classification and the burden to prove that it violated the guarantee of equal protection lay on the petitioner who impeached it.

Civil Appeal Nos. 1685 1686 1971 Appeals by Special leave from the Judgment and Order dated 8.1.1971 & 14.11.1969 of the Punjab and Haryana High Court 374 in S.C. Appeal No. 96 of 1970 & First Appeal No. 59 of 1964. M.N. Phadke and Harbans Singh for the Appellant. Harbans Lal, Urmila Kapoor, Kamini Jaiswal, Nishi Puri, Shahsi Kiran and Tehal Singh Mangal for the Respondents. The Judgment of the Court was delivered by DESAI, J. Whether a religious and/or charitable institution situated in village Mahal Khurd, Tehsil Barnala of Sangrur District is a Sikh Gurdwara within the meaning of the expression in the Sikh Gurdwaras Act, 1925 ( 'Act ' for short) is the subject matter of controversy between the parties in this appeal by special leave. About 56 persons residing in village Mahal Khurd and professing Sikh religion made an application to the Government of Punjab on December 23, 1960 requesting the Government to declare the institution more particularly described in the application as a Sikh Gurdwara. This application was published in the Official Gazette whereupon Mahant Kirpa Ram respondent No. 1 ( 'respondent ' for short) filed objections under Sec. 8 of the Act contending that the institution was not a Sikh Gurdwara and that he was entitled to raise that contention because he was the holder of hereditary office of mahant of the institution. The application was forwarded under Sec. 14 to the Sikh Gurdwara Tribunal set up under the Act. Upon rival contentions the Tribunal framed two issues as under: "1. Is the petitioner a hereditary office holder of the Gurdwara? 2. Is the Gurdwara in dispute a Sikh Gurdwara?" The Tribunal by its judgment dated January 21,1964 answered Issue No. 1 in favour of the respondent holding that he was a hereditary holder of the office of mahant of the institution. On Issue No. 2, the Tribunal held that the institution is a Sikh Gurdwara and is governed by the Act. The respondent preferred F.A.O. No. 59 of 1964 in the High Court of Punjab and Haryana at Chandigrah. A Division Bench of the High Court held that the institution upset was by Gulabdas for commemorating the memory of his Guru named Jad Guru. The 375 High Court further held that the land on which the institution was set up with the grant of Muafi had been donated by a Muslim ruler named Rai Kala of Rai Kot in favour of Mahant Gulabdas. It was also held that the succession to the office of mahant is from Guru to Chela. After referring to various entries in the land records, it was held that way back in 1861 the institution was not only serving as a Gurdwara for the worship of Ganth Saheb but was also used as a Dera or lodging house for Sadhus or Faqirs of the Udasi Sect and that there was a duality of faiths in the institution. After taking all the aspects into consideration the High Court concluded that the institution in question was catering to the religious views and beliefs of both the sects amongst the local population and that therefore, the Tribunal was in error in declaring that it was a Sikh Gurdwara which would permit one of the communities to appropriate the institution to its exclusive use and to deprive the other community or sect from the dual use to which the institution has been put ever since it was founded or established. Accordingly, the High Court allowed the appeal and set aside the declaration made by the Tribunal. Original applicants moved the High Court for a certificate under article 133(1) (a) and (c) of the Constitution which was numbered ss S.C.A. No. 96 of 1970. The High Court on receipt of a report as a result of enquiry directed by it, by its order dated January 8, 1971 rejected the application for certificate both under article 133 (1) (a) and (c). Thereupon the original applicants filed these two appeals by special leave; one against the decision of the High Court reversing the decision of the Tribunal and another against the order of the High Court rejecting the application for certificate. Mr. M.N. Phadke, learned counsel who appeared for the appellant urged that if on evidence the appellants (original petitioners) are in a position to show that the institution was established for use by Sikhs for the purpose of public worship and was used for such worship by Sikhs, before and at the time of the presentation of the petition under sub section (1) of Sec, 7. the institution would be a Sikh Gurdwara as contemplated in Sec. 16(2) (iii) of the Act. Proceeding along it was urged that there is evidence to show and even the High Court has not found to the contrary that the institution was established for use by Sikhs for the purpose of public worship and was used for such worship by Sikhs before and at the time of the presentation of the petition under sub section (1) of Sec. 7 376 and therefore notwithstanding the fact that some other members belonging to some other faith or sect also venerate the institution it would not detract from the character of the institution nor would it be destructive of the character of the institution as Sikh Gurdwara. 16(2) (iii) of the Act provides that 'if the tribunal finds that the gurdwara was established for use by Sikhs for the purpose of public worship and was used for such worship by Sikhs, before and at the time of the presentation of the petition under sub sec. (1) of Sec. 7, the tribunal shall decide that it should be declared to be a Sikh Gurdwara, and record an order accordingly. ' 'Sikh ' is defined in Sec. 2(9) of the Act to mean 'a person who professes the Sikh religion, or was known to be a Sikh during his lifetime. ' If a dispute arises as to whether any particular person is or is not a Sikh the outcome will depend upon his willingness to subscribe to a declaration as prescribed in the Act. Amongst Sikhs, there can be Amritdhari Sikhs and Sahjdhari Sikhs. One can be said to be a Patit if he being a Keshdhari Sikh trims or shaves his beard or keshas or who after taking amrit commits any one or more of the four kurahits. The first question is: whether it has been satisfactorily established that the institution was set up by Sikhs for the purpose of public worship and was used for such worship by Sikhs. The Tribunal found that the institution is an old one and no direct oral or documentary evidence regarding the purpose for which it was founded is available. Reliance was placed on the copies of the revenue records, to show how the institution was described in Government land records. On appraisal of the entries, it has been concurrently found that the institution was set up by Mahant Gulabdas upon a grant of land made to him. It appears a Sanad was issued but it was lost when the Mahrattas over ran this part of the country. The High Court then traced the origin of village Mahal Khurd and recorded a finding that the first settlers came to that area in the beginning of the 18th Century and amongst them were Bir Pal, Garib Dass and Bhoja. They cleared the forest land and started cultivating the land. The High Court then examined what area of land can be cultivated with the help of one pair of bullocks. After asserting the probative value of Kafiat Dehi or Wajah Tasmias, Ext. P 21, and P 22 the High Court concluded that the muafi i.e. exemption from payment of land revenue had been granted to the institution from the time village had first been founded about 200 years before the records were prepared, but these records. 377 do not help in asserting the purpose for which muafi was granted or the purpose for which the institution was established. This conclusion was not commented upon and deserves to be accepted as reasonable inference from the evidence. Mr. Phadke however invited as to examine jamabandi entries and on the strength of them attempted to urge that since remote past the entries describe the institution as gurdwara. exhibit P 1 is a will dated May 10, 1958 executed by Mahant Rashi Ram by which the respondent was appointed as his chela with a right to succeed to the office of mahant of this institution. This is a document of recent origin and is not of much assistance. We may next turn to Ext. P 2 dated the 25th Baisakh, 1927 corresponding to 1871 A.D. It is a decision recorded in a muafi enquiry proceeding in respect of land admeasuring 206 Bighas and 16 Biswas then found to be in possession of the institution. It recites that the land was given to Gulab Dass Faqir by Rai Kalha of Rai Kot real donee being his Guru known as Jad Guru who is the muafidar. It was also found that entries in Inam register show that the land admeasuring 120 Bighas has been entered in the name of muafidar and that area of land remained muafi to the muafidar with the approval of Rai Nizam Sahib and the remaining land measuring 86 Bighas and 16 Biswas which was in excess of grant should be resumed to the Government after obtaining the approval of the Diwan Saheb. Two things emerge from Ext. P 2, that the original muafi grant was made by a Muslim ruler in favour of Mahant Gulab Dass Faquir of Udasi sect who appears to have set up the institution to commemorate the memory of his Guru, Jad Guru. These earlier entries do not support the claim advanced on behalf of the appellants that the institution was set up by Sikhs for the purpose of public worship. On the contrary, the institution appears to have been set up by Gulab Dass, a follower of Udasi sect and succession to the office of Mahant is by Guru to Chela. Reference was next made to Exts. P 7 and P 8 which appear to be statements of Lambardars and Patwaris in question answer form which show that they heard from their ancestors that the muafi had been granted by Rai Kalha to Baba Gulab Dass by way of Punarth for meeting the expenses of the Dera and Bal Bhog Parshad Granth Sahib. Relying on these statements it was urged that at the time of recording the statements on April 19, 1872 Granth Sahib was being 378 venerated in the institution and the grant was for Bal Bhog Parsad of Granth Sahib. There statements suffer from the vice of hearsay evidence in as much as the reference to the Granth Sahib for the first time appears in these statements not based on any personal knowledge but of what they had heard from their ancestors. P 8 purports to be a statement of the then Mahant Ram Dass Muafidar Faqir Udasi of the year 1873. It shows that the muafi land was granted by Rai Kalha of Rai Kot to Bawa Gulab Dass his great grand Guru for Bhog of Granth Sahib and for the expenses of the Dera and Faqirs. Mr. Phadke urged that the Mahant himself has admitted that the grant was for Bal Bhog of Granth Sahib and that this admission concludes the point. The High Court declined to treat this admission as conclusive on the ground that the admission was made more than a century after the original grant and establishment of the institution and three or four generations had intervened and the Mahant was talking about facts which had happened long before his birth. These in our opinion, are relevant considerations for not treating the admission as conclusive more so because the earlier entries do not either refer to the institution as Gurdwara or make any mention of the worship of Granth Sahib therein. Mr. Phadke then invited our attention to exhibit P 18 being on order of Ijlas I Khas Committee of the State of Patiala at the relevant time, according approval to the succession to the office of Mahant of the institution. In this order dated June 10, 1937 the institution was described as: "Prem Das Mahant of Dera of Udasi Bhekh (Gurdwara Sahib) situate at Mahal Khurd Tehsil Barnala having died on 18.10.1982, the Administrative Committee recommends appointment of Rikhi Ram Chela of Narain Dass as Mahant on the condition set out in the order. " This order was signed by Her Highness Maharani of Patiala, the then Prime Minister and Revenue Minister amongst others. Mr. Phadke emphasised that the institution apart from being described as Dera of Udasi Bhekh is also described as Gurdwara Sahib and therefore, it would show that was back in 1937 the State authorities had accepted the institution to be a Gurdwara. We are not impressed by the submission for the obvious reason that the expression 'Gurdwara ' is in the bracket and primarily the institution is described as Dera of Udasi Bhekh. Conceding that the use of the expression 379 'Dera ' does not militate against the institution being a Sikh Gurdwara as held by this Court in the decision in Civil Appeal No. 446 of 1962 rendered on November 9, 1984 wherein Sarkar, J. speaking for the Court observed that 'Dera ' in many cases was synonymous with a 'Gurdwara ', a description of the institution as Dera of Udasi Bhekh would certainly have a distinct connotation showing that it was an Udasi institution as recognised by the highest State authorities. The expression 'Gurdwara Sahib ' in the bracket may at best indicate that the Granth Sahib was also venerated in the institution. Mr. Phadke never drew our attention to Ext. P 23 being an extract from the register of mutations relating to Mauza Mahal Khurd dated September, 27 1984. The entry under the column name of owner ' with description reads: "Shri Guru Granth Sahib situate in the Gurdwara of the village under the management of Rikhi Ram chela Partap Dass Faqir Udasi '. In fact, these entries appear to have been made in implementation of the order of the Ijlas I Khas and has no independent probative value. P 24 is a similar extract dated October 1,1959 and does not advance the case of the appellants any further. Not much reliance was placed on the oral evidence led by the parties and therefore we refrain from referring to it. On the evidence as herein discussed, the question is: whether the view taken by the High Court that the institution catered to worship by people belonging to two different faiths namely, Udasis and Sikhs is reasonable and proper or calls, for interference? In our opinion, the view of the High Court is reasonable, proper and just on the evidence placed on record. There is evidence to show that Gulab Dass who founded the institution was an Udasi Faqir. It is satisfactorily established that the succession to the office of Mahant is from Guru to Chela. It appears that the expression 'Gurdwara ' qualifying the Dera of Udasis Bhekh in the Government records at a much later date. It is established that the original grant was by a Muslim ruler in favour of a Faqir and Sadhu of Udasi sect. On this evidence atleast a negative conclusion would satisfactorily emerge that the appellants have failed to prove that it was an institution set up for use by Sikhs for the purpose of public worship. It must be conceded that nearly a century after the setting up of the institution, Granth Sahib was venerated and read in this 380 institution. Does it provide conclusive evidence that the institution was set up and used for public worship by Sikhs? In order to bring the case under Sec. 16(2) (iii) it must not only be established that the institution was established for use by Sikhs for the purpose of public worship but was used for such worship by the Sikhs before and at the time of the presentation of the petition. The use of the conjunctive `and ' clearly imports that in order to attract Sec. 16(2) (iii), both the conditions must be cumulatively satisfied. Not was only that it must satisfactorily established that the institution was established for `use ' by Sikhs for the purpose of public worship but was used for such worship by the Sikhs before and at the time of the presentation of the petition. It was so held in Gurmukh Singh vs Risaldar Deva Singh & Ors.(1) and it our opinion that represents the correct interpretation of Sec. 16(2) (iii). In this case there is no evidence to show that the institution was established for use by Sikhs for the purpose of public worship. It must be conceded that the institution may be established by anyone, may be a Sikh or follower of any other faith, but it must be established for use by Sikhs for the purpose of worship. One can therefore, ignore the fact that the original grantor was a Muslim ruler Rai Kalha but there is nothing to show that when Gulab Dass Faquir of Udasi sect established the institution, he did it for use by Sikhs for the purpose of public worship. Later on as the majority of the population of the village was follower of Shikh religion and as Udasis also Venerate Granth Sahib, reading of Granth Sahib may have commenced and therefore, generally speaking people may describe and revenue record may show it to be Gurdwara but that would neither be decisive of the character of the institution nor sufficient to bring the institution within Sec. 16(2)(iii) of the Act. It is at this stage necessary to point out the distinction between Sikhs and Udasis. In the past it was attempted to be urged that Udasis are a mere order of Shikh preachers and that there is no difference between two faiths. In fact it was urged that they are not two separate faiths but two separate interpretations of the same faith. Repelling this contention way back in Hem Singh & Ors. vs Basant Das and Anr.(2) It was observed as under : 381 "Indeed the Udasis do not appear to their Lordships to have been a mere order of mendicant preachers among the Sikhs. Nor can it be held proved that they were merely Sikhs who had lapsed into Hindu practices. On the contrary, they appear to have a long and independent history as a separate sect or persuasion occupying a position somewhere between the Sikhs and the orthodox Hindus. The differences in belief as well as in practice between Sikhs and Udasis deserve to be described as serious, extensive and inveterate and some were outwardly striking. " At another stage it was observed that since the time of Siri Chand, the founder of Udasi sect there came into existence a sect of Udasis who while using the same sacred writings as the Sikhs, kept up much more of the old Hindu practices, followed asceticism, were given to the veneration of Samadhs and tombs and continued the Hindu, rites concerning birth, marriage and Shradh. It was also observed that the Udasis so far as the matter can be decided by beliefs and practices, are, from the point of view of Sikhs, schismatics who separated in the earliest days of the movement and never merged thereafter. It would thus appear that Udasis form an independent sect. They do venerate Sikh scriptures. There fore, in an institution of Udasis sect, one can visualise reading of Granth Sahib or veneration of Sikh scriptures. That itself is not decisive of the character of the institution. On the contrary, if the succession was from Guru to Chela and those Gurus were followers of Udasis faith and the institution was known as Dera of Udasi Bhekh and they followed some of the practices of Hindu traditional religion that would be completely destructive of the character of the institution as Sikh Gurdwara. In a very recent decision of this Court in Pritam Dass Mahant vs Shiromani Gurdwara Prabhandhak Committee(1) it has been held that mere reading of Granth Sahib or veneration of Sikh scriptures is not decisive of the character of the institution because Udasis are midway between Sikhs on the one hand and Hindus on the other and that the Udasis also venerate Granth Sahib. Earlier also this view has been consistently taken by this Court as will appear from the decision of this Court in Mahant Dharam Dass etc. vs The State of Punjab and Ors:(2) 382 "They do not subscribe to idol worship and polytheism, nor do they have any Samadhi in their shrines. The teaching of Sikhs was against asceticism. They believe in Guru Granth Sahib, which is a Rosary of sacred poems, exhortations etc. During the time of the Sikh Gurus, the Gurdwaras were under their direct supervision and control or under their Masends or missionary agents. After the death of Guru Gobind Singh the Panth is recognised as the corporate representative of the Guru on earth and thereafter they were managed by the Panth through their Granthis and other sewadars who were under direct supervision of the local Sangat or congregation. During Mahraja Ranjit Singh 's time Sikhism became the religion of the State and large estates and Jagirs were granted to the Gurdwaras apart from the Jagirs which had been earlier granted during the Mughal period. The position of the Gurdwaras changed during British regime. The Mahants who were in charge of the Sikh Gurdwaras could either be a Sikh Mahant or Udasi Mahant. " It thus clearly appears that the appraisal of the evidence by the High Court is correct and unexceptional and weight of the evidence discloses that the institution in question was not shown to have been established for use by Sikhs for the purpose of public worship and therefore one of the material conditions for attracting Sec. 16(2)(iii) of the Act is not established. It is immaterial that at the time of presentation of the petition it was, along with the follower of Udasi sect used for worship of Granth Sahib by the Sikhs. We broadly agree with the view taken by the High Court Therefore these appeals fail and are dismissed with costs. Hearing fee in one set. N.V.K. Appeals dismissed.

A group of persons residing in a village and professing the Sikh religion made an application to the State Government to declare the religious and charitable institution described in the application as a Sikh Gurdwara. This application was published in the Officer Gazette and respondent No. 1 filed objections under section 8 of the Sikh Gurdwaras Act, 1925 contending that the institution was not a Sikh Gurdwara and that he was entitled to raise the said contention because he was the holder of the hereditary office of mahant of the institution. The application was forwarded by the State Government under section 14 to the Sikh Gurdwara Tribunal which held that the respondent was the hereditary holder of the office of mahant of the institution and that the institution was a Sikh Gurdwara and was governed by the Act. The respondent thereupon filed an appeal in the High Court which held that the institution was set up by a mahant for commemorating the memory of his Guru and that the land on which the institution was set up with the grant of Muafi had been donated by a Muslim ruler. After considering of the entries in the land records, the High Court further held that institution was not only serving as a Gurdwara for the worship of Granth Saheb but was also used as a Dera or lodging house or Sadhus or Faqirs of the Udasi Sect and that there was a duality of faiths in the institution. The High Court concluded that the institution was catering to the religious views and beliefs of both the sects amongst the local population and that the Tribunal was in error in declaring that the institution was a Sikh Gudrwara which would permit one of the communities to appropriate the institution to its exclusive use and to deprive the other community or sect from the dual use to which the institution has been put ever since it was founded or established. The High Court, consequently allowed the appeal and set aside the declaration made by the Tribunal. Dismissing the further appeals to this Court 373 ^ HELD: 1. The appraisal of the evidence by the High Court is correct and unexceptional. The evidence discloses that the institution in question was not shown to have been established for use by Sikhs for the purpose of public worship and therefore one of the material conditions for attracting section 16(2)(iii) of the Sikh Gurdwara Act, 1925 was not established. It is immaterial that at the time of presentation of the petition it was along with the followers of Udasi Sect used for worship of Granth Sahib by the Sikhs. [382E F] 2. In order to bring a case under section 16(2)(iii) of the Act it must not only be established that the institution was established by Sikhs for the purpose of public worship but was used for such worship by Sikhs before and at the time of the presentation of the petition. The use of the conjunctive 'and ' clearly imports that in order to attract Section 16(2)(iii) both the conditions must be cumulatively satisfied. [380A B] Gurmukh Singh vs Risaldar Deva Singh & Ors., AIR 1937 Lahore 577, allowed. Udasis form an independent sect : They do venerate Sikh Scriptures. Therefore, in an institution of Udasis sect, one can visualise reading of Granth Sahib or veneration of Sikh scriptures. That itself is not decisive of the character of the institution. If the succession was from Guru to Chela and those Gurus were followers of Udasi faith and the institution was known as Dera of Udasi Bhekh and they followed some of the practices of Hindu traditional religion that would be completely destructive of the character of the institution as Sikh Gurdwara. [381E F] Mahant Daram Dass etc. vs The State of Punjab & Ors. ; Hem Singh & Ors. vs Basant Das and Anr. , AIR 1936 PC 93 at 100 and Pritam Dass Mahant vs Shiromani Gurdwara Prabhandak Committee, C.A. No. 1983 of 1970 dated 16.2.84 referred to. In the instant case, there is no evidence to show that the institution was established for use by Sikhs for the purpose of public worship. Though the institution may be established by anyone may be a Sikh or follower of any other faith, but it must be established for use by Sikhs for the purpose of public worship. The original grantor was a Muslim ruler but there is nothing to show that when Gulab Das Faqir of Udasi Sect established the institution, he did it for use by Sikhs for the purpose of public worship. Later on as the majority of the population of the village were followers of Sikh religion and as Udasis also venerate Granth Sahib, reading of Granth Sahib may have commenced and therefore, generally speaking people may describe, and revenue record may show it to be Gurdwara, but that would neither be decisive of the character of the institution nor sufficient to bring the institution within Section 16(2)(iii) of the Act. [380D F]

Civil Appeals Nos. 1121 1125 of 1975. From the Judgment and Order dated the 31st March 1975 of the Punjab and Haryana High Court in Civil Writ Petition Nos. 5948, 6115, 6736, 6779 and 6780 of 1974. Hardev Singh and R. section Sodhi for the Appellant. section K. Bagga and (Mrs.) section Bagga for Sole Respondent in CA 1121 R 1 in CAs. 1122 1125/75. The Judgment of the Court was delivered by CHANDRACHUD, J. These appeals arise out of a decision rendered by a Full Bench of the Punjab High Court in various writ petitions filed by the students of the Punjab University, who were disqualified for adopting unfair practices in the examinations. Most of them had copied from a common source. By a majority of 2 to 1, the High Court by its Judgment dated March 31, 1975 set aside the decisions of a Committee appointed to inquire into the charges against the erring students. The judgment of the majority rests solely on the 69 view that despite the circumstance that two members of the Committee formed the quorum the impunged decisions were vitiated by the fact that only 2 and not all the 3 members of the Committee participated in the proceedings. Aggrieved by the majority judgment of the High Court, the Punjab University, Chandigarh, has filed these appeals by a certificate granted by the High Court on the ground that the appeals involve a substantial question of law of general importance which requires to be determined by this Court. The respondents to these appeals were detected in the use of unfair means by the supervisory staff at different examinations held by the Punjab University. The Deputy Registrar of the University issued notices to the respondents calling upon them to submit their replies to a questionnaire. Respondents denied having used unfair means in the examinations but their explanation having been found to be unsatisfactory, the charges were referred for inquiry and decision to the Standing Committee which was appointed to deal with cases of misconduct and use of unfair means at the University examinations. The Standing Committee consisted of Shri G. L. Chopra, a retired Judge of the High Court, Shri Ajmer Singh, an advocate who was formerly a Minister of the Punjab Government, and Shri Jagjit Singh, the Registrar of the University. The Standing Committee was appointed by the Syndicate of the University under Regulation 31 of the Punjab University Calender, 1973, Volume II. In a meeting dated August 17, 1971 the Syndicate passed a Resolution that two members shall form the quorum for the meetings of the Standing Committee appointed under Regulation 31. In everyone of the meetings, only two out of the three members of the Standing Committee were present. Respondents appeared before the Standing Committee which, on a consideration of their statements came to the unanimous conclusion that the respondents had adopted unfair means in the examinations. By the impugned decisions they were disqualified for varying terms. It is not alleged that the Standing Committee had committed breach of any of the procedural provisions or of the rules of natural justice. We may also mention in passing that none of the respondents took any objection during the inquiry that it was not competent to only two members of the Standing Committee to inquire into the charges. Before the High Court also, the sole ground on which the decisions of the Standing Committee were challenged was that the decisions were without jurisdiction inasmuch as all the three members of the Standing Committee had not taken part in the meetings in which the decision to disqualify the respondents was taken. The Punjab University, Chandigarh, was set up under the East Punjab Ordinance 1947, which was later replaced by the Punjab University Act, 1947. By section 8 of the Act the supreme authority of the University vests in the Senate consisting of the Chancellor, the Vice Chancellor, ex officio Fellows and Ordinary Fellows. Section 1 1(2) of the Act provides inter alia that the Senate shall exercise its powers in accordance with the statutes, rules and regulations for the 70 time being in force. Section 20 of the Act provides that the Executive Government of the University shall vest in the Syndicate consisting of the Vice Chancellor as Chairman, the Directors of Public Instruction Punjab, Haryana and Chandigarh, the Director of Education, Himachal Pradesh, and not less than 12 or more than 15 ex officio or ordinary Fellows elected by various Faculties. Section 31(1) of the Act provides for the framing of Regulations and states that the Senate, with the sanction of the Government, may from time to time make regulations consistent with the Act for providing for all matters relating to the University. Section 31 (2) enumerates matters regarding which regulations can be made and they include the conduct of students, the procedure to be followed at meetings of the Senate, Syndicate and Faculties and the quorum of members to be required for the transaction of business. Acting under the power conferred by section 31, the Senate of the Punjab University framed regulations in consultation with the Government, which include regulations relating to the use of unfair means in examinations. These regulations are contained in Chapter II of the Punjab University Calendar, 1973, Volume II. The decision of these appeals turns on the construction and meaning of regulations 31 and 32.1 of Chapter II which read thus: "31. The Syndicate shall appoint annually a Standing Committee to deal with cases of the alleged misconduct and use of unfair means in connection with examination; 32.1. When the Committee is unanimous, its decision shall be final except as provided in 32.2. If the Committee is not unanimous the matter shall be referred to the Vice Chancellor who shall either decide the matter himself or refer it to the Syndicate for decision". The constitution of the Standing Committee is indisputably within the powers of the Syndicate under Regulation 31. No exception can therefore be taken to the appointment of the Standing Committee by the Syndicate and indeed no objection was at any stage taken in that behalf. Equally clear seems to us the position that the Syndicate which had the power to appoint the Standing Committee had the incidental power to fix the quorum for the meetings of the Standing Committee. 'Quorum ' denotes the minimum number of members of any body of persons whose presence is necessary in order to enable that body to transact its business validly so that its acts may be lawful. It is generally left to committees themselves to fix the quorum for their meetings and perhaps, if the Syndicate had not fixed the quorum it might have been competent to the Standing Committee itself to devise its day to day procedure including the fixation of quorum But that is going one step ahead, for here the quorum was fixed not by the Standing Committee but by the Syndicate itself which appointed the Standing Committee and which indubitably had the right to appoint the Committee under Regulation 31. We are unable to see any valid reason for which the fixation of quorum for the 71 meetings of a Committee appointed by the Syndicate can be said to be beyond the powers of the Syndicate. It is wholly inappropriate in this connection to draw on the constitution of judicial tribunals as a parallel because, if by law such a tribunal must consist of 3 members there is no jurisdiction in the tribunal to fix a smaller quorum for its sittings. A court is not a committee and if by law any matter is required to be heard, say by a bench of three Judges, there is no power in those three Judges to resolve that only two of them will form a quorum. In fact, quorum is fixed for meetings of committees and not for the sittings of courts. In the instant case the Syndicate had the right to fix the number of persons who would constitute the Standing Committee and by fixing the quorum at 2, it did no more than provide that though the Standing Committee may be composed of 3 persons, any 2 of them could validly and effectively transact the business of and on behalf of the committee. Putting the matter a little differently, the Syndicate nominated 3 persons to be members of the Standing Committee but resolved that any 2 of them would validly constitute the Standing Committee for the time being to dispose of any business which comes before it. Great reliance was placed by the respondents both in the High Court and before us on Regulation 32.1 which we have set out above, in support of the contention that the decision of the Standing Committee was without jurisdiction since all the members of the Committee had not participated in the various decisions. By Regulation 32.1, if the Standing Committee is unanimous in its decision, the decision is final except as provided in Regulation 32.2; if the committee is not unanimous, the matter has to be referred to the Vice Chancellor who can either decide the matter himself or refer it to the Syndicate for its decision. It is urged on behalf of the respondents that the possible dissent of the 3rd member, were he present, would have necessitated a reference to the Vice Chancellor who might not agree with the majority opinion, which shows that no sanctity can attach to a decision rendered by less than the whole body of 3 members of the Standing Committee. This argument is purely hypothetical and besides, it overlooks that the fixation of quorum for the meetings of a committee does not preclude all the members of the committee from attending the meetings. By the quorum, a minimum number of the committee must be present in order that its proceedings may be lawful but that does not mean that more than the minimum are denied an opportunity to participate in the deliberations and the decisions of the committee. Whenever a committee is scheduled to meet, due notice of the meetings has to go to all the members of the committee and it is left to each individual member whether or not to attend a particular meeting. Every member has thus the choice and the opportunity to attend every meeting of the committee. If any member considers the matter which is to be discussed or determined in a particular meeting as of such importance that he must make his voice heard and cast his vote, it is open to him and indeed he is entitled to attend the meeting and make his presence felt. Though a faint attempt was made in these appeals for the first time to suggest that the notice of the meetings 72 of the Standing Committee was not served on all the 3 members of the committee we are satisfied that such a notice was in fact given and someone or the other of the 3 members chose to remain absent at the meetings of the Standing Committee. There is, therefore, no warrant for the hypothesis that had the third member attended the meetings he would have dissented from the decision of the 2 other members so as to necessitate a reference to the Vice Chancellor under Regulation 32.1. Apart from this consideration, we are unable to agree that anything contained in Regulation 32.1 can affect the power of the Syndicate to fix the quorum for the meetings of the Standing Committee. If the quorum consists of 2 members, any 2 out of the 3 members can perform the functions of the Standing Committee, though the committee may be composed of 3 members. When Regulation 32.1 speaks of the committee being unanimous, it refers to the unanimity of the members who for the time being are sitting as the committee and who, by forming the quorum can validly and lawfully discharge the functions of the committee and transact all business on behalf of the committee. If only 2 members out of the 3 who compose the Standing Committee have participated in the business of any particular meeting, the question to ask under Regulation 32.1 is whether there is unanimity amongst those two members. If they are unanimous their decision is final. If they differ, the matter has to be referred to the Vice Chancellor. Thus, the fixation of quorum neither makes Regulation 32.1 a dead letter nor does it affect its application or utility. With respect, we are unable to appreciate the reasoning of the majority that "The manner in which Regulation 32.1 has been framed leaves no doubt that the consideration of the question of students ' misconduct and the use of unfair means in examination by them has been placed at a high pedestal" and that therefore "there is no escape from the conclusion that the consideration of the case of a student against whom there are allegations of misconduct or of use unfair means in an examination, has to be by all the members of the Standing Committee and not by some of them and that any decision of the Syndicate to the contrary would he violative of the letter and spirit of Regulation 32.1. " The fixation of quorum by the Syndicate violates neither the letter nor the spirit of that Regulation. The majority Judges were therefore in error in holding that Regulation 32.1 "clearly negatives the fixation of a quorum and makes it incumbent that the decision must be taken by the full Committee" for the reason that "In a way, this regulation fixes the quorum at the number of members originally appointed". The learned Judges read far more into Regulation 32.1 than there is in it and we see no warrant for construing that regulation as fixing the quorum at the number of members originally appointed to the committee. Regulation 32.1 is aimed at conferring finally on decision of the committee if they are unanimous and at leaving the validity and propriety of a dissenting decision to the judgment of the Vice Chancellor who can deal with the matter himself or refer it to the decision of the Syndicate. Regulation 3 2.1 does not even remotely attempt to fix the 73 quorum. That is not its purpose, and it sounds strange that the Regulation, by a circuitous method, should fix the quorum at the full complement of members. Quorums are seldom so fixed and were it intended that the entire committee must decide every case, Regulation 31 could appropriately have said so. We share the deep concern voiced in the dissenting opinion of Sandhawalia J. that there was no justification for ignoring the stream of precedents which had consistently recognised the validity of decisions taken by 2 members of the Standing Committee. In Bharat Indu vs The Punjab University and another(1), Regulation 19 which was the precursor of and was identical with Regulation 32.1 came before the Punjab High Court. By a closely considered judgment, Dua J. who spoke for the Bench specifically rejected the argument accepted by the two learned Judges in the instant case. In Miss Manjinder Kaur vs The Punjab University (Civil Writ No. 3516 of 1972, decided on March 30, 1973), the same contention was repeated on behalf of the students and once again it was considered and rejected. It is quite true that judicial consistency is not the highest state of legal bliss. Law must grow, it cannot afford to be static and theretore Judges ought to employ an intelligent technique in the use of precedents. Precedents, as observed by Lord Macmillan, should be "stepping stones and not halting places".(2) But, Justice Cardozo 's caution should not go unheeded that the weekly change in the composition of the court ought not to be accompanied by changes in its rulings. The language of the Regulations called for no review of established precedents. Nor indeed is there any fear of unfairness if only 2 members decided the cases of students accused of adopting unfair practices in the examinations. In such cases it is so much better that the law is certain. In the result we allow the appeals, set aside the decision of the majority and uphold that of the minority Judge. The writ petitions filed by the respondents will consequently stand dismissed but there will be no order as to costs. S.R. Appeal allowed.

Regulations 31 and 32.1 of the Punjab University Calendar, 1973, Volume II are as under: "31. The Syndicate shall appoint annually a standing committee to deal with cases of the alleged misconduct and use of unfair means in connection with examinations; 32.1. When the committee is unanimous, its decision shall be final except as provided in S.32.2. If the Committee is not unanimous, the matter shall be referred to the Vice Chancellor who shall either decide the matter himself or refer it to the Syndicate for decision". By virtue of the powers vested in the syndicate, the Punjab University appointed a standing committee under Regulation 31 consisting of a retired high court judge, an Advocate who was formerly a minister of State of Punjab & the Registrar of the University. It also resolved, by its Resolution dated 17th August 1971, that two members shall form the quorum for the meetings of the standing committee appointed under Regulation 31. For adopting unfair practices in the examination, respondents were disqualified by the Committee, in all the sittings of which, only two out of the three members were present. The respondents contended by their writ petitions that the decisions of the Standing Committee were without jurisdiction in as much as all the three members of the Standing Committee had not taken part the meetings in which the decisions to disqualify them were taken. By a majority of 2 to 1, the High Court set aside the decisions taking the view that despite the circumstance that two members of the committee formed the quorum, the impugned decisions were vitiated by the fact that only 2 and not all the 3 members of the committee participated in the proceedings. Allowing the appeals by certificate, the Court, ^ HELD: (1) The Constitution of the Standing Committee is indisputably within the powers of the Syndicate under Regulation 31. The Syndicate which had the power to appoint the Standing Committee had the incidental power to fix the quorum for the meetings of the Standing Committee. 'Quorum ' denotes the minimum number of members of any body of persons whose presence is necessary in order to enable that body to transact its business validly so that its acts may be lawful. It is wholly inappropriate to draw on the Constitution of judicial tribunals as a parallel. In the instant case, the syndicate by nominating 3 persons to be members of the Standing Committee, but by resolving that 2 of them would validly constitute the standing committee, did no more than provide that though the Standing Committee may be composed of 3 persons, any 2 of them could validly and effectively transact the business of and on behalf of the Committee. [70 E F, 71 A C] (ii) By the quorum, a minimum number of members of the committee must be present in order that its proceedings may be lawful, but that does not mean that more than the minimum are denied an opportunity to participate in the deliberations and the decision of the committee. There is no 68 warrant for the hypothesis that had the third member attended the meetings he would have dissented from the decision of the 2 other members so as to necessitate a reference to the Vice Chancellor under Regulation 32.1. [71 F G 72 AB] (iii) When Regulation 32.1 speaks of the committee being unanimous, it refers to the unanimity of the members who for the time being are sitting on the committee and who, by forming the quorum can validly and lawfully discharge the functions of the Committee. The fixation of quorum neither makes Regulation 32.1 a dead letter nor does it affect its application or utility. The fixation of quorum by the Syndicate violates neither the letter nor the spirit of that Regulation. [72 C D, E, F] (iv) Regulation 32.1 is aimed at conferring finality on decisions of the committee if they are unanimous and at leaving the validity and priority of a dissenting decision to the judgment of the Vice Chancellor who can deal with the matter himself or refer it to the decision of the Syndicate. Regulation 32.1 does not even remotely attempt to fix the quorum. That is not its purpose, and it sounds strange that the Regulation, by a circuitous method, should fix the quorum at the full complement of members. Quorums are seldom so fixed and were it intended that the entire committee must decide every case, Regulation 31 could appropriately have said so. [72 G H, 73 A] It is quite true that judicial consistency is not the highest state of legal bliss. Law must grow, it cannot afford to a static and therefore, judges ought to employ an intelligent technique in the use of precedents. But the language of the Regulations called for no review of established precedents. Nor indeed is there any fear of unfairness if only 2 members decided the cases of students accused of adopting unfair practices in the examinations. In such cases, it is so much better that the law is certain. [73 C D, E] Bharat Indu vs The Punjab University & Anr. ILR [1967] 2 Punjab & Haryana 198; Miss Manjinder Kaur vs The Punjab University (Civil Writ No. 3516/72 dt. 30 3 1973 decided by the Punjab High Court (approved).

Civil Appeal No. 3702 (NCE) of 1982. Appeal by Special leave from the judgment and order dated the 2nd August, 1983 of the Allahabad High Court in Election Petition No. 28 of 1980. 24 With Civil Appeal No. 9 of 1983 Appeal by Special leave from the Judgment and Order dated the 15th October/Ist December, 1982 of the Allahabad High Court in Election Petition No. 1 of 1982. And Civil Appeal No. 10 of 1983 Appeal by Special leave from the Judgment and Order dated the 15th October, 1982 and 1st December, 1982 of the Allahabad High Court in Election Petition No. 1 of 1982. S.N. Kacker, R.L. Srivastava, Rajesh and V.K. Verma for the Appellants in CA. No. 3702 of 1982. Appellant in person in CA. No. 10 of 1983. M.C. Bhandare and V.K. Verma for the Appellant in CA. Yogeshwar Prasad, Ms. R. Chhabra, Sujat Ullah and K.K. Gupta for the Respondents. The Judgment of the Court was delivered by FAZAL ALI J. As these appeals involve common points of law, we propose to decide them by one judgment. Civil Appeal No. 3702 of 1982 This appeal arises out of election to '375 Iglas Assembly Constituency, Aligarh to the Uttar Pradesh Legislative Assembly ' which was held on May 28, 1980 and the result of which was declared on June 1, 1980, in which the appellant was declared elected. Respondent No. 1, Smt. Usha Rani had also contested the above mentioned election but was defeated. Aggrieved by the result of the aforesaid election, Smt. Usha Rani filed an election petition on 25 July 15, 1980, at the residence of the Registrar of the Allahabad High Court. Thereafter, on September 24, 1981, the appellant filed a petition before the High Court for rejection of the election petition filed by the respondent, on the ground that the copy of the petition served on him was neither attested to be a true copy nor a correct copy of the original petition, as contemplated by the provisions contained in section 81 (3) of the Representation of the People Act (hereinafter referred to as the 'Act ') and hence the election petition should be rejected in limine under section 86 of the Act. Sub section (3) of section 81 may be extracted thus; "81. Presentation of petitions XX XX XX (3) Every election petition shall be accompanied by as many copies thereof as there are respondents mentioned in the petition, and every such copy shall be attested by the petitioner under his own signature to be a true copy of the petition. " An analysis of this sub section would reveal that every election petition should be accompanied by as many copies as there are respondents and that every copy should be attested by the petitioner under his own signature. If these requirements are not followed strictly and literally, it would result in dismissal of the election petition without any trial as provided by section 86 of the Act. In the instant case, the main point raised by the appellant was that two sets of copies were filed by the election petitioner in the High Court, one set being a correct and exact one and the other containing vital omissions and mistakes. This position is not disputed by the respondent (election petitioner). In reply to the preliminary objection raised by the appellant, the respondent rebutted the charge on the ground that the appellant had got a correct copy as required by section 81 (3) of the Act and, therefore, he could not be heard to complain of any non compliance with the provisions of the aforesaid sub section. After going through the judgment of the High Court it is not clear whether the appellant received the correct copy of the petition or an incorrect one. On the other hand, on the evidence and admitted facts the following circumstances appear to be undisputed; 26 (a) that two sets of copies were filed by the election petitioner in the High Court, (b) that one set was correct as required by the Act, and (c) the other set was incorrect as it contained vital omissions and mistakes regarding the details of corrupt practices alleged against the appellant. There is, however, no clear evidence or finding to show that the copies which were received by the appellant were correct or incorrect and there is some divergence on this point. The High Court seems to have come to the conclusion that as the respondent had filed correct copies also, she did not violate the provisions of section 81 (3) and it was for the appellant to have chosen the correct copy from the two sets. The learned Judge of the High Court has also invoked the doctrine of benefit of doubt in order to cure the non compliance of the mandatory provisions of section 81 (3). On going through the relevant evidence we find that there is overwhelming material to show that the appellant did not receive the correct copy and even the respondent in her evidence did not categorically deny this fact. The respondent in her evidence before the Court admitted that out of the 22 23 copies filed by her, 10 copies were correct and were duly signed by her and the rest were left with the counsel with instructions to get them corrected. Therefore, she was not at all sure whether all the copies were corrected or not. She further admitted that in some of the copies she did not initial the various corrections and that Exts. R 1, R 2, R 3 and R 4 were not out of those 10 copies which had been filed by her along with the election petition at the residence of the Registrar. There is, however, clear evidence to show that the copies which were received by the appellant were Exts. R 1 to R 4, which admittedly were not correct copies of the election petition. This being the position, it is manifest that the appellant did not receive the correct copies as contemplated by section 81 (3) of the Act. The respondent has also not been able to prove that the copies served on the appellant were out of the 10 corrected copies which she had signed and filed. It appears that in view of a large number of copies of the petition having been filed, there was an utter confusion as to which one was correct and which was not. It is obvious that if an 27 election petitioner files a number of copies, some of which may be correct and some may be incorrect, it is his duty to see that the copy served on the respondent is a correct one. A perusal of sections 81 (3) and 86 of the Act gives the impression that they do not contemplate filing of incorrect copies at all and if an election petitioner disregards the mandate contained in section 81 (3) by filing incorrect copies, he takes the risk of the petition being dismissed in limine under section 86. It is no part of the duty of the respondent to wade through the entire record in order to find out which is the correct copy. If out of the copies filed, the respondent 's copy is found to be an incorrect one, it amounts to non compliance of the provisions of section 81 (3) which is sufficient to entail a dismissal of the election petition at the behest. Hence, the mandate contained in section 81 (3) cannot be equated with section 537 of the Code of Criminal Procedure which makes certain omissions as a curable irregularity. No such concept can be imported into the election law because the object of the law is that the electoral process should not be set at naught and an elected candidate should not be thrown out unless the grounds mentioned in the Act are clearly and fully proved. An election dispute concerns the entire constituency and in a parliamentary democracy it is of paramount importance that duly elected representatives should be available to share the responsibility in the due discharge of their duties. That is why the law provides time bound disposal of election disputes and holds out a mandate for procedural compliance. In these circumstances, therefore, in the instant case there was absolutely no justification for the learned Judge to have invoked the doctrine of benefit of doubt. We are satisfied that it has not been proved by the respondent that she filed correct copies of the election petition or, for that matter the appellant got the correct copy and not the incorrect one, in the face of the clear and categorical assertion by him that he did not receive the correct copy. For these reasons, therefore, the appeal is allowed and the election petition filed by the respondent is dismissed under section 86 of the Act. There will be no order as to costs. Civil Appeal Nos. 9 & 10 of 1983 There two connected appeals also involve more or less the same point of law as was involved in Civil Appeal No. 3702 of 1982, with the difference that in Civil Appeal No. 9 of 1983, J.P. Goyal, 28 and in Civil Appeal No. 10 of 1983, Bishamber Nath Pandey, (appellants) were declared elected to the Rajya Sabha on March 29, 1982. An election petition to set aside their election was filed on May 10, 1982 by the Respondent (Raj Narain) making a number of allegations. When the case came up before the Court on 5.7.82, an application was made by the respondents for amendment of the original petition by insertion of page 17, which was allowed. The appellants filed a petition before the Election Judge for rejecting the election petition of the respondents because no amendment could be allowed which would have the effect of defeating or bypassing the provisions of s.81 (3) of the Representation of the People Act (for short, referred to as the 'Act '). It may be stated here that Shri Bishamber Nath Pandey has in the meantime been appointed as Governor of Orissa and has resigned his membership of the Rajya Sabha, Therefore, as requested at the Bar, his name is deleted from the category of appellants. The main argument on behalf of the remaining appellants was that 11 copies of the election petition were filed on 10.5.1982 and although the copies which were served on them did contain page 17 yet the original petition did not contain page 17 and was sought to be added only by way of approaching the Court for amendment of the petition. It was further contended that the Court had no jurisdiction to accede to the prayer for amendment of the petition when at the time of filing the petition, the mandate contained in section 81 (3) was not complied with. In other words, the position seems to be that while the copies which were served on the appellants did contain page 17 yet the original election petition did not contain page 17. This being the admitted position, it could not be said that the copies served on the appellants were the correct and exact copies of the election petition. The provision of section 81 (3) is clear and specific and requires that every copy of the election Petition must be a true and exact copy of the petition. The learned counsel for the respondent submitted that this is a highly technical objection and did not cause any prejudice to the appellants because so far as their copies were concerned they already contained page 17. Mr. Bhandare, counsel for the appellants, however, submitted that this is beside the point and does not cure the invalidity of the election petition filed on 10.5.82. The mandate contained in section 81 (3) enjoins that there should be no difference of 29 any kind whatsoever barring some typographical or insignificant omissions between the petition filed and the copy served on the respondent. If an entire page is missing in the petition but it is there in the copy served on the respondent, then it is manifest that the copy served was not an exact and true copy of the petition. The consequences of the mandatory provisions of s.81 (3) could not be got over by praying for an amendment of the election petition because that would defeat the very object and purpose of section 81 (3). It is not disputed that this discrepancy between the election petition and the copies served on the appellants was undoubtedly there. In these circumstances, the High Court was wrong and committed a serious error of law in allowing the amendment of the petition. The High Court should have tried to appreciate the tenor and spirit of the mandate contained in s.81 (3) of the Act. In the case of Sharif ud Din vs Abdul Gani Lone(1) this Court dismissed the election petition only on the ground that the words "attested to be a true copy" were not signed by the election petitioner and held that this was not a sufficient compliance with the provisions of s.89 (3) of the Jammu & Kashmir Representation of the People Act, which is the same as s.81 (3) of the Act. In the instant case, the inconsistency is much greater than in Sharif ud Din 's case. Similarly, in an earlier case of Satya Narain vs Dhuja Ram & Ors(2)., this Court held as follows: "If there is any halt or arrest in progress of the case, the object of the Act will be completely frustrated. We are, therefore, clearly of opinion that the 1st part of section 81 (3) with which we are mainly concerned in this appeal is a peremptory provision and total non compliance with the same will entail dismissal of the election petition under section 86 of the Act". This view has been consistently taken all through in all the decided cases of this Court so far. Reliance was, however, placed by the counsel for the respondents on the following observations of Dwivedi, J., in Satya Narain 's case: 30 "Our decision restores that primacy of procedure over justice. It make s.86 (1) a tyrannical master. The rigidity of the rule of precedent ties me to its chains. My only hope now is that Parliament would make a just choice between the social interest in the supply of copies by the election petitioner alongwith his election petition and the social interest in the purity of election by excluding s.81 (3) from the purview of s.86 (1) of the Act. The aforesaid observations express a pious wish but do not at all detract from what has been decided in this case and with which the learned Judge also agreed. Despite these observations, the Parliament in its wisdom has not made any attempt to interfere with the peremptive and mandatory provisions of section 81 (3) resulting in the consequence of dismissal of the petition under s.86 of the Act. For the reasons given above, we allow the appeals, set aside the judgment of the High Court and dismiss the election petitions in limine under s.86 of the Act. In the circumstances, there will be no order as to costs. N.V.K. Appeals allowed.

The respondent filed an Election Petition for setting aside the election of the appellant to the State Legislative Assembly. The appellant filed a petition for rejection of the said Election Petition in limine under Section 86 of the Representation of the People Act, 1951 on the ground that the copy of the petition served on him was neither attested to be a true copy nor a correct copy of the original petition, as contemplated by the provisions contained in section 81(3). The case of the respondent election petitioner was that two sets of copies were filed, one set being correct as required by the Act and the other set incorrect containing vital omissions and mistakes, the appellant having got a correct copy as required by section 81(3) there was compliance with the requirement of the section. The High Court held that as the respondent had filed correct copies, the provisions of section 81(3) were not violated and it was for the appellant to have chosen the correct copy from the two sets and invoked the doctrine of benefit of doubt in order to cure the non compliance of the mandatory provisions of section 81(3), and rejected the application to dismiss the Election Petition. In the connected appeals, the 1st Respondent had filed separate Election Petitions for setting aside the election of the appellants to the Rajya Sabha. When the said petitions came up before the High Court for hearing an application was made by the respondent for amendment of the original petition by insertion of page 17 which was allowed. The appellants filed petitions before the Election judge for rejecting the Election Petition on the ground that no amendment could be allowed which would have the effect of defeating or bypassing the provisions of section 81(3) of the Act, and that the original petition served on the appellants did not contain page 17 and hence was not the correct and exact copy of the election petition. The High Court rejected the application to dismiss the Election Petition. Allowing the Appeals. 23 ^ HELD: 1. The mandate contained in section 81(3) is clear and specific and requires that every copy of the election petition must be a true and exact copy of the petition. The consequences of this mandatory provision cannot be got over by praying for an amendment of the election petition because that would defeat the very object and purpose of section 81(3). B] In the instant cases, the judgment of the High Court are set aside, and the election petitions dismissed in limine under section 86 of the Act. [30 D] Sharif ud Din vs Abdul Gani Lone, ; ; referred to. Section 81(3) and 86 of the Act do not contemplate the filing of incorrect copies and if an election petitioner disregards the mandate contained in section 81(3) by filing incorrect copies, he takes the risk of the petition being dismissed in limine under section 86. It is no part of the duty of the respondent to wade through the entire record in order to find out which is the correct copy. If out of the copies filed, the respondent 's copy is found to be an incorrect one, it amounts to non compliance of the provisions of section 81(3) which is sufficient to entail a dismissal of the election petition at the behest of the respondent. [27 B; C] 3. If an election petitioner files a number of copies, some of which may be correct and some may be incorrect, it is his duty to see that the copy served on the respondent is a correct one. [27 A] In the instant case, it has not been proved by the respondent that correct copies of the election petition had been filed or, that the appellant got the correct copy and not the incorrect one, in the face of the clear and categorical assertion by him that he did not receive the correct copy. [27 F] 4. The mandate contained in Section 81(3) cannot be equated with section 537 of the Code of Criminal Procedure which makes certain omissions as a curable irregularity. No. such concept can be imported into the election law because the object of the law is that the electoral process should not be set at naught and an elected candidate should not be thrown out unless the grounds mentioned in the Act are clearly and fully proved. [27 D] 5. Parliament in its wisdom has not made any attempt to interfere with the preemptive and mandatory provisions of section 81 (3) resulting in the consequence of dismissal of the petition under section 86 despite the observations in Satya Narain. vs Dhija Ram & Ors. ; [30 C]

Civil Appeal No. 90 of 1973. From the Judgment and Order dated the 24th and 25th July, 1972 of the Gujarat High Court in Election Petition No. 2 of 1971. section N. Andley, K. J. John and Shri Narain Mathur for the appellant. F. section Nariman, P. H. Parekh, Mrs. section Bhandare and Manju Jaitley for respondent No. 1. The Judgment of the Court was delivered by ALAGIRISWAMI, J. This appeal arises out of an election petition questioning the election of 1st respondent in the election held in March 1971 to the Lok Sabha from the Banaskantha constituency in Gujarat. In that election the 1st respondent, a nominee of the Ruling Congress was declared elected securing 1,16,632 votes as against 92,945 votes secured by the 2nd respondent, a nominee of the Organisation Congress. The appellant, a voter in the constituency, also belonging to the Organisation Congress, filed a petition challenging the validity of the election on various grounds out of which only those covered by issue No. 10, hereinafter set out, survive for consi deration: "(10) Whether respondent No. 1 or his agents or/ other persons with his consent made a gift or promise of gratification to the petitioner with the object directly or indirectly of inducing the petitioner to vote for respondent No. 1 or to refrain from voting for respondent No. 2 ?" The allegation relating to this charge in the election petition is that the 1st respondent and his agent Maulvi Abdur Rehman and the 1st respondent 's son Bipin Popatlal Joshi with the consent of the 1st respondent had made a gift and a promise of gratification to the appellant for voting in 1st respondent 's favour. The appellant as well as one Madhusudansinhji, who has been examined as P.W. 10, seem to have been at that time prominent members of the Organisation Congress and also leaders of the Kshatriya community which formed 900 about 20 to 25 per cent of the votes in the Banaskantha constituency. It was alleged that on February 9, 1971 the 1st respondent and Maulvi Abdur Rehman came to the appellant 's residence and persuaded him to leave Congress (O) and join Congress (R) offering (1) to secure a party ticket for the appellant for the election to the Gujarat Legislative Assembly in 1972, (2) to meet all his expenses for that election and to pay him Rs. 10,000/ in cash towards the said expenses, and (3) to construct a hostel for the Kshatriya students of the Banaskantha district. A specific allegation was made that the 1st respondent wanted the appellant to vote for him. It was also alleged that the 1st respondent asked the appellant to convey to Madhusudansinhji an offer of a party ticket for the Legislative Assembly election in 1972 and to pay him also a sum of Rs. 10,000/ . The Prime Minister was addressing a meeting at Palanpur on that day. The appellant, his wife and Madhusudansinhji were taken to the helipad, Palanpur when the Prime Minister landed there and also to the dais from which the Prime Minister was addressing a public meeting. One Akbarbhai Chavda, convener of the District Congress Committee announced that the appellant and Madhusudansinhji had joined Congress (R), and asked the appellant to say a few words. The appellant went to the microphone, took out the bundle of notes of Rs. 10,000/ given to him and flung it in the air and told the gathering that he and his colleagues could not be purchased and that they would remain loyal to the Organisation Congress. During the trial of the election petition Madhusudansinhji, who had by that time joined the Ruling Congress and Maulvi Abdur Rehman were examined as witnesses on behalf of the appellant. The learned Judge of the High Court after considering the evidence before him held that Bipin Popatlal Joshi, son of the 1st responident, handed over Rs. 10,000/ to the appellant as a bribe to bring about the appellant 's defection from the Organisation Congress. But he took the view that the object of the gift was to bring about the appellant 's defection from the Organisation Congress and not induce directly or indirectly any voters to cast their votes for the Ruling Congress candidate or to refrain from voting in favour of the 2nd respondent. As regards the offer to build the hostel for Kshatriya students he held that the fact that a person who defects from another party to the Ruling Congress would be expected to work for that party and would be expected to use his personal influence in support of the candidate of that party does not mean that the object of bringing about the defection was to indirectly induce the Kshatriya voters to cast their votes for the 1st respondent. He therefore held that payment of such money and holding out such inducement does not amount to any offence under the Election Law and it was with regret that he had to decide the case in favour of the 1st respondent. We are in entire agreement with the finding of the learned Judge as regards the payment of Rs. 10,000/ to the appellant and also the offer to build hostel for Kshatriya students and do not consider it 901 necessary to go into the evidence in support of that finding. That finding is supported not only by the evidence of Madnusudansinhji and Maulvi Abdur Rehman but also the letter exhibit T, passed by the latter to the appellant and Madhusudansinhji. The question is whether that finding is enough to establish the charge of bribery against the 1st respondent. There is still another finding necessary in regard to the allegations made in the petition in respect of which the learned Judge has given no finding and that is with regard to what happened of the 9th of February 1971. We are at one with the view of the learned Judge that the payment of Rs. 10,000/ to the appellant was with a view to induce him to defect from organisation Congress to the Ruling Congress. It may carry with it the implication that he was expected to use his influence with the voters to vote for the candidate set up by the Ruling Congress. It has been held by this Court in Kalia Singh vs Genda Lal & ors.(1) to which two of us (Untwalia & Alagiriswami JJ) are party, that a payment made to a person in order to induce him to canvass votes on behalf of the bribe giver would not be bribery within the definition of that word in section 123(1) of the Representation of the People Act. It was held that it is only in a case where the payment to a third person by itself induces the voter to vote for the bribe giver that it would fall under section 123(1). Mr. Andley appearing on behalf of the appellant tried to persuade us that that decision requires reconsideration. After having considered his arguments we are still of the opinion that the view taken in that decision is correct. The object of providing that a payment should not be made to a person in order that that payment should induce some other person to vote for the bribe giver is obvious. It is apparently intended to cover situations where payment to a husband, wife, son or father is intended to induce the wife, husband, father or son to vote for the bribe giver. That would be indirect inducement. otherwise it would be easy for the bribe giver to say that he did not bribe the voter himself and therefore it is not bribery. That this provision was not intended to cover a case where money is paid to a certain person in order to make him induce another person to vote for the person who paid him the money would be obvious by looking at the converse case. Under section 123(1)(B)(b) the receipt of or agreement to receive, any gratification, whether as a motive or a reward by any person whomsoever for himself or any other person for voting or refraining from voting or inducing or attempting to induce any elector to vote or refrain from voting, or any candidate to with draw or not to withdraw his candidature is bribery. Under this clause any person who receives or agrees to receive any gratification as a reward for inducing or attempting to induce any elector to vote etc. would be receiving a bribe. The law therefore contemplates that where a person makes any payment to another person in order to make him use his influence to induce a third person to vote for him that is not bribery by the person who pays but the receipt of money by the second person for inducing or attempting to induce another elector to vote is bribery. It is also bribery for the voter himself to receive 902 the money. We, therefore, reiterate the view that when a candidate or anybody on his behalf pays any gratification to a person in order that the payment made to him may induce the voter to vote for the bribe giver it is bribery. But where the gratification is paid to a person in order that he may induce the other persons to vote for the bribe giver it is not bribery on the part of the bribe giver. It is, however, as we have explained above, bribery on the part of the bribe taker even when he takes it in order to induce an elector to vote for the bribe giver. In this case it is obvious that the primary object of the payment made to the appellant was to induce him to defect from the Organisation Congress to the Ruling Congress. That is not a corrupt practice under the Representation of the People Act. Even if the payment was received with the promise that he would induce the voters to vote for the bribe giver it will not be bribery on the part of the bribe giver but only bribery on the part the bribe taker. The defection of the appellant to the Ruling Congress, if it took place, might mean that he was expected to work for the Ruling Congress. Equally it may not. A person who changes his party allegiance at the time of the election probably might not command much respect among electors if the 1 electors knew that he had done so after receiving some money. Otherwise the fact that two important persons the appellant and Madhusudansinhji, a younger brother of the ex ruler of Danta Stata had joined the Ruling Congress might be expected to influence the voters to vote for the candidate set up by the Ruling Congress. But that would be not because of the payment made to the appellant and Madhusudansinhji. Nor would such payment be bribery. To reiterate, it is the payment to the appellant that must induce the voters to vote for the candidate set up by the Ruling Congress in order that it might amount to bribery. It is not enough that his defection from organisation Congress to the Ruling Congress induces voters to vote for the Ruling Congress candidate. As we said earlier, if the payment to the appellant came to be known as the cause for his changing allegiance it may have a boomerang effect. It is therefore clear that the payment made to the appellant would not have induced the voters to vote for the Ruling Congress candidate. While after his defection therefore the appellant might have been expected to work for the Ruling Congress candidate or equally might not have been, it is perhaps implicit that he would also vote for the Ruling Congress candidate. Is this enough to make the payment made to the appellant bribery ? The payment was made not for the purpose of inducing him to vote but to make him defect to the Ruling Congress. That was the purpose for which the payment was made. That incidentally he might vote for the Ruling Congress candidate does mean that the payment was made to him in order to make him vote for the Ruling Congress candidate. The bargain was not for his vote, the bargain was for his defection. Therefore on this point we agree with the learned Judge of the High Court. But if there was a specific request by the 1st respondent to the appellant that he should vote for him then the position would be different. In that case it would be bribery and even bribery to one 903 person is enough to make an election void. A specific allegation to that effect has been made in the election petition and that has not been considered by the learned Judge of the High Court. We shall now proceed to do so. The appellant gave evidence to the effect that the 1st respondent asked him on 9th February to vote for him and made the three promises earlier referred to. He was not cross examined on that point but the 1st respondent in his turn deniesd this when he gave evidence. Maulvi Abdul Rehman speaks to his having met the appellant on February 9, 1971 but he says that the 1st respondent was not with him at that time. Madhusudansinhji says that he had met the appellant before the 14th and that at that time the appellant told him that the Maulvi and the 1st respondent were insisting that the appellant and he (Madhusudansinh) should join Congress (R). He also denied a suggestion put to him in cross examination that it was not true that the appellant had told him before the 14th of February anything about the Maulvi or the 1st respondent telling the appellant that the appellant and he (Madhusudansinh) should join the Congress (R) on certain terms. This is the evidence relied on to show that on the 9th the 1st respondent also had met the appellant. If the appellant and Madhusudansinhji had met at Palanpur before the 14th and the appellant then told him that Maulvi and the 1st respondent were insisting that they should join the Ruling Congress the meeting should have been on the 13th or earlier and the request to him on the 12th or earlier. Naturally having chosen to examine Madhusudansinhji, who had by that time joined the Ruling Congress, as his witness the appellant would not have risked putting questions about the exact date on which Maulvi and the 1st respondent had met him. Quite possibly there was no such meeting on the 9th of February and that was why that question was not specifically put to him. When that question was put to Maulvi Abdul Rehman, who was examined as P.W. 8 a little earlier, he denied that the 1st respondent was with him on the 9th February. Coming to the conversation which the appellant and Madhusudansinhji had before the 14th, if the Maulvi and the 1st respondent were insisting either on the 13th or earlier that the appellant should join the Ruling Congress there should have been a meeting between them a little earlier than the 13th and it should have been on the 9th is the argument on behalf of the appellant. But there are many imponderables in this argument. If the Maulvi and the 1st respondent were insisting that the appellant and Madhusudansinhji should join the Ruling Congress it does not mean that they both did so at the same time. They could have been doing it on different occasions separately. Nor does it follow that the Maulvi and the 1st respondent met him on the 9th. Nor does it follow that on that date the 1st respondent asked the appellant to vote for him. The statement of Madhusudansinh is too slender a foundation on which this argument could be built. It is thus a case of the appellant 's oath against 1st respondent 's oath and in a case of a serious charge like bribery we would not be satisfied merely on the basis of an oath against oath to hold that it has been satisfactorily established that the 904 1st respondent asked the appellant on 9th February to vote for him. He may also mention that with regard to the alleged visit of the Maulvi and the 1st respondent to the appellant three other possible witnesses including the appellant 's wife, Pushpaben who could have been examined to establish that the 1st respondent accompanied the Maulvi to the appellant had not been examined. A further fact which improbabilises this story is that in the election petition it is stated that the 1st respondent told the appellant that he would arrange for a ticket for Madhusudansinh in the 1972 elecations and pay him Rs. 10,000/ if Madhusudansinh left organisation Congress and joined the Ruling Congress and voted and worked for him (1st respondent) and asked him to convey the offer to Madhusudansinh. No evidence was let in about the voting and what is more Madhusudansinh was not a voter in the Banaskantha Constituency. This shows that the allegation regarding the request to appellant to vote for 1st respondent is of the character as the request to Madhusudansinh and put in merely for the purposes of the election petition and not a fact. On broader considerations also it is very unlikely that when the talk was about the appellant and Madhusudansinh defecting to the Ruling Congress from the organisation Congress there would have been any talk about the voting itself. All parties would have proceeded on the understanding that when they defected to the Ruling Congress they would both work and vote for the Ruling Congress. The distinction between a gift or offer combined with the request to vote and the gift or offer to a person asking him to work for him with the incidental result that person might vote for him should always be kept in mind. In such a case there is no specific bargain for the vote. Were it not so it would be impossible for persons standing for election to get any person to work for them who is not also a voter in the constituency. This was brought out by this Court in the decision in onkar Singh vs Ghasiram Majhi(1). We would, therefore, hold that the case that 1st respondent bargained for the appellant 's vote has not been satisfactorily made out. On behalf of the 1st respondent it was urged that the actions of the appellant and Madhusudansinhji immediately after the payment of Rs. 10,000/ and the dramatic developments at the meeting addressed by the Prime Minister show that there would not have been any bargaining for the appellant 's vote. The points relied upon were (1) that it was not said by the appellant when he threw the money into the crowd on the 18th that he was asked to vote for the 1st respondent, (2) that it was not mentioned in the statement (exhibit 5) made by the appellant and Madhusudansinhji on 18 2 1971, (3) that was not mentioned in the interview given to the newspaper reporters found in exhibit 7 or in the newspaper report exhibit 8. We do not consider that these things are of much importance. At that time the most important factor was the attempt to persuade the appellant and Madhusudansinhji to defect to the Ruling Congress and any request to the appellant to vote for the 1st respondent would have been insignificant 905 even as we have held that when requesting the appellant and Madhusudansinhji to defect to the Ruling Congress it is not likely that they would have been asked to vote for the 1st respondent. The reference to the piece of evidence just mentioned cannot be said to establish that there was no request made to the appellant to vote for the 1st respondent. That would have to be decided on other factors and other evidence and on the basis of that evidence we have already held that it is not established that the 1st respondent requested the appellant to vote for him. Now remains the question of the offer to build a hostel for Kshatriya boys. Strictly speaking this does not arise on issue 10. This is probabilised by the evidence of Madhusudansinhji, Maulvi Abdul Rehman and the appellant as well as exhibit T. Whether it was to be in Danta or Banaskantha does not make much difference as long as it was for the Kshatriya boys. The two places are near to each other though in different Parliamentary constituencies and in whichever place it was situate it will benefit Kshatriya boys and there is No. doubt that if the hostel were constructed by respondent No. 1 or the Ruling Congress party at his instance that would induce the voters to vote for the Ruling Congress candidate. But before that happens the matter should come to the knowledge of the voters. Only if the voters knew that the promise had been made to the appellant and Madhusudansinhji that promise would induce the voters to vote for 1st respondent. But the knowledge of the prormise remained confined to the appellant and P.W. 10, in addition of course to Maulvi Abdul Rehman and the 1st respondent 's son. If the payment or the promise was to induce the voters, it cannot induce the voters unless they come to know about the payment or the promise. There is no evidence her that the voters knew about the promise to build the hostel. The bargain in such cases as we have mentioned in the judgement delivered by us today in section Iqbal Singh vs Gurdas Singh & Ors. is really an offer on the part of the bribe giver that he would do such a thing if the voters would vote for him. It is not necessary that the voters should have accepted it. But the voters should have a knowledge about the offer. Then only it would be a bargain. An offer contemplated and retained in the mind of the offerer and not articulated and made known to the offeree will not be a bargain. It therefore follows that in this case the offer to build a hostel does not also amount to bribery. In the result we upheld the judgment of the High Court and dismise this appeal. We make no order as to costs. P.H.P Appeal dismissed.

The first respondent, a candidate of the ruling Congress was elected to the Lok Sabha from Banaskantha constituency in Gujarat, defeating his rival candidate of Organisation Congress. The appellant a voter in the constituency belonging to the Organisation Congress filed an election petition challenging the validity of election of respondent No. 1 on various grounds. The only ground surviving now is the allegation that respondent No. 1 or his agents or other persons with his consent made a gift or promise of gratification to the petitioner with the object of directly or indirectly inducing the petitioner to vote for respondent No 1 or to refrain from voting for respondent No. 2. The allegation is that the first respondent 's agent Maulvi and the respondent 's son Bipin with the consent of the first respondent made a gift of Rs. 10,000/ and promised to secure a party ticket for the appellant and to construct a hostel for the Kshatriya students of the Bansaskantha district. A specific allegation was made that the first respondent wanted the appellant to vote for him. It was also alleged that the first respondent asked the appellant to convey to Madhusudan Sinhji, another voter an offer of a party ticket for the Legislative Assembly election, and to pay to him also a sum of Rs. 10,000/ The High Court after considering the evidence held that Bipin handed over Rs. 10,000/ to the appellant to bring about the appellant 's defection from the Organisation Congress. The High Court took the view that the object of the gift was to bring about the appellant 's defection from the Organisation Congress and not to induce directly or indirectly any voters to cast their votes for the ruling Congress candidate or to refrain from voting in favour of the second respondent. The High Court held that the payment of Rs. 10,000/ and holding out inducement to build the hostel for Kshatriya students does not amount to any offence under the election law. On an appeal, the appellant contended: (i) that the first respondent or his agent or his son with his consent induced the appellant and Madhusudan Sinhji to vote for respondent No. 1 and to refrain from voting for respondent No. 2. (ii) that the whole purpose of the defection was that the appellant and Madhusudan Sinhji should canvass votes for respondent No. 1. particularly, from the Kshatriya voters on the inducement of building hostel for the Kshatriya students. (iii) that the decision of this Court in the case of Kalia Singh vs Gendalal requires to be reconsidered. (iv) that there was a specific request by respondent No. 1 to the appellant to vote for him in exchange for the gift and inducement. Dismissing the appeal, ^ HELD: (1) We are in entire agreement with the finding of the High Court as regards the payment of Rs. 10,000/ to the appellant and also the offer to build hostel for Kshatriya students. [900 H] 898 (2) The payment of Rs. 10,000/ to the appellant was with a view to induce him to defect from Organisation Congress to the ruling Congress. It may carry with it the implication that he was expected to use his influence with the voters to vote for the candidate set up by the ruling Congress. [901 B C] (3) The decision of this Court in the case of Kalia Singh vs Genda Lal approved. The said decision does not require any re consideration. The expression "directly or indirectly" is intended to cover situations where payment to a husband, wife son or father is intended to induce the wife, husband, father or son to vote for the bribe giver, that would be indirect inducement. Otherwise it would be easy for the bribe given to say that he did not bribe the voter himself. This provision was not intended to cover a case where money is paid to a certain person in order to make him induce another person to vote for the person who paid him the money would be obvious by looking at the converse case. When a candidate or anybody on his behalf pays any gratification to a person in order that the payment made to him may induce the voter to vote for the bribe giver, it is bribery. But where the gratification is paid to a person in order that he may induce the other person to vote for the bribe giver, it is not bribery on the part of the bribe giver. [901 C H, 902 A] (4) In this case it is obvious that the primary object of the payment made to the appellant was to induce him to defect from the Organisation Congress to the ruling Congress. The bargain was not for his vote. The bargain was for defection. That is not a corrupt parctice under the Representations of the People Act. Even if the payment was received with the promise that he would induce the voters to vote for the bribe giver, it will not be bribery on the part of the bribe giver but only bribery on the part of the bribe taker. The defection of the appellant to the ruling Congress, if it took place, might mean that he was expected to work for the ruling Congress. Equally it may not. The fact of the appellant and Madhusudan Sinhji 's joining the ruling Congress might be expected to influence the voters to vote for the candidate set up by the ruling Congress. But, that would not be because of the payment made to the appellant and Madhusudan Sinhji nor would such payment be bribery. It is the payment to the appellant that must induce the voters to vote for the candidate set up by the ruling Congress in order that it might amount to bribery. It is not enough that his defection from Organisation Congress to the ruling Congress induces voters to vote for the ruling Congress candidate. [902 B E] (5) As far as the promise to build a hostel for the Kshatriya students is concerned, before it can be termed a bribery the matter should come to the knowledge of the voters. Only if the voters know that the promise has been made to the appellant and Madhusudan Sinhji, can that promise would induce the voters to vote for the first respondent. In the present case, the knowledge of the promise remained confined to the appellant. If the payment or the promise was to induce the voters, it cannot induce the voters unless they come to know about the payment or the promise. It is not necessary that the voters should have accepted the bribe but the voters must have a knowledge about the offer. Then only it would be a bargain. Therefore, in the present case the offer to build a hostel does not amount to bribery. [904 D F] (6) But, if there was a specific request by the first respondent to the appellant that he should vote for him in exchange for the gift and the inducement in that case it would be bribery and even bribery to one voter is enough to make a election void. A specific allegation to that effect was made in the election petition and that has not been considered by the High Court. This Court, therefore, went through the evidence and came to the conclusion that no such request for vote was made to the appellant for the following reasons. [902H; 903A] (i) Madhusudan Sinhji was not put a question about the exact date on which Maulvi and the first respondent met him. Quite possibly there was no such meeting on the 9th February and that is why the question was not put to him. [903 E] 899 (ii) The statement of Madhusudan Sinhji is too slander a foundation on which the argument could be built. It is, thus, a case of the appellant 's oath against the first respondent 's oath and in a case of serious charge like bribery we would not be satisfied merely on the basis of an oath against an oath. [903 H] (iii) Three other possible witnesses including the appellant 's wife Pushpa who could have been examined to establish that the first respondent accompanied the Maulvi to the appellant had not been examined. [904 A] (iv) No evidence was led about the first respondent 's having asked the appellant to vote. The allegation regarding the request to appellant to vote for first respondent is put in merely for the purpose of election petition and not a fact. [904 C] (v) All parties would have proceeded on the understanding that when the appellant defected to the ruling Congress, he would both work and vote for the ruling Congress. There could not have been a specific bargain for the vote. [904 D]

Civil Appeal No. 3751 of 1982. From the Judgment and Order dated 15.9.1982 of the Punjab and Haryana High Court in L.P. A. No. 1232 of 1982. Soli J. Sorabjee Ram K.B. Rohtagi and H.N. Salve, for the Appellant. P.P. Rao, Arun Madon, R. Venkataramani and A Marriarputtam for the Respondent No. 4. L.N. Sinha, Attorney General and R.N. Poddar for the Respondents. The Judgment of the Court was delivered by 545 DESAI, J. As the matter brooked no delay, when the arguments were concluded, the Court pronounced the order which reads as under "The appeal is allowed and the decision of the High Court of Punjab and Haryana at Chandigarh in L.P.A. No. 1232 of 1982 dated September 15, 1982 as well as the decision of the learned Single Judge in Civil Writ Petition No. 2321 of 1981 dated August 30, 1982. The writ petition filed by the present appellant succeeds. The order of the Director of Industries dated May 25, 1981 granting a quarry lease to M/s Pioneer Crushing Co. (respondent No. 4) in respect of Serai Khawaja Plot No. II Quarry (except the area of Green Field colonies) for the period ending with 31st March, 1984 is quashed and set aside. The first respondent the State of Haryana and the second respondent the Director of Industries are directed under and subject to the relevant provisions of the Haryana Minor Minerals (Vesting of Rights) Act, 1973 read with Punjab Minor and Mineral Concession Rules, 1964 as applicable to the State of Haryana to grant a right to the appellant in the form of contract usually entered into in similar cases to extract stones from Serai Khawaja Plot No. II on compensation howsoever described at the rate of Rs. 25 lacs per, year for a period of five years commencing from January I, 1983 and upto and inclusive and ending with December 31, 1987. The appellant herein is directed to appear before the second respondent within a weak from today to execute the contract and/or necessary documents, instruments and to carry out all formalities including the making of deposits and/or payments, if any, required to be made under the relevant provisions of the Act and Rules. The fourth respondent is given time upto December 31, 1982 to clear out from the area and this time is given to him as and by way of locus penitentae to wind up his affairs as far as the quarry involved in this appeal. 546 In the circumstances of the case, there will be no order as to costs. Reasons will follow. " Here are the reasons. It must be confessed that reasons in support of the decision are delayed but without offering an alibi for the tardiness, one aspect which inhibited giving of the reasons may be mentioned. My learned colleague suddenly left the Court and the doubt nagged me for some time whether one Judge alone can give the reasons. It was an agreed order. Before pronouncing the order broad discussion took place which showed identity of views on all points involved in the matter. In this background to give reasons which appealed to us though drawn up by one of us would any day provide a better choice than not to give reasons because it would always annoy and distress the party who lost the legal battle whether there are legal or logical reasons in support of the order or it is merely an arbitrary exercise of power. However, what happened in the Court in the presence of all parties and the learned counsel is res ipsa loquiter. What started before the Court as a minor whisper, hardly audible, ended with the experience in a whispering gallery where the whisper multiplied at the other end of the gallery in volleying thunders. There would have been no qualms of conscience if the matter was disposed of sub silentio as to reasons because of the outcome of the Court 's exercise of jurisdiction under article 136. The reasons which dictated the choice and indicated the path did stand in need of justification because the end product justified interference. The very outcome would provide the raison d 'etre for the exercise of power. Yet to bow to the tradition to convince the protagenis of reasoned orders, these are the reasons. Factually matrix first. The State of Haryana in exercise of the power conferred upon it by Haryana Mioner Minerals (Vesting of Rights) Act, 1973 ( '1973 Act ' for short) grants lease for winning minor mineral vestige in it. The grant of the lease is regulated by Punjab Minor Mineral Concession Rules, 1964 ( 'Rules ' for short) in their application to the State of Haryana. A notification was issued on December 26, 1980 specifying that minor mineral quarries at various places in Faridabad District would be auctioned on February 20, 1981. At the auction held on that day, appellant Ram & Shyam Company 547 gave the highest bid for Sarai Khawaja Plot No. II in the amount of Rs 1,52,000 p.a. The presiding Officer conducting the auction accepted the bid but the State Government did not confirm the same. A fresh auction was notified to be held on May 4, 1981. The appellant participated and gave the bid for the same plot, his highest bid rising to Rs 3,87,000 for a period of three years. The same routine followed. The Presiding Officer accepted the bid and the State Government declined to confirm the same. Then there happened something which cannot have any parallel or precedent in a constitutional democracy like ours but one could have profitably drawn parallel from the administration of old princely States. Respondent No. 4 wrote a letter dated May 9, 1981 (Anx. R 1 in the High Court) addressed to the Chief Minister, Haryana State setting out therein the history of various auctions, and casting serious aspersions on those who participated in the auction inter alia saying that the bidders at the auctions have formed a syndicate and want to monopolise the business by not outbidding each other so that the State gets uneconomical rent/royalty. It was further alleged that 'the goondas and anti social elements are assisting those monopolists/bidders and successfully pushed out a party like respondent No. 4. The letter further proceeds to make an offer/that if the contract for a period of five years is given to respondent No. 4 in respect of Sarai Khawaja Plot No. 2, it is willing to pay Rs 4,50,000 per year. There is also an offer for Sarai Khawaja Plot No. 1 with which we are not concerned. Promptly this offer was accepted by the Chief Minister. The appellant challenged the action of the Chief Minister in Writ Petition No. 2321/81 in the Punjab and Haryana High Court inter alia contending that those who formed the firm styled as M/s Pioneer Crushing Co. respondent No. 4, had participated in the auction and Then made false allegations against the appellant whose bid was the highest and without giving him any opportunity, the offer of respondent No. 4 was accepted which has denied equality of opportunity to the appellant in the matter of distribution of State largesse. A learned Single Judge issued a notice to the respondents calling upon them to show cause why rule nisi may not be issued. In response to the notice, respondent No. 4 appeared and contended that the petitioner had an alternative remedy and on this short ground, the learned Single Judge rejected the writ petition. A Division Bench of the High Court in the Letters Patent Appeal filed by the appellant 548 concurred with the learned Single Judge and dismissed the appeal. Hence this appeal by special leave. At this stage it would be advantageous to refer in some details what transpired at the hearing of this appeal in this Court. Let us at once recapitulate what happened in the court because that by itself provides a tell tale piece of evidence compelling the court to interfere and set aside the impugned order. Mr. L.N Sinha, learned Attorney General raised a sort of a preliminary objection that this Court should not assist the syndicalists to join hands to deprive the State of its legitimate revenue. Then he made a pertinent observation a interposing an objection when Mr. Sorabjee, learned counsel for the petitioner was making his submissions. The question posed was: if the Court interferes and quashes the grant in favour of the fourth respondent, the only option open to the court would be to direct a fresh auction. He posed the further question that if at the time of re auction, the highest bid does not reach upto Rs 4,50,000 p.a. for which the lease is granted to the fourth respondent, would the Court make good the loss ? Apart from the rhetoric of the question, the issue raised was of primary importance. We, therefore, asked Mr. Sorabjee whether his client is willing to make an affidavit incorporating therein that if the highest bid at a reauction, if the court so directs, falls short of Rs 4,50,000 the appellant would agree and undertake to accept the contract at the value of Rs 5,50,000 p.a. Such an affidavit was immediately filed. In order to give the fourth respondent to whom contract under the impugned order was given, an opportunity whether he would like to raise his offer. Mr. P.P. Rao voiced his apprehension about his contentions. We assured him that without prejudice to his contentions, it would be open to his client to raise his offer. What transpired may be tabulated in a chart: Appellant 's offer Respondent 's offer 1. 5.50 lacs 2. 6 lacs 3. 6.50 lacs 4. 7 lacs 5. 7.53 lacs 6. 8 lacs 7. 8.50 lacs 8. 9 lacs 9. 10 lacs 10. 10.50 lacs 549 Court intervened at this stage and said that the raise must be minimum at the rate of Rs 1 lac. 12 lacs 12. 14 lacs 13. 15 lacs 14. 16 lacs 15. 17 lacs 16. 18 lacs 17. 19 lacs 18. 20 lacs 19. 21 lacs 20. 22 lacs 21. 25 lacs. Shock and surprise was visible on the face of each one in the court. Shock was induced by the fact that public property was squandered away for a song by persons in power who holds the position of trust. Surprise was how judicial intervention can serve larger public interest. One would require multi layered blind fold to reject the appeal of the appellant or any tenuous ground so that the respondent may enjoy and aggrandize his unjust enrichment. On this point we say no more. Before we deal with the contentions, let us have a look at the relevant provisions of the Act and the Rules. Rule 28(1) of the Rules provides that contracts for extraction of minor mineral may be granted by the Government by auctioning or tendering for a maximum period of five years after which no extension shall be granted ' Sub rule (2) provides that 'the amount to be paid annually by the contractor to the Government shall be determined in auction or by tender to be submitted for acceptance, by the authority competent to grant the contract. ' Rule 29 confers power on the Presiding Officer to reject or accept any bid or tender without assigning any reason to the bidders or tenderers. However, where the highest bid or tender is rejected, the reason shall however, be reported to the Government. Rule 30 provides for notifying of the proposed auction on the notice board of the Director, Mining Officers and at least in one newspaper having wide circulation in the locality nearest to the area in question in the regional language as also in the Government Gazette. Sub cl. (4) of sub r. (2) of Rule 30 provided that 'no bid shall be regarded as accepted unless confirmed by Government. ' Rule 58 confers 550 power on the Government to relax any of the provisions of the Rules in the interest of mineral development or better working of the mine. Before we deal with the larger issue, let me put out of the way the contention that found favour with the High Court in rejecting the writ petition. The learned Single Judge as well as the Division Bench recalling the observations of this Court in Assistant Collector of Central Excise vs Jainson Hosiery Industries rejected the writ petition observing that 'the petitioner who invokes the extraordinary jurisdiction of the court under article 226 of the Constitution must have exhausted the normal statutory remedies available to him '. We remain unimpressed. Ordinarily it is true that the court has imposed a restraint in its own wisdom on its exercise of jurisdiction under article 226 where the party invoking the jurisdiction has an effective, adequate alternative remedy. More often, it has been expressly stated that the rule which requires the exhaustion of alternative remedies is a rule of convenience and discretion rather than rule of law. At any rate it does not oust the jurisdiction of the Court. In fact in the very decision relied upon by the High Court in The State of Uttar Pradesh vs Mohammad Nooh it is observed that there is no rule, with regard to certiorari as there is with mandamus, that it will lie only where there is no other equally effective remedy. It should be made specifically clear that where the order complained against is alleged to be illegal or invalid as being contrary to law, a petition at the in stance of person adversely affected by it, would lie to the High Court under article 226 and such a petition cannot be rejected on the ground that an appeal lies to the higher officer or the State Government. An appeal in all cases cannot be said to provide in all situations an alternative effective remedy keeping aside the nice distinction between jurisdiction and merits. Look at the fact situation in this case. Power was exercised formally by the authority set up under the Rules to grant contract but effectively and for all practical purposes by the Chief Minister of the State. To whom do you appeal in a State administration against the decision of the Chief Minister ? The clutch of appeal from Ceasar to Ceasar wife can only be bettered by appeal from one 's own order to oneself. Therefore this is a case in which the High Court was not at all justified in throwing out the petition on the untenable ground 551 that the appellant had an effective alternative remedy. The High Court did not pose to itself the question, who would grant relief when the impugned order is passed at the instance of the Chief Minister of the State. To whom did the High Court want the appeal to be filed over the decision of the Chief Minister. There was no answer aud that by itself without anything more would be sufficient to set aside the judgment of the High Court. Turning to the merits of the case, the arguments covered a much larger canvass than was anticipated when the hearing opened. It was submitted that India being a Sovereign Socialist Secular Democratic Republic, the property of the Union or of the Slate is socialist property which would imply that it is community property and every citizen of this country has vital interest in its effective use and legitimate disposal. It was never disputed nor could it have been disputed that minerals vest in the state. The minor minerals vast in the State where the land from which they are to be extracted is situated and minerals other than minor minerals vast in the Union. 'Minor minerals ' have been defined in The Mines and Minerals (Regulation and Development). Act, 1957 to mean, 'building stores, gravel, ordinary clay, ordinary sand other than sand used for prescribed purposes, and any other mineral which the Central Government may, by notification in the Official Gazette, declare to be a minor mineral. ' Minor minerals vest in the state in which the land is situated. The first respondent State of Haryana notified that an auction would be held for mineral quarries of Faridabad District. The appellant gave his bid at the auction so notified. It is an admitted position that his was the highest bid. Anyone conversant with auction would not be naive enough to believe that one can go on raising his own bid. His was the highest bid in the amount of Rs. 3,87,000 p.a. Though the Presiding Officer accepted the bid of the appellant, being the highest bid at the auction, yet the State Government in the exercise of the power conferred by cl. (4) of sub r. (2) of Rule 30 declined to confirm the same presumably under the belief that the highest bid did not represent the adequate lease rent which the State Government was entitled to get. The right of the State Government not to confirm the bid as also its action of not confirming the highest bid of the appellant is not questioned. Therefore, various decisions laying down that the Government is not bound to accept the highest bid to which our attention was drawn 552 by Mr. P.P. Rao, learned counsel for the fourth respondent are of no relevance in this case. This Court in Trilochan Mishra etc. vs State of Orissa & Ors. State of Uttar Pradesh & Ors. vs Vijay Bahadur Singh & Ors. and State of Orissa & Ors. vs Harinarayan Jaiswal & Ors. held that the Government is under no obligation to accept the highest bid and that no rights accrue to the bidder merely because his bid happened to be the highest. The Court also observed that the Government had the right, for good and sufficient reason, not to accept the highest bid but even to prefer a tenderer other than the highest bidder. In Vijay Bahadur Singh 's case the Court further observed that the power conferred on the Government by the act to refuse to accept the higher bid, cannot be confined to inadequacy of bid only. There may be variety of other good and sufficient reasons to reject the same. The appellant has no grievance that even though his was the highest bid, the same was not accepted nor Mr. Sorabjee on his behalf contends that the highest bid of the appellant was rejected on grounds which are either irrelevant or extraneous. This aspect therefore need not detain us any more. Let us put into focus the clearly demarcated approach that distinguishes the use and disposal of private property and socialist property. Owner of private property may deal with it in any manner he likes without causing injury to any one else. But the socialist or if that word is jarring to some, the community or further the public property has to be dealt with for public purpose and in public interest. The marked difference lies in this that while the owner of private property may have a number of considerations which may permit him to dispose of his property for a song. On the other hand, disposal of public property partakes the character of a trust in that in its disposal there should be nothing hanky panky and that it must be done at the best price so that larger revenue coming into the coffers of the State administration would serve public purpose viz. the welfare State may be able to expand its beneficient activities by the availability of larger funds. This is subject to one important limitation that socialist property may be disposed at a price lower than the market price or even for a token price to achieve some defined constitutionally recognised public purpose, one such being to achieve 553 the goals set out in Part IV of the Constitution. But where disposal is for augmentation of revenue and nothing else, the State is under an obligation to secure the best market price available in a market economy An owner of private property need not auction it nor is he bound to dispose it of at a current market price. Factors such as personal attachment, or affinity kinship, empathy, religious sentiment or limiting the choice to whom he may be willing to sell, may permit him to sell the property at a song and without demur. A welfare State as the owner of the public property has no such freedom while disposing of the public property. A welfare State exists for the largest good of the largest number more so when it proclaims to be a socialist State dedicated to eradication of poverty. All its attempt must be to obtain the best available price while disposing of its property because the greater the revenue, the welfare activities will get a fillip and shot in the arm. Financial constraint may weaken the tempo of activities. Such an approach serves the larger public purpose of expanding welfare activities primarily for which the Constitution envisages The setting up of a welfare State. In this connection we may profitably refer to Ramana Dayaram Shetty vs The International Airport Authority of India and Ors in which Bhagwati, J. speaking for the Court observed: "It must, therefore. be taken to be the law that where the Government is dealing with the public, whether by E way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largesse, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norms which is not arbitrary, irrational or irrelevant. The power or discretion of the Government in the matter of grant of largesse including award to jobs, contracts, quotas, licences etc., must be confined and structured by rational, relevant and non discriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action of the Government would be liable to be struck down, unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory. 554 At another place it was observed that the Government must act in public interest, it cannot act arbitrarily or without reason and if it does so, its action would be liable to be invalidated. It was further observed that the object of holding the auction is generally to raise the highest revenue. The Government is entitled to reject the highest bid if it thought that the price offered was inadequate. But after rejecting the offer, it is obligatory upon the Government to act fairly and at any rate it cannot act arbitrarily. Following this line of thought, in Kasturi Lal Lakshmi Reddy vs State of Jammu & Kashmir and Anr. while upholding the order of the Government of Jammu & Kashmir dated April 27, 1979 allotting to the second respondent 10 to 12 lacs blazes annually for extraction of resin from the inaccessible chir forests in Poonch, Reasi and Ramban Divisions of the State for a period of 10 years on the terms and conditions set out in the order, observed as under: "Where any governmental action fails to satisfy the test of reasonableness and public interest discussed above and is found to be wanting in the quality of reasonableness or lacking in the element of public interest, it would be liable to be struck down as invalid. It must follow as a necessary corollary from this proposition that the Government cannot act in a manner which would benefit a private party at the cost of the State; such an action would be both unreasonable and contrary to public interest. The Government, therefore, cannot for example give a contract or sell or lease out its property For a consideration less than The highest that can be obtained for it, unless of course there are other considerations which render it reasonable and in public interest to do so. " (emphasis supplied) At one stage, it was observed that the Government is not free like an ordinary individual, in selecting recipient for its largesse and it cannot choose to deal with any person it pleases in its absolute and unfettered discretion. The law is now well settled that the Government need not/deal with anyone, but if it does so, it must do so fairly and without discretion and without unfair procedure. Let it be made distinctly clear that respondent No. 4 was not selected for any special purpose or to satisfy ally Directive Principles of State Policy. He 555 surreptitiously ingratiated himself by a back door entry giving a minor raise in the bid and in the process usurped the most undeserved benefit which was exposed to the hilt in the court. Only a blind can refuse to perceive it. Approaching the matter from this angle, can there be any doubt that the appellant whose highest bid was rejected by the Government should have no opportunity to improve upon his bid more so when his bid was rejected on the ground that it did not represent adequate market consideration for the concession to extract minor mineral. A unilateral offer, secretly made, not correlated to any reserved price made by the fourth respondent after making false statement in the letter was accepted Without giving any opportunity to the appellant either to raise the bid or to point out the falsity of the allegations made by the fourth respondent in the letter as also the inadequacy of his bid. The appellant suffered an unfair treatment by the State in discharging its administrative functions thereby violating the fundamental principle of fair play in action. When he gave the highest bid, he could not have been expected to raise his own bid in the absence of a competitor. Any expectation to the contrary betrays a woeful lack of knowledge of auction process. And then some one surreptitiously by a secret offer scored a march over him. No opportunity was given to him either to raise the bid or to controvert and correct the erroneous statement. What happened in this case must open the eyes both of the Government as well as the people at large. How an uncontrolled exercise of executive power to deal with socialist property in which entire community 's interest was sacrificed so as to cause huge loss to the public exchequer would have gone unnoticed but for the vigilance of the appellant who no doubt is not altruistic in its approach but its business interests goaded it to expose the unsavoury deal. Conceding that on weighty and valid considerations, the highest bid can to rejected by the State one such which can be foreseen is that the highest bid does not represent the adequate market price of the concession, yet before giving up the auction process and accepting a private bid secretly offered, the authority must be satisfied that such an offer if given in open would not be outmatched by the highest bidder. In the absence of such satisfaction, acceptance of an offer secretly made and sought to be substantiated on the allegations without the verification of their the truth, which was not undertaken, would certainly amount to arbitrary action in the matter of distribution of State largesse which by the decisions of this Court is 556 impermissible. Even though repeatedly, this Court has said that the State is not bound to accept the highest bid, this proposition of law has to be read subject to the observation that it can be rejected on relevant and valid considerations, one such being that the concession is to be given to a weaker section of the society who could not outbid the highest bidder. In the absence of it, the approach must be as clearly laid down by the Constitution Bench of this Court in K.N. Guruswamy vs The State of Mysore & Ors. In that case, the appellant and the fourth respondent were rival liquor contractors for the sale of the liquor contract for the year 1953 54 in the State of Mysore. The contract was auctioned by the Deputy Commissioner under the authority conferred upon him by the Mysore Excise Act, 1901. The appellant 's bid was the highest and the contract was knocked down in his favour subject to formal confirmation by the Deputy Commissioner. The fourth respondent was present at the auction but did not bid. Instead of that he went direct to the Excise Commissioner and made a higher offer. The Excise Commissioner cancelled the sale of favour of the appellant and directed the Deputy Commissioner to take action under the relevant rule. The latter accepted the tender of the respondent. The appellant moved the High Court for a writ of mandamus which was dismissed. In appeal by the certificate, it was urged on behalf of the State that the Deputy Commissioner acted within the ambit of his powers under the relevant rule which gave him an absolute discretion either to re auction or to act otherwise and no fetters are placed upon the 'otherwise ' method. The court negatived this contention observing that arbitrary improvisation of an ad hoc procedure to meet the exigencies of a particular case is ruled out. Therefore, the grant of the contract to the fourth respondent was wrong. Repelling the contention that a writ petition at the instance of the appellant would not be maintainable, the Constitution Bench observed as under: "The next question is whether the appellant can complain of this by way of a writ. In our opinion, he could have done so in an ordinary case. The appellant is interested in these contracts and has a right under the laws of the State to receive the same treatment and be given the same chance as anybody else. Here we have Thimmappa who was present at the auction and who did not bid not that it would make any difference if he had, 557 for the fact remains that he made no attempt to outbid the appellant. If he had done so it is evident that the appellant would have raised his own bid. The procedure of tender was not open here because there was no notification and the furtive method adopted of setting a matter of this moment behind the backs of those interested and anxious to compete is unjustified. Apart from all else, that in itself would in this case have resulted in a loss to the State because, as we have said, the mere fact that the appellant has pursued this with such vigour shows that he would have bid higher. But deeper considerations are also at stake, namely, the elimination of favouritism and nepotism and corruption: not that we suggest that occurred here, but to permit what has occurred in this case would leave the door wide open to the very evils which the Legislature in its wisdom has endeavored to avoid. All that is part and parcel of the policy of the Legislature. None of it can be ignored. We would there fore in the ordinary course have given the appellant the writ he seeks. But, owing to the time which this matter has taken to reach us (a consequence for which the appellant is in no way to blame, for he has done all he could to have an early hearing), there is barely a fort night of the contract left to go. We were told that the excise year for this contract (1953 54) expires early in June. A writ would therefore be ineffective and as it is not our practice to issue meaningless writs we must dismiss this appeal and leave the appellant content with an enunciation of the law." Fact of no two cases are alike, but if one attempts to compare the situation, the conclusion is inescapable. Appellant 's bid was the highest bid. It was in the amount of Rs. 3,87,000 p.a. Respondent No. 4 approached the Chief Minister with a slightly higher bid of Rs. 4,50,000 per year. This was granted without any reference to the appellant to raise his bid. Such a thing, if allowed to pass once is bound to be repeated because this method is open to the abuse of favouritism and nepotism and the loss of revenue in this case to the State is enormous. What happened in tho court staggered everyone. Learned Attorney General Shri L.N. Sinha, who questioned the competence of the court to deal with the matter when he witnessed the rising crescendo of the auction in the 558 court and the bid reached Rs. 12 lacs per year, he quietly left the court frankly stating that he does not wish any contention to be raised on behalf of the State of Haryana. Apprehension voiced by the Constitution Bench has literally come true in this case. This view of the Constitution Bench was reaffirmed in Nand Kishore Saraf vs State of Rajasthan & Anr., the only distinguishing feature of the case being that the highest bid of the appellant was rejected and the contract was given to Dharti Dan Shramik Theka Sahkari Samiti Ltd., a cooperative Society of the workmen. Though the court did not so specifically state, it upheld the rejection of the highest bid of the appellant on the ground that the benefit of the concession was given to a cooperative society formed by the weaker section of the society and thereby it serves the public purpose as set out in article 41 of the Directive Principles of the State Policy. In Fertilizer Corporation Kamgar Union (Regd), Sindri and Ors. vs Union of India & Ors., Krishna Iyer, J. speaking for himself and Bhagwati, J. Observe as under: "A pragmatic approach to social justice compel us to interpret constitutional provisions, including those like Articles 32 and 226, with a view to see that effective policing of the corridors of power is carried out by the court until other ombudsman arrangements a problem with which Parliament has been wrestling for too long emerges. I have dwelt at a little length on this policy aspect and the court process because the learned Attorney General challenged the petitioner 's locus standi either qua worker or qua citizen to question in court the wrong doings of the public sector although he maintained that what had been done by the Corporation was both bona fide and correct. We certainly agree that judicial interference with the administration cannot be meticulous in our Montesquien System of separation of powers. The court cannot usurp or abdicate, and the parameters of judicial review must be clearly defined and never exceeded. If the Directorate of a Government company has acted fairly, even if it has faltered in its wisdom, the court cannot, as a super auditor, take the Board of Directors to I l task. The function is limited to testing whether the 559 administrative action has been fair and free from the taint of unreasonableness and has substantially complied with the norms of procedure set for it by rules of public administration. " In a concurring opinion, Chandrachud, CJ. Observed that sales of public property, when the intention is to get the best price, ought to take place publicly. In State of Uttar Pradesh vs Shiv Charan Sharma & Ors. , this court observed that public auction with open participation and a reserved price guarantees public interest being fully subserved. Even though later on, learned Attorney General did not invite us to examine any specific contention on behalf of the State of Harayana, it may in passing be stated that with regard to transactions with the State, the principle enunciated in Sec. 55(5) (a) of the Transfer of Property Act would apply with greater vigour. Proceeding along it was submitted that if that is accepted and if it appears to the court that the State of Haryana did not appear to have full appreciation of the value of the property and the other party i.e. respondent No. 4 by reason of its profession was aware of the same and the resulting transaction is materially unfair, then such a case falls outside the principle enunciated by the decision of this court, on which reliance was placed on behalf of the respondent No. 4. We consider it unnecessary in the facts of this case to examine this aspect. The position that emerge is this. Undoubtedly rule 28 permits contracts for winning mineral to be granted by the Government by auction or tender. It is true that auction was held. It is equally true that according to the State Government, the highest bid did not represent the market price of the concession. It is open to the State to dispose of the contract by tender. Even here the expression 'tender ' does not mean private secret deal between the Chief Minister and the offerer. Tender in the context in which the expression is used in rule 28, meant tenders to be invited from intending contractors. ' If it was intended by the use of the expression 'tender ' in rule 28 that contract can be disposed of by private negotiations with select individual, its validity will be open to serious question. The 560 languages ordinarily used in such rules is by public auction or private negotiations. The meaning of the expression 'private negotiations ' must take its colour and prescribe its content by the words which precede them. And at any rate disposal of the state property in public interest must be by such method as would grant an opportunity to the public at large to participate in it, the State reserving to itself the right to dispose it of as best subserve the public weal. Viewed from this angle, the disposal of the contract pursuant to the letter by the fourth respondent to the Chief Minister is objectionable for more than one reason. The writer has indulged into allegations, the truth of which was not verified or asserted. The highest bidder whose bid was rejected on the ground that the bid did not represent the market price, was not given an opportunity to raise his own bid when privately a higher offer was received. If the allegations made in the letter influenced the decision of the Chief Minister, fair plan in action demands that the appellant should have been given an opportunity to counter and correct the same. Application of the minimum principles of natural justice in such a situation must be reading the statute and held to be obligatory. When it is said that even in administrative action, the authority must act fairly, it ordinarily means in accordance with the principles of natural justice variously described as fair play in action That having not been done, the grant in favour of the fourth respondent must be quashed. Apart from various considerations herein examiner, if any other view is taken in the facts and circumstances of this case, it may provide a classic example of ostrich burying its face in sand and declining to see the reality.

The State Government respondent No. 1 issued a notification for auctioning a minor mineral quarry situated in the State. The appellant offered the highest bid in the amount of Rs. 3.87 lakhs per annum as rent/royalty. The Presiding Officer accepted the bid of the appellant. The State Government however under the belief that the highest bid did not represent the adequate lease rent, exercised powers under clause (4) of sub rule 2 of Rule 130 or the Punjab Minor Mineral Concession Rules 1964 and declined to confirm the same. Respondent No. 4 wrote a letter to the Chief Minister casting serious aspersions on those who participated in the auction, and made an offer that if the contract for a period of 5 years is given he was willing to pay Rs. 4.5 lakhs per year. The Chief Minister accepted this offer. Being aggrieved, the appellant challenged the order of the Chief Minister, in a writ petition before the High Court, contending that respondent No. 4 had participated in the auction and made false allegations against the appellant, and without giving him any opportunity, the offer of respondent No. 4 was accepted which has denied equality of opportunity to the appellant in the matter of distribution of the State largesse. The High Court following the decision of this Court in Assistant Collector of Central Excise vs Jainson Hosiery Industries, ; , dismissed the writ petition on the ground that the appellant had an alternative remedy and that he must have exhausted the normal statutory remedies before invoking the extraordinary jurisdiction under Article 226. 542 Being aggrieved, the appellant filed an appeal to this Court and during is hearing filed an affidavit, that if the Court orders re auction, and if the highest bid falls short of Rs. 4.5 lakhs then he would undertake to accept the contract at the value of Rs. 5.5 lakhs per annum. The Court held are auction and both the appellant and respondent No. 4 participated there in and the appellant offered the highest bid at the value of Rs. 25 lakhs. Allowing the Appeal, ^ HELD: 1. (i) The Court has imposed a restraint in its own wisdom on its exercise of jurisdiction under Article 226 where the party invoking the jurisdiction has an effective adequate alternative remedy. It has been expressly stated that the rule which requires the exhaustion of alternative remedies is a rule of convenience and discretion rather than a rule of law. It does not oust the jurisdiction of the Court It is made specifically clear where the order complained against is alleged to be illegal or invalid as being contrary to law, a petition at the instance of a person adversely affected would lie to the High Court under Article 226 and such a petition cannot be rejected on the ground that an appeal lies to the higher officer or the State Government. An appeal in all cases cannot be said to provide in all situations an alternative effective remedy. [550 C F] In the instant case, power was exercised by the authority set up under the rules to grant contract. The High Court did not pose to itself the question who would grant the relief when the impugned order is passed at the instance of a Chief Minister of the State. This is therefore a case in which the High Court was justified in throwing out the petition on the untenable ground that the appellant had an effective alternative remedy. [550 G H] Assistant Collector of Central Excise v Jainson Hosiery Industries, ; and The State of Uttar Pradesh v Mohammad Nooh, ; , referred to. (2) (i) There is a clear distinction between the use and disposal of private property and socialist property. Owner of private property may deal with it in any manner he likes without causing injury to any one else. But the socialist or if that word is jarring to some, the community or further the public property has to be dealt with for public purpose and in public interest. Tho marked difference lies in this that while the owner of private property may have a number of considerations which may permit him to dispose of his property for a song. On the other hand, dispose at of public property partakes the character of a trust in that in its disposal their should be nothing hanky panky and that it must be done at the best price so that large revenue coming into the offers of the State administration would serve public purpose viz. the welfare state may be able to expand its beneficient activities by the availability of larger funds. This is subject to one important limitation that socialist property may be disposed at a price lower than the market price or oven for a token price to achieve some defined constitutionally recognised Public purpose, one such being to achieve the goals set out in Part IV of the 543 Constitution. But where disposal is for augmentation of revenue and nothing else, the State is under an obligation to secure the best market price available in a market economy. [552 G H; 553 A] (ii) The Government is not free like an ordinary individual, in selecting recipient for its largesse and it cannot chose to deal with any person it please a in its absolute and unfettered discretion. The law is now well settled that the Government need not deal with anyone, but if it does so, it must do so fairly and without discretion and without unfair procedure. Even though the State is not bound to accept the highest bid, this proposition of law has to be read subject to the observation that it can be rejected on relevant and valid considerations, one such being that the concession is to be given to a weaker section of the society who could not outbid the highest bidder. In the absence of it, the approach must be as clearly laid down by the Constitution Bench of this Court in K. N. Guruswamy vs The State of Mysore and Ors. [19551 SCR 305. Before giving up the auction process and accepting a private bid secretly offered, the authority must be satisfied that such an offer if given in open would not be outmatched by the highest bidder. In the absence of such satisfaction, acceptance of an offer secretly made and sought to be substantiated on the allegations without the verification of their truth, which was not undertaken would certainly amount to arbitrary action in the matter of distribution of State largesse which by the decisions of this Court is impermissible. 1554 G H; 556 A B; 555 G H] Trilochan Mishra etc vs State of Orissa and Ors. , State of Uttar Pradesh and Ors vs Vijay Bahadur Singh and Ors. and State of Orissa and Ors. vs Harinarayan Jaiswal and Ors. ; held inapplicable. Raman Dayaram Shetty v The International Airport Authority of India and Ors. ; and Kasturi Lal Lakshmi Reddy vs State of Jammu and Kashmir and Anr. ; relied upon. Rule 28 of Punjab Minor and Mineral Concession Rules, 1964 permits contract for winning mineral to be granted by the Government by auction or tender. It is open to the State to dispose of the contract by tender. Even here the expression 'tender ' does not mean a private secret deal between the Chief Minister and the offerer. Tender in the context in which the expression is used in rule 28, means 'tenders to be invited from intending contractors. ' If it was intended by the use of the expression 'tender ' in Rule 28 that contract can be disposed of by private negotiations with select individual, its validity will be open to serious question. The language ordinarily used in such rules is by public auction or private negotiations. The meaning of the expression 'private negotiations ' must take its colour and prescribe its content by the words which precede them. And at any rate disposal of the State property in public interest must be by such method as would grant an opportunity to the public at large to participate in it, the State reserving to itself the right to dispose it of as best subserve the public weal. [559 F H; 560 A B 544 Nand Kishore Saraf vs State of Rajasthan and Anr. ; and Fertilizer Corporation Kamgar Union (Regd). Sindri and Ors. vs Union of India and Ors. ; relied upon. State of Uttar Pradesh vs Shiv Charan Sharma and Ors. etc. [1981] Supp. SCC 85 referred to. In the instant case, it is clear that respondent No. 4 was not selected for any special purpose or to satisfy any Directive Principles of State Policy. He surreptitiously ingratiated himself by a back door entry giving a minor raise in the bid and in the process usurped the most undeserved benefit which was exposed to the hilt in the court. A unilateral offer, secretly made, not correlated to any reserved price made by the fourth respondent after making false statement in the letter was accepted without giving any opportunity to the appellant either to raise the bid or to point out the falsity of the allegations made by the fourth respondent in the letter as also the inadequacy of his bid. The appellant suffered an unfair treatment by the State in discharging its administrative functions thereby violating the fundamental principle of fair play in action. When he gave the highest bid, he could not have been expected to raise his own bid in the absence of a competitor. Any expectation to the contrary betrays a woeful lack of knowledge of auction process. And then some one surreptitiously by a secret offer scored a march over him. No opportunity was given to him either to raise the bid. Application of the minimum principles of natural justice in such a situation must be read in the Statute and held to be obligatory. When it is said that even in administrative action, the authority must act fairly, it ordinarily means in accordance with the principles of natural justice variously described as fair play in action. That having not been done, the grant in favour of the fourth respondent must be quashed. [554 H; 555 A E; 560 D E]

Appeal No. 297 of 1976. Appeal by Special Leave from the Judgment and Order dated the 16 10 74 of the Allahabad High Court in Special Appeal No. 169/72. S.T. Desai, M.K. Garg, K.B. Rohtagi, V.K. Jain and M.M. Kashyap, for the Appellant. O.P. Rana for Respondents 1 4. V.M. Tarkunde, Pramod Swarup and R.S. Verma for Respond ent No. 5. The Judgment of the Court was delivered by KHANNA, J. This appeal by special leave is against the judgment of a Division Bench of the Allahabad High Court, reversing on appeal the decision of learned single Judge, whereby notification dated April 23, 1966 issued by the State Government under section 7(1) of the U.P. Land Acqui sition (Rehabilitation of Refugees) Act, 1948 (hereinafter referred to as the Act) had been quashed. As a result of the decision of the Division Bench, the writ petition filed by the appellants to quash that notification stood dis missed. The Sufferers ' Co operative Housing Society, Jaunpur, respondent, applied to the Uttar Pradesh Government in 1955 for acquiring four acres of land for the purpose of erecting houses, shops and workshops for the rehabilitation of the refugees who were members of that society. At the instance of the State Government, the society deposited a sum of Rs.15,000 towards the cost of the land to be acquired. In 1964, the society entered into an agreement with the State Government under section 6 of the Act. The State Government thereafter published on April 23, 1966, the impugned notifi cation and the same reads as under: "Under sub section (1 ) of section 7 of the U.P. Land Acquisition (Rehabilitation of Refugees) Act No. XXVI of 1948, the Governor of Uttar Pradesh is pleased to declare that he is satisfied that the land mentioned in the Schedule is needed and is suitable for the erection of houses, shops and 228 workshops for the rehabilitation of displaced persons and/ or for the provision of amenities directly connected therewith. All the persons interested in the land in question are, therefore, required to appear personally or by duly autho rised agent before the Compensation Officer of the Distt. at Jaunpur on the twenty seventh day of April 1966, with neces sary documentary or other evidence for the determination of the amount of compensation under section 11 of the Act. The Collector of Jaunpur is directed to take possession of the aforesaid land fourteen days after the publication of this notice in the official gazette. Upon the publication of this notice, the aforesaid land shall be deemed to have been acquired permanently and shall vest absolutely in the State Government free from all encum brances from. the beginning of the day on which the notice is so published. SCHEDULE Distt. Pargana Mauza Municipality PlotNo. Area Cantonment, Town area or Notified area 154 Mohalla Diwan Shah Kabir alias 152/1 1,00 Tartala Pargana Haveli, Tahsil 152/2 Jaunpur Municipal Area 149 Jaunpur 153 2 shops No. 6 and 7 For what purpose required: for the rehabilitation of displaced persons. Note: A copy of the site plan may be inspected at the office of the Collector, Jaunpur. " Subsequent to that notification, the Land Acquisition Offi cer determined the amount of compensation for the land and shops to be acquired at a little over rupees forty one thousand. The balance of the amount to be paid as compensa tion was thereafter deposited by the society. On April 10, 1970 the appellants, claiming to be the owners of a part of the land sought to be acquired, fried petition under article 226 of the Constitution of India in the Allahabad High Court with a prayer for quashing the impugned notification. The notification was assailed on the following three grounds: (1) The notification did not properly specify the lands sought to be acquired; (2) The notification was ultra vires the Act inasmuch as it sought to acquire lands for the rehabilitation of the displaced persons and not for the rehabilitation of refugees; and (3) The notification was not in accordance with the provisions of section 7(1) of the Act. 229 The learned single Judge, while allowing the writ peti tion, did not go into the first ground. He, however, accepted the second and third grounds and in the result quashed the notification. On the second ground, the learned Judge referred to the definition in section 2(7) of the Act, according to which refugee means any person who was a resident in any place forming part of Pakistan and who, on account of partition of civil disturbances or the fear of such disturbance, has on or after the first day of March 1947 migrated to any place in the U.P. and has been since residing there. It was observed that there was nothing to show that the displaced persons for whose benefit the land in question was being acquired had settled in Uttar Pradesh. Regarding the third ground, the learned Judge expressed the view that the notification under section 7(1) of the Act required that the State Government should indicate in the notification that it had decided to acquire the land. As the word "decided" was not mentioned in the notification, the notification was held to be not in accordance with law. On appeal, the Division Bench of the High Court disagreed with the learned single Judge on both the grounds on which he had quashed the notification. It was held that the notification was substantially in accordance with section 7(1) of the Act. It was further observed that the society for whose benefit the land was being acquired consisted of refugees. Dealing with the first ground, namely, that the notification was vague as it did not properly specify the land sought to be acquired, the Division Bench held that all the necessary particulars in respect of the land sought to be acquired had been given. In the result, the appeal was allowed and the writ petition was dismissed. In appeal before us, Mr. Desai has assailed the decision of the Division Bench on all the three grounds and has urged that the impugned notification is liable to be quashed on each of those grounds. We shall accordingly deal with those grounds. So far as the ground is concerned that the persons for whose rehabilitation the land is sought to be acquired are not refugees, Mr. Desai could not in spite of our query refer us to any paragraph in the writ petition wherein the above ground had been taken. All the same, he submitted that as the question had been allowed to be agitated before the High Court, we should not debar the appellants from advancing arguments on that score. The submission made by the learned counsel in this behalf is that there is nothing to show that the persons for whose benefit the land is being acquired arc settled in Uttar Pradesh. In this respect we are of the view that the question as to whether those per sons are settled in Uttar Pradesh or not is essentially one of fact. In the absence of any averment in the writ peti tion that the person concerned were not settled in Uttar Pradesh, it is obvious that the material facts having bear ing on this point could not be brought on record. A party seeking to challenge the validity of a notification on a ground involving questions of fact should make necessary averments of fact before it can assail the notification on that ground. As such we find it difficult to sustain the contention of Mr. Desai that the persons for whose benefit the land is being acquired were not settled in Uttar Pra desh. Apart from that, we find that 230 ground No. 13 taken in the writ petition proceeds upon the assumption that the persons for whose benefit the land was being acquired were in fact refugees. It further appears from the judgment of the Division Bench that there was hardly any dispute before the Division Bench on the point that the respondent society, namely, Sufferers ' Co opera tive Housing Society, consists of refugees and has refugees as its members. Coming to the second ground taken by the appellants that the notification was not in conformity with section 7(1) of the Act inasmuch. as it did not state that the State Gov ernment had decided to acquire the land in dispute, we are of the opinion that a reading of the notification which has been reproduced above leaves no manner of doubt that the State Government had decided to acquire the land. It is stated in the notification that the Governor of Uttar Pra desh is pleased to declare that he is satisfied that the land mentioned in the schedule is needed and is suitable for the erection of houses, shops and workshops for the rehabil itation of displaced persons and/or for the provision of amenities directly connected therewith. The notification further proceeds to state that the land in question shall be deemed to have been acquired permanently and shall vest absolutely in the State Government free from all encum brances from the date of the notification. The recital in the earlier part of the notification as well as the opera tive part of the notification that the land shall be deemed to have been acquired permanently and shall vest in the State Government lend clear support for the conclusion that the State Government decided to acquire the land and the order of acquisition was merely an implementation of that decision. The fact that the word "decided" has not been used in the notification would not prove fatal when the entire tenor of the notification reveals the decision of the State Government to acquire the land and is consistent only with the hypothesis of such a decision having been arrived at. The courts should be averse to strike down a notification for acquisition of land on fanciful grounds based on hypertechnicality. What is needed is substantial compliance with law. The impugned notification, in our opinion, clearly satisfies that requirement. Lastly, we may deal with the contention advanced on behalf of the appellants that the notification in question is vague. It is pointed out by Mr. Desai that the total area of the land comprised in field numbers mentioned in the notification is 1.26 acres, while the actual area which is sought to be acquired is one acre. The learned counsel accordingly urges that it is not possible to find out the particular portions of those fields which are sought to be acquired. As such, the notification is stated to be vague and thus not in conformity with law. Our attention has also been invited by Mr. Desaid to the report dated June 23, 1971 of the Tehsildar, who was deputed to deliver possession of the acquired land to the society. In the said report the Tehsildar stated that he found it difficult to find out as to which part of the fields mentioned in the notification were acquired. In this respect we find that the report of the Tehsilder itself indicates that when he went to the spot to deliver possession of the acquired 231 land, he did not take with, him the correct plan of the said land. The impugned notification makes an express reference to the site plan. An affidavit has been filed on behalf of the society and that affidavit makes it plain that the area of the land which has been acquired comes to exactly one acre. There appears to be no cogent ground to interfere with the finding of the Division Bench of the High Court that the impugned notification has not been shown to be vague. We, therefore, find no infirmity in the impugned notification. The appeal fails and is dismissed but in the circumstances with no order as to costs. Before we conclude, we would like to observe that the case before us tells a sad tale of delays in a matter which on sheer humanitarian grounds needed to be attended to with expedition. The case, as would appear from the above, pertains to the acquisition of land with a view to rehabili tate refugees who were uprooted from their hearths and homes in areas now in Pakistan because of disturbances and fear of disturbances which marred the partition of the country. The refugees for this purpose formed a society, and applied to the administration in 1955 for acquisition of land so that they could erect shops and workshops on that land with a view to earn their livelihood. It took the administra tion 11 years thereafter to issue necessary notification for the acquisition of the land in dispute. Four years were thereafter spent because possession of the land could not be delivered. The only attempt made to deliver possession proved infructuous as the Tehsildar entrusted with this task took a wrong plan. From 1970 till today the delivery of possession remained stayed because of the writ proceedings initiated by the appellants. One can only hope that now that the final curtain has been dropped, the matter would be attended to with the necessary promptitude. P.H.P. Appeal dismissed.

U.P. Government issued a notification under Section 7(1) of the U.P. Land Acquisition (Rehabilitation of Refugees) Act, 1948 for acquiring the land belonging to the appellant for the purpose of Sufferers Cooperative Housing Society. The Society entered into an agreement with the Government under section 6 of the Act. The Land Acquisition Officer determined the amount of compensation for the acquired land. The appellants challenged the validity of the said notifica tion on the following grounds: 1. The notification did not properly speci fy the land sought to be acquired. The notification was ultra vires the Act because it sought to acquire land for the rehabilitation of displaced persons and not for the rehabilitation of refugees. The notification was not in accordance with the provisions of section 7(1) of the Act. The single Judge of the High Court did not go into the first ground but accepted the second and third grounds and quashed the notification. He held that according to the definition of refugees in section 2(7) a refugee is a person who has migrated from Pakistan to any place in the U.P. and has been since then residing in U.P. and that there was nothing to show that the displaced persons who are the members of the Society had settled in U.P. While accepting the third ground the learned Judge held that section 7(1) requires to indicate in the notification that it had decid ed to acquire the land. However, the notification did not mention the expression "decided". On an appeal, the Division Bench disagreed with the conclusions of the Single Judge and allowed the appeal. The Division Bench held that the notification was substantially in accordance with the sect.ion 7( 1 ) and that the members of the Society consisted of refugees. The Division Bench also held that the notification was not vague and it proper ly specified the land sought to be acquired. In an appeal by Special Leave the appellants repeated the 3 grounds. Dismissing the appeal HELD: 1. The ground about the members of the Society not being refugees has not been taken in the Writ Petition at all. The question whether those members have settled in U.P. is essentially one of fact. In the absence of any averment in the writ petition the material facts having bearing on the point could not be brought on record. A party seeking to challenge the validity of a notifi cation on a ground involving questions of fact should make necessary averments of fact before it can assail the notification on that ground. [229 F H] 227 2. The recital in the earlier part of the notification as well as the operative part of the notification that the land shall be deemed to have been acquired permanently and shall vest in the State Government lends clear support to the conclusion that the State Government decided to acquire the land and the order of acquisition was merely an implementa tion of that decision. The fact that the word decided has not been used in the notification would not prove fatal when the entire tenor of the notification reveals the decision of the State Govt. to acquire land. The court would not strike down a notification for acquisition on hypertechnicality; what is needed is sub stantial compliance with law and the impugned notification clearly satisfies that require ment. [230 D F] 3. The contention that the notification in question is vague is not substantiated. The notification makes an express reference to the site plan. [230 G 231 A]

eal No. XIII of 1950. Appeal from a judgment and decree of a Division Bench of the Madras High Court (Wadsworth and Rajamannar JJ.) dated 27th November, 1945, in Appeal No. 518 of 1941, reversing the judgment of the Subordinate Judge of Mayuram dated 10th July, 1944, in Original Suit No. 34 of 1943. B. Somayya (R. Ramamurti, with him) for the appel lant. 951 K.S. Krishnaswami Aiyangar (K. Narasimha Aiyangar, with him) for respondent No. 1. 1950. December 21. The Judgment of the Court was delivered by MUKHERJEA J. This appeal is directed against an appellate judgment of a Division Bench of the Madras High Court dated November 27, 1945, reversing the decision of the Subordinate Judge of ' Mayuram made in Original Suit No. 34 of 1943. There is no dispute about the material facts of the case which lie within a short compass and the controversy centers round one point only which turns upon the construction of a will left by one Kothandarama Ayyar to whom the properties in suit admittedly belonged. Kothandarama, who was a Hindu inhabitant of the District of Tanjore and owned considerable properties, died on 25th April 1905, leaving behind him as his near relations his adoptive mother Valu Ammal, his widow Parbari and two daughters Nagammal and Gnanambal, of whom Nagammal,who became a widow during the testator 's life time had an infant daughter named Alamelu Kothandarama executed his last will on 13th March, 1905, and by this will, the genuineness of which is not disputed in the present litigation, he gave an authority to his widow to adopt unto him a son of his second daughter Gnanambal, should she beget one before January., 1908, or in the alter native any of the sons of his two nephews, if the widow so chose. The suit, out of which the appeal arises, was commenced by Raju Ayyar, who was a son of the testator 's nephews and was taken in adoption by the widow in terms of the will; and it was for recovery of possession of certain properties, known as Kothangudi properties which formed part of the testator 's estate on the allegation that under the will mentioned above, these properties were given to Nagarnmal, the wid owed daughter of the testator for her life time, but as there was no disposition of the remaining interest after the death of the life tenant, the properties vested in the 952 plaintiff as the adopted son and heir of the deceased on the death of Nagammal which took place on 3rd of January, 1943. Gnanambal, the second daughter of the testator, was the first and main defendant in the suit, and she resisted the plaintiff 's claim primarily on the ground that there was no intestacy as regards the suit properties after the termina tion of the life interest of Nagammal, and that under the terms of the will itself she was entitled to get these properties in absolute right after the death of Nagammal, subject to payment of a sum of Rs. 5,000 to Alamelu, the daughter of Nagammal. Alamelu was made the second defendant in the suit and as she died when the suit was pending in the trial court, her heirs were impleaded as defendants 3 to 9. The first court accepted the contention of the defendant No. 1 and dismissed the plaintiff 's suit. On appeal to the High Court, the judgment was reversed and the plaintiff 's claim was allowed. The defendant No. 1 has now come up appeal to this court. To appreciate the contentions that have been raised by the parties to this appeal, it would be convenient first of all to refer briefly to the relevant provisions of the will: After cancelling his previous wills. the testator in the third paragraph of his will, gave his widow authority to adopt a son. She was to adopt the son of Gnanambal, if the latter got a son previous to January 1908, or she could adopt any of the sons of the testator 's nephews. Paragraph 4 provides that if the first course is followed, that is, if the son of Gnanambal is adopted by the widow, then all the properties, movable and immovable, belonging to the testator excepting the village of Kothangudi, the house at Injigudi and the other properties which were disposed of by the will would go to such adopted son. Paragraph 5, which is materi al for our present purposes runs as follows:. "The whole village of Kothangudi and the house at Injigudi, both of Nannilam Taluk, my daughter Nagammal, shall enjoy with life interest and after her the said property shall pass to my daughter Gnanambal and her chil dren on payment by the latter of Rs. 5,000 to Alamelu Nagam mal 's daughter. " 953 By the sixth paragraph the Nallathukudi and Pungavur villages together with certain house property at Mayavaram are given to the testaor 's adoptive mother and wife in equal shares to be enjoyed by both of them during their life time and after their death they are to pass on to the adopted son. Paragraph 7 gives a small h.use absolutely to Nagammal for her residence and paragraph 8 makes certain provisions for management of the properties. In paragraph 9 direction is given to collect the money due on the insurance policy on the life of the testator and to pay off his debts. Pragraph 10 mentions certain charities, the expenses of which are to be derrayed from the income of the Nallathukudi properties. Paragraph 11 then says that in the event of the widow adopt ing any of the nephew 's sons of the testator, such son shall inherit the entire property at Kokkur and also the lands of Nallathukudi after the death of the testator 's wife and mother. By paragraph 12, the village of Maruthanthanallur is given to Gnanambal and paragraph 13 provides that "the village of Kothangudi shall be enjoyed by Nagammal as stated in paragraph 5" By paragraphs 15 and 16 the remainder in the house at Mayavaram situated in the east row of Vellalar kovil Street is given to Gnanambal after the death of the testator 's wife and mother. Paragraph 18 provides for cer tain other charities. In paragraph 20 it is stated that if the wife of the testator should die before January, 1908, without making any adoption, then the eldest or any son of Gnanambal would be his adopted son without any formality and inherit all the properties subject to the conditions men tioned in the will. Paragraph 21, which is the penultimate paragraph in the will, further lays down that if all the three contingencies fail and no adoption is taken, the male child or children born to Gnanambal shall inherit as grand sons all the properties of the testator, subject to the conditions specified in the will. These, in brief, are the dispositions made in the will. The plaintiff founds him claim upon paragraph 13 of the will which, according to him, contains the enire disposition so far as the Kothangudi 954 property is concerned. That village is given to Nagarm mal for her life with no disposition of the remaining inter est. If the remainder has not been disposed of, there is no doubt that the plaintiff would be entitled to the property as the heir of the testator under the ordinary law of inher itance. The defendant No. 1. on the other hand, relies on para graph 5 of the will, which gives the Kothangudi village and the Injigudi house to Nagammal to he enjoyed by her so long as she lives and after her death they are to go to Gnanambal and her children subject to the payment of a sum of Rs. 5,000 to be paid to Alamelu, the daughter of Nagammal. The High Court on a construction of the will has found in favour of the plaintiff primarily on the ground that in the contingency which happened in the present case, viz., that the widow took in adoption a nephew 's son of the testa tor, paragraph 5 of the will did not come into operation at all. The disposition as regards Kothangudi property is, therefore, to be found exclusively in paragraph 13 of the will and the actual words employed by the testator in that paragraph do not indicate that apart from Nagammal 's taking a life estate in the Kothangudi village the rest of the provisions in regard to this property as laid down in para graph 5 would also be incorporated into paragraph 13. An Obvious difficulty, according to the learned Judges, in accepting the construction sought to be put upon the will by defendant No. 1 is that paragraph 5 speaks both of Kothan gudi and Injigudi properties, whereas paragraph 13 does not mention the Injigudi house at all, nor does it purport to give a life interest in the same to Nagammal. It could not be reasonably held on a construction of the will that the intention of the testator was that Gnanambal was to pay Rs. 5,000 to Alamelu for the Kothangudi property alone. The result was that the plaintiff 's claim was allowed. It is the propriety of this decision that has been challenged before us in this appeal. In course of the arguments, we have been referred by the learned Counsel on both sides to quite a large 955 number of decided authorities, both English and Indian, in support of their respective contentions. It is seldom prof itable to compare the words of one will with those of anoth er or to attempt to find out to which of the wills upon which decisions have been: given in reported cases, the will before us approximates closely. Cases are helpful only in so far as they purport to lay down certain general princi ples of construction and at the present day these general principles seem to be fairly well settled. The cardinal maxim to be observed by courts in constru ing a will is to endeavour to ascertain the intentions of the testator. This intention has to be gathered primarily from the language of the document which is to be read as a whole without indulging in any conjecture or speculation as to what the testator would have done if he had been better informed or better advised. In construing the language of the will as the Privy Council observed in Venkata Narasimha vs Parthasarathy (1), "the courts are entitled and bound to bear in mind other matters than merely the words used. They must consider the surrounding circumstances, the position of the testator, 'his family relationship, the probability that he would use words in a particular sense, and many other things which are often summed up in the somewhat picturesque figure 'The court is entitled to put itself into the testator 's armchair ' . But all this is solely as an aid to arriving at a right construction of the will, and to ascertain the meaning of its language when used by that particular testator in that document. So soon as the con struction is settled, the.duty of the court is to carry out the intentions as expressed, and none other. The court is in no case justified in adding to testamentary dispositions. In all cases it must loyally carry out the will as properly construed, and this duty is universal, and is true alike of wills of every nationality and every religion or rank of life." A question is sometimes raised as to whether in constru ing a will the court should lean against (1) 42 I.A. 51 at p.70. 956 intestacy. The desire to avoid intestacy was considered by the Privy Council in the case referred to above as a rule based on English necessity and English habits of thought which should not necessarily bind an Indian court. It seems that a presumption against intestacy may be raised if it is justified by the context of the document or the surrounding circumstances; "but it can be invoked only when there is undoubted ambiguity in acertainment of the intentions of the testator. As Lord Justice Romer observed in Re Edwards; Jones vs Jones (1), "it cannot be that merely with a view to avoiding intestacy you are to do otherwise than construe plain words according to their plain meaning". It is in the light of the above principles that we should proceed to examine the contents of the will before us. The present will, which is the last of four testamentary document executed by the testator, appears to have been prepared with a great deal of care and circumspection. The testator had clearly in mind the different situations that might arise in case his widow adopted either Gnanambal 's son or a son of one of the nephews of the testator. He envis aged also the possibility of the widow dying without making any adoption at all. Besides the son to be adopted, the only other relations who had natural claims upon the affection and bounty of the testator and for whom he desired to make provisions were his wife, his adoptive mother, the two datughters and the infant grand daughter. The interests given to his wife, the adoptive mother and the eldest daugh ter, who were all widows, were for their life time, except a small house property which was given absolutely for the residence of the eldest daughter. On the other hand., the bequests in favour of Gnanambal, who was a married daughter, and the adopted son of the testator, were absolute in their character. Besides these dispositions, there were certain gifts for charity which were to be met out of the income of the properties given to the wife and the adoptive mother for their lives. One singular feature (1) [1906]1 Ch. 570 at p. 574. 957 in the will is that the testator took scrupulous care to include in it every item of property that he owned. There are two provisions in the will relating Kothan gudi property to which the dispute in the present suit relates. One is in paragraph 5 which gives this property along with the house at Injigudi to Nagammal, the remainder being given to the appellant subject to the payment of a sum of Rs. 5, 000 to Alamelu, the daughter of Nagammal. The other is in paragraph 13, which merely says that Nagammal was to get it for life as stated in paragraph 5. The view taken by the High Court and which has been pressed for our acceptance here by the learned Counsel for the respondents is that paragraph 5 was meant to be operative only if Gna nambal 's son was adopted by the widow. As that was not done, paragraphs 4 to 8 of the will, it is urged, will go out of the picture alttgether and it is not permissible to refer to them except to the extent that they were impliedly incorporated in the subsequent paragraphs of the will. We do not think that this is the correct way of reading the document. The testator undoubtedly contemplated different contingencies; but a reading of the whole will does not show that he wanted to make separate and self contained provisions with regard to each of the contingencies that might arise and that each set of provisions were to be read as exclusive of the other set or sets. That does not appear to be the scheme of the will. The testator 's main desire undoubtedly was that his widow should adopt the son of his daughter Gnanambal, and in the first part his will after making provisions for his two daughters, his wife and adoptive mother and also for certain charities, he left the rest of his properties to the son of Gnanambal that was to be adopted by his widow. In the second part of the will, which is comprised in paragraphs 11 to 16, the testator sets out the modifications which he desires to make in the earli er dispositions in case a son of one of his nephews was adopted by the widow. It was not the intention of the testa tor that on the happening of the second contingency, all 958 the earlier provisions of the will would stand cancelled and the entire dispositions of the testator 's property would have to be found within the four corners of paragraphs 11 to 16 of the will. In our opinion, the provisions made for the two daughters, the widow and the adoptive mother as made in paragraphs 5, 6 and 7 of the will and also the provisions for charities and payment of debts contained in paragraphs 9 and 10 were meant to be applicable under all the three contingencies referred to above. This is clear from the fact that provisions of paragraphs 7, 9 and 10 have not been repeated or incorporated in paragraphs 11 to 16, although it cannot be suggested that they were not to take effect on the happening of the second contingency. Again in the third contingency contemplated by the testator, which is described in paragraph 20, it is expressly stated that if no adoption is made, the eldest or any son of Gnanambal would inher it the properties and he shall take the properties subject to the conditions mentioned in the will. The conditions spoken of here undoubtedly refer to the provi sions made for the mother, wife and the two daughters of the testator as well as in respect to payment of debts and carrying out of the charities specified in paragraph 10. The changes that are to take effect on the happening of the second event are in regard to the bequests in favour of the adopted son. Under paragraph 4 of the will, the adopted son was to get all the p. roperties of the testator with the exception of those given to the two daughters, the mother and the wife. Under paragraph 11, if the adoption is of a nephew 's son of the testator, the adopted son gets only the Kokkur properties and the reversionary interestin Nallathukudi village after the death of the testator 's wife and mother. The village Maruthanthanallur which would go to the adopted son under paragraph 4 is taken away under para graph 11 and is given to Gnanambal. She is also given the remaining interest in the Mayavaram house which was given to the adopted son under paragraph 6. Subject to the changes thus made, the provisions 959 of paragraphs 5, 6 and 7 would, in our opinion, still remain operative even if the person adopted was a nephew 's son of the testator. No change is made in paragraphs 11 to 16 with regard to the provision in paragraph 5 of the will. In paragraph 13 it is only stated that the village Kothangudi shall be enjoyed by Nagammal as stated in paragraph 5. It may be conceded that this statement by itself does not let in the entire provision of paragraph 5, but that is not material for our present purpose. It is enough that para graph 5 has not been changed or altered in any way. The statement in paragraph 13 may, after all, be a loose expres sion which the testator used only for the purpose of empha sising that the Kothangudi village would be enjoyed by Nagammal even if Gnanambal 's son was not adopted. This is not by way of making any new disposition, but only to affirm what has been already done. The affirmation of a portion of the provision which is perfectly superfluous cannot exclude the rest. It is somewhat difficult to say why the rest of the provisions in paragraph 5, particularly the benefit that was meant to be given to Alamelu, was not repeated in para graph 13. It may be that the testator did not consider it necessary or it may be that it was due to inadvertance. It is to be noted here that the testator did not mention any where in paragraphs 11 to 16 the small house that was given absolutely to Nagamreal under paragraph 7. It was certainly not the intention of the testator that Nagammal would not have that house on the happening of the second contingency. If paragraph 5 itself is held to be applicable and in our opinion it should be so held there is no question of adding to or altering any of the words made use of by the testator. It is not a question of making a new will for the testator or inventing a bequest for certain persons simply because the will shows that they were the objects of the testator 's affection. The provision is in the will itself and it is only a question of interpretation as to whether it is ap plicable in the circumstances which have happened in the present case. The position, therefore, seems 960 to be that the disposition made in paragraphs 5, 6 and 7, which were in favour of the mother, the wife and the two daughters of the testator were meant to take effect immedi ately on the testator 's death. They were not contingent gifts in the sense of being made dependent upon the adoption of Gnanambal 's son by the wife of the testator. Only the reversionary interest in the Mayavaram house, which was to vest in the adopted son under the provision of paragraph 6 after the death of the widow and the mother was taken away from the adopted son and given to Gnanambal in case the person adopted was not her own son. If the whole of para graph 5 remains operative the Injigudi house must also be deemed to have been given to Nagammal for her life and in fact the evidence is that she enjoyed it so long as she was alive. No difficulty also arises regarding the payment of Rs. 5,000 to Alamelu as has been stated by the High Court in its judgment. Having regard to the meticulous care with which the testator seems to have attempted to provide for the differ ent contingencies that might arise and the anxiety displayed by him in making an effective disposition of all the proper ties he owned, it is not probable that he would omit to make any provision regarding the future devolution of the Kothan gudi village if he really thought that such direction had to be repeated in the latter part of the will. The omission of the gift of Rs. 5,000 to Alamelu also cannot be explained on any other hypothesis. It is not necessary for the purpose of the present case to invoke any rule of presumption against. intestacy, but if the presumption exists at all, it certainly fortifies the conclusion which we have arrived at. The result is that the appeal is allowed, the judgment and decree of the of the High Court are set aside and those of the Subordinate Judge restored. The appellant will have costs of all the courts. Appeal allowed. Agent for respondent No. 1: M. section Krishnamoorthi Sastri.

The cardinal maxim to be observed by courts in constru ing a will is to endeavour to ascertain the infentions of the testator. This intention has to be gathered primarily from the language of the document which is to be read as a whole without indulging in any conjecture or speculation as to what the testator would have done if he had been better informed or better advised. The courts are however entitled and bound to bear in mind other matters than merely the words used. They must consider the surrounding circumstances, the position of the testator, his family relationship, the probability that he would use words in a particular sense, and many other things which are often summed up in the somewhat picturesque figure the court is entitled to put itself into the testator 's armchair '. But all this is solely as an aid to arriving at a right construetion of the will, and to ascertain the meaning of the language when used by that particular testator in that document. As soon as the construction is settled, the duty of the court is to carry out the intsentions as expressed. The court is in no case justified in adding to testamentary dispositions. In all cases it must loyally carry out the will as properly construed, and this duty is 950 universal, and is true alike of wills of every nationality and every religion or rank of life. A presumption against intestacy may be raised if it is justified by the context of the document or the surrounding circumstances; but it can be invoked only when there is undoubted ambignity in ascertainment of the intentions of the testator. It cannot be that merely with a view to avoiding intestacy you are to do otherwise than construe plain words according to their plain meaning. A Hindu died leaving a widow, a widowed daughter and a married daughter G, after he had made a will giving authori ty to his widow to adopt a son of G should she beget one, or in the alternative a son of one of his nephews. 4 of the will provided that if his widow adopted G 's son all his properties except the village of K and the house at I and other properties disposed of by the will shall pass to the adopted son; and para. 5 provided as follows: ' 'The whole of the village of K and the house a I, my daughter N shall enjoy with life interest and after her the said property shall pass to my daughter G and her children on payment by the latter of Rs. 5,000 to A, the daughter of N." Later on, amongst the provisions which he wished to make if a son of a nephew was adopted, there was a provision which ran as follows: "Para. 13. The village of K shall be enjoyed by N as stated in para. " A nephew 's son was adopted and he instituted a suit against G after N 's death for recovery of the village K contending that under para. 13 of the will there was no disposition of the village after the life interest of N and on her death the village vested in him as the testator 's heir: Held, on a construction of the will as a whole, that the teststor did not intend that in the contingency of the adoption of nephew 's son, the village K should pass, on N 's death, to the adopted son; on the other hand, the provisions of para. 5 of the will were intended to apply even in the case of such a contingency and the village passed to G on N 's death under para. 5 of the will. Judgment of the High Court of Madras reversed. Venkatanarasimha vs Parthasarathy (41 I.A. 51) and Re Edward; Jones vs Jones , referred to.

erred Case No. 2 of 1991. (Under Article 139 A(1) of the Constitution of India) Salman Khurshid, Madhan Panikkar, Mrs. Vimla Sinha and Gopal Singh for the Appellant. Kapil Sibal and Arun Jaitley, Additional Solicitor Generals, Ms. Kamini Jaiswal and C.V.S. Rao for the Respond ents. The Judgment of the Court was delivered by section RATNAVEL PANDIAN, J. The above case has been regis tered in pursuance of our order dated 23.11.90 in Transfer Petition (Civil) No.546/90 transferring O.A.No.191 of 1990 under Article 139 (A) of the Constitution of India from the file of the Central Administrative Tribunal, Patna Bench, Patna. the appellant 's prayer is to dispose of the above case along with Civil Appeal Nos. 5439 52/90 (arising out of SLP (Civil) Nos. 13525 38 of 1990). The relief sought for by the appellant before the CAT, Patna Bench was similar to the one before the CAT, Principal Bench, Delhi that being to declare the second proviso to Rule 4 of C.S.E. as violative of Articles 14 and 16 of the Constitution of India. On 29.8.90 the 114 Patna Bench in M.P. No. 36/90 granted an interim relief which reads thus: "Heard the learned counsel for the applicant. The applicant may be allowed to appear at the Civil Services Main Examination, 1990, subject to result of the final orders in the original application. The respondents are directed accordingly. Copy be given to the parties today." Mr. Salman Khurshid appearing for the appellant submit ted that the interim direction given by the Patna Bench if covered by the directions given in paras 5(ii) and 6 of the order of CAT, Delhi he has no further submission to be made, and the implementation of those directions will satisfy his relief. We in our order dated 7.12.1990 have clarified certain directions given by the CAT, Delhi with reference to the various interim orders passed by it in a number of OAs and finally gave the following direction: "Hence we permit all those candidates falling under Para Nos. 5 (ii), 6 and 7 to sit for the main examination subject to the condition that each candidate satisfies the Secretary, Union public Service Commission that he/she falls within these categories and that the concerned candidates have passed the preliminary exami nation of 1990 and have also applied for the main examination within the due date. This permission is only for the ensuing examina tion. , As we are now permitting those who have passed the preliminary examination of 1990 and have applied for the main examination on the basis of the unquestioned and unchallenged directions given under paras 5(ii), 6 and 7 of the judgment of the CAT, Principal Bench, New Delhi, the same benefit is extended to the other appellants also who satisfy those condi tions as mentioned under paras 5 (ii), 6 and 7. " The above direction virtually confirms the direction given by the Patna Bench in M.P. No.36/90 allowing the appellant therein to sit for C.S.E. (Main) of 1990. However, we have not subjected our direction with any rider in the sense that that direction will be subjected to the result of the appeals. In fact, we have in the judgment rendered today in Civil Appeal Nos. 5439 52/90 and batches given a direction to the respondents inclusive of the Union Public Service Commission that "all those candidates who have appeared for the Civil Services (Main) Examination, 1990, pursuant to our permission given in the order dated 7.12.90 and who have 115 come out successfully in the said examination and thereby have qualified themselves for the interview, shall be per mitted to appear for the interview test and that if those candidates completely and satisfactorily qualify themselves by getting through the written examinations as well as the interview shah be given proper allocation and appointment on the basis of their rank in the merit list notwithstanding the restriction imposed by the second proviso and our present judgment upholding the validity of the said proviso since the respondents have not questioned and challenged the directions given by CAT, Principal Bench, Delhi in para graphs 5(ii), 6 and 7 of its judgment dated 20.8.1990. We would like to make it clear that the unchallenged directions given by the CAT in its judgment as well as directions given by us in our order dated 7.12.90 are not.controlled by any rider in the sense that the said directions were subject to the result of the cases and hence those directions would be confined only to those candidates who appeared for CSE, 1990 and no further. The seniority of those successful candidates in CSE, 1990 would depend on the service to which they have qualified. The seniority of the left out candidates would be maintained in case they have joined the service to which they have been allocated on the result of previous CSE and such candidates will not be subjected to suffer loss of seniority as held by the CAT, Delhi in its judgment". Therefore, we hold that this appellant is also entitled for the same above benefit. In other respects, this trans ferred case is dismissed for the reasons mentioned in the main judgment in Civil Appeal Nos. 5439 52/90 and batches. No order as to costs. R.P. Appeal dismissed.

The appellant filed an application before the Central Administrative Tribunal, Patna Bench, for a declaration that the second proviso to rule 4 of Civil Services Examination Rules was violative of Articles 14 and 16 of the Constitu tion of India. By an interim order the Tribunal allowed the appellant to appear at the Civil Services (Main) Examina tion, 1990, subject to the result of the final orders in the original application. The said application was transferred to this Court. In a bunch of similar cases, the Central Administrative Tribunal, Delhi upheld the validity of Rule 4 of Civil Services Examination Rules. In appeal to this Court (Civil Appeal Nos. 5439 52/90)** by an interim order dated 7.12.1990, the appellants therein were allowed to appear in Civil Services (Main) Examination, 1990; and while finally disposing of the appeals, the judgment of CAT, Delhi was affirmed. Dismissing the case of the appellant in view of the judgment in C.As Nos. 5439 52/90,** this Court, HELD: The appellant was also entitled to the same benefits as granted to the appellants in Civil Appeals No. 5439 52/90, namely: (i) All those candidates who appeared for the Civil Services (Main) Examination, 1990, pursuant to this Court 's order dated 7.12.90 and qualified themselves for the inter view, shall be permitted to appear for the interview test and that if those candidates completely and satisfactorily qualify themselves by getting through the written examina tions as well as the interview shall be given proper alloca tion and appointment on the basis of their rank in the merit list notwithstanding the restriction imposed by the second proviso to rule 4 and this Court 's judgment 113 upholding the validity of the said proviso since the re spondents have no/ questioned and challenged the directions given by C.A.T. Principal Bench, Delhi in its judgment dated 20.8.1990. (ii) The un challenged directions given by the C.A.T. in its judgment as well as directions given by this Court in its order dated 7.12.90 were not controlled by any rider in the sense that the said directions were subject to the result of the cases and hence those directions would be confined only to those candidates who appeared for C.S.E. 1990 and no further. The seniority of those successful candidates in C.S.E. 1990 would depend on the service to which they have qualified. The seniority of the left out candidates would be maintained in ease they have joined the service to which they have been allocated on the result of previous C.S.E. and such candidates will not be subjected to suffer loss of seniority as held by the C.A.T. Delhi in its judgment. [pp 114 H, 115A D] **Mohan Kumar Singhania & Ors. vs Union of India, [1991] Supp. 1 SCR 46

N: Criminal Appeal No. 120 of 1971. Appeal by Special Leave from the Judgment and order dated the 24th July, 1970 of the Allahabad High Court at Allahabad in Criminal Appeal No. 581 of 1968. A. N. Mulla and O. N. Mohindroo for the Appellant. D. P. Uniyal and O. P. Rana for the Respondent. The Judgment of P. N. Bhagwati and R. section Sarkaria was delivered by R. section Sarkaria, J. Beg, J. gave a separate opinion. BEG, J. I have had the advantage of going through the judgement of my learned brother Sarkaria. I confess that I do not feel confident enough about the veracity of the defence case and the evidence found in support of it to be able to hold that it is proved on a balance of probabilities. But, I think that what transpires from a consideration of the whole evidence is enough to entitle the accused to a benefit of doubt for the reasons given below. The findings of the Trial Court on the defence version indicate that a question of law arise here which seems to have troubled several High Courts. It gave rise to two Full Bench decisions of the Allahahad High Court, the first in Parbhoo vs Emperor,(l) and the second in Rishi Kesh Singh & ors. vs the State( '). It does not seem to have been considered in the same form by this Court. r I think this is an appropriate case in which this Court could consider and decide it, and, it is because this aspect of the case was ignored by the Trial Court as well as the High Court that I consider this to be a fit case for a reconsideration of evidence and interference by this Court under Article 136 or the Constitution. The Trial Court, after assuming that there may be some truth in the defence version that Ram Nath had gone to the scene of occurrence with a bhala, said: "Even if Ram Nath had arrived there armed with bhala, there could be no apprehension of death or grievous hurt to any one of the accused persons as the accused persons were armed with gun and pistol and could defend themselves if Ram Nath tried t(3 strike them with 'bhala '. Pratap and Suresh 'accused could not be justified in firing gun shots and pistol shots at Ram Nath in the expectation that Ram Nath may reach the place where Puttu Lal accused was standing and may strike him with 'bhala '. (1) A.l. R. 1941 All. 402 (FB). (2) AIR 1970 All. Sl (FB). 760 Pratap and Suresh accused had started from their house A with gun and pistol before they had known about the reaching of Ram Nath at that place with a 'bhala '. It can reasonably be inferred from the own case of the defence that Pratap and Suresh accused, or at least Pratap accused, had arrived there with the intention of committing the murder of Raj Kumar or of any body who may interfere in the wordy duel between Raj Kumar P.W. and Puttu Lal accused". This shows that the Trial Court was inclined to believe that the defence version was true to the extent that Ram Nath had rushed to the scene of occurrence with a bhala, when a quarrel between the two sides was taking place. But, it overlooked here that Ram Nath, while going to the help of Raj Kumar, had actually expressed his intention to break the heads of members of Puttu Lal 's party. At any rate, according to the prosecution evidence. , Ram Nath was acting in such a way as to appear like a "lion" bent on interference to protect Raj Kumar in a quarrel between the two sides. If this was Ram Nath 's conduct, could he not have done something which gave rise to the right of private defence of person ? If that right had arisen how could shooting him be murder ? Even if it was exceeded the offence could not be culpable homicide amounting to murder. Why should Pratap, the appellant, have spared Raj Kumar who, according to the prosecution evidence itself, had given offence to Puttu Lal in the past and then on the date of incident by actually demolishing a nali and then advancing towards him with his phawra, threatening to strike Puttu Lal, but shoot at Ram Nath who appeared subsequently and was, according to the prosecution version, quite unarmed ? The prosecution evidence is that Puttu Lal had called his son Pratap and asked him to bring his gun only when Raj Kumar had threatened to attack him with his phawra and had advanced towards Puttu Lal. Nevertheless, Pratap and Suresh are alleged to have shot down Ram Nath, even though Ram Nath was empty handed, but did nothing to Raj Kumar who was, according to the prosecution version, more offensive and threatening with a phawrah and was the cause of the whole trouble Such conduct, attributed to Pratap and Suresh, in the setting alleged, seems quite unnatural and eccentric. Raj Kumar, P.W. 1, also stated that Atma Ram, Achhe Ram and Sia Ram, Pradhan, took their stand in parti land at about the same time as Ram Nath had arrived on the scene and had asked Ram Nath not to loose heart or to be discouraged as he was coming to deal with each one of Raj Kumar 's adversaries. Then, at Puttu Lal 's instigation, Pratap and Suresh are alleged to have shot at Ram Nath. Why is it that this version of the obviously interested Raj Kumar, PW 1, is, only supported by two chance witnesses of another village, but neither Atma Ram nor Achhe Ram, nor Sia Ram, Pradhan of village Sant Kuiyan, who had, according to the prosecution version, witnessed the occurrence not produced by the prosecution at all ? The prosecution could select its witnesses. But, why was such an objectionable selection made ? Was it not a case in which the Court should have exercised its power under Section 540 Criminal Procedure Code to summon at least Sia Ram 761 Pradhan, in whose grove Ram Nath was shot, so as to ascertain the whole truth more satisfactorily ? Had not the Trial Court and the High Court too readily assumed that absolute truth fell from the lips of prosecution witnesses as regards the commencement of aggression even when their own statements contained admissions indicating that the whole or the real truth had not been revealed by them ? These are some of the doubts which the rather mechanical examination of evidence by the Trial Court and the High Court do not dispel. The question which arises in this case is: Even if the defence version is not held to be fully established, by a balance of probabilities, were there not sufficient pointers in evidence of what was probably the truth which leaked out from some statements of the prosecution witnesses themselves ? They had indicated the bellicose and threatening attitude of Ramnath while he was advancing. Did this not tend to corroborate the defence version that he was actually advancing menacingly armed with a bhala piosed for an attack with it when he was shot at ? It was held in the case of Rishi Kesh Singh (supra) by a majority of a Full Bench of nine Judges of the Allahabad High Court explaining and relying upon the decisions of this Court discussed there (at p. 51): "The accused person who pleads an exception is entitled to be acquitted if upon a consideration of the evidence as a whole (including the evidence given in support of the plea of the general exception) a reasonable doubt is created in the mind of the Court about the built of the accused". In that case, the result of a consideration of the decisions of this Court in relation to the provisions of Section 105 of the Evidence Act was summed up by me as follows (at page 97 98): ". an accused 's plea of an exception may reach one of three not sharply demarcated stages, one succeeding the other, depending upon the effect of the whole evidence in the case judged by the standard of a prudent man weighing or balancing probabilities carefully. These stages are: firstly, a lifting of the initial obligatory presumption given at the end of section 105 of the Act; secondly, the creation of a reasonable doubt about the existence of an ingredient of the offence; and, thirdly, a complete proof of the exception by 'a preponderance of probability ', which covers even a slight tilt of the balance of probability in favour of the accused 's plea. The accused is not entitled to an acquittal if his plea does not get beyond the first stage. At the second stage, he becomes entitled to acquittal by obtaining a bare benefit of doubt. At the third stage, he is undoubtedly entitled to an acquittal. This, in my opinion, is the effect of the majority view in Parbhoo '. case which directly relates to first two stages only. The Supreme Court decisions have considered the last two stages so far, but the first stage has not yet been dealt with directly or separately there in any case brought to our notice." 18 L925SupCl/75 762 Provisions of Section 105 of the Evidence Act, which are applicable in such cases, contain what are really two kinds of burden of the accused who sets up an exception; firstly, there is the onus laid down of proving the existence of circumstances bringing the case within any of the General exceptions in the Indian Penal Code, or, within any special exception or proviso contained in any other part of the same Code, or in any law defining the offence, and, secondly, there is the burden of introducing or showing evidence which results from the last part of the provision which says that "the Court shall presume the absence of such circumstances". The effect of this obligatory presumption at the end of Section 105 of the Evidence Act is that the Court must start by assuming that no facts exist which could be taken into consideration for considering the plea of self defence as an exception to the criminal liability which would otherwise be there. But, when both sides have led evidence of their respective versions, the accused can show, from any evidence on the record, whether tendered by the prosecution or the defence, that the mandatory presumption is removed. the last mentioned burden is not really a burden of establishing the plea fully but of either introducing or of showing the existence of some evidence to justify the taking up of the plea. The burden resulting from the obligatory presumption is not difficult to discharge and its removal may not be enough nor an acquittal. D Section 105 of the Evidence Act was thus explained in Rishi Kesh Singh 's case (supra) (at P. 95): "Even a literal interpretation of the first part of Section 105 could indicate that 'the burden of proving the existence of circumstances bringing the case ' within an exception is meant to cover complete proof of the exception pleaded, by a preponderance of probability, as well as proof of circumstances showing that the exception may exist which will entitle, the accused to the benefit of doubt on the ingredients of an offence. If the intention was to confine the benefit of bringing a case within an exception to cases where the exception was established by a pre ponderance of probability, more direct and definite language would have been employed by providing that the accused must 'prove the existence ' of the exception pleaded. But, the language used in the first part of Section 105 seems to be deliberately less precise so that the accused, even if he fails to discharge his duty fully, by establishing the existence of an exception, may get the benefit of the exception in directly when the prosecution fails in its duty to eliminate genuine doubt about his guilt introduced by the accused. Again, the last part of Section 105, even if strictly and literally interpreted, does not justify reading into it the meaning that the obligatory presumption must last until the accused 's plea is fully established and not just till circumstances (i.e. not necessarily all) to support the plea are proved. Moreover, a restrictive interpretation of Section 105, excluding an accused 11 from the benefit of bringing his case within an exception until he fully proves it, is ruled out by the declaration of law by the Supreme Court that there is no conflict between Section 763 105 and the prosecution 's duty to prove its case beyond reasonable doubt. Hence, the obligatory presumption, at the end of Section 105, cannot be held to last until the accused proves his exception fully by a preponderance of probability. It is necessarily removed earlier or operates only initially as held clearly by judges taking the majority view in Parbhoo 's case, 1941 All LJ 619 AIR 1941 All 402 (FB)". It was also said there (at p. 89): "The legal position of a state of reasonable doubt may Be viewed and stated from two opposite angles. One may recognise, in a realistic fashion, that, although the law prescribes only the higher burden of the prosecution to prove its case beyond reasonable doubt and the accused 's lower burden of proving his plea by a preponderance of probability only, yet, there is, in practice, a still lower burden of creating reason able doubt about the accused 's guilt, and that an accused 's can obtain an acquittal by satisfying this lower burden too in practice. The objection to stating the law in this fashion is that it looks like introducing a new type of burden of proof, although, it may be said, in defence of such a statement of the law, that it only recognises what is true. Alternatively, one may say that the right of the accused to obtain the benefit of a reasonable doubt is the necessary outcome and counterpart of the prosecution 's undeniable duty to establish its case beyond reasonable doubt and that this right is available to the accused even if he fails to discharge his own duty to prove fully the exception pleaded. This technically more correct way of stating the law was indicated by Woolmington 's case and adopted by the majority in Parbhoo 's case, and, after that, by the Supreme Court. It seems to me that so long as the accused 's legal duty to prove his plea fully as well as his equally clear legal right to obtain the benefit of reasonable doubt, upon a consideration of the whole evidence, on an ingredient of an offence, are recognised, a mere difference of mode in describing the position, from two different angles, is an immaterial matter of form only. Even if the latter form appears somewhat artificial, it must be preferred after its adoption by the Supreme Court". (See: K. M. Nanavati vs State of Maharashtra AIR Applying the principle of benefit of doubt, as I had ' explained above, to the plea of private defence of person in the instant case, I think that, even if the appellant did not fully establish his plea, yet, there is sufficient evidence, both direct and circumstantial, to justify the finding that the prosecution has not established its case beyond reasonable doubt against Pratap on an essential ingredient of the offence of murder: the required mens rea. After examining all the facts and circumstances revealed by the prosecution evidence itself and the defence evidence and considering the effect of non production of the better evidence available which for some unexplained reason, was not produced, I am not satis 764 fied that the plea of private defence of person can be reasonably ruled A out here. This is enough, in my opinion, to entitle the appellant to get the benefit of doubt. I may observe here that the High Court had not only failed to grapple with this difficulty arising from the evidence in the case and some of the findings of the Trial Court, which seemed to think that the intention to murder or the required mens rea for murder must be presumed from the mere fact of homicide (a wholly incorrect approach in a case where a plea of private defence had been raised and sought to be established by some evidence), but, the High Court itself started from a totally unsound premise when it observed: "It was Puttu Lal who was committing aggression by insisting that Raj Kumar should not dismantle the Nali It is again admitted by Puttu Lal that he cried out for help in response to which Pratap arrived armed with a double barrel gun. " In other words, the High Court assumed that a mere insistence by Puttu Lal that Raj Kumar should not dismantle the nali amounted to an "aggression" begun. The word "aggression" is generally used for an actual invasion of the property of another or an attack on the body of another. It is true that it is not necessary that an actual attack should commence before a right of private defence can arise. Nevertheless, a reasonable apprehension of injury could not be said to arise by a mere prohibition to dig up a "nali" or drain. It could arise if a man is advancing aggressively towards others holding out threats to break their heads even if he is armed with a lathi with which he could carry out such a declared intention. The extent of the right or its justification is another matter depending again upon facts which have a bearing on extent of the right or its reasonable exercise. In the circumstances of the case before us, I think, we can hold, that, even if Ram Nath was not positively proved to be threateningly advancing with a bhala poised for attack towards Pratap, appellant, or Puttu Lal, yet, a consideration of all the probabilities and evidence on record leads us to infer that this was reasonably likely to be true. If this was so, it is clear that the appellant must have discharged his gun when Ram Nath had advanced and come near enough in a manner which must have been so menacing as to raise an apprehension of an attack with the bhala. Such an assumption fits in with medical evidence too showing that the shots were fired from a close enough range to cause charring. Another feature of the case is that the High Court itself did not rely on the statements of the alleged eye witnesses when it acquitted Suresh, who was also alleged to have shot with his pistol" giving him the benefit of doubt because, unlike Puttu Lal and Pratap, he had denied his presence or participation in the occurrence and was said to be only distantly related to Puttu Lal. 765 I think, on an analysis of the whole evidence, that the appellant Pratap was also entitled to the benefit of a doubt which could be said to be reasonable. I, therefore, concur in the order proposed by my learned Brother. SARKARIA, J. This appeal by special leave is directed against a judgment of the High Court of Allahabad dismissing the appeal of Partap appellant and maintaining his conviction under section 302, Penal Code. The facts of the prosecution case as narrated at the trial by Raj Kumar, the star witness of the prosecution, were as follows: Raj Kumar had installed a Tubewell in his field known as 'Chharelawala.field ' in the revenue estate of village Sant Kuiyan, in the year 1962. The water pumped out from this tubewell was utilised by him not only for irrigating his own fields but also those of the neighbours against charges. Subsequently, Puttu Lal accused also set up a tubewell in his land situate in the vicinity of Chharelawala field. Puttu Lal, too, started letting out the use of his tubewell on hire. An unhealthy competition ensued between Raj Kumar and Puttu Lal in this water business, and their relations became strained. There was a water channel running from north to south in Raj Kumar 's field through which Puttu Lal used to supply water to others. To the south of Chharelawala field, there is grove belonging to Sia Ram, Pardhan of the village. The tubewell of Puttu Lal is located towards the south of that grove. To the west of the Chharelawala field, is a plot belonging to Puttu Lal. Two or three days before the occurrence in question, there was an exchange of hot words between Raj Kumar and Puttu Lal when the latter insisted on taking water through the said channel. Raj Kumar firmly refused Puttu Lal the use of that channel. on S 1 1967, at about 7.45 a.m., Raj Kumar and his brothers Ramchander and Bhagwan Sahai, started demolishing their channel so that Puttu Lal should not be able to supply water through it. About fifteen minutes thereafter, Puttu Lal and his son, Ram Parkash, appeared on the northern ridge of the grove of Siya Ram. Puttu Lal was carrying a lathi and Ram Parkash a bhala. Puttu Lal asked Raj Kumar and his companions not to demolish the channel. Raj Kumar rudely refused asserting that the channel belonged to him and he had every right to erase it. Raj Kumar advanced towards Puttu Lal threatening to break his head with the spade, and thus settle the matter once for all. On being so threatened, Puttu Lal shouted to his son, the appellant, to come immediately with his gun. In response to Puttu Lal 's call, the appellant, armed with the double barrel licensed gun of Puttu Lal, and Puttu Lal 's other son, Suresh, armed with a pistol, came. A couple of minutes after the arrival of the appellant and Suresh, the deceased Ram Nath who was the son of Raj Kumar 's wife 's brother, came out running from the grove. He shouted to 766 Raj Kumar not to be afraid as he would settle the matter with every A one of the accused and break their heads. On seeing the deceased, Puttu Lal said: "He thinks himself to be a lion, let us see him first of all". On this instigation, Partap fired his gun at Ram Nath from a distance of four or five paces. On receiving the gun shot, Ram Nath turned back when he was hit by a second shot fired by Suresh from his pistol. Ram Nath, dropped dead. The accused then ran away taking their weapons with them. Raj Kumar PW 1 went home, scribed the report. ka 3, and handed it over in the Kain Ganj Police Station, 8 miles away, at 9.30 a.m. After registering a case on the basis of this report, Sub Inspector Kartar Singh reached the spot and started the investigation. He prepared the inquest report and sent the body for post mortem examination. The autopsy was conducted by Dr. section P. Chaturvedi, PW 3, on 6 1 1967, at 12.40 p.m. The Doctor found five gunshot wounds of entry and three of exit on the deadbody. There was blackening around all the wounds of entry. The death, in the opinion of the Doctor, was due to shock and haemorrhage on account of the gunshot wounds of the head and the right lung. The accused surrendered in the court of the Additional District Magistrate, Farrukhabad on 7 1 1969, and thereafter their custody was taken over by the Police. After conducting the preliminary enquiry the Magistrate committed Puttu Lal, Suresh and Partap accused for trial to the court of Session on charges under sections 302/34, 109 Penal Code All the three accused were convicted and each of them was sentenced to imprisonment for life and a fine of Rs. 200/ . The plea of the accused was one of denial of the prosecution case. Suresh pleaded alibi and alleged false implication. Partap pleaded that the deceased was about to strike him with a bhalla and consequently, he fired two shots, in self defence, from his double barrel gun at the deceased. The accused examined Chhote Khan, DW 1. in defence. The trial judge rejected the defence version and convicted and sentenced the accused as aforesaid. In appeal, the High Court acquitted Suresh accused but maintained the conviction of Puttu Lal and Partap. Before the admission of the special leave petition under Article 136 of the Constitution by this Court, Puttu Lal died. Thus only the appellant 's conviction survives for consideration in this appeal. The decision of the courts below rests mainly on the testimony of the three eye witnesses, namely, Raj Kumar, PW 1, Atma Ram PW 2, and Achhey Ram, PW 4. Mr. A. N. Mulla, the learned Counsel for the appellant contends that the evidence of P.Ws. 2 and 4 was not worthy of credence; that being residents of another village and having failed to give a credible reason for their presence at the scene of occurrence, they were chance witnesses of the worst type; that as admitted by their brother" Bisheshar Dayal, PW 15, they were not only related to the deceased but were 767 stock witnesses of the Police. that since the witnesses did not frankly and fully admit their mutual blood relationship" they were of a type to whom truth, even in trifles, appeared to be unpalatable; that the prosecution had failed to examine Siya Ram and Mahabir who were also named as eye witnesses in the F.I.R. and the courts below had erred in not drawing an adverse inference against the prosecution on that score. Although this criticism levelled against P.Ws. 2 and 4 is not totally devoid of force, we do not think it a sufficient ground to depart from the settled rule of practice according to which this Court does not, in the absence of material irregularity, illegality or manifest error, itself reappraise the evidence. In spite of these infirmities, the courts below have believed their presence at the time and place of occurrence. The reasons given by the witnesses for their presence at the spot, may be vulnerable, even wrong. True, they are residents of the neighbouring village, 1 1/2 or 2 miles away, and belong to the caste of the deceased. PW 15 may be bearing some relationship with the deceased. But the fact remains that PWs 2 and 4 have been named as eye witnesses in the F.I.R. which was lodged in the Police Station, 8 miles away, with utmost promptitude. Be that as it may, the fate of the case did not depend on the evidence of these two witnesses. Raj Kumar 's evidence corroborated by the F.I.R. and the other evidence on the record, was by itself, sufficient to hold that the appellant had fired a fatal shot at the deceased from close range with the double barrel gun of his father. Thus, the only question that falls to be considered in this appal is, whether Ram Nath was shot dead by the appellant in the exercise of his right of private defence ? We have carefully scrutinised the judgments of the courts below. In our opinion, their finding in regard to the plea of self defence is clearly erroneous. They appear to have overlooked he distinction between the nature of burden that rests on an accused under section 105 Evidence Act to establish a plea of self defence and the one cast on the prosecution by Section 101 to prove its case. It is well settled that the burden on the accused is not as onerous as that which lies on the prosecution. While the prosecution is required to prove its case beyond a reasonable doubt, the accused can discharge his onus by establishing a mere preponderance of probability. Since the approach of the courts below is basically wrong, it has become necessary to examine the material on record bearing on the plea of self defence. This plea was specifically taken by the appellant at the trial in his examination under section 342, Cr. It was put to Raj Kumar PW 1, the chief witness of the prosecution, in cross examination. Raj Kumar replied: "It is wrong to suggest that Ram Nath would have murdered Partap if Partap had not fired at him. Ram Nath had nothing in his hand. " The courts below have accepted without demur the ipse dixit of Raj Kumar that the deceased was unarmed. We find it impossible to swallow this so improbable a version the credibility of which was extremely underminded by the telling 768 circumstances appearing in the prosecution evidence, itself. It was the admitted case of the prosecution that following the threatening gesture made by Raj Kumar to break Puttu Lal 's head with the spade, and the call given by Puttu Lal, the appellant came there armed with a gun and immediately thereafter, the deceased came running, proclaiming that he would break the heads of and settle the scores with everyone of the accused party. It is further admitted that the deceased had reached at a distance of 3 or 4 paces from the appellant when the latter fired. The blackening found around the wounds of entry on the deadbody by the medical witness, confirm that the deceased was within six feet of the assailant when he received those injuries. Again, it is the case of the prosecution that at the time of the first gun fire the deceased was facing the appellant. The medical evidence also confirms it, inasmuch as two entrance wounds (1 and 5) were located on the front side of the deceased. From this circumstance it is clearly discernible that the deceased was charging at the gunman and had reached within a striking distance when his charge was foiled by the gun fire. It is difficult to believe that the deceased would have behaved in the bold and truculent manner he did, if he were not armed with a formidable weapon. It was put to Raj Kumar by the defence that if the deceased was empty handed as was alleged by the witness how did he proclaim to break the heads of the accused. The witness had no satisfactory answer to it. Conscious that he was suppressing the fact in question, all that he could say in befuddled embarrassment, was: '`I do not know with what weapon he was going to break the heads. " The appellant 's plea that the deceased was going to strike him with a Bhalla, when the gun was fired, was highly probable. one of the reasons given by the learned Judges of the High Court for ignoring this plea was that it was belated and had not been set up by the appellant during his examination in the Committal Court. A glance at the record of that examination would show that he was not properly examined in that court. Only a composite question with regard to all the circumstances of the prosecution case, was put to him in the Committal Court, which he denied. The omission of the appellant to set up the plea of private defence in the Committal Court, therefore, was no ground to brand it as an after thought, particularly when there was foundation for it in the prosecution evidence, itself. The circumstances appearing in the prosecution evidence, and the statement of the appellant recorded under Sec 342, Cr. P.C. did not exhaust the material in support of the plea of self defence. There was the direct testimony of Chhote Khan, DW 1, who testified that he was attracted from his house to the spot by the outcry of Puttu Lal accused which was to the effect, that he was being killed. Witness saw Ram Nath deceased, armed with a spear, running towards the move of Siya Ram. Thereafter, he heard two reports of gun fire. On reaching the grove, the witness saw Ram Nath lying dead with a spear by his side. Partap appellant and Puttu Lal were also seen running away from the scene. Partap was carrying a gun. Witness did not see Suresh and Ram Parkash there. Excepting the precise words of 769 Puttu Lal 's call and the fact of the deceased being armed with a spear, Chhote Khan 's evidence in so far as it goes, fits in with the prosecution story. The High Court has rejected hi, evidence without much discussion for two reasons; firstly, that he was not speaking the truth inasmuch as he stated that Puttu Lal was raising an outcry that he was being killed, because it was no body 's case that any body assaulted or attempted to assault Puttu Lal. Secondly, the witness did not appear and make any statement before the investigating officer. Neither of these was a good ground to reject his testimony but of hand. Chhote Khan was a resident of the same village. The place of occurrence is not situated at a far off distance from the village, Indeed, it was the prosecution case that the appellant and deceased came to the spot after hearing the shouts of Puttu Lal and Raj Kumar. Chhote Khan 's coming to the spot from the village on hearing the same shouts, was therefore, equally probable. In any case, his reaching the scene on hearing the reports of gun fire and seeing Ram Nath lying dead with a spear, was a highly probable fact. Nor could his version that Puttu Lal was raising an outcry that he was being killed, be rejected outright. It was admitted by Raj Kumar in cross examination, that he and his companions had advanced 2 paces towards the accused Puttu Lal and others, threatening to break their heads with the Phawra (spade and that the witness was then carrying (rather brandishing) the spade. It is further admitted that it was after this threat that Puttu Lal gave a call to the appellant to come armed with the gun. In the face of such a threat, it was not improbable for Puttu Lal to cry out for help saying that he was being killed. Chhote Khan was an independent witness. Nothing was brought out in cross examination to show that he was hostile towards the complainant party or had any special interest in the defence. In the light of the above discussion, the conclusion is inescapable that the appellant had succeeded in establishing by a preponderance of probability, that the deceased was within a striking distance, poised for imminent attack on the appellant with a spear, when the latter fired the fatal gunshot. In such a situation, the appellant had reasonable and immediate apprehension that he would suffer death or grieous hurt if he did not fire at the deceased. Thus the death was, in all probability, caused by the appellant in the exercise of his right of private defence. For the foregoing reasons we allow the appeal, set aside the conviction of the appellant and acquit him. V.P.S Appeal allowed .

The appellant, his father and another were charged with murder and convicted by the trial court. The first information referred to eye witnesses, of whom the prosecution examined only two. These two were chance witnesses of another village, but the others who belonged to the village where the occurrence took place, were not examined. The third accused was acquitted on appeal. by the High Court and the father died after his conviction was con firmed by the High Court. The appellants plea of private defence was rejected both by the trial court and the High Court. Allowing the appeal to this Court, ^ HELD (Per M. H. Beg J.): Section 105 of the Evidence Act contains two kinds of burden on the accused who sets up an exception (i) the onus of proving the existence of circumstances bringing the case within any of the general or special exceptions in the I.P.C. Or in any other law; and (ii) the burden of introducing or showing evidence, resulting from the last part of the provision which says that the court shall presume the absence of such circumstances. The effect of the obligatory presumption at the end of Section 105 is that the court must start by assuming that no facts exist which could be taken into consideration for considering the plea of self defence as an exception to the criminal liability which would otherwise be there. But when both sides have led evidence of their respective versions the accused ' can show, from the evidence on record, whether tendered by the prosecution or the defence that the mandatory presumption is removed. The last mentioned burden is not really a burden of establishing the plea fully but of either introducing or showing the existence of some evidence to justify the taking up of the plea. The burden resulting from the obligatory presumption is not difficult to discharge and its removal may not be enough for acquittal. But the right of the accused to obtain the benefit of reasonable doubt is the necessary outcome and counter part of the prosecution 's undeniable duty to establish its case beyond reasonable doubt and that right is available to the accused even if he fails to discharge his own duty to prove fully the exception pleaded. [762A D; 763E] In the present case, even if the appellant did not fully establish his plea. yet, there is sufficient evidence, both direct and circumstantial, to justify the finding that the prosecution has not established its case beyond reasonable doubt against the appellant on an essential ingredient of the offense of murder namely the required mens rea. An examination of all the facts and circumstances revealed by the entire evidence, including the effect of non production of the better evidence available which. for some unexplained reason was not produced, shows that the plea of private defence cannot be reasonably ruled out. Even if the deceased was not positively proved to be advancing threateningly with a spear poised for attack, towards the appellant or his father, yet, a consideration of the whole evidence leads to the inference that this was reasonably likely to be true. [763C 764A E] (1) The trial court was inclined to believe that the defence version was true to the extent that the deceased had rushed to the scene with a spear. It overlooked that the deceased while going to help P.W. 1, had actually expressed his intention to break the heads of the members of the accused party and that he was acting in such a was as to appear to be bent on physically aggressive interference in a quarrel between the two sides. If that was the conduct of the deceased, it is reasonable to infer that he must have done some 758 thing which gave rise to the right of private defence in favour of the appeallant Otherwise, the conduct of the appellant, in sparing, P W. 1, who according to the prosecution had given offence to his father in the past and on the day of the incident. and was advancing towards the father threatening to strike him with a spade, but shooting the deceased who appeared on the scene subsequently and was, according to the prosecution version unarmed becomes inexplicable If the right of self defence had arisen the shooting could not be murder, even if the right was exceeded the offence could not he culpable homicide amounting to murder.[760B F] (2) Further, the prosecution version is supported only by two chance witnesses, hut the other persons, who had according to the prosecution version witnessed the occurrence and whose names were mentioned in the FIR. were neither produced by the prosecution nor were they examined as court witnesses [760G 761B] (3) Moreover the High Court itself did not rely on the statements of the alleged eye witnesses when it acquitted the third accused who was also alleged to have shot with his pistol [764H] Parbhoo vs Emperor, AIR 1941 All 402(FB) and Rishi Kesh Singh ors. vs The State AIR 1970 All] 51 (FB), referred to (Per P. N. Bhagwati and R.S. Sarkaria, JJ) The appellant had established by a preponderance of probability, that the deceased was within a striking distance poised for imminent attack on the appellant with a spear, when the appellant fired the fatal shot, and hence. the death was caused by the appellant in the exercise of the right of private defence.[769F G] (1) Nothing turns on the evidence or the two witnesses who were examined but the approach of the trial court and the High Court to the plea of self defense raised by the appellant was wrong necessitating a review of the evidence by this Court [767D,G] (2) The burden on the accused under s.105, Evidence Act is not as onerous as that which lies on the prosecution under s 101, Evidence Act, to prove its case. While the prosecution is required to prove its case beyond reasonable doubt, the accused can discharge his onus by establishing a mere preponderance of probability [767 T] (3) The plea of private defence was specifically taken by the appellant at the trial in his examination under s 342 Cr.P.C., and was put to P.W. 1. the chief eye witness for the prosecution. The High Court was wrong in branching the plea as an after though on the ground that he did not raise it in the committal court, especially when there is foundation for it in the prosecution evidence itself. The record also shows that only a composite question was put to the appellant and that he was not properly examined in the committal court. [767;768E G] (4) The appellant plea that the deceased was about to strike with his spear when the gun was fired was highly probable. The prosecution case was that, following the threatening gesture made by P.W. 1. to break the father 's head with a spade and the call given by him, the appellant came to the scene of occurrence with a gun; that immediately thereafter the deceased came proclaiming that, he would break the heads of, and settle scores with everyone of, the accused party, and that the deceased had reached a distance of 3 or 4 paces from the appellant and was charging at him with the appellant fired. The prosecution story that the deceased was unarmed is improbable. He would not have behaved in that bold and truculent manner unless he was armed with a formidable weapon. [767H 767D] (5) The defence witness also testified that he was attracted from his house to the scene of occurrence by the outcry of the father, that he saw the deceased 759 armed with a spear running towards the scene of occurrence and that he saw the deceased Lying dead with a spear beside him. He was an independent witness and nothing was brought out in the cross examination to show that he was either hostile towards the complainant 's party or had any special interest in the accused. His version was probable and the High Court Was wrong in rejecting his evidence. [769D F]

tition (Criminal) Nos. 271 272 of 1982. (Under Article 32 of the Constitution of India) Ram Jethmalani and Miss Rani Jethmalani for the Petitioner. R.K. Garg and A.V. Rangam, for the Respondents. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. Richard Beale and Paul Duncan Zawadzki, two British nationals, said to be friends and collaborators in smuggling enterprises are now under detention under the provisions of the . Richard Beale arrived at Madras from Singapore on December 11, 1981. He brought with him a Mercedez Benz van. On examination by the customs authorities, the van was found to have secret compartments and hidden cavities. It was laced and lined, as it were, with all manner of electronic equipment and goods worth several lakhs of rupees. Richard Beale was interrogated and made a statement. He was arrested and produced before the learned Metropolitan Magistrate of Madras. His friend and collaborator Paul Duncan Zawadzki, who had separately arrived in India and who attempted to contact Richard Beale, was also interrogated, later arrested and produced before the Metropolitan Magistrate. Orders of detention under the COFEPOSA 771 were made against both of them on January 7, 1982 and grounds of detention were duly served on them. The detenus moved the High Court of Tamil Nadu for their release from detention, but their applications were dismissed. They have now come to this Court seeking Writs of Habeas Corpus under article 32 of the Constitution. The two petitions were argued together by Shri Jethmalani and they may be conveniently disposed of by a single order. The first submission of the learned Counsel was that the representation made by the detenus to the Central Government to revoke the orders of detention so long back as March, 1982 remained undisposed of till this day and on that ground alone, the detenus were entitled to be released. Shri Jethmalani drew my attention to section 11 of the COFEPOSA which enables the Central Government to revoke or modify an order of detention made by the State Government or its officers and to the decisions of this Court laying down that delay by the Central Government in dealing with representations of the detenu would also entail the detention invalidating itself. Apart from the fact that there is no proper foundation for the submission, I am not satisfied that there is any merit in the submission. The Writ Petitions were filed on March 12, 1982 and there was then no hint of this submission. The counter affidavit on behalf of the State of Tamil Nadu was filed on April 5, 1982. Thereafter, the clerk of the learned Counsel for the Petitioners has sworn to an affidavit mentioning the facts giving rise to the present submission. It appears from the affidavit that when the Prime Minister of India was recently in England, a Bout De Papier was presented to the delegation accompanying her, expressing concern about the detention without trial of Richard Beale and Paul Duncan Zawadzki and suggesting that the detention order might be 'lifted ' and the detenus either released or charged and brought to trial without delay. It further appears that the British High Commission in India also addressed the Ministry of External Affairs, Government of India, and reminded them about the Bout De Papiere presented to the Prime Minister 's delegation in Britain during her visit to that country. According to Shri Jethmalani, the Bout De Papiere presented to the Prime Minister 's delegation in Britain and the subsequent reminder by the British High Commission constitute a representation to the Central Government demanding their immediate consideration in terms of the provisions of the COFEPOSA. I have no doubt that the Bout De Papier and the reminder, diplomatic 772 communications that they are between the Governments of the two countries, will be attended to and answered through appropriate diplomatic channels in proper time and with necessary expedition. But I find it difficult to treat such diplomatic communications between one country and another as representations to the statutory authorities functioning under the COFEPOSA, as representations which require immediate consideration by the statutory authorities and which if not considered immediately, would entitle the detenus to be set at liberty. Nor is it possible to treat the countless petitions, memorials and representations which are everywhere presented to the Prime Minister and other Ministers as statutory appeals or petitions, statutorily obliging them to consider and dispose of such appeals and petitions in the manner provided by statute. No doubt the Prime Minister and other Ministers, as leaders in whom the people have reposed faith and confidence, will deal with such appeals and petitions with due and deserved despatch. But quite obviously that will not be because they are discharging statutory obligations. It is not also possible to treat representations from whatever source addressed to whomsoever officer of one or other department of the Government as a representation to the Government requiring the appropriate authority under the COFEPOSA to consider the matter. I do not consider that the Bout de Papiere presented to the Prime Minister during her visit to Britain and the subsequent reminder addressed to the External Affairs Ministry by the British High Commission are representations to the Central Government which are required to be dealt with in the manner provided by the COFEPOSA. It was next submitted by the learned Counsel that the Chief Minister, who according to the Rules of Business of the Government of Tamil Nadu, was required to deal with matters relating to preventive detention neither applied his mind to the making of the orders of detention, nor considered the representation of the detenus himself. The relevant files have been produced by the learned Counsel for the State of Tamil Nadu and on perusing them, I find no substance in the submission of the learned Counsel. The submission which was most strenuously urged by the learned counsel was that the detenus had been denied the right to 773 be represented before the Advisory Board by an Advocate or at least by a friend and that they were thus denied the right to make a proper and effective representation to the Advisory Board. This was sufficient, said the learned Counsel, to vitiate the detention. The learned Counsel urged that the detenus were foreign nationals and they were under a handicap being ignorant of the laws and procedures of this country. To deny legal representation to them was an unreasonable exercise of the discretion vested in the Advisory Board to permit or not to permit legal representation. According to the learned Counsel, this was a clear case where legal representation should have been permitted. In any case, it was urged, the detenus ought to have been offered at least 'friendly ' representation, if not legal representation. Reliance was placed upon the following observations of the Constitution Bench in A.K. Roy vs Union of India : "Another aspect of this matter which needs to be mentioned is that the embargo on the appearance of legal practitioners should not be extended so as to prevent the detenu from being aided or assisted by a friend who, in truth and substance, is not a legal practitioner. Every person whose interests are adversely affected as a result of the proceedings which have a serious import, is entitled to be heard in those proceedings and be assisted by a friend. A detenu, taken straight from his cell to the Board 's room, may lack the ease and composure to present his point of view. He may be "tongue tied, nervous, confused or wanting in intelligence" (see Pett vs Greyhound Racing Association Ltd., , and if justice is to be done, he must at least have the help of a friend who can assist him to give coherence to his stray and wandering ideas. Incarceration makes a man and his thoughts dishevelled. Just as a person who is dumb is entitled, as he must, to be represented by a person who has speech, even so, a person who finds himself unable to present his own case is entitled to take the aid and advice of a person who is better situated to appreciate the facts of the case and the language of the law. It may be that denial of legal representation is not denial of natural justice 774 per se, and, therefore, if a statute excludes that facility expressly, it would not be open to the Tribunal to allow it. Fairness, as said by Lord Denning M.R., in Maynard vs Osmond , 253, can be obtained without legal representation. But, it is not fair, and the statute does not exclude that right, that the detenu should not even be allowed to take the aid of a friend. Whenever demanded, the Advisory Boards must grant that facility. " In the present case, the Advisory Board consisting of three Judges of the High Court of Tamil Nadu considered it unnecessary and inadvisable to allow legal representation to the detenus. It was a matter for the decision of the Advisory Board and I do not think I will be justified in substituting my judgment in the place of their judgment. The detenus were heard personally by the Advisory Board. After seeing and hearing them personally also, the Board did not feel it necessary to provide legal representation to them which they would certainly have done if they had thought that the detenus appeared to require such representation. Regarding representation by a friend, there was never any such demand by the detenus. A 'friendly ' representation would certainly have been provided if it had been so demanded. It was not for the Advisory Board to offer 'friendly ' representation to the detenus even if the latter did not ask for it. Relying upon a sentence in the counter Affidavit of Shri Thiru Bhaskaran that representation not only by a lawyer, but by a friend was also considered not necessary by the Advisory Board, it was argued that the Advisory Board had, without warrant, refused even friendly representation. Shri Thiru Bhaskaran was speaking for the State of Tamil Nadu and not for the Advisory Board. I have perused the file of the Advisory Board which was produced before me and I have also perused the communications addressed by the Advisory Board to the Government of Tamil Nadu and to the detenus. I do not find the slightest hint of a demand for 'friendly ' representation or its denial anywhere. The Advisory Board was neither asked nor did the Board deny any 'friendly ' representation. A charge was made against the Advisory Board that there was inequality of treatment. It was said that while the detaining authority was allowed to be represented by its officers and advisers, the detenus were allowed no representation. There is no substance 775 in this charge. From the affidavit of the Chairman of the Advisory Board, I find that all that happened was that some customs officers were allowed to be present in the corridor so as to enable them to produce the relevant files whenever required for perusal by the Board. The charge of inequality of treatment is, therefore, baseless. Yet another submission of the learned Counsel was that the Advisory Board failed to consider the question whether the detention continued to be justified on the date of the report of the Advisory Board, even if it was justified on the date of the making of the order of detention. The order of detention was made on 7.1.82 and the consideration by the Advisory Board was on 8.2.82. The passage of time was not so long nor had any circumstances intervened to justify any compartment wise consideration of the justification for the detention on the date of the making of the order of detention and on the date of the report of the Advisory Board. In the circumstances of the case, I think that the report of the Advisory Board that there was sufficient cause for the detention of Richard Beale and Paul Duncan Zawadzki necessarily implied that the detention was found by the Board to be justified on the date of its report as also on the date of the making of the order of detention. A complaint was also made that the Advisory Board carried on its correspondence with the detenus through the Government. This, it was stated, gave rise to a suspicion that everything was done by the Board at the behest or in consultation with the Government. This complaint is wholly unjustified. As already mentioned by me, the Advisory Board consisted of three Judges of the High Court of Tamil Nadu and as explained by the Chairman in his Affidavit, the correspondence etc. is carried on through the Government because the Board has no separate administrative office of its own. All the points urged on behalf of the detenus fail and the petitions are, therefore, dismissed. N.V.K. Petitions dismissed.

The two petitioners who were British nationals and friends and collaborators in smuggling enterprises were detained under the provisions of the for smuggling electronic equipment and goods worth several lakhs of rupees in secret compartments and hidden cavities of a Mercedez Benz van. The High Court dismissed their petitions for release from detention. In their writ petitions under Article 32 it was contended that: (1) the representation made by them to the Central Government to revoke the orders of detention as long back as March 1982 remained undisposed of and on this ground alone they were entitled to be released; (2) the Bout De Papier presented to the Prime Minister of India during her visit to England pointing out that the order of detention passed against the petitioners might be lifted and the detenus be either released or charged and brought to trial without delay, had not been disposed of; and (3) that they had been denied the right to be represented before the Advisory Board by an Advocate or at least by a 'friend ' and thus they were denied an opportunity to make an appropriate and effective representation to the Advisory Board. Dismissing the petitions, ^ HELD: (1) Representations from whatever source addressed to whomsoever officer of one or other department of the Government cannot be treated as representations to the Government under the COFEPOSA. [772 D] (2) The Bout De Papier presented to the Prime Minister during her visit to Britain and the subsequent reminder addressed to the External Affairs Ministry by 770 the British High Commission are not representations to the Central Government. They were merely diplomatic communications between the Governments of the two countries which will be answered through appropriate diplomatic channels in proper time. Such diplomatic communications between one country and another cannot be treated as representations to the statutory authorities functioning under the COFEPOSA. [771 G H; 772 A E] 3(i) The Advisory Board consisting of three Judges of the High Court considered it unnecessary and inadvisable to allow legal representation to the detenus. That was a matter for decision of the Advisory Board and this Court would not be justified to substitute its judgment in place of the Boards judgment. [774 C] (ii) A 'friendly ' representation would have been provided by the Board had it been demanded. But it was not for the Advisory Board to offer 'friendly ' representation to the detenus without being asked for. [774 D E] In the instant case the order of detention made on January 7, 1982 was considered by the Advisory Board on February 8, 1982 and its report showed that the detention was justified. [775 C D]

Appeal No. 408 of 1957. Appeal by Special Leave from the Judgment and Order dated the 28th September, 1955, of the former Bombay High Court in Income tax Reference No. 5 of 1955. Sanat P. Mehta, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellant. A. N. Kripal, R. H. Dhebar and D. Gupta, for the respondent. October 18. The Judgment of the Court was delivered by SHAH J. To the appellant who was a non resident for the purposes of the Indian Income Tax Act, 1922, had accrued in the assessment years 1943 44, 194445, 1946 47 and 1947 48 certain dividend income within the taxable territory of British India, but the appellant did not submit returns of his income for those assessment years. In exercise of his powers under section 34 of the Indian Income Tax Act, 1922, the Income Tax Officer, Bombay City, served upon the appellant notices under section 34 read with s, 22(2) of the Act for assessment of tax in respect of those years. The notice for the year 1943 44 was served on the appellant on March 27, 1952, for the year 1944 45 on February 16, 1953, for the year 1946 47 on April 4, 1951 and for the year 1947 48 on April 2, 1952. The Income Tax Officer completed the assessments in respect of the years 1943 44, 1944 45 and 1947 48 on May 6, 1953 and for the year 1946 47 on March 19, 1952. The orders of assessment were confirmed by the Appellate Assistant Commissioner and by the Income Tax Appellate Tribunal. At the instance of 37 the appellant, the Income Tax Appellate Tribunal drew up a statement of the case under section 66(1) of the Income Tax Act and submitted to the High Court of Judicature at Bombay the following two questions: (I). Whether the notices issued under section 22(2) of the Act read with section 34 of the Act for the assessment years 1943 44, 1944 45, 1946 47 and 1947 48 were served after the period of limitation prescribed by section 34 of the Act? (2) If the answer to Question No. 1 is in the affirmative, whether the assessments for the years in question were invalid in law? The High Court answered the first question in the negative and observed that on that answer, the second question " did not arise ". With special leave under article 136 of the Constitution, this appeal is preferred by the appellant against the order of the High Court. The only question which falls to be determined in this appeal is whether the proceedings for assessment were commenced within the period of limitation prescribed for serving notice of assessment under section 34(1)(a) of the Act. At the material time, by section 34 (1)(a), the Income Tax Officer was invested with power amongst others to serve at any time within eight years from the end of any year of assessment notice of assessment if he had reason to believe that income, profits or gains had escaped assessment by reason of omission or failure on the part of the assessee to make a return of his income under section 22 for that year, or to disclose fully and truly all material facts necessary for his assessment of that year. In those cases where the Income Tax Officer had in consequence of information in his possession reason to believe that income, profits or gains had escaped assessment even though there was no omission or failure as mentioned in el. (a), he could under cl. (b) within four years from the end of the year of assessment serve a notice of assessment. Admittedly, the notices issued by the Income Tax Officer for the years in question were issued within eight years from the end of the years of assessment and if el. (1)(a) of section 34 applied, the assessment was not barred by the law of limitation. 38 But the appellant contended that the notices for assessment were, even though he had not made a return of his income for the years in question, governed not by cl. (1)(a) of section 34, but by cl. (1)(b) of section 34. He contended that being a resident outside the taxable territory in the years of , assessment, a general notice under section 22(1) did not give rise to a liability to submit a return, and his inaction did not amount to omission or failure to submit a return, inviting the applicability of section 34(1)(a). He submitted that omission or failure to make a return can only arise qua a non resident, if no return is filed after service of an individual notice under section 22(2). In other words, the plea is that a notice under section 22(1) imposes an obligation upon persons resident within the taxable territory and not upon non residents, and support for this argument is sought to be obtained from section 1 sub section (2) which extended the Income Tax Act at the material time to British India. The expression " every person whose total income during the previous year exceeded the maximum amount which is not chargeable to income tax " in section 22(1) includes all persons who are liable to pay tax and there is nothing in the section or in its context which exempts non residents from liability to submit a return pursuant to a notice thereunder. The fact that a non resident assessee may not come to know of the general notice issued under section 22(1) is not a ground for not giving effect to the plain words used in the section. In terms, the clause read with r. 18 requires every person who has taxable income to submit his return, and if he fails to do so, under section 34 of the Act the Income Tax Officer may commence proceedings for assessment within the period prescribed by cl. (1)(a). Section 34(1)(b) applies only to those cases where there is no omission or failure to make a return of the income or to make a full and true disclosure of facts material to the assessment. To the appellant though non resident income bad admittedly accrued in the taxable territory and that income exceeded the maximum amount not chargeable to income tax. , The appellant not having submitted a return in pursuance of the notice issued under section 221 the Income Tax 39 Officer was competent under section 34(1)(a) to issue notice at any time within eight years of the end of the year of assessment for assessing him to tax. Once a notice is given by publication in the press and in the prescribed manner under section 22(1), every person whose Th. income exceeds the maximum amount exempt from tax is obliged to submit a return and if he does not do so, it will be deemed that there was omission on his part to a make a return within the meaning of section 34(1)(a). There is no warrant for the submission that section 22(1) applies to residents only and that an obligation to make a return on the part of a nonresident can only arise if a notice under sub section (2) is served. Under sub section (2) it is open to the Income Tax Officer to serve a special notice upon any person requiring him to furnish a return in the prescribed form, but that provision does not derogate from the liability arising under sub section (1) to submit a return. The Income Tax Act extends by section 1(2) to the taxable territory and not beyond; but within that territory, the Income Tax Officer has power to tax income which accrues, arises or is received, and that is not disputed by the appellant. If power to tax be granted, it is difficult to appreciate the ground on which the plea that the general provision imposing liability upon persons receiving taxable income is subject to an unexpressed limitation that it is to apply only to residents and not to non residents. The submission that a person liable to pay tax but resident outside the taxable territory must be served with a special notice under section 22(2) before his inaction in the matter of making a return may be deemed omission within the meaning of section 34(1) is without force. There is no such express provision made by the statute and none can be implied from the context. The High Court was therefore right in holding that the proceedings for assessment were properly commenced within the period of limitation prescribed by section 34(1)(a) from the close of the year of assessment. The appeal fails and is dismissed with costs. Appeal dismissed.

The appellant, a non resident for the purposes of the Indian Income tax Act, did not submit returns of certain dividend income accruing to him within the taxable territory. The Income tax Officer served upon him notices under section 34 read with section 22(2) of the Act for assessment of tax in respect of those years. The notices in question were issued within eight years from the end of the years of assessment and were within the period prescribed by section 34(i)(a). The appellant contended that notices for assessment were governed by cl. (i)(b) of section 34 and not by cl. (i)(a), even though the appellant had not made a return of his income for the years in question as a general notice under section 22(1) did not give rise to a liability to submit a return and his inaction did not amount to omission or failure to submit a return as he was a non resident, and the assessment proceedings were barred by limitation. Held, that the expression "every person " in section 22 (1) of the Indian Income tax Act, 1922, includes all persons who are liable to pay tax and non residents are not exempted from liability to submit a return pursuant to the general notice thereunder. Once a notice is given by publication in the prescribed manner under section 22(i), every person whether resident or non resident whose income exceeds the maximum amount exempt from tax is obliged to submit a return and if he does not do so, 36 it will be deemed that there was omission on his part to make a return within the meaning of section 34(i)(a) of the Indian Income tax Act. Section 34(1)(b) applied only to those cases where there was no omission or failure to make a return of the income or to make a full and true disclosure of facts material to the assessment. In the instant case the proceedings for assessment were pro perly commenced within the period of limitation prescribed by section 34(1)(a).

Civil Appeal No. 157 of 1985 From the Judgment and Order dated 20.1.1984 of the Allahabad High Court in W.P. No. 1404 of 1983. V.M. Tarkunde and Shakeel Ahmed Syed for the Appellant. S.C. Maheshwari, R.D. Upadhyay and Manoj Saxena for the Respondents. The Judgment of the Court was delivered by SINGH, J. This appeal by special leave is directed against the judgment of the High Court of Allahabad (Lucknow Bench) dt. January 20, 1984 setting aside order of the Addl. District Judge, Lucknow dt. January 18, 1983 and quashing the allotment order made in appellant 's favour and directing the Addl. District Magistrate (Civil Supplies), Lucknow to reconsider the applications made for allot ment of the premises in dispute after giving notice to the respondent landlord. 129 The dispute relates to 1st floor of House No. 109/16 situate in Model House Colony, Aminabad, Lucknow. Mauji Ram Gupta the owner of the house was residing in the ground floor of the house while the 1st floor was let out to a tenant. Vacancy in the first floor arose, several persons including the appellant, H.C. Ghildiyal and Ramakant Srivastava made appli cations for allotment of the same. Mauji Ram Gupta, the landlord also made an application for the release of the premises to him under sec. 16 of the U.P Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 (hereinafter referred to as the Act). The Addl. District Magistrate, respondent No. 4 by his Order dt. 25.2.76 rejected Mauji Ram Gupta 's application and allotted the premises to H.C. Ghildiyal, but he did not occupy the premises; instead he informed respondent No. 4 that he did not require the premises. Thereaf ter respondent no.4 allotted the first floor of the house to the appellant by his order dt. July 23, 1976 and in pursuance to that order she obtained possession of the premises on 25.7.76. Mauji Ram Gupta, the landlord chal lenged the allotment order by means of revi sion application before the District Judge but the same was rejected. Mauji Ram Gupta entered into an agreement for the sale of the house with G.L. Pahwa, respondent No. 1 and in part performance of the agreement he permitted G.L. Pahwa to occupy the ground floor of the house in November 1976. G.L. Pahwa made application for allotment and the respondent No. 4 allot ted the ground floor to him on 31.12.76, this appears to have been done with a view to regularise his possession. Mauji Ram Gupta executed a registered sale deed in favour of G.L. Pahwa on 18.7.77 transferring the entire house including the premises in dispute to him, as a result of which respondent No. 1 became the owner and the landlord of the premises in dispute. R.K. Srivastava on unsuc cessful applicant for the allotment of the premises in dispute had challenged the allot ment order dt. 23.7.86 made in appellant 's favour under sec. 18 of the Act. The District Judge by his order dt. 18.8.77 allowed his revision application set aside the allotment order made in appellant 's favour and directed respondent No. 4 to reconsider the applica tions made for allotment of the premises in accordance with law. In pursuance of the directions issued by the District Judge re spondent No. 4 considered the applications and by his order dt. 4.1.78 he again allotted the premises to the appellant and rejected the claims of other applicants. Notice of the allotment proceedings was not given to re spondent No. 1, although by that time he had acquired full rights of a landlord. It appears that respondent had made an application to the State Govt. for release of the first floor and that had been forwarded by the Govt. to re spondent No. 4, which he disposed of by the same order dt. 4.1.78. Respondent No. 1 filed a 130 revision application under sec. 18 of the Act challenging the allotment order dt. 4.1.78. He filed a review application also before re spondent No. 4 for recall of the order dt. 4.1.78. During the pendency of the review application the revision application made by respondent No. 1 was dismissed by the District Judge on 28.2.78 for want of prosecution. However the review application of respondent No. 1 was allowed by respondent No. 4 by his order dr. 14.12.81 on the finding that since the premises in dispute was a part of land lord 's building which he was occupying, it was mandatory that notice should have been issued to the landlord and since no notice had been issued to him the allotment order was vitiat ed. On these findings, he recalled his Order dated 4.1.78. The appellant challenged the order by means of a revision application before the District Judge under sec. 18 of the Act. The Addl. District Judge, Lucknow exer cising powers of the District Judge allowed the revision application by his order dt. 18.1.83, and set aside the order of respondent No. 4 dt. 14.12.81, on the findings that review application was not maintainable and respondent No. 4 had no jurisdiction to review his order on the ground of absence of notice to respondent No. 1 who was transferee land lord. Respondent No. 1 challenged the validity of the order of the Addl. District Judge dt. 18.1.83 by means of a writ petition under article 226 of the Constitution before the High Court. A learned Single Judge of the High Court allowed the writ petition by his order dt. January 20, 1984 and quashed the order of the Addl. District Judge and directed respondent No. 4 to consider the application for allot ment for giving notice to respondent No. 1. Aggrieved the appellant challenged the validi ty of the order of the High Court. Before we consider the submissions made on behalf of the appellant it is necessary to briefly notice the findings recorded by the High Court. The High Court held that since the District Judge while setting aside the initial order of allotment made in appellant 's favour dt. 23.7.76 directed respondent No. 4 to consider the allotment applications in accord ance with law. Respondent No. 4 was under a legal duty to issue notice to respondent No. 1 who had by that time acquired rights of land lord. Since no notice was given to him the allotment proceeding was rendered illegal. The High Court further held that even though the landlord 's application for release of the premises in dispute had been rejected, the transferee landlord had right to nominate a tenant of his choice in accordance with sec. 17(2) of the Act. But as no notice was issued to him, he could not exercise his right to nominate a tenant of his choice although the appellant as well as the authority considering the application, for allotment both had ac quired 131 knowledge that respondent No. 1 was the trans feree landlord occupying a portion of the building. The High Court held that provisions of sec. 17(2) were mandatory and its non compliance rendered the allotment order void. The High Court held that as the order of allotment dt. 4.1.78 was made without giving notice to the landlord, the alloting authority was competent to recall its order in exercise of its inherent jurisdiction. On these find ings the High Court set aside the order of the Addl. District Judge and directed the alloting authority to reconsider the applications for allotment after giving notice to the landlord respondent No. 1. Shri Tarkundc learned counsel for the appellant urged that the High Court committed error in setting aside the allotment order and directing the District Magistrate to reconsid er the allotment applications at the instance of G.L. Pahwa, respondent No. 1. He further urged that since Mauji Ram Gupta, the erst while landlord 's application for release of the premises in dispute had been dismissed and revision against that was also dismissed for non prosecution, the erstwhile landlord had exhausted all his rights available to him under the Act. G.L. Pahwa being the successor in interest of Mauji Ram Gupta, did not and could not acquire any further right either to get the premises in dispute released in his favour or to challenge the validity of the allotment order. G.L. Pahwa was not entitled to maintain a review application and Addition al District Magistrate had no jurisdiction to recall his order dated 4.1.78 alloting the premises to the appellant and further he was not entitled to any notice either under sec tion 17(2) of the Act or under Rule 9(3), as the requisite notice had already been issued to the erstwhile landlord Mauji Ram Gupta who had contested the allotment proceedings. Having given our anxious consideration to these submissions and having regard to the facts and circumstance of the case we do not find any merit in the submissions. When a building or a part of a building falls vacant or is likely to fail vacant, the District Magistrate under section 16(1)(a) of the Act has jurisdiction to issue allotment order requiring the landlord to let the build ing or part thereof to the person specified in the order. The landlord may apply to the District Magistrate for release of the whole or any part of such building under section 16(1)(b) of the Act, if the release applica tion is allowed, the landlord is permitted to occupy the building or part thereof as the case may be. But if release application is dismissed the District Magistrate is empowered to issue allotment order in favour of an applicant, and in pursuance thereof the allot tee is entitled to take possession. Before applications for allotment are con 132 sidered by the District Magistrate it is mandatory for him to serve notice of the vacancy on the landlord informing him the date on which the allotment is to be considered as prescribed by Rule 9 of the U.P. Urban Build ings (Regulation of Letting, Rent and Evic tion) Rules, 1972 (hereinafter referred to as the Rules). Rule 9(3) requires service of notice and intimation of the date fixed for considering the allotment of the premises which may have fallen vacant or is likely to fall vacant. This is mandatory as has been held by this Court in Yoginder Tiwari vs District Judge, Gorakhpur and Ors., and in catena of cases the High Court of Allahabad, has taken the same view, it is not necessary to burden the judgment by refer ring to all those decisions. The object and purpose of the notice to the landlord regard ing the date fixed for allotment proceedings is to enable him to file his objections if any, to the allotment proceedings or to make application for release of the premises as contemplated by section 16(1)(a) of the Act or to nominate a tenant of his choice if he himself is in occupation of a portion of the building. An allotment order made without giving notice to the landlord as required by Rule 9(3) would be rendered illegal. We there fore agree with the view taken by the High Court. At the initial stage of allotment proceed ings for the year 1976, Mauji Ram Gupta, the erstwhile landlord had made application for release of the accommodation and the first floor of the house, but that application was rejected and thereupon the District Magistrate allotted the premises to H.C. Ghildiyal by his order dated 23.7.76 Mauji Ram Gupta 's revision application against the order rejecting his release application was rejected by the Dis trict Judge on 5.8.76. Meanwhile the District Magistrate allotted the premises to the appel lant by his order dated 23.7.76. On the dis missal of the revision application of Mauji Ram Gupta, his claim for release of the premises in dispute stood rejected final ly. As noted earlier Mauji Ram Gupta sold the entire house in dispute to G.L. Pahwa on 18.7.77 and the allotment order in appellant 's favour was set aside by the Additional Dis trict Judge on 8.8.77 at the instance of R.K. Srivastava on unsuccessful applicant for the allotment of the premises in dispute. It is noteworthy that the appellant took no pro ceedings to challenge the order of Additional District Judge dt. 8.8.77 under which the allotment order was set aside and the District Magistrate was directed to reconsider the allotment applications in accordance with law. In such a situation G.L. Pahwa who had admittedly became the landlord of the premises in dispute was entitled to exercise fights of the landlord available to him under the Act. Section 17(2) lays down that where a part of a building is in occu 133 pation of landlord for a residential purpose, the allotment of any other part thereof under section 16(1)(a) shall be made in favour of a person nominated by the landlord. This provision safeguards interest of the landlord to have a tenant of his choice if he is occupying a portion of the building. The legislature enacted sec. 17(2) with a view to ensure peaceful living to a landlord and for that purpose it permitted the landlord to have a tenant of his choice. The. landlord 's valuable right cannot be taken away by the Dis trict Magistrate while exercising his powers of allotment under sec. 16(1)(a) of the Act. The scope and purpose of sec. 17(2) of the Act was considered by this Court in Babu Singh Chauhan vs Rajkumar Jain & Ors., ; and the Court observed: "A perusal of this statutory provision would clearly dis close that the object of the Act was that where a tenant inducted by the landlord voluntarily vacates the premises, which arc a part of the building occupied by the landlord, and allotment in the vacancy should be made only to a person nominated by the landlord. The dominant purpose to be sub served by the Act is manifestly the question of removing any inconvenience to the landlord by imposing or thrusting on the premises an unpleasant neighbour or a tenant who invades the right of privacy of the landlord. It is obvious that if the tenant has vacated the premises by himself and not at the instance of the landlord, there is no question of the landlord occupying the said premises because he has got a separate remedy for evicting the tenant on the grounds of personal necessity. The statute, however, while empowering the prescribed authority to allot the accommodation, safe guards at least the right of the landlord to have a tenant of his choice. " In the instant case there is no dispute that when the allotment proceedings were taken in pursuance of the Dis trict Judge 's Order dt. 8.8.77 and when the allotment was made in appellant 's favour on 4.1.78 no notice of the allot ment proceedings was issued to G.L. Pahwa, respondent No. 1, although the appellant as well as the Addl. District Magis trate both knew that G.L. Pahwa had stepped in the shoes of landlord and that he was occupying ground floor of the building. The allotment order was made in appellant 's favour on 4.1.78, but the landlord, though residing in a part of the building was denied opportunity of nominating a tenant of his choice as contemplated by sec. 17(2) of the Act. In these circumstances there can be no doubt that 134 the order of the Addl. District Magistrate alloting the premises to the appellant was completely without jurisdic tion and against the plain terms of sec. 17(2) of the Act. The submission of Shri Tarkunde that on dismissal of the revision application of Mauji Ram Gupta the erstwhile land lord, all fights of the landlord stood exhausted and G.L. Pahwa being the transferee landlord could not exercise any further fight of landlord in the matter relating to allot ment of the premises in dispute are untenable. Mauji Ram Gupta 's application for release of the premises was dis missed and a revision application filed 'by him against the order of the Addl. District Magistrate refusing to release premises in dispute stood rejected, but if the conditions set out in sec. 16(1)(b) existed we see no reason as to why the transferee landlord could. not press his case for re lease but we do not think it necessary to consider this question in detail or to express any opinion on this ques tion as admittedly the transferee landlord respondent No. 1 made no application for release of the premises in dispute to the District Magistrate or to the prescribed authority and his application made to the State Government for release of the accommodation which was forwarded to the District Magistrate was rejected and the High Court has upheld that order and no challenge has been made by G.L. Pahwa to that order. Assuming that the transferee landlord 's fight to get the premises in dispute released stood exhausted, G.L. Pahwa being the landlord had every fight to nominate a tenant of his choice in accordance with sec. 17(2) of the Act. Admit tedly no notice had been issued to G.L. Pahwa affording any opportunity of nominating a tenant of his choice before the order of allotment dt. 4.1.78 was made. The landlord has fight to apply for release of the premises on the falling of a vacancy failing which he has another fight under sec. 17(2) to nominate a tenant of his choice if he is occupying a portion of the building. It is the duty of the authority considering the allotment under sec. 16(1)(a) of the Act, to afford opportunity to the landlord to nominate tenant of his choice and if the landlord nominates a person of his choice the authority is bound to allot the premises in favour of the nominee of the landlord. Mauji Ram Gupta was not given that opportunity, there was thus no question of his having exhausted his right to nominate a tenant of his choice. Learned counsel for the appellant urged that the Addl. District Magistrate had no power to allow the review appli cation made by G.L. Pahwa or to recall his order dt. 4.1.78 alloting the premises in dispute to the appellant. 16(5) provides for review of an order of allotment at the instance of a landlord on an application made within 7 135 days. In the instant case the Addl. District Magistrate by his Order dt. 14.12.81 recalled his order dt. 4.1. 78 allot ing the premises in dispute to the appellant on the ground that no notice of the proceeding had been served on the landlord, respondent No. 1 and that there was enough evi dence on record to show that the premises in dispute was a part of the landlord 's accommodation, yet he was not given opportunity to nominate a tenant of his choice. The Addl. District Magistrate therefore recalled the order on the ground that the allotment order had been issued in violation of the mandatory provision of sec. 17(2) of the Act. No exception can be taken to the correctness of the merit of the order of the Addl. District Magistrate. As discussed above we have already expressed our opinion that the allot ment order dt. 4.1.78 issued in appellant 's favour was rendered illegal for the non compliance of the mandatory provision of sec. 17(2) of the Act. In that view even if there was any procedural defect in entertaining the review application, it would not be proper and desirable to inter fere with the order of the Addl. District Magistrate, more so, when the High Court has already upheld that order. In view of the above discussion we are of the opinion that the High Court 's order does not suffer from any error of law and the appellant is not entitled to any relief. We accord ingly dismiss the appeal with costs. M.L.A. Appeal dis missed.

One Mauji Ram Gupta was the owner of a house consisting of ground floor and first floor. When the vacancy in the first floor arose, the landlord applied for release of the premises section 16 of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972. Respondent No. 4, the Additional District Magistrate, rejected the claim of the landlord and allotted the first floor to the appellant. Thereafter, Respondent No. 1 pur chased the disputed house on 18.7.77 and occupied the ground floor. The aforesaid order of allotment was set aside on 18.8.77 by the District Judge with a direction to respondent No. 4 to reconsider the applications made for allotment of the premises in accordance with law. Respondent No. 4 reconsidered the applica tions and by his order dated 4.1.78, again allotted the premises to the appellant after rejecting the claims of other applicants. However, in a review petition filed by re spondent No. landlord, Respondent No. 4 set aside the aforesaid order of allotment by his order dated 14.12.81 on the ground that since the premises in dispute was a part of the landlord 's building which he was occupying, it was mandatory under section 17(2) of the Act that notice should have been issued to the landlord and since no notice had been issued to the landlord, the order was vitiated. Aggrieved by the order of Respondent No. 4 the appellant filed a revision application before the District Judge. The District Judge set aside the order dated 14.12.81 passed by Respondent No. 4 but the same was restored by the High Court in a writ petition filed by respondent No. 1. The High Court also directed respondent No. 4 to consider the 127 applications for allotment after giving notice to the landlord respondent No. 1. Dismissing the appeal to this Court, HELD: 1. The allotment order dated 4.1.78 issued in appellant 's favour was rendered illegal for the non compliance of the mandato ry provisions of sec. 17(2) of the Act. In that view even if there was any procedural defect in entertaining the review application, it would not be proper and desirable to inter fere with the order of the Addl. District Magistrate, more so, when the High Court has already upheld that order. [I35C] 2.1 When a building or a part of a build ing falls vacant or is likely to fall vacant, the District Magistrate under section 16(1) of the Act has jurisdiction to issue allotment order requiring the landlord to let the building or part thereof to the person specified in the order. The landlord may apply to the District Magistrate for release of the whole or any part of such building under section 16(i)(b) of the Act. If the release application is allowed, the landlord is permitted to occupy the build ing or part thereof as the case may be. But if release application is dismissed the District Magistrate is empowered to issue allotment order in favour of an applicant, and in pursu ance thereof the allottee is entitled to take possession. [131G H] 2.2. Before applications for allotment are considered by the District Magistrate, it is mandatory for him to serve notice of the vacancy on the landlord informing him the date on which the allotment is to be considered as prescribed by Rule 9 of the U.P. Urban Build ings (Regulation of Letting, Rent and Evic tion) Rules, 1972. The object and purpose of the notice to the landlord regarding the date fixed for allotment proceedings is to enable him to file his objections, if any, to the allotment proceedings or to make application for release of the premises as contemplated by section 16(1)(a) of the Act or to nominate a tenant of his choice if he himself is in occupation of a portion of the building. An allotment order made without giving notice to the land lord as required by Rule 9(3) would be ren dered illegal. [131H 132A, C D] 2.3. Section 17(2) of the Act lays down that where a part of a building is in occupa tion of landlord for a residential purpose, the allotment of any other part thereof under section 16(1)(a) shah be made in favour of a person nominated by the landlord. This provision safeguards interest of the landlord to have a tenant of his choice if he is 128 occupying a portion of the building. The legislature enacted sec. 17(2) with a view to ensure peaceful living to a landlord and for that purpose, it permitted the landlord to have a tenant of his choice. The landlord 's valuable right cannot be taken away by the District Magistrate while exercising his powers of allotment under sec.16(1)(a) of the Act. [132H 133B] In the instant case, no notice of the allotment proceedings was issued to G.L. Pahwa, respondent No. I, although the appel lant as well as the Addl. District Magistrate both knew that G.L. pahwa had stepped in the shoes of landlord and that he was occupying ground floor of the building. The allotment order was made in appellant 's favour on 4.1.78, but the landlord, though residing in a part of the building was denied opportunity of nominating a tenant of his choice as contem plated by sec. 17(2) of the Act. In these circumstances there can be no doubt that the order of the Addl. District Magistrate allot ing the premises to the appellant was com pletely without jurisdiction and against the plain terms 0/sec. 17(2) of the Act. [133G 134A] Yoginder Tiwari vs District Judge, Gorakhpur and Ors., & Babu Singh Chau han vs Rajkumar Jain & Ors., ; , relied upon.

: Criminal Appeal Nos. 600 601 of 1989. From the Judgment and Order dated 13.3.1986 of the Punjab and Haryana High Court in Crl. No. 434 and 1295 of 1984. Ms. Geeta Luthra, Ms. Pinky Anand and D.N. Goburdhah for the Appellant. R.L. Kohli and R.C. Kohli for the Respondents. The following Judgments of the Court were delivered SABYASACHI MUKHARJI, J. Ravinder Kaur, daughter of Gurbachan Singh, resident of Amritsar, was married to Satpal Singh in November, 1982. She died on 25th June, 1983 at about 2.30 p.m. She, it was alleged, committed suicide because of the cruel behaviour of her in laws soon after her marriage. She used to visit her parents ' at Amritsar occa sionally and during those visits she used to tell them that there was demand for dowry and also taunting of her by the members of the family of her in laws and also insinuation that she was carrying on illegitimate child. There are sufficient, relevant and acceptable evidence to that effect. It is alleged that provoked by the aforesaid conduct and behaviour , she committed suicide. The father in law, moth er in law and the husband of the accused have been the abettors to the crime. The evidence further established that she died of second to third degree burns on the body, and there was sprawling of kerosene oil on her body and the body was burnt by fire. Accused No. 3 Smt. Kamal Dip Kaur, the mother in law of the deceased and the mother of the accused Satpal Singh, stated in her statement under section 3 13 Cr. P.C. that she was lying in her house at that time and the de ceased was 295 cooking food on a kerosene stove, and as such the deceased caught fire accidentally. Learned Addl. Sessions Judge held that there was absence of burn injuries on the fingertips of the mother in law and other members of the family. As mentioned before, the de ceased was married in November, 1982. After marriage, she used to stay in the house of her in laws at Raja Sansi. The deceased used to visit the house of her parents at Amritsar occasionally, as noted before. During these visits she used to tell them that her in laws were not happy with the dowry given to the latter. It is further on evidence. that she complained that her in laws used to taunt her and insisted her tO bring more dowry. It is stated that she complained that the in laws taunted her that at the time of the mar riage, her parents did not serve proper meals to the in laws and their guests. It is further stated that the accused used to tell her that they had been offered by fridge etc. by other parties for the marriage of the accused while she had not brought dowry expected from her parents. It is also on evidence that she was often openly threatened that she would be turned out of the house in case she did not bring more articles. These were all established by the evidence of Gurbachan Singh, father of the deceased and his two daugh ters. It was insinuated of her by the accused that she was carrying an illegitimate child. On the totality of these evidence on record, it was held by the learned Sessions Judge that the accused were guilty of abetment to suicide and as such punishable under section 306 of the I.P.C. The High Court on appeal was of the view that the guilt of the accused had not been proved, and as such acquitted them. The first thing that is necessary for proving the of fence is the fact of suicide. Abetment is a separate and distinct offence provided the thing abetted is an offence. Abetment does not involve the actual commission of the crime abetted; it is a crime apart. See the observations of Baren dra Kumar Ghosh, It was contended on behalf of the accused that there was no direct evidence of the act of suicide by Ravinder Kaur. There, indeed, could not be in the circumstances in which she died. She was in the house of her in laws. There is ample and sufficient evidence that she had complained that she was taunted for bringing meager dowry and that even insinuated that she was carrying 'an illegitimate child '. The aforesaid facts stand established by cogent and reliable evidence. These are grave and serious provocation enough for an ordinary woman in the Indian set up, to do 296 what the deceased is alleged.to have done. There is also evidence that the persons in the house of her in laws in cluding the mother in law mother of the accused Satpal Singh, made no attempt to save her from the burn injuries. The absence of any burn injury in the hands of the people around, indicates and establishes that there was no attempt to save the deceased though she was seen being burnt. The evidence of attitude and conduct of the in laws the father in law, mother in law and the husband after Ravinder Kaur, the deceased, got burns in not informing the parents and not taking prompt steps to take her to hospital for giving medical assistance corroborate the inference that these accused connived and abetted the crime. Criminal charges must be brought home and proved beyond all reasona ble doubt. While civil case may be proved by mere preponder ance of evidence, in criminal cases the prosecution must prove the charge beyond reasonable doubt. See Mancini vs Director of Public Prosecutions, , Woolmington vs The Director of Public Prosecutions; , It is true even today, as much as it was before. There must not be any 'reasonable doubt ' about the guilt of the accused in respect of the particular offence charged. The courts must strictly be satisfied that no innocent person, innocent in the sense of not being guilty of the offence of which he is charged, is convicted, even at the risk of letting of some guilty persons. Even after the introduction of section 498A of the I.P.C. and section 113A of the Indian Evidence Act, the proof must be beyond any shadow of reasonable doubt. There is a higher standard of proof in criminal cases than in civil cases, but there is no absolute standard in either of the cases. See the observations of Lord Denning in Bater vs Bater, at 459 but the doubt must be of a reasonable man. The standard adopted must be the standard adopted by a prudent man which, of course, may vary from case to case, circumstances to circumstances. Exaggerated devotion to the rule of benefit of doubt must not nurture fancilful doubts or lingering suspicions and thereby destroy social defence. Justice cannot be made sterile on the plea that it is better to let hundred guilty escape than punish an innocent. Letting guilty escape is not doing justice, according to law. The conscience of the court can never be bound by any rule but that is coming itself dictates the consciousness and prudent exercise of the judgment. Reasonable doubt is simply that degree of doubt which would permit a reasonable and just man to come to a conclusion. Reasonableness of the doubt must be commensurate with the nature of the offence to be investigated. 297 Having regard to the circumstances of the case, there is no direct evidence indicating the circumstances in which the death took place, the conduct of the accused and the nature of the crime with which the accused was charged, there cannot be any scope of doubt that the learned Sessions Judge was right and the conviction was properly made. This is not a case where there could be two views possible on the facts found and on the facts which could not possibly be found because of i,the nature of the offence. The fact the two view are reasonably possible, is not established by the fact that two different conclusions are reached by two adjudica tory authorities. The factum of that may be only a piece of evidence, but whether two views at all are possible or not, has to be judged in all circumstances by the Judge, by the logic of the facts found in the background of law. For the reasons aforesaid, I respectfully agree with the judgment and order proposed by my learned brother. RAY, J. Special leave granted. These appeals are at the instance of Gurbachan Singh, the complainant against the judgment and order passed in Criminal Appeal No. 434 SB of 1984 by the High Court of Punjab & Haryana at Chandigarh acquitting the accused re spondents of the charge under section 306 of the Indian Penal Code on setting aside the conviction and sentence passed by the Additional Session Judge on August 9, 1984 convicting and sentencing all the accused. The appeal was allowed on holding that there was no evidence on record that the ac cused at the time of commission of suicide by Ravinder Kant, in any way instigated or abetted her to commit suicide and as such the prosecution failed to establish the charge against the accused and their conviction consequently can not be sustained. The prosecution case is that the deceased, Ravinder Kaur, daughter of Gurbachan Singh, the complainant was married to Satpal Singh in November, 1982. After marriage, Ravinder Kaur started living in the house of her in laws at Raja Sansi. She used to visit the house of her parents at Amritsar occasionally and during these visits, she used to tell them that her in laws were not happy with the dowry given to her and they used to taunt her and insisted her to bring more dowry and that they even used to taunt her that her parents at the time of the marriage did not serve them with proper meals. The accused also used to tell her that they were being offered Fridge etc. by the other parties in the marriage of Accused Satpal Singh and that she has not brought the dowry expected from her parents. She was often told 298 by them that she would be turned out of the house, in case she did not bring more articles. In November, 1982, Gurbachan Singh visited the house of her in laws at Raja Sansi where his daughter complained that the behaviour of her in laws towards her was not cordial and that they were maltreating her for bringing insufficient dowry and they even taunted her that she was carrying an illegitimate child. Hearing these complaints from her daugh ter, Gurbachan Singh brought her daughter to his house at Amritsar, one day prior to Baisakhi, 1983 and his daughter continued to remain at his house for about eight days. There . after Satpal Singh, his father Harbhajan Singh, accused and his mother Smt. Kanwal Dip Kaur along with Harjit Singh, and Mohinder Singh, maternal uncles of Satpal Singh came to the house of Gurbachan Singh at Amritsar and pursuaded that he should send Ravinder kaur with them where upon Gurbachan Singh told them that his daughter complained against the ill treatment and cruel behaviour towards her for bringing insufficient dowry and they also taunted her for this as well as for her illegitimate child and put pressure on her to bring more dowry. So he was reluctant to send her daughter back to her in laws. Gurbachan Singh called Ved Prakash, President of the Mohalla Committee, Smt. Raj Kumari, a social worker living in the neighbourhood of Gurbachan Singh and one Ramesh Kumar to his house and all these complaints and grievances were repeated in presence of these persons. The accused assured him that in future they would not maltreat and taunt her and that he would not receive any complaint against them. They also assured him that in future they would not ask her to bring more dowry. On these assurances of the accused, Gurbachan Singh sent his daughter with the accused to Raja Sansi, the house of the accused. For about two months, Gurbachan Singh did not receive any information from his daughter and so he sent his two daughters Surjit Kaur and Sajinder Kaur to Raja Sansi to the house of the in:laws of Ravinder Kaur to enquire about her welfare. The said daughters of Gurbachan Singh went to the house of the in laws of Ravinder Kaur on June 23, 1983 that is, two days prior to the death of Ravinder Kaur. The de ceased complained to them about the torture as well as cruel behaviour of her in laws, as before and they have not stopped maltreating her and torturing her and she was not happy there. On June 25, 1983 at about 6.30 p.m., Mohinder Singh, maternal uncle of Satpal Singh came to the shop of Gurbachan Singh at Amritsar and informed him that his daugh ter committed suicide by sprinkling 299 kerosene oil on her body and then setting herself on fire and that she was lying at S.G.T.B. Hospital, Amritsar. Gurbachan Singh immediately went to the hospital and found the dead body of her daughter lying in the dead house. It has been alleged that Ravinder Kaur committed suicide on June 25, 1983 at 2.30 p.m. having fed up with the cruel behaviour of her in laws. The appellant alongwith the mem bers of his family stayed in the hospital. On June 26, 1983, Gurmeet Singh, A.S.I. Police Station, Ajnala came to the dead house at Amritsar at about 5 p.m. and examined the dead body of Ravinder Kaur. He recorded the statements of Gurba chan Singh, Ved Prakash and Ramesh Kumar. The statement of Gurbachan Singh was reproduced in the Roznamcha, and the statements of Gurbachan Singh and Ved Prakash, President of the Mohalla Sudhar Committee and Ramesh Kumar though disclosed the commission of a cognizable offence by the accused yet Gurmit Singn, A.S.I. and even Shri Iqbal Singh Dhillon, D.S.P., Ajnala Police Station did not register the case for extraneous reasons. On June 27, 1983, Dr. Gurdip Kumar Uppal, Medical Offi cer, Police Hospital, Amritsar conducted the post mortem examination on the dead body of Ravinder Kaur and found 2nd to third degree burns on the body of deceased. Gurbachan Singh alongwith his daughters and Raj Kumari, Ramesh Kumar, Ved Prakash and others met the S.S.P. Amritsar in this regard and the investigation of the case was then entrusted by S.S.P. to Shri Surjit Singh, S.P. (Head Quar ters) Amritsar who summoned Gurbachan Singh and other per sons and recorded their statements on July 23, 1983. All the three accused were charged for an offence under section 306 of the Indian Penal Code and they pleaded not guilty to the charge framed against them. The accused No. 3 Smt. Kanwal Dip Kaur, the mother of the accused, Satpal Singh stated in her statement under section 313 Cr. P.C. that she was lying in her house at the time and the deceased was cooking food in the kitchen on a kerosene stove and she caught fire accidentally. The learned Additional Sessions Judge held that the absence of burn injuries on the fingertips of the mother in law or other members of the family as evident from the statement of D.W. 1, Jaswant Singh, 300 ruled out the story of accidental fire as set up by the defence. He further held referring to the provisions of section 113A of the Evidence Act that having regard to the facts and circumstances of the case it may be presumed that the ac cused persons have abetted the suicide committed by the deceased and they fail to reverse this prosecution case by any evidence. Accordingly, the Additional Sessions Judge, Amritsar convicted the accused under section 306 IPC and sen tenced them to suffer rigorous imprisonment for five years each and to pay a fine of Rs.2,000 each, in default of payment of fine the accused shall be further liable to rigorous imprisonment for four months. The accused respondents preferred an appeal being Crimi nal Appeal No. 454 of 1984 in the High Court of Punjab and Haryana. The appeal was allowed and the conviction and sentence was set aside on the ground that the prosecution failed to establish the charge against the accused persons. Hence this appeal by special leave has been filed by the complainant. It has been contended by the learned counsel appearing on behalf of the appellant that the cruel behaviour, mal treatment and taunts for not bringing sufficient dowry have been made to the deceased, Ravinder Kaur, soon after her coming to the house of her in laws. It has also been urged that in November, 1982 she complained of her in laws ' iII treatment and taunts to his father and her father took her to his house. It has also been urged that the accused Satpal Singh and his father accused Harbhajan Singh and other relatives of the accused met the deceased father at his house and requested him to send his daughter to the house of her in laws and assured them that they would not maltreat her or taunt her or torture her for not bringing sufficient dowry. These assurances were given in the presence of Ved Prakash, the President of the Mohalla Sudhar Committee, and Raj Kumari, a social worker and one Ramesh Kumar. Gurbachan Singh, father of the deceased on these assurances given by the accused and their relations sent his daughter, Ravinder Kuar to her in laws house. It has also been urged that on June 23, 1983 the two daughters Surjit Kaur and Sujinder Kaur were sent by Gurbachan Singh to the house of the in laws of Ravinder Kaur to enquire about her welfare. Surjit Kaur, PW 7 stated in her statement under section 161 Cr. P.C. that her sister Ravinder Kaur complained them about the same iII treatment by her husband continuing in the same manner as before and as such she was not happy. This was reported by them to their father at Amritsar. It has also been urged that all the three accused taunted the deceased, Ravinder Kaur that she was carrying an illegitimate child. Being 301 depressed with these taunts and iII treatment the deceased committed suicide by sprinkling kerosene on her person and setting her to fire. The evidences of PW 4 Gurbachan Singh, father of the deceased and the evidence of PW 7 Surjeet Kaur as well as evidence of PW 6 Raj Kumari were duly considered by the trial court and the trial court clearly found the accused persons guilty of the offence of abetting the sui cide committed by the deceased. The court of appeal below had wrongly found that the prosecution could not prove charge against the accused and set aside the order of con viction and sentence made by the trial court and acquitted the accused. It has been urged in this connection that the defence that it was a case of accidental fire and not of suicide was also not believed by the trial court and the trial court gave very cogent and plausible reasons for not believing this story and holding that it was a case of suicide committed by the deceased Ravinder Kaur by the taunts and ill treatment made to her by her in laws and this forced her to take her own life by suicide. It has been submitted that the accused have abetted the commission of suicide by Ravinder Kaur, deceased and the accused are, therefore, guilty of the said charge. The order of acquittal made by the High Court is not sustainable in these circum stances. The learned counsel, Mr. R.C. Kohli has made three fold submissions before this Court. The first submission is that the case of suicide committed by the deceased Ravinder Kaur was not proved and as such the conviction on the charge of section 306 I.P.C. as made by the trial court was not sustain able. He has further submitted that the prosecution has not proved beyond reasonable doubts that the deceased committed suicide. The next submission made is that the evidences produced on behalf of the prosecution are meagre and do not prove that the accused had abetted the commission of suicide by the deceased Ravinder Kaur. The prosecution did not prove that there was any instigation by the accused persons charged with the offence in this case. The High Court has rightly held that the prosecution failed to prove the ingre dients of section 306 of the IPC and acquitted the accused of the charge under section 306. This order of acquittal should not be interfered with by this Court in this appeal. It has been lastly contended that if two reasonable views could be taken of evidences, one in favour of the accused and the other against them the appellate court should not interfere in such case and set aside the order of acquittal. As regards the first submission that the case of suicide has not been proved, it is relevant to mention that in the FIR (exhibit PF) lodged by the complainant it has been specifi cally stated that due to constant 302 harassment of Ravinder Kaur by the accused persons for having brought less dowry in her marriage as well as due to constant taunts and also torture, the deceased committed suicide by pouring kerosene oil on her and burnt herself and afterwards she died. It has been further stated in the FIR that the complainant apprehended that some quarrel must have happened on the day of the incident between his daughter, Ravinder Kaur and her husband Satpal Singh, father in law Harbhajan Singh and mother in law Kanwaldip Kaur before she took the extreme step. P.W. 4, Gurbachan Singh has also stated in his deposition that his daughter used to tell them that her husband, father in law and mother in law always taunted her saying that her parents had not given sufficient dowry during the marriage and had not even served them with proper meals at the time of marriage. He further stated that on 25th June, 1983 at 6.30 p.m. Mohinder Singh, maternal uncle of Satpal Singh came to shop and told him that his daughter had committed suicide by sprinkling kerosene oil on her body and then setting her on fire. In his statement under Section 161, Cr. P.C. recorded on 23rd July, 1983 he also stated that her two daughters namely Sajinder Kaur and Surjeet Kaur (P.W. 7) who visited Raja Sansi to meet their sister, Ravinder Kaur two days before the incident were told by her deceased daughter that her in laws often taunted her for not bringing sufficient dowry. It has also been stated by him that the accused taunted her daughter saying that she was carrying an illegal child which is a great defame for them. It has also been stated that "due to the bad treatment meted out towards his daughter Ravinder Kaur at the hands of her husband, Satpal Singh, her mother inlaw, Kanwaldip Kaur and her father in law, Harbhajan Singh that she had not brought scooter and fridge and had brought less dowry in her marriage they had forced her to put kerosene oil on her body and commit suicide and as they often taunted her saying that she had begotten immoral and illegal pregnancy and for this reason she had committed suicide and thus had lost her life." Furthermore, though the house of the accused persons is not far off yet the information was given not by his son in law or other members of the family promptly but it was given by the maternal uncle of the son in law, Satpal Singh at 6.30 p.m. to the appellant although the incident occurred at about 2.30 p.m. It is also evident that the deceased, Ravinder Kaur who had second to third degree burns on her person was brought to the hospital in the evening and the doctor, P.W. I immediately examined her and declared that she was already dead. Another most pertinent question which has been decided by the Trial Court is that the de fence story as stated by her mother in law, 303 Kanwaldip Kaur in her examination under section 3 13 Cr. P.C. that it was a case of accidental fire and not a case of suicide, was falsified by the absence of burn injuries on the finger tips of the mother in law or other members of the family. The Trial Court rightly held "that the intending circumstances show that she was not allowed to move till the process of burning had become irrecoverable and till she succumbed to her injuries. " We do not find any infirmity in this finding and we also hold on consideration and appraisement of the evidences as well as the circumstances set out hereinbefore that it was not a case of accidental fire but a case of suicide commit ted by the deceased Ravinder Kaur being constantly abused, taunted for bringing less dowry and also being defamed for carrying an illegitimate child. It is pertinent to mention that in the appeal before the High Court it was not urged on behalf of the accused that the case of suicide was not proved and as such there was no finding by the High Court on this score. In such circumstances this argument is totally devoid of merit and as such it is not sustainable. It is convenient to refer in this connection the deci sion cited at the bar in Wazir Chand and Another vs State of Haryana with State of Haryana vs Wazir Chand and Another, to which one of us (B.C. Ray, J) was a party, wherein it has been held that "a plain reading of this provision (section 306 I.P.C) shows that before a person can be convicted of abetting the suicide of any other person, it must be established that such other person committed sui cide. " This decision is not at all applicable to the instant case in view of our specific finding that the evidence adduced on behalf of the prosecution clearly establish that the deceased Ravinder Kaur committed suicide at the instiga tion and abetment of the accused persons in the commission of the said offence. The next argument advanced is that the evidences were too meagre and unreliable to sustain the conviction. It has also been urged that the High Court considered the evidences and came to a reasonable finding that the prosecution could not prove the ingredients of Section 306, IPC as there was no instigation by the accused nor there was any conspiracy for the commission of that offence. The High Court arrived at this finding on some contradictions in the statement of the evidences of P.W. 4, Gurbachan Singh, father of the deceased and of P.W. 7, Surjeet Kaur, sister of the deceased respectively with their statements made under Section 161 Cr. P.C. 304 It is convenient to refer in this connection the obser vation made by this Court in the case of Sat Pal vs Delhi Administration, ; at 30 to the following effect: "It emerges clear that on a criminal prosecu tion when a witness is cross examined and contradicted with the leave of the court, by the party calling him, his evidence cannot, as a matter of law, be treated as washed off the record altogether. It is for the Judge of fact to consider in each case whether as a result of such cross examination and contradiction, the witness stands thoroughly discredited or can still be believed in regard to a part of his testimony. If the Judge finds that in the process, the credit of the witness has not been completely shaken, he may, after reading and considering the evidence of the witness, as a whole, with due caution and care, accept, in the light of the other evidence on the record that part of his testimony which he finds to be creditworthy and act upon it. " We have already referred to the material portions of the FIR as well as all the statements made by P.W. 4 in his evidence as well as his statement under Section 161 Cr. P.C. as well as the evidence of P.W. 7 and her statement under Section 161 Cr. On a plain reading of these statements it will be crystal clear that the accused persons since the date when the deceased, Ravinder Kaur went to her in laws ' house after the marriage, was mal treated and was constantly taunted, harassed and tortured for not bringing sufficient dowry from her father and she was taunted for carrying an illegitimate child. The appellant sometime in November, 1982 went to her in laws house. His daughter, Ravinder Kaur complained to him about this torture and constant taunts for not bringing sufficient dowry. On hearing this, her father brought her to his house and after eight days the accused persons, Satpal Singh, his father Harbhajhan Singh and two maternal uncles came to the house of the appellant and requested him to send his daughter with them assuring that there would be no further taunts or any iII treatment by the respondents. The President of the Mohalla Sudhar Committee, Ved Prakash, P.W. 5 and a social worker, Smt. Raj Kumari, P.W. 6 and another person Ramesh Kumar of the same village were called in by Gurbachan Singh and in their presence all these talks were held. On the assurances given, Gurbachan Singh sent his daughter with them. It is also in evidence that as no information of her was received, Gurbachan Singh sent his two other daughters namely Surjeet Kaur, P.W. 7 and Sajinder Kaur, to the 305 house of the in laws of the deceased Ravinder Kaur to en quire about her welfare. Ravinder Kaur told them that there was no improvement in the treatment meted out to her and she was being taunted and tortured by her in laws in the same way and she was not happy. Two days thereafter i.e. on 25th June, 1983 at 2.30 P.M. this unfortunate incident occurred. P.W. 7, Gurjeet Kaur also stated in her deposition to the same effect. In her statement under Section 161 Cr. P.C. she also stated categorically that after about one month of the marriage whenever Ravinder Kaur met her she told that her in laws i.e. the respondents were not treating her well for bringing less dowry. She was also told that the respondents were demanding refrigerator and a scooter. They had also taunted that she was having illegitimate child. She further stated that two days prior to the present occurrence she and her sister, Sajinder Kaur went to Raja Sansi to enquire about the welfare of our sister, Ravinder Kaur who told them weepingly that she was being beaten by the accused and again was mal treated for bringing less dowry and scooter and fridge etc. She further stated that the respondents were leveling allegations that she had been carrying an illegiti mate child and that she should die. It was also stated by her that her mother in law, Kanwaldip Kaur was present in the house and she was abusing Ravinder Kaur in their presence. The learned Sessions Judge after carefully considering and weighing the evidences held that the witnesses P.W. 4, Gurbachan Singh, P.W. 5, Ved Prakash, President of the Mohalla Sudhar Committee, P.W. 6, Smt. Raj Kumari, social worker and P.W. 7, Surjeet Kaur clearly proved that the respondents mal treated Ravinder Kaur for bringing less dowry and they even tortured her for carrying an illegiti mate child. The said witnesses testified to the greedy and lusty nature of the respondents that they were persistently demanding more money. It has also been held that the worst part of the cruelty was that she was even taunted for carry ing an illegitimate child. The Trial Court also held that a respectable lady cannot bear this kind of false allegation levelled against her and this must have mentally tortured her. Thus the persistent demands of the accused for more money, their tortures and taunts amounted to instigation and abetment that compelled her to do away with her life. This finding was arrived at by the learned Sessions Judge on a proper appreciation of the evidences adduced by the prosecution. The High Court without properly considering and weighing the evidences of the prosecution witnesses and on a wrong appreciation of the evidences found that the prosecution failed to prove the ingredients of 306 Section 306 of I.P.C. It was also held that there was no evidence on record that the accused at the time of commis sion of suicide by Ravinder Kaur, deceased in any way insti gated or abetted her to commit suicide even though it has been brought but in evidences that the deceased was being maltreated by the accused continuously after her coming to the house of her in laws. It was further held that the prosecution has singularly failed to establish the charge against the accused and their conviction and sentences were consequently unsustainable. We have already stated hereinfore that P.W. 4, Gurbachan Singh, P.W. 7, Surjeet Kaur have clearly stated in their depositions about the ill treatment, torture and the cruel behaviour meted out to the deceased Ravinder Kaur which instigated her to take the extreme step of putting an end to her life by sprinkling kerosene oil on her body and setting fire. We have also stated hereinbefore that though the incident occurred at 2.30 P.M. the information of the death of Ravinder Kaur by burning was given to her father, Gurba chan Singh at 6.30 P.M. in his shop at Amritsar. Gurbachan Singh with members of his family immediately rushed to the hospital and found the dead body of her daughter in the dead house of the hospital. It is also in evidence that Ravinder Kaur was brought to the hospital after much delay when she was already dead. The Trial Court rightly held that in such cases direct evidence is hardly available. It is the circumstantial evidence and the conduct of the accused persons which are to be taken into consideration for adjudicating upon the trust fulness or otherwise of the prosecution case. We have already referred to hereinbefore the evidences of the prosecution witnesses who clearly testified to the greedy and lusty nature of the accused in that they persist ently taunted the deceased and tortured her for not having brought sufficient dowry from her father. It is also in evidence that they also taunted her for carrying an illegit imate child. All these tortures and taunts caused depression to her mind and drove her to take the extreme step of put ting an end to her life by sprinkling kerosene oil on her person and setting fire. Circumstantial evidence as well as the evidences of the prosecution witnesses clearly prove beyond reasonable doubt that the accused persons instigated and abetted Ravinder Kaur, deceased in the commission of the offence by committing suicide by burning herself. The find ings arrived at by the Trial Court after considering and weighing 307 the entire evidences are unexceptional. The findings arrived at by the High Court without considering properly the cir cumstantial evidence as well as the evidences of the prose cution witnesses cannot be sustained. As such the findings of the High Court are liable to be reversed and set aside. The High Court drew an inference from the conduct of Gurbachan Singh, P.W. 4 in making a delay of about 24 hours after receipt of the information regarding her daughter 's death to make a statement to the police about the incident with lodging the F.I.R. on the same date, i.e. June 25, 1983 or on the following morning. The High Court, therefore, held that all these circumstances would raise considerable doubt regarding the veracity of the evidence of these two witness es (P.W. 4 and P.W. 7) and point an infirmity in their evidence as would render it unsafe to base the conviction of the accused. It is in evidence of P.W. 4 that he was intimate about the death of his daughter by committing suicide, by the maternal uncle of Satpal Singh, son in law on June 25, 1983 at about 5.30 p.m. He immediately rushed to the hospital with members of his family where his daughter was brought. It is also in his evidence that he stayed there the whole night with his wife and other members of his family near the dead body of his deceased daughter and also on the next day till the dead body was handed over to him after the comple tion of post martem in the afternoon. The Assistant Sub Inspector of Police of Ajnala Police Station reached SGTB Hospital on the next day i.e. on June 26, 1983 and got his statement recorded there. It has been rightly held by the Additional Sessions Judge that in the circumstances it cannot be said that there has been any delay in reporting the matter to the police. We fully accept this finding of the Additional Sessions Judge and we also held that the delay in lodging the FIR in the above circumstances does not raise any doubt regarding the veracity of the said two witnesses and there is no infirmity in the evidences of P.W. 4 and P.W. 7 which would render them unsafe to base the conviction of the accused as wrongly observed by the High Court. It is also convenient to refer to this connection to the provisions of Section 113A of which provide that: "113 A. Presumption as to abetment of suicide by a married women When the question is whether the commission of suicide by a woman had been abetted by her husband or any rela tive of her husband and it is shown that 308 she had committed suicide within a period of seven years from the date of her marriage and that her husband or such relative of her husband had subjected her to cruelty, the court may presume, having regard to all the other circumstances of the case, that such suicide had been abetted by her husband or by such relative of her husband." In the instant case the deceased Ravinder Kaur was married to the accused, Satpal Singh in November, 1982 and she committed suicide on June 25, 1983. It has also been found on a consideration of the circumstantial evidence that she was compelled to take the extreme step of committing suicide as the accused persons had subjected her to cruelty by constant taunts, mal treatment and also by alleging that she has been carrying an illegitimate child. The suicide having been committed within a period of seven years from the date of her marriage in accordance with the provisions of this Section, the Court may presume having regard to all the other circumstances of the case which we have set out earlier that such suicide has been abetted by the husband and his relations. Therefore, the findings arrived at by the Additional Sessions Judge are quite in accordance with the provisions of this Section and the finding of the High Court that the accused persons could not be held to have instigate or abetted the commission of offence, is not sustainable in law. It has been contended on behalf of the accused respond ents that Section 113 A of the was inserted in the Statutes Book by Act 46 of 1983 whereas the offence under Section 306, I.P.C. was committed on June 23, 1983 i.e. prior to the insertion of the said provision in the . It has, therefore, been submitted by the learned counsel for the respondents that the provi sions of this Section cannot be taken recourse to while coming to a finding regarding the presumption as to abetment of suicide committed by a marriage woman, against the ac cused persons. The provisions of the said Section do not create any new offence and as such it does not create any substantial right but it is merely a matter of procedure of evidence and as such it is retrospective and will be applicable to this case. It is profitable to refer in this connection to Hals bury 's Laws of England, (Fourth Edition), Volume wherein it has been stated that: "The general rule as mat all statutes, other than those which are merely declaratory or which relate only to mat 309 ters of procedure or of evidence, are prima facie prospective, and retrospective effect is not to be given to them unless, by express words or necessary implication, it appears that this was the intention of the legislature It has also been stated in the said volume of Halsbury 's Law of England at page 574 that: "The presumption against retrospection does not apply to legislation concerned merely with matters of procedure or of evidence; on the contrary, provisions of that nature are to be construed as retrospective unless there is a clear indication that such was not the inten tion of Parliament." In Blyth vs Blyth, the wife left the husband in 1954 and lived with the co respondent until August, 1955, when she broke off the association. In 1958 the husband and wife met by chance and sexual intercourse took place. In December, 1962, the husband sought a divorce on the ground of his wife 's adultery. During the pendency of the application section 1 of the Matrimonial Causes Act, 1963 came into force on July 31, 1963 which provided that any presumption of condonation which arises from the contin uance or resumption of marital intercourse may be rebutted on the part of a husband, as well as on the part a of wife, by evidence sufficient to negative the necessary intent. The question arose whether this provision which came into force on July 31, 1963 can be applied in the instant case. It was held that the husband 's evidence was admissible in that Section 1 of the Act of 1963 only altered the law as to the admissibility of evidence and the effect which the courts are to give to evidence, so that the rule against giving retrospective effect to Acts of Parliament did not apply. In Herridge vs Herridge, similar ques tion arose, it was held that section 2(1) of the Act of 1963 was a procedural provision, for it dealt with the adducing of evidence in relation to an allegation of condonation in any trial after July 31, 1963; accordingly the subsection was applicable, even though the evidence related to events before that date, and the resumption of cohabitation in the present case did not amount, by reason of Section 2(1), to condonation. On a conspectus of these decisions, this argument on behalf of 310 the appellant fails and as such the presumption arising under Section 113 A of The Evidence Act has been rightly taken into consideration by the Trial Court. It has been urged by referring to the decision in Brij Lal vs Prem Chand & Anr., JT that where two views could reasonably be taken the appellate court should not interfere with the order of acquittal made by the Trial Court. In the instant case on a proper consideration and weigh ing of the evidences the only reasonable view that can be taken is that the cruel behaviour and constant taunts and harassment caused by the accused persons while Ravinder Kaur, deceased was in her in laws house instigated her to commit suicide and in our considered opinion no other rea sonable view follows from a proper consideration and ap praisement of the evidences on record. As such the decision cited above is not applicable to the facts and circumstances of the instant case. For the reasons aforesaid we set aside the judgment and order of acquittal passed by the High Court and affirm the conviction of the accused of the offence under Section 306 I.P.C. and sentence imposed upon them by the Additional Sessions Judge, Amritsar. The respondents will immediately surrender in the Court of Sessions Judge, Amritsar to serve out the remaining period of their sentence. R.N.J. Appeals allowed.

Ravinder Kaur, daughter of Gurbachan Singh was married to Satpal Singh in November, 1962. She died on 25th June, 1983 at about 2.30 P.M. It was alleged, she committed sui cide because of the harassment, constant taunts and cruel behaviour of her in laws towards her and persistent demand for dowry and insinnuations that she was carrying an ille gitimate child. It is alleged, provoked by the aforesaid conduct and behaviour she committed suicide. The father in law, mother in law and the husband of the deceased have been the abetters of the crime and the deceased died of second to third degree burns. The learned Additional Sessions Judge on the totality of evidence on record held that the accused were guilty of abetment to suicide and as such punishable under Section 306 of the I.P.C. On appeal by the accused the High Court was of the view that the guilt of the accused had not been proved and as such acquitted them. The complainant and father of the deceased aggrieved by the order of the High Court preferred these appeals by way of special leave to appeal. This Court holding that the order of acquittal made by the High Court is not sustainable and affirming the conviction of the accused under section 306 of I.P.C. and the sentence imposed by the Additional Sessions Judge, Amritsar, HELD: (Per Sabyasachi Mukharji J. ) Abetment is a sepa rate and distinct offence provided the thing abetted is an offence. Abetment does not involve the actual commission of the crime abetted; it is a crime apart. [295G] Criminal charges must be brought home and proved beyond all reasonable doubts. While civil case may be proved by mere preponderance of evidence, in criminal cases the prose cution must prove the 293 charge beyond reasonable doubt. There must not be any 're asonable doubt ' of the guilt of the accused in respect of the particular offence charged. The courts must strictly be satisfied that no innocent person innocent in the sense of not being guilty of the offence of which he is charged is convicted. even at the risk of letting of some guilty per sons. Even after the introduction of section 493A of the I.P.C. and section 113A of the Indian Evidence Act, the proof must be beyond any shadow of reasonable doubt. There is a higher standard of proof in criminal cases than in civil cases, but there is no absolute standard in either of the cases. [296C F] The standard adopted must be the standard adopted by a prudent man which, of course, may vary from case to case, circumstances to circumstances. Exaggerated devotion to the rule of benefit of doubt must not nurture fanciful doubts of lingering suspicions and thereby destroy social defence. Justice cannot be made sterile on the plea that it is better to let hundred guilty escape than punish an innocent. Let ting guilty escape is not doing justice, according to law. [296F] (Per B.C. Ray, J): Circumstantial evidence as well as the prosecution witnesses in the instant case clearly prove beyond doubt that the accused instigated and abetted Ravind er Kaur, deceased in the commission of the offence by com mitting suicide by burning herself. [306G] The findings arrived at by the Trial Court after consid ering and weighing the entire evidences are unexceptional. The findings arrived at by the High Court without consider ing properly the circumstantial evidence as well as the evidences of the prosecution witnesses cannot be sustained. As such the findings of the High Court are liable to be reversed and set aside. [306H; 307A] The suicide having been committed within a period of seven years from the date of her marriage in accordance with the provisions of Section 113A the Court may presume having regard to all the other circumstances of the case that such suicide had been abetted by the husband and his relations. Therefore, the findings arrived at by the Additional Ses sions Judge are quite in accordance with the provisions of this section and the findings of the High Court that the accused persons could not be held to have instigated or abetted the commission of offence, is not sustainable in law. [308C D] Section 113A of the Indian Evidence Act was inserted in the Statute Book by Act 46 of 1983 whereas the offence under Section 306, I.P.C. was committed on June, 23, 1983 i.e. prior to the insertion of the 294 said provisions in the Indian Evidence Act. [308E] Bardendra Kumar Ghosh, Mancini vs Director of Public Prosecutions, Woolmington vs The Director of Public Prosecutions; , , Bater vs Bater, [1950] 2 AET 458 at 459. Wazir Chand and Anr. vs State of Haryana with State of Haryana vs Wazir Chand and Anr. , [1989] I SCC 244, Sat Pal vs Delhi Administration, ; at 30. Blyth vs Blyth, Herridge ' vs Herridge, [1966] I AER 93, Brij Lal vs Prem Chand & Anr. , Halsbury 's Laws of England, 4th Edn. & P. 574, refered to.

ition (Civil) Nos. 351/72 and 798 of 1992. (Under Articte 32 of the Constitution of India). G. Ramaswamy, Attorney General, Soli J. Sorabjee, H.N. Salve, G.L. Sanghi, Dr. V. Gaurishankar, D.D. Thakur, A.K. Ganguli, J.B. Dadachandji Mrs. A.K. Verma, Sunil Gupta, section Sukumaran, Manmohan, Mrs. section Pathak, section Rajappa, Ms. A. Subhashini, P. Parmeshwaran, C.V.S. Rao, R.F. Nariman, M.P. Vinod, R. Nagendra Naidu, N.N. Bhatt, C.N. Sreekumar, Pichai, D. Goburdhan, Santokh Singh, Ms. M. Karanjawala, Antip Sachthey and G. Prakash for the appearing Parties. The Judgments of the Court were delivered by. section RATNAVEL PANDIAN, J. These two Writ Petitions call in question the constitutional validity of the Constitution (Twenty sixth Amendment) Act of 1971 inter alia, on the ground that it violates the basic structure and essential features of the Constitution of India and is, therefore, outside the scope and ambit of constituent powers of the Parliament to amend the Constitution as provided under Article 368 of the Constitution. In addition, certain directions or suitable orders are sought for declaring that the petitioner continue to be the Rulers or the 'Successor Rulers ', as the case may be and directing the respondent Union of India to continue to recognise their personal rights, amenities and privileges as Rulers of their erstwhile States and also continue to pay privy purse to them in addition to their arrears of amounts. For facilitating a proper understanding of the controversy that has led to the filing of these two Writ Petitions and the interlocutor Applications 1 to 3 of 1992 in Writ 490 Petition No. 351 of 1972, a synoptical resume of the case as adumbrated in Writ Petition No. 351/72 with the historical background may be stated : The petitioner, Shri Raghunathrao Raja was the Co Ruler of Indian State of Kurundwad Jr. which was prior to 15th August, 1947 a sovereign State in treaty relationship with, and under the suzerainty of the British Crown. On the commencement of the Indian Independence Act, 1947, British Paramountcy lapsed and the Indian States became completely sovereign and independent. They were free to accede to either of the two Dominions of India or Pakistan or to remain independent. The petitioner 's co Ruler, on behalf of both, executed an instrument of accession under Section 5 of the Government of India Act, 1935, as adopted under the Indian Independence Act, 1947. This instrument was accepted by the Governor General of India and the State thus became a part of the Dominion of India. Likewise, Rulers of most of the other Indian States also executed similar instruments which were accepted by the Governor General. By the said instrument, the petitioner accepted the matters specified in the schedule thereto as matters with respect to which the Dominion Legislature may make laws for the State and declared his intent that the Governor General of India, the dominion Legislature, the Federal Court and any other Dominion authority established for the purposes of the Dominion shall, subject to the terms of the instrument, exercise in relation to the Kurundwad State such functions as may be vested in them by the Government of India Act, 1935 as in force in the Dominion of India on the 15th August, 1947. According to the petitioner, clause 7 of the Instrument provided that nothing therein shall be deemed to commit the Ruler in anyway to acceptance of any future Constitution of India or to fetter his discretion to enter into agreements with the Government of India under any such future Constitution. Subsequently, a number of Rulers executed Agreements of Merger and transferred the administration of their States to the Dominion Government. The Merger Agreement was in the form given in the 'White Paper on Indian States ' and it was executed on the 19th February, 1948. Then the administration of the State of the petitioner was handed over on the 8th March, 1948. The case of the petitioner is that under the Merger Agreement he was entitled to receive annually from the revenues of the State his privy 491 purse as specified in the Merger Agreement (as amended by an order of Government of India in 1956) free of taxes, besides reserving his personal rights, privileges and dignities. Certain groups of States entered into covenants for the establishment of United States comprising the territories of the covenanting States and Talukas with a common executive, legislature and judiciary. The covenants inter alia provided for the administration of United States by a Rajpramukh aided and advised by a Council of Ministers. They also envisaged the establishment of a Constituent Assembly charged with the duty to frame Constitution for the United States within the framework of covenants and of the Constitution of India. Each of the covenants was concurred in by the Government of India which guaranteed all its provisions including provisions relating to the privy purse, personal privileges etc. However, it was later desired that the Constitution of the United States should also be framed by the Constituent Assembly of India and form part of the Constitution of India. It was decided in consultation with the Government of the United States that the Constitution of India as framed by the Constituent Assembly of India should itself contain all the necessary provisions governing the constitutional structure of the United States as well as the provisions for the guarantee contained in the covenants and the Merger Agreements. In pursuance of this decision the necessary provisions including part VII providing for the Government, legislature, judiciary, etc. of the United States as well as certain separate articles governing other matters, for example, the privy purse and privileges of Rulers bringing them within the framework of the covenants were included in the Constitution of India. Accordingly on 13th October, 1949 the Constituent Assembly of India adopted inter alia two Articles namely, Article 291 relating to payment of privy purse and Article 362 relating to personal rights and privileges of the Rulers. Amendment relating to the United States and other States which had not merged were also adopted and these States were called Part 'B ' States. The Rulers and Rajpramukhs of the States agreed to adopt the Constitution as drafted by the Constituent Assembly of India and issued proclamations directing that the Constitution to be adopted by the Constituent Assembly of India shall be the Constitution for the United States. Supplementary covenants were also executed by the covenanting States which covenants were concurred in and guaranteed by Government of India. Thereafter, the Constituent Assembly passed and adopted the Constitution. According to the petitioner, it was only on the 493 was to terminate the privy purses and privileges of the former Indian Rulers and to terminate expressly the recognition already granted to them under those two deleted Articles. According to the learned counsel appearing for the writ petitioners the withdrawal of the guarantees and assurances given under those articles and the abolition of the privy purse, personal rights, privileges and dignities is in violent breach of the power of Parliament acting as a constituent body under Article 368 of the Constitution inasmuch as it not only sought to amend the Constitution but also destroy the basic philosophy, personality, structure and feature of the Constitution. Though it is not necessary to narrate in detail the historical events leading to the transfer of power and the integration of Indian States consequent upon the political and constitutional changes, yet a prefatory note of the past historical background may be stated so as to have a better understanding of the policy step taken for the integration of the States in terms of the consolidation of the country. Though India is geographically one entity yet throughout its long and past chequered history it never achieved political homogeneity. There were about 554 States (subject to a marginal variation as found in various Reports), out of which the States of Hyderabad and Mysore were left territorially untouched. Two hundred and sixteen states were merged in the adjoining provinces in which they were situated, or to which they were contiguous. Five were taken over individually as Chief Commissioners ' provinces under the direct control of the Government of India besides twenty one Punjab Hill States which comprised Himachal Pradesh. Three hundred and ten were consolidated into six Unions, of which Vindhya Pradesh was subsequently converted into a Chief Commissioner 's province. Thus, as a result of integration, in the place of 554 states, fourteen ad ministrative units had emerged. This was a physical or geographical consolidation. The next step was to fit all these units into a common administrative mould. Administration in the erstwhile States was in varying stages of development and, with a few exceptions it was both personal and primitive. Such states being Mysore, Baroda, Travancore and Cochin could stand comparison with their neighboring provinces and in some respects were ahead of them. But there were smaller States where, owing mainly to the 449 slenderness of their resources, the rulers were not in a position to discharge even the elementary functions of government. Between these two extremes, there were several States with administrative systems of varying degrees of efficiency. In the past, the comparative Indian area covered by the States was 48 per cent of the total area of the Dominion of India, the relative population ratio of the States was 28 per cent of the total population of the Dominion of India. All the above Indian states formed a separate part of India before their merger with the rest of India. It is common knowledge that the aim of Government of India Act, 1935 was to associate the Indian states with the British India as equal partners in loose federation. When India became independent by the Indian Independence Act of 1947, British paramountcy in respect of the Indian states lapsed. Therefore, theoretically though the Rulers became independent in actual fact almost all the Rulers signed Instruments of Accession in August 1947 surrendering Defence, External Affairs and Communications. The Rulers immediately after independence became divided into four classes. All the agreements of merger and covenants provided for the fixation of the Rulers ' privy purse which was intended to ;cover all the expenses of the Rulers and their families including the expenses of their residences, marriages and other expenses etc. Under the terms of the agreements and covenants entered into by the Rulers, privy purses were paid to the Rulers out of the revenues of the States concerned and payments had so far been made accordingly. During the course of the discussion with the Indian States Finances Enquiry Committee, it was urged by most of the States that the liability for paying privy purses of Rulers should be taken over by the Centre. Having regard to the various factors, it was decided that the payments should constitute a charge on the Central revenues. The privy purses settlements, were, therefore in the nature of consideration for the surrender by the Rulers of all the ruling powers and also for the dissolution of the States as separate units. it is stated that the total amount of the privy purse came to about Rs. 5.8 crores per annum and the quantum of privy purse each year was liable to reduction with every generation. According to V.P. Menon, who was the Constitutional Advisor to the Governor General till 1947 and then the Secretary to the Ministry of States and closely connected with the 495 annexation of the princely states "the price paid as Privy Purses was not too high for integration and indeed it was insignificant when compared with what the Rulers had lost. " He pointed out that "the cash balances were to the tune of Rs. 77 crores and that palaces in Delhi alone were worth several lakhs of rupees. " It is appropriate to refer to the speech of Sardar Vallabhbhai Patel made on 12th October 1949 in the Constituent Assembly on the Draft constitution, on which reliance was placed by the writ petitioners. The speech reads thus : "There was nothing to compel or induce the Rulers to merge the identity of their States. Any use of force would have not only been against our professed principles but would have also caused serious repercussions. If the Rulers had elected to stay out, they would have continued to draw the heavy civil lists which they were drawing before and in large number of cases they could have continued to enjoy unrestricted use of the State revenues. The minimum which we could offer to them as quid pro quo for parting with their ruling powers was to guarantee to them privy purses and certain privileges on a reasonable and defined basis. The privy purse settlements are, therefore, in the nature of consideration for the surrender by the Rulers of all their ruling powers and also for the dissolution of the States as separate units. We would do well to remember that the British Government spent enormous amounts in respect of the Mahratta settlements alone. We are ourselves honouring the commitments of the British Government in respect of the persons of those Rulers who helped them in consolidating their empire. Need we cavil then at the small purposely use the world small price we have paid for the bloodless revolution which has affected the destinies of millions of our people. justice to them; let us place ourselves in their position and then assess the value of their sacrifice. The Rulers have now discharged their part of the obligations by transferring all ruling powers and by agreeing to the 496 integration of their States. The main part of our obligation under these agreements, is to ensure that the guarantees given by us in respect of privy purse are fully implemented. Our failure to do so would be a breach of faith and seriously prejudice the stabilization of the new order. " The constitutional provisions of Articles 291 a, ,id 362 which are now deleted by Section 2 of the impugned Constitution (Twenty sixth) Amendment Act as they stood, read as follows "291 Privy purse sums of Rulers (1) Where under any covenant or agreement entered into by the Ruler of any Indian State before the commencement of this Constitution, the payment of any sums, free of tax, has been guaranteed or assured by the Government of India to any Ruler of such State as privy purse (a) such sums shall be charged on, and paid out of, the consolidated Fund of India; and (b) the sums so paid to any Ruler shall be exempt from all taxes on income. (2) Where the territories of any such Indian State as aforesaid are comprised within a State specified in Part A or Part B of the First Schedule, there shall be charged on, and paid out of, the Consolidated Fund of that State such contribution, if any, in respect of the payments made by the Government of India under clause (1) and for such period as may, subject to any agreement entered into in that behalf under clause (1) of Article 278, be determined by order of the President. 362 Rights and privileges of Rulers of India States In the exercise of the power of Parliament or of the Legislature of a State to make laws or in the exercise of the executive power of the Union or of a State, due regard shall be had to the guarantee or assurance given under any such covenant or agreement as is referred to in clause 497 (1) of Article 291 with respect to the personal rights, privileges and dignities of the Ruler of an Indian State. ' Clause (22) of Article 366 was amended by Section 4 of the impugned Act of 1971. We shall reproduce that clause as it stood then and the substituted clause (present) consequent upon the amendment. Unmended Clause Ruler" in relation to an Indian State means the Prince, Chief or other person by whom any such covenant or agreement as is referred to in clause (1) of Article 291 was entered into and who for the time being is recognized by the President as the Ruler of the State, and includes any person who for the time being is recognized by the President as the successor of such Ruler. " Substituted or amended clause "Ruler" means the Prince, Chief or other person who, at any time before the commencement of the Constitution (Twenty sixth Amendment) Act, 1971 was recognized by the President as the Ruler of an Indian State or any person who, at any time before such commencement, was recognized by the President as the successor of such Ruler. ' In this connection, the new Article 363 A which has been inserted by section 3 of the impugned Amendment Act which is also relevant for our purpose may be reproduced : 363 A Recognition granted to Rulers of Indian States to cease and privy purses to be abolished Notwithstanding anything in this Constitution or in any law for the time being in force (a) the Prince, Chief or other person who, at any time before the commencement or the Constitution (Twentysixth Amendment) Act, 1971 was recognized by the President as the Ruler of any Indian State or any persons who, at any time before such commencement, was recognized by the President as the successor of such ruler shall, on 498 and from such commencement, cease to be recognized as such Ruler or the Successor of such Ruler. (b) on and from the commencement of the Constitution (Twenty sixth Amendment) Act, 1971 privy purse is abolished and all rights, liabilities and obligations in respect of privy purse are extinguished and accordingly the Rulers, or as the case may be, the successor of such Ruler, referred to in clause (a) or any other person shall not be paid any sum as privy purse. The submissions advanced by Mr. Soli J. Sorabjee the learned senior counsel appearing on behalf of the writ petitioner in Writ Petition No. 351 of 1972 are thus. Articles 291, 362 and 366(22) of the Constitution were integral part of the constitutional scheme and formed the important basic structure since the underlying purpose of these Articles was to facilitate stabilization of the new order and ensure organic unity of India. These Articles guaranteed pledges to the Rulers based on elementary principles of justice and in order to preserve the sanctity of solemn agreements. It was only by the incorporation of these Articles that the unity of India was achieved by getting all the Rulers within the fold of the Constitution, and that the deletion of these Articles has damaged and demolished the very basic structure of the Constitution. The covenants entered into were in the nature of contracts which had been guaranteed constitutionally and affirmed by making the privy purse an expenditure charged under the Consolidated Fund of India and the use of the expressions 'guaranteed or assured by the Government of the Dominion of India to any Ruler" as embodied in Article 291 and the expression 'guaranteed and assurance given under such covenants or agreements as is referred to in clause (1) of Article 291. . . as comprised in Article 362 were a permanent feature of the Constitution reflecting the intention of the founding fathers of the Constitution and as such these two Articles should have been kept intact. According to the learned counsel, the deletion of these Articles amounted to a gross breach of the principle of political justice enshrined in the preamble by ', depriving or taking away from the princes the privy purses which were given to them as consideration for surrendering all their sovereign rights and contributing to the unity and integrity of the country 499 and that the deletion of these Articles by the impugned Amendment Act, is arbitrary, unreasoable and violative of Article 14 of the Constitution. Further it has been urged that the Rulers acceded to the Dominion of India and executed Instruments of Accession and Covenants in consideration of the pledges and promises enshrined in Articles 291 and 362 and that the impugned Amendment Act is beyond and outside the scope and ambit of, the constitutional power of the Parliament to amend the Constitution as provided under Article 368 of the Constitution. Mr. Soli J. Sorabjee, the learned senior counsel in his additional written submissions has further urged that without the co operation of the Rulers, not only the territory of India, its population, the composition of the State Legislatures, the Lok Sabha and Rajya Sabha but also the Constitution that was adopted on 26th November, 1949 would have been basically different and that India i.e. Bharat would have been fundamentally different from the Bharat that came into being. In Writ Petition No. 351 of 1972 in Ground Nos. 38, 39 and 40, it is contended that the Constitution (Twenty sixth Amendment) Act is unconstitution, null void and violative of Articles 14, 19(1)(g), 21, 31 (1) and (2) of the Constitution. Mr. Harish Salve, the learned senior counsel contended that 291 and 362 when incorporated were intended to grant recognition to the solemn promises on the strength of which the former Rulers ageed to merge with the Indian Dominion and the guarantee of privy purses and certain privileges was as a just quid pro quo for surrendering their sovereignty and dissolving their States. It has been stated that the constitutional guarantees and assurances promising continuance of privy purse as enshrined in the Agreements and Covenants were 'an integral part of the Constitutional Schemes ' and 'an important part of the Constitutional structure ' and they were to be fully honoured and not cast away on a false morass of public opinion or buried under acts of States, but the impugned Act, ex facie has abolished and destroyed those constitutional provisions of Articles 291 and 362 affirming the guarantees and assurances given to agreements. To highlight the signature of those agreenents whereby the Rulers were persuaded to sign the instruments, the statement of Shri V.P. Menon who was Closely connected with the annexation of the princely states and the speech of Sardar Vallabhbhai 500 Patel made in the Constituent Assembly were cited. It is further emphasized that Sardar Patel also made it clear that according to the vision and views of the Constitution makers, the guarantees of Privy Purse, privileges etc., were perfectly in keeping with the democratic ethos and principle of the Indian people. Then the learned counsel stated that the views expressed in the Constituent Assembly were unanimously accepted and there was no dissent and that in fact the closing remarks in the debate of Dr. B. Pattabhai Sitaramayya were not only remarkably confirmatory of the permanence and indefeasibility of the aforesaid guarantees and assurances but also went a long way in determining that the said guarantees and assurances have come to stay as an integral and untouchable part of the basic structure of the Constitution. Finally, it was said that there can be no basic structure of a Constitution divorced from the historical evolution of the precepts and principles on which the Constitution is founded. Any effort to determine the basic structure of the Constitution without keeping a finger on the historical pulse of the Constitution may well lead to substantial injustice. According to him, if the historical approach to the test of basic structure is kept in view, the guarantees and assurances of the privy purses, privileges, etc. granted by the Constitution makers by incorporating Articles 291, 362 and 366 (22) in the Constitution framed by them would, without any doubt or dispute, emerge in their own rights 'as basic features ' of the Constitution which cannot be abrogated or annihilated by any Constitutional amendment. What he fmally concluded is that the guarantees and assurances of the privy purses, privileges etc. contained in the above three Articles were, in fact, the reflections of the aforesaid virtues of the Constitution makers which are the very virtues which characterized the personality of the Indian Constitution and that the Objects and Reasons of the impugned Amendment clearly establish the mala fides of the Amendment. Mr. A.K. Ganguly, the learned senior counsel appearing in IA. No. 3 of 1992 in W.P. No. 351 of 1972 pointed out that after the Articles 291, 362 and 366 (22) were adopted by the Constituent Assembly of India on 12th, 13th, 14th and 16th October of 1949, Maharaja of Mysore then issued a proclamation on 25th November 1949 to the effect that the Constituent Assembly of Mysore and Maharaja adopted the Constitution of India which would be as passed and adopted by the Constituent Assembly of India. On 501 the following day, namely, 26th November, 1949, the Constituent Assembly adopted the Constitution of India. Thereafter, on 23rd January, 1950, Maharaja of Mysore executed the Merger Agreement with the Government of India. The learned counsel after giving a brief history of the Merger of the princely States, stated that the fact that the framers of the Constitution adroitly chose the words "guarantee or assured" unequivocally conveys the intention of the framers of the Constitution to continue the guarantee as per the covenants in their plain meaning. Learned counsel submitted that the fact that the expression "guaranteed" occurring both in Article 32 and Article 291 besides in Article 362 ( 'guarantee ') clearly demonstrates the mind of the Constitution makers that they intended the said provisions of Articles 291 and 362 to be the basic and essential structure of the Constitution. According to him, to preserve the sanctity of these rights, the framers of the Constitution chose to avoid voting in Parliament on the amount to be paid as privy purses and keeping that object in their view, they framed Articles 291(1) reading "Such sums shall be charged on and paid out of the Consolidated Fund of India and that the said payments would be exempted from all taxes on income". When such was the sanctity attached to this guarantee, the impugned Amendment completely throwing away those guarantees and assurances to the wind is palpably arbitrary and destructive of the equality clause which is admittedly a basic feature of the Constitution. 1992 in Writ Petition No. 351 of 1972 adopted the arguments of the other counsel and contended that the erstwhile Rulers of the princely states formed a class apart in that there is a real and substantial distinction between them and the citizenry of India. In this context, he referred to Section 87B of the Civil Procedure Code, 1908 which was introduced by way of Amendment after the Constitution came into force in the year 1951 and in order to protect the erstwhile Rulers from frivolous suits filed against them in free India after the Constitution came into force. This, according to learned counsel was legislative recognition in addition to the constitutional guarantee contained in Articles 291 and 362 of the fact that the erstwhile Princes formed a class apart. When such was the position, according to the learned counsel, the impugned Amendment which violates the basic structure of the Constitution is unconstitutional. He cited certain decisions in support of his arguments that the Amendment Act is violative of the essential features contained in Articles 14 and 19(1)(f). 502 Mr. D.D. Thakur, the learned senior counsel appearing for the petitioner in Writ Petition No. 798/92 besides adopting the argument advanced in Writ Petition No. 351/72 added that these two Articles Were not at all amendable on the principle of prohibition, against impairment of the contract obligations, a principle recopised in Section 10, Article 1 of the Constitution of the United States of America. The same principle is incorporated in the Indian Constitution in the shape of Articles 362 and 291. According to the learned counsel, the impugned Amendment Act is an ugly epitome of immorality perpetrated by the Indian Parliament, that, too, in the exercise of its constituent powers and the said Amendment Act constitutes an unholy assault on the spirit which is impermissible and that the principle of justice, fairness and reasonableness are beyond the amending powers of the Parliament. He further stated that the equality clause as interpreted by this Court in various decisions is the most important and indispensable feature of the Constitution and destruction thereof will amount to changing the basic structure of the Constitution, and that the authority of the Parliament to amend the Constitution under Article 368 could be exercised only if the Amendment in the Constitution is justifiable and necessitated because of the socioeconomic reasons broadly referred to in the directive principles of the State Policy and that any Amendment unrelated to any genuine compulsion amounts to an abuse of the power and is therefore a fraud on the exercise of power itself. The learned Attorney General of India with regard to the above pre Constitutional agreements stated that the history of the developments leading to the merger agreements and the framing of the Constitution clearly show that it is really the union of the people of the native States with the people of the erstwhile. British India and the Instruments of Accession were only the basic documents but not the individual agreements with the Rulers and therefore to attribute the agreements entered into by Rulers as a sacrifice by the Rulers is unfounded. Secondly, the nature of the covenants is not that of a contract because a contract is enforceable at law while these covenants were made non justiciable by the Constitution vide Article 363. According to him the covenants were political in nature and that no legal ingredients as the basis can be read into these agreements and that the guarantees and assurances embodied in Articles 291 and 362 were guarantees for the payment of privy purses. He has urged that such a guarantee can always be revoked in public interest pursuant to fulfilling, a policy objective or the directive principles of the Constitution. That being 503 so, the theory of sanctity of contract or unamendability of Articles 291 or 362 did not have any foundation. He continues to state that the theory of political justice is also not tenable because political justice means the principle of political equality such as adult suffrage, democratic form of Government etc. In this context, he drew the attention of this Court to a decision in Nawab Usmanali Khan vs Sagarmal, ; wherein Bachawat, J speaking for the Bench has held: ". . . the periodical payment of money by the Government to a Ruler of a former Indian State as privy purse on political considerations and under political sanctions and not under a right legally enforceable in any municipal court is strictly to a political pension within the meaning of section 60(1)(g) of the Code of Civil Procedure. The use of the expression "privy purse" instead of the expression "pension" is due to historical reasons. The privy purse satisfies all the essential characteristics of a political pension. " Furhter it has been observed in the above case purse are not liable to attachment or sale in execution of the respondent 's decree. " Before embarking upon a detailed discussion on the various facets of the contentions both factual and legal we shall deal with the precursive point with regard to the pre constitutional Instrument of Accession, the Merger Agreement and the covenants which guaranteed the payment of privy purse and the recognition of personal privileges etc. and which ageements ultimately facilitated the integration of these States with the Dominion of India. In 1947, India obtained independence and became a Dominion by reason of the Indian; Independence Act of 1947. The suzerainty of the British Crown over the Indian States lapsed at the same time because of Section 7 of that Act. Immediately after, all but few of the Indian States acceded to the new Dominion by executing Instruments of Accession. The Instrument of Accession executed by the Rulers provided for the accession of the States to the Dominion of India on three subjects, namely, (1) 504 Defence, (2) External Affairs and (3) Communications, their contents being defined in List I of Schedule VII of the Government of India Act, 1935. This accession did not imply any financial liability on the part of the acceding States. This accession of the Indian States to the Dominion of India established a new organic relationship between the States and the Government, the significance of which was the foregoing of a constitutional link or relationship between the States and the Dominion of India. The accession of the Indian States to the Dominion of India was the first phase of the process. of fitting them into the constitutional structure of India. The second phase involved a process of two fold integration, the consolidation of States into sizable administrative units, and their democratization. Though high walls of political isolation had been raised and buttressed to prevent the infiltration of the urge for freedom and democracy into the Indian States, with the advent of independence, the popular urge in the States for attaining the same measure of freedom as was enjoyed by the people in the Provinces, gained momentum and unleashed strong movements for the transfer of power from the Rulers to the people. On account of various factors working against the machinery for self sufficient and progressive democratic set up in the smaller states and the serious threat to law and order in those States, there was an integration of States though not in an uniform pattern in all cases. Firstly, it followed the merger of States in the Provinces geographically contiguous to them. Secondly, there was a conversion of States into Centrally administered areas and thirdly the integration of their territories to create new viable units known as Union of States. Sardar Vallabhbhai Patel had a long discussion with the Rulers and took a very active role in the integration of the States. As a result of the application of various merger and integration schemes, (1) 216 States had been merged into Provinces; (2) 61 States had been taken over as Centrally administered areas; and (3) 275 States had been integrated in the Union of States. Thus, totally 552 States were affected by the integration schemes. Reference may be made to (1) the Report of the Joint Select Committee on Indian Constitutional Reforms (1933 34), (2) the Report of the Expert Committee headed by Nalini Ranjan Sarkar, published in December 1947, (3) The Indian States ' Finances Enquiry Committee chaired by 505 Sir V.T. Krishnamachari appointed on 22nd October, 1948 the recommendations of which, on further discussions with the representatives of the States and Union of States led to the conclusion that the responsibility for payment of the privy purses fixed under various covenants and agreements should be taken over by the Government and (4) the Report of the Rau Committee appointed in November 1948 under the chairmanship of Sir B.N. Rau. Reverting to the cases on hand, Shri Raghunathrao Ganpatrao, the petitioner in Writ Petition No. 351 of 1972 executed a merger agreement as per the form of merger on 19th February 1948 and handed over the administration of the State on 8th March, 1948. The petitioner was entitled to receive annually from the revenues of the States his privy purse of Rs. 49,720 as specified in the Merger Agreement (as amended by an Order of Government of India in 1956) free of taxes besides his personal privileges, rights and the Dominion Government guaranteed the succession according to law and custom of the Gadi of the State and the Raja 's personal rights privileges and dignities. Shri Jaya Chamaraja Wadiyar, father of the petitioner (Sri Srikanta Datta Narasimharaja Wadiyar) in Writ Petition No. 798 of 1992 executed an Instrument of Accession and entered into an Merger Agreement/Treaty on 23rd January, 1950. Under the merger Agreement, the Maharaja of Mysore was entitled to receive annually for his privy purse the sum of Rs. 26,00,000 (Rupees twenty six lakhs) free of all taxes w.e.f. 1st April 1950. Article (1) of the said Agreement contained a proviso that the sum of Rs. 26,00,000 was payable only to the then Maharaja of Mysore for his life time and not to his successor for whom a provision would be made subsequently by the Government of India. Besides, the then Maharaja was entitled to the full ownership, use and enjoyment of all his private properties (as distinct from State properties) belonging to him on the date of the agree ment as specified under clause (1) of Article (2) of the Agreement. We are not concerned about the particulars of the agreements executed by other Rulers of various States. While, it was so, in 1950 when the Constitution was enforced, it conferred upon the Rulers the aforesaid guarantees and assurances to privy purse, privileges etc. under Articles 291, 362 and 366(22) of the Constitution. Accordingly, Rulers continued to enjoy the said benefits upto 1970. 506 On 14th May, 1970, the Constitution (Twenty fourth Amendment) Bill, 1970 for abolition of the above said privy purse, privileges etc. conferred under Articles 291, 362 and 366 (22) was introduced in the Lok Sabha by the then Finance Minister, Shri Y.B. Chavan. The Bill contained three caluses and a short statement of Objects and Reasons. The statements reads thus : "The concept of rulership, with Privy Purses and Special Privileges unrelated to any current functions and social purposes, is incompatible with an egalitarian social order. Government have, therefore, decided to terminate the Privy Purses and Privileges of the Rulers of former Indian States. Hence this Bill. " On 2nd September, 1979, the Bill was voted upon in the Lok Sabha. But on 5th September, 1970, the Rajya Sabha rejected the same since the Bill failed in the Rajya Sabha to reach the requisite majority of not less than two third members present as required by Article 368 and voting. Close on the heels of the said rejection, the President of India purporting to exercise his powers under clause (22) of Article 366 of the Constitution, signed an Order withdrawing recognition of all the Rulers in the country en masse. A communication to this effect was sent to all the Rulers in India who have been previously recognised as Rulers. This Presidential Order de recognising the Rulers was questioned in H.H. Maharajdhiraja Madhav Rao Jiwaji Rao Scindia Bahadur & Ors. vs Union of India ; by filing Writ Petitions under Articles 32 of the Constitution challenging it as unconstitutional, ultra vires and void. An eleven Judges Bench of this Court by its Judgment dated 15th December 1970 struck down the Presidential Order being illegal, ultra vires and inoperative on the ground that it had been made in violation of the powers of the President of India under Article 366(22) of the Constitution and declared that the writ petitioners would be entitled to all their pre existing rights and privileges including right to privy purses as if the impugned orders therein had not been passed. Here, it may be noted that Mitter and Ray, JJ. gave their dissenting judgment. Thereupon, the payment of privy purses to the Rulers was restored. Subsequently, Parliament enacted a new Act entitled the Constitution (Twenty Fourth Amendment) Act, 1971 on receiving the ratification by the 507 Legislature of 11 States. It received the assent of the President on 5th November, 1971. By this amendment Act, clause (4) reading "Nothing in this article shall apply to any amendment of this Constitution made under Article 368" was inserted in Article 13 and Article 368 was renumbered as clause (2). The marginal heading to that article was substituted namely "Power of Parliament to amend the Constitution and procedure therefor" in the place of 'Procedure for amendment of the Constitution. Before re numbered clause (2), clause (1) was inserted. In the re numbered clause (2) for the words "it shall be presented to the President for his assent upon such assent being to the Bill" the words "it shall be presented to the President who shall give his assent to the Bill and thereupon" was sub stituted. After the re numbered clause (2), clause (3) was inserted, namely 'Nothing in article 13 shall apply to any amendment under this article. " It may be recalled that Article 368 was firstly amended by Section 29 of the Constitution (Seventh Amendment) Act, 1956 by omitting the words and letters "specified in Part A and B of the First Schedule ' and thereafter by Section 3 of the Constitution (Twenty Fourth Amendment) Act, 1971. Again by Section 55 of the Constitution (Forty second Amendment) Act, 1956, clauses (4) and (5) were inserted. But this amendment has been held unconstitutional in Minerva Mills vs Union of India, ; , holding that Sections 55 of the Forty second Amendment Act inserting clauses (4) and (5) to Article 368 had transgressed the limits of the amending power of the Parliament which power in Kesavananda Bharati was held not to include the power of damaging the basic features of the Constitution or destroying its basic structure. The Constitution (Twenty fifth Amendment) Act, 1971 by substituting a new clause to clause (2) of Article 31 and inserting clause (2B) after clause (2A) came into force. By the same Amendment Act, Article 31C was inserted after Article 31B entitled "Saving of laws giving effect to certain directive principles". It is significant to note that Article 31 was omitted by the Constitution (Fourty fourth Amendment) Act, 1978 w.e.f. 20th June, 1979. The impugned Constitution (Twenty sixth) Amendment, 1971 was passed by the Parliament and it received the assent of the President on 28th December 1971. By this Act, Articles 291, 362 were omitted and Article 363 A was inserted under the title "Recognition granted to Rulers 508 of India States to cease and privy purses to be abolished". By the same Amendment Act, an amended new clause was substituted to the then existing clause (22). We have already reproduced Articles 291, 362 and the past and present clause (22) of Article 366. After the impugned Twenty sixth Amendment was brought into force w.e. L 28th December, 1971, the present writ Petition No. 351 of 1972 was filed on 24th August, 1972 for declarations that the Twenty fourth, Twenty fifth and Twenty sixth Amendment Acts of 1971 are unconstitutional, invalid, ultra vires, null and void and that the petitioner continues to be entitled to the privy purse and to personal rights, privileges as a Ruler and for a Writ or order directing the respondent to continue to pay privy purse to the petitioner. Another Writ Petition No. 352 of 1972 was filed by H.H. Nawab Mohanuned If tikhar Ali Khan of Malekotla seeking same relief as in Writ Petition No. 351 of 1972. It may be noted when Writ Petition Nos. 351 and 352 challenging the Twenty fourth, Twenty fifth and Twenty sixth Amendment Acts were filed in this Court, Writ Petition No. 135 of 1970 entitled His Holiness Kesavananda Bharati Sripadagalvaru vs State of Kerala and Another was pending before this Court. When both these Writ Petitions i.e., W.P. No. 351 and 352 of 1972 were listed together, on 28th August, 1972 this Court passed the following order : "Upon hearing for the parties, the Court directed issue of Rule Nisi and directed these petitions to be heard along with Writ petition No. 135 of 1970. Respondents granted time till end of September 1972 to file counter affidavit to the writ petitions. Notice of the writ petitions shall issue to the Advocates General of all States. All the Writ Petitions to be heard on the 23rd October,1972. Written arguments dispensed with. " A thirteen Judges bench of this court in Kesavananda Bharati vs State of Kerala, [1973] 4 SCC 225 heard some writ petitions along with these two writ petitions and gave its conclusions thus: "The view by the majority in these writ petitions is as 509 follows: 1. Golak Nath 's case is over ruled; 2. article 368 does not enable Parliament alter the basic structure of framework of the Constitution; 3. The Constitution (Twenty fourth Amendment) Act, 1971 is valid; 4. Section 2(a) and (b) of the Constitution (Twenty fifth Amendment) Act, 1971 is valid; 5. The first part of Section 3 of the Constitution (Twenty fifth Amendment) Act, 1971 is valid. The second part, namely, "and no law containing a declaration that it is for giving effect to such policy shall be called in question in any Court on the ground that it does not give effect to such policy ' is invalid. The Constitution (Twenty ninth Amendment) Act, 1971 is valid. The Constitution Bench will determine the validity of the Constitution (Twenty sixth Amendment) Act, 1971 in accordance with law. The cases are remitted to the Constitution Bench for disposal in accordance with law. There will be no order as to costs incurred up to this stage. ' In pursuance of the said Order, Writ Petition No. 351 of 1972 is now before this Constitution Bench for determination of the constitutional validity of the Twenty sixth Amendment Act in accordance with the law laid down in Kesavananda Bharati. Since the constitutional validity of the same Twenty sixth Amendment Act is involved in Writ Petition No. 798 of 1992, it is also before this Bench along with Writ Petition No. 351 of 1972. As regards the inbuilt separate mechanism for amending the Constitution, Dr. Amedkar said, "One can, therefore, safely say that the Indian 510 federation will not suffer from the faults of rigidity or legalism. Its distinpishing feature is that it is a flexible consideration." Dr. Wheare in his modern Constitution has commended that it "strikes a good balance by protecting the rights of the State while leaving remainder of the Constitution easy to amend. ' Our constitution is amendable one. In fact, tin now Seventy two amendments have been brought about, the first of which being in 1951 i.e. within 15 months of the working of the Constitution. The first amendment was challenged in Shankari Prasad vs Union of Indua ; but the Supreme Court unanimously upheld the validity of the Amendment. A brief note as regards the circumstances which necessitated the Twenty fourth Amendment being brought may be recapitulated. The Constitution Bench of this Court in Sajjan Singh vs State of Rajasthan; , wherein the constitutional validity of the Constitution (Seventeenth Amendment) Act, 1964 was challenged, reiterated the views expressed in Shankari Prasad by a mojority of three Judges although two Judges gave their separate dissenting judgments. one of the dissenting Judges, Hidayatullah, J stated that the "Constitution gives so many assurances in Part III that it would be difficult to think that they were the playthings of a special majority. ' The other dissenting Judge, Mudholker, J. took the view that the word 'law ' in Article 13 included a constitutional amendment under Article 368 and that, therefore, the Fundamental Rights part was unalterable. In his view, Article 13 qualified the amending power found in Article 368 making the Fundamental Rights part of India 's Constitution unamendable. The concerns of the two dissenting learned Judges came before an eleven Judges Bench of this Court in Golak Nath vs State of Punjab; , involving another round of attack on three Amendment Acts, namely, the first, fourth and seventeenth Amendment Acts. This Court by a ratio of six to five held that the Parliament had no power "to amend any of the provisions of Part III. . so as to take away or abridge the fundamental rights enshrined in that Part. The decision in Golak Nath was rendered in 1967, but one of the amendments it would invalidate dated am 1951, another from 1955 and another from 1964. Therefore, this Court order to avoid any catastrophe that would have ensued in the social and economic relations, had the Court ruled that the amendments were void 511 ab initio, relied on American cases and adopted the doctrine of prospective overuling which was construed to enable the Court to reverse its prior decisions, to continue the validity of the three amendments in issue, and to declare that after judgment the Indian Parliament would have no power to amend or abridge any of the Fundamental Rights. Therefore, intending to override the ruling in Golak Nath 's case, the (Twenty fourth Amendment) Act, 1971 was brought, as reflected from the Objects and Reasons of the Twenty fourth Amendment, which read thus Objects and Reasons In the Golak Nath case; , , the Supreme Court reversed, by a narrow majority, its own earlier decisions upholding the power of Parliament to amend all parts of the Constitution including Part III relating to fundamental rights. The result of the judgment was that Parliament was considered to have no power to take away or curtain any of the fundamental rights even if became necessary to do so for the attainment of the objectives set out in the Preamble to the Constitution. The Act, therefore, amends the Constitution to provide expressly the Parliament power to amend any part of the Constitution. " Thereafter, the Twenty fifth Amendment Act was brought in 1971 which amended the Constitution to surmount the difficulties placed in the way of giving effect to the Directive Principles of State Policy by the interpretation of Article 31 of the Constitution in Rustom Cawasjee Cooper vs Union of India ; The said Act substituted clause (2) and inserted clause (2B) to Article 31 and added Article 31C. These amendment acts, namely, twenty fourth and twenty fifth besides twentyninth Amendment Act and the continuing validity of the dictum laid down in Golak Nath 's case, were the subjects for decision in Kesavananda Bharati. Though Writ Petition No. 351 of 1972 challenging the twentyfourth, twenty fifth and twenty sixth Amendment Act was also listed along with other writ petitions in Kesavananda Bharati the constitutional validity of the twenty sixth amendment was left over for determination by a Constitution Bench. We shall now proceed to examine the constitutional validity of the ampuped Amendment Act. 512 The question whether Article 291 is a provision related to the Covenants and Agreements entered into between the Rulers of the States and Indian Domination and is that in reality and substance a provision on the subject matter of covenants and agreements were considered by Hidayatullah, CJ in his separate concurring judgment in Madhav Rao and they" are answered in the following terms "The Article when carefully analysed leads to these conclusions: The main and only purpose of the provision is to charge Privy Purses on the Consolidated Fund of India and make obligatory their payment free of taxes on in come. It narrows the guarantee of the Dominion Government from freedom from all taxes to freedom only from taxes on income. Earlier I had occasion to show that the Princes had guaranteed to themselves, their Privy Purses free of all taxes. The Dominion Government had guaranteed or assured the same freedom. The Constitution limits the freedom to taxes on income and creates a charge on the Consolidated Fund. There were other guarantees as in the Merger Agreements of Bilaspur and Bhopal (quoted earlier) which are ignored by the Article. The guarantee of the Dominion Government is thus continued in a modified form. The reference to Covenants and Agreements is casual and subsidiary. The immediate and dominant purpose of the provision is to ensure payment of Privy Purses, to charge them on the consolidated Fund and to make them free of taxes on income." (emphasis supplied) Shah, J speaking for the majority with reference to the covenants and eements made the following observation : "After the Constitution the obligation to pay the privy purse rested upon the Union of India, not because it was inherited from the Dominion of India; but because of the constitutional mandate under article 291. The source of the obligation was in article 291, and not in the covenants and the agreements." (emphasis supplied) 513 So far as Article 362 is concerned, it has been held by majority of the Judges that the said Article is plainly a provision relating to covenants within the meaning of Article 363 and a claim to enforce the rights, privileges and dignities under the covenants therefore, are barred by the first limb of Article 363 and a claim to enforce the recognition of rights and privileges under Article 362 are barred under the second limb of Article 363 and that the jurisdiction of the Courts however, is not excluded where the relief claimed is founded on a statutory provision enacted to give effect to personal rights under Article 362. The important question now that arises for our consideration is whether the twenty sixth amendment Act, which completely omitted Articles 291, 362 and inserted a new Article 363A and also substituted a new clause (22) in place of its original clause or Article 366, has destroyed, damaged and altered the basic structure of the Constitution. The Constitution remains at the apex because it is the supreme Law. The question is what is the power of the Parliament to amend the Constitution either by abridging or omitting any existing Article or adding any new Article or clause or substituting any new clause for its original clause. To answer this most important question, some supplementary questions have to be examined, those being as to what is the parameter or the mode by which an amendment can be brought and what are limitations either express or implied on the amending power which inters in the Constitution itself including its Preamble. Before, we proceed further, let us understand what is meant by an 'amendment '. The word has latin origin 'emendere ' to amend means to correct. Walter F. Murply in 'Constitutions, Constitutionalism and Democracy ' while explaining what 'amendment ' means has stated "Thus an amendment corrects errors of commission or omission, modifies the system without fundamentally changing its nature that is an amendment operates within the theoretical parameters of the existing Constitution. " In our Constitution, the expression 'amendment of the Constitution ' is not defined. However, Part XX which contains one Article viz. Article 368 provide a special procedure for amending certain provisions of the Constitution under the heading "Amending of the Constitution". 514 It is not necessary for us to deal with the different provisions of the Constitution and the procedures for amendment as laid down by the Constitution because the authority of the Parliament in bringing about the impugned amendment Act is not under challenge. After the judgment of Madhav Rao Scindia the twenty sixth amendment was brought to overcome the effect of the judgment, The objects and reasons of the twenty sixth amendment makes the position clear, which read thus : "The concept of rulership, with privy purses and special privileges unrelated to any current functions and social purposes, was incompatible with an egalitarian social order. Government, therefore, decided to terminate the privy purses and privileges of the Ruler of former Indian States. It was necessary for this purpose, apart from amending the relevant provisions of the Constitution to insert a new article therein so as to terminate expressly the recognition already granted to such Rulers and to abolish privy purses and extinguish all rights, liabilities and obligations in respect of privy purses. Hence this Act. " We shall now deal with the dictum laid down in Kesavananda Bharati as regards the power vested in the Parliament and the limitations either express or implied or inherent therefor to amend the Constitution. In Kesavananda Bharati, the Supreme Court upheld the validity of the twenty fourth Amendment. Of the 13 Judges, Shelat, Hedge, Grover, Jagmohan Reddy and Mukherjea observed that the Twenty fourth Amendment did not more than clarify in express language that which was implicit in the unamended Article 368 and it did not and could not add to the power originally conferred thereunder. Ray, J said that the Twenty fourth Amendment made explicit what the judgment in Shankari Prasad and the majority judgment in Sajjan Singh and the dissenting judgment in Golak Nath said, namely, that Parliament has the constituent power to amend the Constitution. Sikri, CJ and Ray, Palekar, Khanna, Beg, Dwivedi, JJ who also held the twenty fourth Amendment valid, said that under Article 368 Parliament can now amend every article of the Constitution. According to Khanna, J. the non obstante clause (1) has been in 515 serted in the article to emphasise the fact that the power exercised under that Article is constituent power, not subject to the other provisions of the Constitution and embraces within itself addition, variation and repeal of any provision of the Constitution. Mathew, J. put it succinctly stating that the twenty fourth Amendment Act did not add anything to the content of Article 368 as it stood before the amendment, that it is declaratory in character except as regards the compulsory nature of the assent of the President to a Bill for amendment. Dwivedi, J. has explicitly stated that except as regard the assent of the President to the Bill, everything else in the twenty fourth Amendment was already there in the unamended Article 368 and that this amendment is really declaratory in nature and removes doubts cast on the amending power by the majority judgment in Golak Nath. Sikri, CJ. elaborating the above theme has observed that the Twenty fourth Amendment, insofar as it transfers power to amend the Constitution from the residuary entry (Entry 97, List I) or from Article 248 of the Constitution to Article 368 is valid; in other words, Article 368 of the Constitution as now amended by the twenty fourth Amendment Act deals not only with the procedure for amendment but also confers express power on Parliament to amend the Constitution. He has also further held that under Article 368, Parliament can now amend every article of the Constitu tion as long as the result is within the limits laid down. Thus the Constitutional questions that arose in Kesavananda Bharati 's case were scrupulously and conscientiously examined in detail on varied and varying topics from different angles such as 'the basic elements of the Constitutional structure ', 'the basic structure of the Constitution ', 'the essential and non essential features of the Constitution ', 'the plenary power of amendment ' etc. etc., and finally by majority it is laid down that the power of amendment is plenary and it includes within itself the power to add, alter or repeal the various Articles of the Constitution including those relating to fundamental rights, but the power to amend does not include the power to alter the basic structure or framework of the Constitution so as to change its identity. In fact, there are inherent or implied limitations on the power of amendment under Article 368. We shall now examine the various arguments made on behalf of the petitioners and the interveners grouping all those submissions under separate and distinct topics. 516 One of the points urged in common before us is that the framers of the Constitution in their wisdom had thought it fit to incorporate the words ,guaranteed ' or 'assured ' in Article 291 which by their very plain meaning convey the intention of the framers of the Constitution guaranteeing or promising that the erstwhile Rulers of the States would be entitled to receive their privy purses from the revenues of the Union and that it would be free from all taxes. As we have indicated above there were multiple sequence of events in the historical evolution which necessitated the Indian Rulers to enter into various agreements and ultimately to agree for integration of their States with the Dominion of India by dissolving the separate indentity of their States and surrendering their sovereignty but reserving only their rights for privy purses and privileges. Though India was geographically regarded as one entity it was divided in as many as about 554 segments big and small. On 15th August 1947 the British paramountacy lapsed and India attained its independence. The fact that a heavy price was paid to attain independence and freedom which are sanctified by the blood of many martyrs is unquestionable. During the independence struggle there was popular urge in the Indian States for attaining the freedom which unleashed strong movements for merger and integration of the States with the Dominion of India. The agreements entered into by the Rulers of the States with the Government of India were simple documents relating to the accession and the integration and the "assurances and guarantees" given under those documents were only for the fixation of the privy purses and the recognition of the privileges. The guarantees and the assurances given under the Constitution were independent of those documents. After the advent of the Constitution, the Rulers enjoyed their right to privy purses, private properties and privileges only by the force of the Constitution and in other respects they were only ordinary citizens of India like any other citizen, of course, this is an accident of history and with the concurrence of the Indian people in their Constituent Assembly. Therefore, there cannot be any justification in saying that the guarantees and assurances given to the Rulers were sacrosanct and that Articles 291 and 362 reflected only the terms of the agreements and covenants. In fact as soon as the Constitution came into force, the Memoranda of 517 Agreements executed and ratified by the States and Union of States were embodied in formal agreements under the relevant Articles of the Constitution and no obligation flowed from those agreements and covenants but only from the Constitutional provisions. To say differently, after the introduction of Articles 291 and 362 in the Constitution, the agreements and covenants have no existence at all. The reference to Covenants and Agreements was casual and subsidiary and the source of obligation flowed only from the Constitution. Therefore, the contention urged on the use of the words 'guaranteed ' or 'assured ' is without any force and absolutely untenable. The next vital issue is whether the impugned Amendment Act has damaged any basic structure or essential feature of the Constitution. According to Mr. Soli J. Sorabjee, by the repeal of Articles 291 and 362 which were integral part of the constitutional scheme, the identity of the Constitution has been changed and its character has been fundamentally altered. The total repeal of these Articles coupled with an express repudiation of the guarantees embodied therein has resulted in nullification of "a just quid pro quo" which were the essence of these guarantees. He has urged that the underlying purpose of doing justice to the Rulers has been subverted and breach of faith has been sanctioned. He based the above arguments on three decisions of this Court, namely, (1) Waman Rao and Others vs Union of India and Others, ; at 588 80; (2) Maharao Sahib Shri Bhim Singhji vs Union of India and Others, at 212; and (3) Madhav Rao vs Union, at 74 and 83. There has been a common recurrent argument that the impugned Amendment Act is beyond the constituent power of the Parliament since it has damaged the basic structure and essential features of the Constitution. Mr. D.D. Thakur in addition to the above has stated that one of the tests to determine whether the provision of the Constitution was intended to be permanent or could be deleted or amended is to see whether the Constitution makers had intended that to be permanent. In support of his submission, he placed much reliance on the observation of Mudholkar, J in Sajjan Singh vs State of Rajasthan, ; at page 966 reading thus : 518 "Above all, it formulated a solemn and dignified preamble which appears to be an epitome of the basic features of the Constitution. Can it not be said that these are indicate of the intention of the Constituent Assembly to give a permanency to the basic feature of the Constitution. " This observation has been reiterated in a separate judgment of Hedge and Mukherjea, JJ in Kesavananda Bharati stating that it was Mudholkar, J who did foresee the importance of the question whether there is any implied limitation on the amending power under Article 368 of the Constitution. On the basis of the above, he has urged that if the intention of the founding fathers regarding the permanence or imper manence of a provision of the Constitution is conclusive for determining whether a provision is basic or not, there is no difficulty in gathering the intention of the founding fathers from Article 362 itself He continues to state that the fact that 'assurances and guarantees ' had been insulated against every future constituent inroad or legislative incursion of Parliamentary control is further substantiated from the provisions of Article 291 of the Constitution. Mr. A.K. Ganguly has adopted the above arguments and supple mented the same stating that the privileges of the Rulers of the State were made an integral part of the constitutional scheme and that thereby a class of citizens are for historical reasons accorded special privileges and that the recognition of the status, rights and privileges conferred on the Rulers were not on temporary basis and as such they are not liable to be varied or repudiated. Mr. Nariman also emphasises the same. Before adverting to the above contentions, we state in brief about the basic principle to be kept in view while amending a Constitution. In our democratic system, the Constitution is the supreme law of the land and all organs of the Government executive, legislative and judiciary derive their powers and authority from the Constitution. A distinctive feature of our Constitution is its amendability. The Courts are entrusted with important constitutional responsibilities of upholding the supremacy of the Constitution. An amendment 519 of a Constitution become ultra vires if the same contravenes or transgresses the limitations put on the amending power because there is no touchstone outside the Constitution by which the validity of the exercise of the said powers conferred by it can be tested. In our Constitution, there are specific provisions for amending the Constitution. The amendments had to be made only under and by the authority of the Constitution strictly following the modes prescribed, of course, subject to the limitations either inherent or implied. The said power cannot be limited by any vague doctrine of repugnancy. There are many outstanding interpretative decisions delineating the limitations so that the Constitutional fabric may not be impaired or damaged. The amendment which is a change or alteration is only for the purpose of making the Constitution more perfect, effective and meaningful. But at the same time, one should keep guard over the process of amending any provision of the Constitution so that it does not result in abrogation or destruction of its basic structure or loss of its original identity and character and render the Constitution unworkable. The Court is not concerned with the wisdom behind or proprietary of the Constitutional amendment because these are the matters for those to consider who are vested with the authority to make the Constitutional amendment . All that the Court is concerned with are (1) whether the procedure prescribed by Article 368 is strictly complied with '? and (2) whether the amendment has destroyed or damaged the basic structure or the essential features of the Constitution. If an amendment transgresses its limits and impairs or alters the basic structure or essential features of the Constitution then the Court has power to undo that amendment. The doctrine of basic structure was originated in Sajjan Singh and has been thereafter developed by this Court in a line of cases, namely (1) Kesavananda Bharati (supra), (2) Indira Gandhi Nehru, (3) Minerva Mills, (4) Waman Rao and (5) Sanjeev Coke Manufacturing Company vs Bharat Coaking Coal Ltd.; , Mr. Soli J. Sorabjee 'in support of his contention that Articles 291 and 362 and clause (22) of Article 366 were integral part of the constitutional scheme which otherwise would mean the 'essential part of the constitutional scheme ', referred to Webster New International Dictionary, 3rd Edition and Collins Concise English Dictionary, and has pointed out the lexical meaning say, that 'integral ' means 'essential ' and, therefore, 520 according to him, the total abolition of the provisions of the Constitution which are its integral parts otherwise essential parts has damaged the essential and basic features of the Constitution. To draw strength for his submission, he relied upon certain observations made by Shah, J in his judgment in Madhav Rao observing, "By the provisions enacted in Articles 366(22), 291 and 362 of the Constitution the previliges of Rulers are made an integral part of the constitutional scheme" and 'An order merely "de recognising" a Ruler without providing for continuation of the institution of Rulership which is an integral part of the constitutional scheme is, therefore, plainly illegal." (emphasis supplied) The learned Attorney General has vehemently opposed the above submission stating that the expression "integral part of the scheme of the Constitution" used in Madhav Rao are not the same as the basic structure and that expression has to be read in the context of a challenge to the Ordinance which sought to render nuptory certain rights guaranteed in the Constitution, then existing. It is further stated that the attack on the Twenty sixth Amendment based on the principles laid down. in Madhav Rao is totally misconceived because only in order to overcome the effect of that judgment, the Twenty sixth Amendment was passed by the Parliament in exercise of its constituent powers. According to the Attorney General, the observations in the said case were nullified by the Amendment and that judgment is no longer good law after the Amendment. To test the Amendment on the basis of that judgment is impermissible and all the arguments based upon this case are, therefore, misconceived. In this content, it becomes necessary to recall certain events which ultimately gave rise to Madhav Rao 's case. After the commencement of the Constitution, in pursuance of Article 366(22), the Rulers were recognised and they had been enjoying the Privy purses, privileges, dignities etc. on the basis of the relevant constitutional provisions. Pursuant to the resolution passed by the AD India Congress committee in 1967, the Union of India introduced the Twenty fourth Amendment Bill in 1970 to implement the decision of the AR India Congress Committee favouring removal of privy purses, privileges etc. But the Bill though passed in the Lok Sabha failed to secure the requisite majority in the Rajya Sabha and thereby it lapsed. It was only thereafter, the President of India issued an Order in exercise of the powers vested in him under Article 366(22) derecognising the Rulers and stopping the privy 521 purses, privileges etc. enjoyed by the rulers. This Order passed by the President was the subject matter of challenge in Madhav Rao. The Supreme Court struck down the Order of the President as invalid as in the view of the Court derecognition of the Rulers would not take away right to privy purses when Articles 291 and 362 were in the Constitution. It was only in that context, the observations which have been relied upon by Mr. So;i J. Sorabjee, were made. The Twenty sixth Amendment itself was passed by Parliament to overcome the effect of this judgment. Now by this Amendment, Articles 291 and 362 are omitted, Article 363A is inserted and clause 22 of Article 366 is amended. Therefore, one cannot be allowed to say that the above said omitted Articles and unamended clause were the essential part of the constitutional scheme. So they have to be read only in the context of a challenge made to the Presidential Order which sought to render nugatory certain rights guaranteed in the Constitution which were then existing. In any event, the constitutional bar of Article 362 denudes the jurisdiction of any Court in disputes arising from covenants and treaties executed by the Rulers. The statement of Objects and Reasons of Twenty sixth Amendment clearly points out that the retention of the above Articles and continuation of the privileges and privy purses would be incompatible with the egalitarian society assured in the Constitution and, therefore, in order to remove the concept of rulership and terminate the recognition granted to Rulers and abolish the privy purses, this Amendment was brought on being felt necessary. We are of the opinion that the observations of Shah, J in Madhav Rao that 'the privileges of Rulers are made an integral part of the constitutional scheme" and that "institution of Rulership is an integral part of the constitutional scheme ', must be read in their proper context. That was a case, where by a Presidential order, the Rulers were deprived of their privy purses and other privileges while keeping Articles 291 and 362 intact in the Constitution. Indeed, the said Presidential order was issued after the Government failed in its attempt to effect an amendment on those lines. It is in that connection that the learned Judge made the above observations. It is clear that the learned Judge used the words 'integral part ' in their ordinary connotation not in any lexicographical sense. Ordinarily speaking, 'integral ' means "of a whole or necessary to the completeness of a whole ' and as "forming a whole ' (Concise Oxford Dictionary). Our Constitution is not a disjointed document. It incorporates a particular socio economic and political philosophy. It is an integral whole. Every provision 522 of it is an integral part of it even the provisions contained in Part XXI "Temporary, Transitional and Special Provisions". One may ask which provision which concept or which 'institution ' in the Constitution is not an integral part of the Constitution? He will not find an answer. To say that a particular provision or a particular 'institution ' or concept is an integral part of the Constitution is not to say that it is an essential feature of the Constitution. Both are totally distinct and qualitatively different concepts. The said argument is really born of an attempt to read a judgment as a statute. One may tend to miss the true meaning of a decision by doing so. We may say, the aforesaid observations of Shah, J constituted the sheet anchor of the petitioners ' argument relating to basic structure. In the above premise, it is not permissible to test the Twenty sixth Amendment with reference to the observations made in Madhav Rao. We shall now dispose of the contention raised in the grounds of the Writ Petition No. 351 of 1972 that the impugned Amendment is violative of Articles 14, 19(1)(f) and (g), 21, 31 (1) and (2) of the Constitution. Evidently this contention has been raised in the year in 1972, that is long before the Constitution (Fortv fourth Amendment) Act of 1978 was passed w.e.f. 26th June 1979. Writ Petition No. 798 of 1992 has been filed on October 15, 1992 in which the ground with reference to Articles 19(1)(f) and 31 are left out. It is to be stated that Articles 19 (1) (f) and 31 are completely omitted by the Forty fourth Amendment. By the deletion of these Articles by Forty fourth Amendment, the status of 'right to property ' from that of a fundamental right is reduced to a legal right under Article 300A which reads "No person shall be deprived of his property save by authority of law. However, in order to allay the fears of the minorities in respect of that right guaranteed in the then Article 31, Article 30 (1A) has been inserted by the Forty fourth Amendment. The right to property even as a fundamental right was not a part of the basic structure and even assuming that the right to privy purse is a property, it is a right capable of being extinguished by authority of law vide article 300A. Needless to emphasise, according to the rules laid down in Keshavananda Bharati that even the fundamental right can be amended or altered provided the basic structure of the Constitution in any way is not damaged. Permanent retention of the privy purse and the privileges of rights 523 would be incompatible with the sovereign and republican form of Government. Such a retention will also be incompatible with the egalitarian form of our Constitution. That is the opinion of the Parliament which acted to repeal the aforesaid provisions in exercise of its constituent power. The repudiation of the right to privy purse privileges, dignities etc. by the deletion of Articles 291 and 362, insertion of Article 363A and amendment of clause 22 of Article 366 by which the recognition of the Rulers and payment of privy purse are withdrawn cannot be said to have offended Article 14 or 19 (g) and we do not Find any logic in such a submission. No principle of justice, either economic, political or social is violated by the Twenty sixth Amendment. Political justice relates to the principle of rights of the people, i.e. right to universal suffrage, right to democratic form of Government and right to participation in political affairs. Economic justice is enshrined in Article 39 of the Constitution. Social justice is enshrined in Article 38. Both are in the Directive Principles of the Constitution. None of these rights are abridged or modified. by this Amendment. We feel that this contention need not detain us any more and, therefore, we shall pass on to the next point in debate. A serious argument has been advanced that the privy purse was a just quid pro quo to the Rulers of the Indian States for surrendering their sovereignty and rights over their territories and that move for integration began on a positive promising note but it soon de generated into a game of manoeuvre presumably as a deceptive plan or action. This argument based on the ground of breaking of solemn pledges and breach of promise cannot stand much scrutiny. To say that without voluntary accession, India i.e. Bharat would be fundamentally different from that Bharat that came into being prior to the accession is untenable muchness inconceivable. We have already dealt with the necessity of the Rulers to accede for the integration of States with the Dominion of India in the earlier part of this judgment and, therefore, it is quite unnecessary to reiterate in this context, except saying that the integration could have been achieved even otherwise. One should not lose sight of the fact that neither because of their antipathy towards the Rulers nor due to any xenophobia, did the Indian Government entertain the idea of the integration but because of the will of the people. It was the people of the States who were basically instrumental in the integration of India. It would be apposite to refer to the observation of Bose, J in Varinder singh & Ors vs State of U.P., ; at 435. The said observation reads as follows 124 "Every vestige of sovereignty was abandoned by the dominion of India and by the States and surrendered to the peoples of the land who through their representatives in the Constituent Assembly hammered out for themselves a new Constitution in which all were citizens in a new order having but one tie, and owning but one allegiance : devotion, loyality, fidelity to the Sovereign Democratic Republic that is India. " It is also worthwhile to take note of the historical process of states integration which is well set out in Chapter 18 under the heading Indian states in 'The Framing of Constitution A Study by B. Shiva Rao. A persual of that chapter indicates that the attitude of the princes towards joining a united India was one of resistance, reluctance and high bargain, and it was the peoples of the States who forced them to accede to the new United India. To say in other words, the States were free but not stable because of the stress and strain they underwent both from inside and outside. Though the process of integration and democratisation called as unionization" in the words of Sardar Patel, was undertaken step by step at various stages, multiple forces, such as political, economic and geographic, more so the democratic movement within the States accelerated the process of integration. Therefore, it is a misnomer to say that the Rulers made their. sacrifices for which they were given just compensation and assured permanent payment of privy purses. What was given to the Rulers was a political pension as rightly pointed out in Usman A1is case, on consideration of their past position. Hence there is no question of breaking of solemn pledges or breach of promises etc. given to the Rulers. Therefore, the repudiation of the same cannot be said to have amounted to any breach of those guarantees and promises resulting in alteration of the basic structure of the Constitution. Mr. D.D. Thakur has submitted that the Twenty sixth Amendment is an ugly epitome of immorality perpetrated by the Indian Parliament, that too in the exercise of its constituent powers and that the justice, fairness and reasonableness is the soul, spirit and the conscience of the Constitution of India as framed originally and that the impugned Amendment Act constitutes an unholy assault on that spirit which is impermissible and beyond the amending powers of the Parliament under Article 368 of the constitution. According to him, the equality clause as interpreted by this 525 Court in (1) Maneka Gandhi vs Union of India, [1978] 2 SCR 621, (2) R.D. Shetty vs Intemational Airport Authority of India, ; , (3) Kasturi Lal Lakshmi Reddy vs State of Uttar Pradesh; , , (4) E.P. Royappa vs State of Tamil Nadu, ; , (5) Indira Gandhi 's case and (6) Minerva Mill 's case (supra) is the most important indispensable feature of the Constitution and destruction thereof will amout to changing the basic structure of the Constitution. Mr. Harish Salve in addition to the above, urged that the basic structure test is to be applied on the touchstone of the Constitution as it stood while being delivered at the hands of the Constitution makers and that it would be contrary to the very principle of the basic structure to apply any personal notion or ideological predilections while determining the ' personality test ' of the original Constitution. Further he states that the identity of the Constitution has been lost on account of the impugned Amendment. As regards the submission that the amendment is an ugly epitome of immorality perpetrated by the Indian Parliament, it has been seriously opposed by the learned Attorney General that this argument based on immorality has only to be stated to be rejected and that it is an elementary principle of jurisprudence that a law cannot be interpreted on the basis of moral principles. In this connection, reference may be made to the following passage in Dias 's Jurisprudence, Fifth Edition, at Page 355 and 356, It reads thus : "As a positivist, Prof. Hart excludes morality from the concept of law, for he says that positivists are concerned to promote 'clarity and honesty in the formulation of the theoretical and moral issues raised by the existence of particular laws which were morally iniquitous but were enacted in proper form, clear in meaning, and satisfied all the acknowledged criteria of validity of a system. Their view was that, in thinking about such laws, both the theorist and the unfortunate official or private citizen who was called on to apply or obey them, could only be confused by an invitation to refuse the title of 'law ' or 'valid ' to them. They thought that, to confront these problems, simpler, more candid resources were available, which would bring into focus far 526 better, every relevant intellectual and moral consideration: we should say, 'This is law , but it is too inquitous to be applied or obeyed. ' "it was pointed out at the beginning of this chapter that the principal. call for a positivist concept of law is to identify laws precisely for the practical purposes of the present and that for the limited purpose, it is desirable to separate the 'is ' from the 'ought '. To accomplish this no more would appear to be needed than simply those uses of the word 'law ' by courts; which is akin to Salmond 's definition alluded to above. Professor Hart 's concept, however, is of 'legal system ', which is a continuing phenomenon. . . . . . . . . When Professor Hart thinks in a continuum, as he does with society, he has to bring in morality , but in order to defend positivism he shifts ground and takes refuge in the present time frame, for only in this way can he justify the exclusion of morality for the purpose of identifying laws here and now. There would thus appear to be a greater separation between his concept of law and his positivism than ever he alleges between law and morality. For the limited purpose of identifying 'law his concept seeks to accomplish more than is necessary; for the purpose of portraying law in a continuum it does not go far enough. Bentham in his Theory of Legislation, Chapter XII at page 60 said thus: "Morality in general is the art of directing the actions of men in such a way as to produce the greatest possible sum of good. Legislation ought to have precisely the same object. But although these two arts, or rather sciences, have the same end, they differ greatly in extent. All actions, whether public or private, fall under the jurisdiction of morals. It is a guide which leads the individual, as it were, by the hand through all the details 527 of his life, all his relations with his fellows. Legislation cannot do this; and, if it could, it ought not to exercise a continual interference and dictation over the conduct of men. Morality commands each individual to do all that is advantageous to the community, his own personal advantage included. But there are many acts useful to the community which legislation ought not to command. There are also many,injurious actions which it ought not to forbid, although morality does so. In a word legislation has the same centre with morals, but it has not the same circumference. " Reference may also be made to Krishna Kumar vs Union of India, ; The above passages remind us of the distinction between law and morality and the line of demarcation which separates morals from legislation. The sum and substance of it is that a moral obligation cannot be converted into a legal obligation. In the light of the above principle, the Attorney General is right in saying that Courts are seldom concerned with the morality which is the concern of the law makers. According to him there is no unreasonableness, unfairness and dishonesty in bringing this amendment or in any way injuring the basic feature of the Constitution and this amendment has not caused any damage to the concept of reasonableness and non arbitrariness pervading the entire Constitution scheme. On a deep consideration of the entire scheme and content of the Constitution, we do not see any force in the above submissions. the present case, there is no question of change of identity on account of the Twenty sixth Amendment. The removal of Articles 291 and 362 has not made any change in the personality of the Constitution either in its scheme nor in its basic features, nor in its basic form nor in its character. The question of identity wilt arise only when there is a change in the form, character and content of the Constitution. In fact, in the present case, the identity of the Constitution even on the tests proposed by the counsel of 528 the writ petitioners and interverners, remains the same and unchanged. Mr. R.F. Nariman has contended that by removing the 'real and substantial ' distinction between the erstwhile Princes forming a class and the rest of the citizenary of India the Constitutional amendment has at one stroke violated the basic structure of the Constitution as reflected both in Articles 14 and 51 (c) and treated unequals as equals thereby giving a go by to a solemn treaty obligation which was sanctified as independent Constitutional guarantee. He has drawn strength in support of his above argument from the decisions in Md. Usman & Ors. vs State of Andhra Pradesh & Ors, [1971] Supp. SCR 549 and Ramesh Prasad Singh vs State of Bihar & Others, ; After carefully going through the above decisions which relate to service matters, we are afraid that such an argument. as one made by Mr. Nariman could be substantiated on the principles laid down in these two decisions that Article 14 will be violated if unequals are treated as equals. In our considered opinion this argument is misconceived and has no relevance to the facts of the present case. One of the objectives of the Preamble of our Constitution is 'fraternity assuring the dignity of the individual and the unity and integrity of the nation. ' It will be relevant to cite the explanation given by Dr. Ambedkar for the word 'fraternity ' explaining that 'fraternity means a sense of common brotherhood of all Indians. ' In a country like ours with so many disruptive forces of regionalism, communalism and linguism, it is necessary to emphasise and reemphasise that the unity and integrity of India can be preserved only by a spirit of brotherhood. India has one common citizenship and every citizen should feel that he is Indian first irrespective of other basis. In this view, any measure at bringing about equality should be welcome. There is no legitimacy in the argument in favour of continuance of princely privileges. Since we have held that abolition of privy purses is not violative of Article 14, it is unnecessary for us to deal with the cases, cited by Mr. Nariman, which according to him go to say that any law violating Article 14 is equally violative of the basic structure of the Constitution, inasmuch as Article 14 is held to be a basic postulate of the Constitution. One of the arguments advanced by Mr. D. D. Thakur is that the Constitution should be read in the context of the pluralistic society of India where there are several distinct and differing interests brought together 529 and harmonised by the Constitution makers by assuring each Section, class and society, preservsation of certain political, cultural and social features specific to that class or section. By way of example, reference to Article 370 which confers a special status for Jammu and Kashmir, is made. He continues to state that likewise in the North Eastern States, the tribals were given autonomus powers for their District Councils coequal to what is conferred on the states and that for minorities, special provisions are made under Article 30. Besides Articles 25 and 26 are meant to safeguard the minorities and religious denominations. The persons to determine the injury will be those for whom these provisions were made and whose interests are prejudiced. According to him, in such a circumstance the "assurances and guarantees given under Articles 291 and 3462 which are the magna karta assuring the rulers of their pre existing rights cannot in any way be destroyed. We do not think that the aforesaid special provisions have any relevance herein. As repeatedly pointed out supra, the only question is whether there is any change in the basic structure of the Constitution by deletion of Articles 291, 362 and by insertion of Article 363A and amendment of clause (22) of Article 366. We have already answered this question ill the negative observing that the basic structure or the essential features of the Constitution is/are in no way changed or altered by the impugned Amendment Act. We cannot make surmises on 'ifs ' and 'buts ' and arrive to any conclusion that Articles 291 and 362 should have been kept intact as special provisions made for minorities in the Constitution. It is but a step in the historical evolution to achieve fraternity and unity of the nation transcending all the regional, linguistic, religious and other diversities which are the bed rock on which the constitutional fabric has been raised. The distinction between the erstwhile Rulers and the citizenary of India has to be put an end to so as to have a common brotherhood. On a careful consideration of the various aspects of both the writ petitions, we hold that the Constitution (Twenty sixth Amendment) Act of 1971 is valid in its entirety. For all the aforementioned reasons, both the Writ Petitions as well as the connected 1. As are dismissed. No costs. It has been brought to our notice that a number of writ petitions are pending before the Karnataka High Court touching the matter in question 530 raising various other questions. Since we have now upheld the validity of the Twenty sixth Amendment Act, the High Court may proceed to dispose of all those pending writ petitions with reference to other issues, if any arising, in accordance with law and in the light of this judgment upholding the Constitutional validity of the impugned Amendment Act. MOHAN. J. I had the advantage of perusing the judgment of my learned Brother Ratnavel Pandian, J. Though I am in respectful agreement with him having regard to the importance of the constitutional issues involved in this case, I would like to add the following: It was on the 15th day of August, 1947 when India attained freedom. Pandit Jawahar Lal Nehru said in memorable words: "When the world sleeps, India will awake to life and freedom. A moment comes, which comes but rarely in history, when we step out from the old to the new, when an age ends and when the soul of nation long suppressed, finds utterance. " With the advent of freedom, India had to faee problems of highest magnitude. Of the many problmes three were most pressing and urgent. The earlier they were resolved, the better it was for the country. The first of them was, to restore the communal harmony which had been impaired to great extend. (ii) Princely States had to be integrated into the Indian Union. (iii) There was necessity to frame a republican constitution which would vibrate the new ideas. With the dawn of independence it was felt that in an independent India the existence of princely states was an anachronism in the body politic. Neither the past history nor economic and administrative realities could justify the existence of a multitude of autonomous islands. They had to be integrated with the rest of Indian Union to forge the unity of the country. After the withdrawal of British Power the paramountcy lapsed to the princes. They could decide either to join India or Pakistan or even to stay independent. Sardar Vallabhbhai Patel the architect of Indian unity and the master builder of destiny of nationalist India brought the princely states into the Indian Union by means of judicious threats of force, appeals to patriotism, warnings of anarchy and diplomatic persuasion. An invitation was extended to all the rulers of the State to work through the Councils of 531 Constituent Assembly for the common good of all. This invitation was accepted on 19.5.1949. On this the White Paper says at page 109: "As the States came closer to the Centre it became clear that the idea of separate Constitutions being framed for different constituent units of the Indian Union was a legacy from the Rulers ' polity which, could have no place in democratic set up. The matter was, therefore, further discussed by the Ministry of States with the Premiers of Unions and States on May 19, 1949 and it was decided, with their concurrence, that the Constitution of the States should also be framed by the Constituent Assembly of India and should form part of the Constitution of India. " It may not be correct to state that those who sat down together in the Constituent Assembly and those who sent their representatives there, sat as conqueror and conquered, as those who ceded and as those who absorbed, as sovereigns or their plenipotentiaries contracting alliances and entering into treaties as high contracting parties to an act of State. They were not there as sovereign and subject, or as citizen and alien. On the contrary, they were the sovereign peoples of India, free democratic equals, forgoing the pattern of a new life for the common weal moving with a spirit of all times. When India became a Dominion every vestige of sovereignty was abandoned, equally so, by the States. They all surrendered to the peoples of the land who through their representatives in the Constituent Assembly hammered out for themselves a new Constitution in which all were citizens, in a new order having but one tie, and owing but one allegiances devotion, loyalty, fidelity, to the Sovereign Democratic Republic that is India as was eloquently stated by Justice Bose in Virendra Singh and Others vs State of Uttar Pradesh ; at P. 454: " At one Stroke all other territorial allegiances were wiped out and the past was obliterated except where expressly preserved; at one moment of time the new order was born with its new allegiance springing from the same source for all, grounded on the same basis; the sovereign will of the 532 peoples of India with no class, no caste, no race, no creed, no distinction,. ." The will of the Union Government was clearly expresssed in its White Paper: At page 115 it is said: "With the inauguration of the new Constitution the merged States have lost all vestiges of existence as separate entities" and at page 130: "The new Constitution of India gives expression to the changed conception of Indian unity brought about if by. . the unionisation of states. . " and at page31: "Unlike the scheme of 1935 the new Constitution is not an aliance between democracies and dynasties but a real union of the Indian people built on the concept of the sovereignty of the people All the citizens of India, whether residing in States or Provinces, will enjoy the same fundamental rights and the same legal remedies to enforce them. In the matter of their constitutional relationship with the Centre and in their internal set up, the States will be on a par with the Provinces. The new Constitution therefore finally eradicates all artificial barriers which separated the States from Provinces and achieves for the first time the objective of a strong, United and democratic India built on the true foundations of a cooperative enterprise on the part of the peoples of the Provinces and the States alike. " The princes were first stripped of their three virtal fucntions, defence, foreign affairs and communications. They were then urged to transfer internal government to popular movements inside the respective states. In recompense they were allowed to retain their titles, dignities and immunities and were given generous privy purses. It was in this context 533 Articles 291 and 362 were brought into the Constitution. Likewise, Article 366 (22) defined the "Ruler". On 2nd September, 1970, a Bill (Twenty fourth Amendment Bill, 1970) was introduced omitting these articles. Though it was passed in the Lok Sabha it could not obtain the requisite majority of two thirds of the members present in voting in the Rajya Sabha. Therefore, the motion for introduction of the Bill was declared lost. Immediately thereafter the President of India in exercise of his power under clause (22) of Article 366 of the Constitution signed an instrument withdrawing recognision of all the Rulers. Thereupon, the order was challenged in this Court under Article 32 of the Constitution of India. In H.H. Maharajadhiraja Madhav Roa Jiwaji Rao Scindia Bahadur & Ors. vs Union of India; , it was held that the order of the President derecognising the Rulers was ultra vires and illegal. (In the later part of this judgment the ratio of this ruling will be discussed in detail). In order to render this ruling ineffective the Twenty Sixth Amendment to the Constitution was introduced. The following tabulated statement will bring out the legal postition as is obtainable after Twenty Sixth Amendment. Articles before 26th Amendment Where under any covenant or agreement entered into by the Ruler of any Indian State before the commencement of this Constitution, the payment of any sums, free of tax, has been guaranteed or assured by the Government of the Dominion of India to any Ruler of such State as privy purse (a) such sums shall be charged on, and paid out of, the Consolidated '. Fund of India, and (b) the sums so paid to any Ruler shall be exempt from all taxes on income. Articles after 26th Amendment 291. (Privy purse sums of Rulers) Rep. by the Constitution (Twenty sixth Amendment) Act, 1971, Section 2. 534 Article 362. In exercise (if the power of Indian States). Rep. by the Parliament or of the Legislature of a State to make laws or in the exercise of the executive power of the Union or of a State, due regard shall be had to the guarantee or assurance given under any such covenant or agreeable as is referred in article 291 with respect to the personal rights, privileges and dignities of the Ruler of an Indian State. 362.(Rights and privileges of Rulers of Indian States.)Rep. by the Constitution (Teenty Amendment) Act, 1971 Section 2. 363 A. Recognition granted to Rulers of Indian States to cease and privy purses to be abolished Now it that and any anything in this Constitution or in any law for the time being in force (a) the Prince, Chief or other person, who at any time before the commencement or the Constitution (Twenty sixth Amendment) Act, 1971, was recognised by the President as the Ruler of an Indian State or any person who, at any time before such commencement, was recognised by the President as the successor of such Ruler shall, on and from such commencement, cease to be recognised as such Ruler or the successor of such Ruler; (b) on and from the commencement of the Constitution (Twenty sixth Amendment ) Act, 1971, privy purse is abolished and all rights, liabilities and obligations in respect of privy purse are extinguished and accordingly the Ruler or, as the case may Article 362(22): "Ruler" In relation to an Indian State means the Prince, Chief or other person by whom any such covenant or agreement as is referred to in clause (1) of Article 291 was entered into and who for the time being is recognised by the President as the Ruler of the State, and includes any person who for the time being is recognised by the President as the successor of such Ruler. 535 be, the successor of such Ruler, referred to in clause ( a) or any other person shall not be paid and sum as privy purse. "Rulers" means the Prince, Chief or other person who, at any time before the commencement of the Constitution (Twenty sixth Amendment) Act, 1971, was recognised by the President as the Ruler of an Indian State or any person who, at any time before such commencement, was recognised by the President as the successor of such Rulers. The validity of this amendment was challenged which came up for consideration in His Holiness Keasavananda Bharati Sripadagalavaru vs State of Kerala, The Court after holding that the basic structure of the Constitution cannot be amended directed by its judgment dated 24th April, 1973 that the Constitution Bench will determine the validity of the Constitution (Twenty sixth Amendment) Act, 1971 in accordance with law and the cases are remitted to the Constitution Bench for disposal in accordance with law. This is how the matter comes before us. Mr. Soli J. Sorabjee, learned counsel for the petitioners relying on Madhav Rao 's case (supra) makes the following submissions. Articles 291 and 362 embodied and guaranteed pledges to the Rulers. They are based on elementary principles of Justice. The underlying purpose of these articles was to facilitate stabilization of the new order and to ensure organic unity of India. This Court in no unmistakable terms said that Articles 366(22), 291 and 362 are integral part of the constitutional scheme. The institution of rulership is an integral part of the constitutional scheme. This enunciation of law is by a Bench of 9 Judges and is binding. 536 Integral" means essential. Such a provision, therefore, could constitute the basic feature of the Constitution. Conseqently, the total abolition of these previsions of Constitution would necessarily damage its essential or basic feature. Therefore, if the amendment damages the basic or an essential feature of the Constitution it would be beyond the constituent power of the Parliament as laid down in Waman Rao and others vs Union of India and others ; @ 588 89 as also in Mahtarao Sahib Shri Bhim Singhji vs Union of India & Ors., @ 212. The correct approach is to examine in each case the place of the particular feature in the scheme of our Constitution, its object and purpose as was held in Indira Nehru Gandhi vs Raj Narain 's case, [1975] Suppl. SC(, page 1 @ 252. It was by the incorporation of Articles 291 and 362 that the Constitution makers were able to get the willing consent and cooperation of the Rulers to be brought within the fold of the Constitution as laid down by this Court in Madhav 's Rao case (supra). Without the accession of the Rulers the Constitution would have been basically different. Equally, the territory of India, its population, the composition of the State Legislature and Assemblies and the Lok Sabha and Rajya Sabha would be radically different. The learned counsel seeks to emphasise the nature and the character of guarantees contained in Articles 291 and 362. When they came to he incorporated it was nothing more than the statutory recognition to the solemn promises held out by Government of India. In order to secure a truly democratic form of Government in the united independent India these solemn promises were meant to be honoured. They were intended to incorporate a just quid pro quo for surrender by them of their authority and powers and dissolution of their States. By repeal of these articles it has resulted in nullification of a just quid pro quo. The underlying purpose of doing justice to the Rulers has been subverted. Breach of faith has been sanctioned. Consequently, the character and personality of the Constitution have been changed from one of honouring solemn promises and doing justice into one of breaking solemn pledges. 537 One of the tests of identifying the basic feature is, whether the identity of the Constitution has been changed. As laid down in Kesavananda Bharati 's case (supra), the question to be addressed is, can it maintain its identity if something quite different is substituted? The personality of the Constitution must remain unchanged. It is not necessary that the constitutional amendment which is violative of a basic or essential feature should have an instant or immediate effect on the basic structure. It is enough if it damages the essential feature as laid down in Indira Nehru Gandhi 's case (supra). The test to be applied, therefore, is whether the amendment contravenes or runs counter to an imperative role or postulate which is an integral part of the Constitution. As a matter of fact in Bhim Singhji 's case (supra), it has been laid down that if a statutory provision Section 27 of the Urban Land (Ceiling & Regulation) Act, 1976 confers unfettered discretion and thereby violates Article 14 of the Constitution, it can also damage the basic structure of the constitution. For all these reasons, it is submitted that the impugned amendment is bad in law. Mr. D.D. Thakur, learned counsel for the petitioner supporting Mr, Soli J. Sorabjee, urges that one of the most important features of the Indian Constitution is morality. By the impugned amendment, morality is destroyed because Article 361 before the amendment contained a solemn promise to the future generations. By the impugned amendment the solemn promise is breached. The privy purses are charged upon the consolidated fund of India and therefore, goes out of control of Parliament. These privy purses are payable during the life time of Maharajas or Princes. If, therefore, it is temporary in nature and is to last only for a stated period, would the Parliament have intended to amend the law? If that was the intention of incorporation of these provisions in the Constitution, the amendment would run counter to such an intention and therefore, cannot be supported. Article 14 guarantees equality which forbids unfair treatment. Where by reason of this amendment, the petitioner is subject to unfair treatment, there is an impairment of basic structure since equality is a basic structure. In connection with this submission, the learned counsel cites case dealing with equality as Ajay Hasia vs Khalid Mujib Sehravardi; , and Minerva Mills Ltd. vs Union of India & Ors., ; and 538 In any event, privy purse is property. If the petitioner is deprived of the same, it is unfair and is violative of basic structure. Even from that point of view, the amendment cannot be supported. Mr. A.K. Ganguli, learned counsel on behalf of the intervenor in I.A. No. 3/92 in W.P. 351/72 would submit that under Article 291 of the Constitution, payment of any sum has been guaranteed or assured. This guarantee is of great importance. The guarantee would mean continuity of provision. Article 32(4) also contains the word 'guarantee '. The same meaning must be ascribed to guarantee under Article 291. It is not without purpose that the privy purse is charged upon the consolidated fund of India as seen from Article 112(g). In this connection, reference may be made to O.N. Mohindroo vs District Judge, Delhi, [1971] III SCC 9. As to what would constitute the basic structure, could be gathered from Kesavananda Bharati Sripadagalvaru 's case (supra), par ticulary, the passages occurring at parts 582 83, 631, 632, 1159 & 1473. Mr. R.F. Nariman, learned counsel appearing for petitioner No. 1 would draw our attention to Section 87(b) of the Code of Civil Procedure. That provision lists the immunities of foreign rulers. That was challenged as violative of Article 14 of the Constitution. That challenge was repelled in Mohanlal Jain vs His Highness Maharaja Shri Swai Man Singhji, [1962] 1 SCR 702. On the same line of reasoning, it should be held, where by the impugned amendment, the princes who form a class is sought to be destroyed there is violation of Article 14. Wherever unequals are treated as equals, this Court has disapproved of such treatment as seen from Ramesh Prasad Singh vs State of Bihar & Ors., ; at page 793 and Nagpur Improvement Trust & Another vs Vithal Rao & Ors., [1973] III SCR 39. If, therefore, there is violation of Article 14 that would be offensive of basic structure as seen from Minerva Mills Ltd. case (supra). It is added that the impugned amendment is violative of Article 51(c) of the Constitution. The learned Attorney General in countering these submissions advanced on behalf of the petitioners, would argue that the agreements with the princes were pre constitutional agreements. Admittedly, they were entered into for the purposes of facilitating integration of the nation and 539 creating the constitutional documents for all citizens including those of the native states. The history of the development relating to the merger agreements and the framing of the Constitution clearly shows that it is really the union of the people of the native states with the people of the erstwhile British India. The instruments of accession arc the basic documents and not the individual agreements with the rulers. Therefore, to contend that the agreements were entered into by the rulers as a measure of sacrifice by them is untenable. Secondly, the nature of the covenant is not that of a contract since a contract is enforceable at law. On the contrary, these covenants are made non justiciable as seen from Articles 363. The convenants are political in nature and no legal ingredients as the basis can be read into these agreements as laid down in Usman Ali Khan vs Sagar Mal, 119651 3 SCR 201. The guarantees in Articles 291 and 362 are guarantees for the payment of privy purses. Such a guarantee can always be revoked in public interest; more so, for fulfilling a policy objective or the directive principles of the Constitution. This is precisely what the preamble to the impugned amendment says. That being so, the theory of sanctity of contract or the unamendability of Article 291 or 362 does not have any foundation. The theory of political justice is also not tenable since political justice means the principle of political equality such as adult suffrage, democratic form of Government, etc. The treaties/covenants/etc. entered into between the Union of India and the Rulers were as a result of political action. No justiciable rights were intended to be created. Article 363 as it stood in its original form spells out this proposition. The rights and privileges in the Articles prior to the 26th Amendment were as acts of State of the Government and not in recognition of the scarifies of the rulers. By no means, can it be contended that these guarantees given to the rulers were ever intended to be con tinued indefinitely. Turning to basic feature, the proper test for determining basic feature is to find out what are not basic features. Rights arising out of covenants which were non justiciable cannot be regarded as basic features. Where, therefore, Article 363 makes these features non justiciable, the 540 question of basic feature does not arise. It is equally incorrect to contend that the amendment is violative of Article 14. There is no such violation. It is not that by the proposed amendment, Article 14 is amended. Whether a provision is violative of basic feature of the Constitution has to be decided on the language of the provisions. The observations in Madhav Rao 's case have to be read in the context of the Constitution as it then stood. The Court did not intend limiting the amending power. The 26th Amendment does not in any manner amend the Constitution impairing a basic structure. The right to property even as a fundamental right was not a part of the basic structure. Even conceding that pre 26th Amendment right to privy purses to be property, it was a right capable of being extinguished by authority of law. A permanent retention of the privy purses and the privileges of the rulers would be incompatible with a sovereign and republican form of Government. Such a retention would also be incompatible with the egalitarian form of the Government envisaged by Article 14. The words 'integral part of the scheme of the Constitution ' in the majority judgment in Mudhavrao 's case (supra) are not the same as basic structure. They have to be read in the context of a challenge to an ordinance which sought to render nugatory certain rights guaranteed in the Constitution then existing. In any event, the constitutional bar of Article 363 denudes the jurisdiction of any court in relation to disputes arising from covenants and treaties executed by rulers. Hence, it is idle to contend that the impugned amendment in any manner interferes with the basic structure of the Constitution. Usman Ali 's case (supra) is still good law. What is overruled by Madhav Rao 's case (supra) is the political character. Articles 291, 362, 366(22) could never have intended to form a basic structure. They have no overall applicability permeating throughout the entire Constitution so to say that their absence will change the nature of the Constitution. The 541 intrinsic evidence is the availability of a machinery for enforcement. In the case of the rights guaranteed under Part III of the Constitution, a machinery is available for the enforcement. On the contrary, such a machinery for enforcement of privy purses is not available under Article 363. Therefore, it is submitted that it is a inferior right than the fundamental right. Hence, it cannot be called a basic structure at all. As to what is the meaning of basic structure, reference must be made to Kesavanand 's case (supra). The learned Attorney General also draws our attention to an Article of K. Subba Rao, Ex Chief Justice of India in [1973] 2 SCC page 1 journal section entitled as "The two judgments: Golaknath and Kesavananda Bharati". As to the morality part of the impugned amendment, it is urged that there is nothing immoral about it. Where the changed situation and anxiety to establish an egalitarian society require the change of law it is valid. In reply to these submissions, Mr. Soli J. Sorabjee would contend that the submissions of learned Attorney General that the guarantees under Articles 291 and 362 are unenforceable in view of Article 363 are not tenable in view of the judgment of this Court in Madhav Rao 's case (supra). It is also not correct to argue that it is an act of State and therefore, no relief can be granted in respect of matters covered by it. Such a submission has not been accepted by this court as seen from Madhav Rao 's case (supra) at pages 53; 90 93. Strong reliance was placed on Usman Ali Khan 's case (supra) that the privy purses are in the nature of compensation. The observations relied upon by the learned Attorney General have been regarded by the majority in Madhav Rao case as not only obiter but also incorrect as seen from Usman Ali khan 's case at pages 98, 145 & 193. The submission that the privy purses are mere privileges is contrary to the decision of Madhav Rao 's case (supra) since these have been held to be fundamental rights guaranteed under Articles 19(1)(b) and 31. Having regard to the above submissions, the sole question would be whether the 26th Amendment is beyond the constituent power of the Parliament ? To put it in another words, does the amendment damage any 542 basic or essential feature of the Constitution ? The law prior to and after 26th Amendment has already been set out in the tabulated statement. As could be seen by the impugned amendment, Articles 291 and 362 have come to be omitted. A new Article 363A has come to be inserted. The original cause 22 of Article 366 has come to be substituted by a new clause. In pith and substance, this amendment seeks to terminate the privy purses and privileges of the Princes of the former Indian States. It also seeks to terminate expressly the recognition already granted to them as guaranteed and assured under Articles 291 and 362 of the Constitution. Therefore, the impugned amendment has withdrawn the guarantees and assurances and abolished the privy purses, personal rights, privileges and dignities. The validity of the amendment is attacked under: (i) Articles 291, 362 and 366(22) of the Constitution form an important basic structure and demolition of these articles would amount to violation of basic structure. (ii) The covenants entered into are in the nature of contracts backed by constitutional guarantees. They are further affirmed by making the privy purses an expenditure charged upon the consolidated fund of India. Such being the position, a breach of the covenant cannot be made since they were intended to incorporate a just quid pro quo which has come to be nullified by the impugned amendment. (iii) It is arbitrary and unreasonable and is, therefore, violative of Article 14 and consequently basic structure. (iv) It is not moral. In order to appreciate the above points, it is necessary to set out the background in which the Articles came to be incorporated in the Constitution. It was on July 5th, 1947, Sardar Vallabhbhai Patel exhorted as under: "This country, with its institutions, is the proud heritage of the people who inhabit it. It is an accident that some live in the States and some in British India, but all alike partake of its culture and character. We are all knit together by bonds of blood and feeling no less than of 543 self interest. None can segregate us into segments; no impassable barriers can be set up between us. I suggest that it is, therefore, better for us to make law sitting together as friends than to make treaties as aliens. I invite my friends, the Rulers of States and their people to the councils of the Constituent Assembly in this spirit of friendliness and cooperation in a joint endeavor, inspired by common allegiance to our motherland for the common good of us all. We are at a momentous stage in the history of India. By common endeavour, we can raise the country to a new greatness while lack of unity will expose us to fresh calamities. I hope the Indian States will bear in mind that the alternative to co operation in the general interest is anarchy and chaos which will overwhelm great and small in a common ruin if we are unable to get together in the minimum of common tasks. Let not the future generation curse us for having had the opportunity but failed to turn it to our mutual advantage. Instead, let it be our proud privilege to leave a legacy of mutually beneficial relationship which would raise this sacred land to its proper place amongst the nations of the world and turn it into an abode of peace and prosperity. " While clarifying the position, he spoke on 13th November, 1947: 'The State does not belong to any individual. Paramountcy has been eliminated, certainly not by the efforts of the Princes, but by that of the people. It is therefore, the people who have got the right to assert themselves and the Nawab cannot barter away the popular privilege of shaping its destiny. " In this connection, it is worthwhile to quote the following from "The framing of India 's Constitution" by B. Shiva Rao at page 520 as under 'The Indian National Congress was in the past wellknown for its sympathy with the Indian States People 's Conference, a body which sought to establish popular 544 governments in the States. Jawaharlal Nehru himself was closely associated with this movement. The start of the proceedings in the Constituent Assembly was not particularly propitious for cooperation between the Assembly and the Rulers. Moving the Objectives Resolution on December 13, 1946, in the Constituent Assembly (in which neither the Indian States nor the Muslim League were at that time represented) Nehru explained that the resolution did not cern itself with what form of Government the States had or "whether the Rajas and Nawabs will continue or not". He also emphasized that if a part of the Indian Republic desired to have its own administration it was welcome to have it. But at the same time he made it clear that the final decision in the matter whether or not there should be a monarchical form of Government in the States was one for decision by the people of the States. " The political background in which the Articles came up to be incorporated in the Constitution has already been set out. At this stage, what requires emphasis is that the people brought about the integration of the States with the erstwhile British India which came to be freed from the foreign yoke. This is very clear from the speech of Sardar Vallabhbhai Patel on 13th November, 1947 quoted above. It was in recognition of the privileges and powers which existed hitherto the privy purses came to be conferred. The articles assured the payment of privy purses. Nature of What exactly is a nature of privy purse in the realm of Privy Purse law could be gathered from Usman Ali Khan 's case (supra) at page 206 as under : "The third contention of Mr. Pathak raises the question whether an amount payable to a Ruler of a former Indian State as privy purse is a political pension within the meaning of Section 60(1)(g), Code of Civil Procedure. The word "pension" in Section 60(1)(g), Code of Civil Procedure implies periodical payments of money by the Government to the pensioner. See Nawab Bahadur of 545 Murshidabad vs Kamani Industrial Bank Ltd., (4) 1931 LR 58 IA. 215, 219 & 220 and in Bishamber Nath vs Nawab Imdad Ali Khan, 1890 L.R. 17 IA. 181,186, Lord Watson observed "A pension which the Government of India has given a guarantee that it will pay, by a treaty obligation contracted with another sovereign power, appears to their Lordships to be, in the strictest sense, a political pension. The obligation to pay, as well as the actual payment of the pension must, in such circumstances, be ascribed to reasons of State policy. " Now, the history of the integration and the ultimate absorption of the Indian States and of the guarantee for payment of periodical sums as privy purse to the Rulers of the former Indian States are well known. Formerly Indian States were semi sovereign vassal States under the suzerainty of the British Crown. With the declaration of Independence, the paramountcy of the British Crown lapsed as from August 15, 1947 and the Rulers of Indian States became politically independent sovereigns. The Indian States parted with their sovereignty in successive stages, firstly on accession to the Dominion of India, secondly on integration of the States into sizeable administrative units and on closer accession to the Dominion of Indian and finally on adoption of the Constitution of India and extinction of the separate existence of the States and Unions of States. During the second phase "of this political absorption of the States, the Rulers of the Madhya Bharat States including the Ruler of Jaora State entered into a Covenant on April 22, 1948 for the formation of the United State of Gwalior, Indore and Malwa (Madhya Bharat). By Article 11 of the Covenant, the Covenanting States agreed to unite and integrate their territories into one State. Article VI provided that the Ruler of each Covenanting State shall not later than July 1, 1948 make over the administration of the State to the Rajpramuckh and thereupon all rights, authority and juris 546 diction belonging to the Ruler and appertaining or incidental to the Government of the State would vest in the United State of Madhya Bharat. Article XI (1) provided that "the Ruler of each covenanting State shall be entitled to receive annually from the revenues of the United State for his privy purse the amount of specified against that Covenanting State in Schedule I. ' In Schedule 1, a sum of Rs. 1,75,000 was specified against the State of Jaora. Article XI(2) provided that the amount of the privy purse was intended to cover all the expenses of the Ruler and his family including expenses of the residence, marriage and other ceremonies and neither be increased nor reduced for any reason whatsoever. Article XI(3) provided that the Rajpramukh would cause the amount to be paid to the Ruler in four equal instalments at the beginning of each quarter in advance. Article XI(4) provided that the amount would be free of all taxes whether imposed by the Government of the United State or by the Government of India. Article XIII of the Covenant secured to the ruler of each Covenanting State al l personal privileges, dignities and titles then enjoyed by them. Article XIV guaranteed the succession, according to law and custom, to the gaddi of each Covenanting State and to the personal rights, privileges, dignities and titles of the Ruler. The covenant was signed by all the Rulers of the covenanting state. At the foot of the Covenant, it was stated that "The Government of India thereby concur in the above Covenant and guarantee all its provisions." In confirmation of this consent and guarantee, the Covenant was signed by a Secretary to the Government of India. On the coming into force of the Constitution of India, the territories of Madhya Bharat became an integral part of India. Article 291 of the Constitution provided : "Where under any covenant or agreement entered into by the Ruler of any Indian State before the commencement of this Constitution, the payment of any sums, free 547 of tax, has been guaranteed or assured by the Government of the Dominion of India to any Ruler of such State as privy purse : (a)Such sums shall be charged on, and paid out of, the Consolidated Fund of India; and (b)the sums so paid to any Ruler shall be exempt from all taxes on income." In view of the guarantee by the Government of the Dominion of India to the Ruler of Jaora State in the Covenant for the formation of the United State of Madhya Bharat, the payment of the sums specified in the covenant as privy purse to the Ruler became charged on the Con solidated Fund of India, and became payable to him free from all taxes on income. Article 362 provides that in the exercise of the legislative and executive powers, due regard shall be had to the guarantee given in any such covenant as is referred to in Article 291 with respect to the personal rights, privileges and dignities of the Ruler of an Indian State. Article 363(1) provides that notwithstanding anything contained in the Constitution, the Courts would have no jurisdiction in any dispute arising out of any provision in any covenant entered into by any Ruler of an Indian State to which the Government of the Dominion of India was a party, or in any dispute in respect of any right accruing under or any liability or obligation arising out of any of the provisions of the Constitution relating to any such covenant. Article 366(22) provides that the expression "Ruler ' in relation to an Indian State means a person by whom the covenant referred to in Article 299(1) was entered into and who for the time being is recopied by the President as the Ruler of the State, ,and includes any person who for the time being is rccognised by the President as the successor of such Ruler. Now, the covenant entered into by the Rulers of Madhya Bharat by which they gave up their sovereipity over their respective territories and vested it in the new United 548 State of Madhya Bharat. The Covenant was an act of State, and any violation of its terms cannot form the subject of any action in any municipal courts. The guarantee given by the Government of India was in the nature of a treaty obligation contracted with the sovereign Rulers of Indian States and cannot be enforced by action in municipal courts. Is sanction is political and not legal On the coming into force of the Constitution of India, the guarantee for the payment of periodical sums as privy purse is continued by Article 291 of the Constitution, but its essential political character is preserved by Article 363 of the Constitution, and the obligation under this guarantee cannot be en forced in any municipal court. Moreover, if the President refuses to recognise the person by whom the covenant was entered into as the Ruler of the State, he would not be entitled to the amount payable as privy purse under Ar ticle 291. Now, the periodical payment of money by the Government to a Ruler of a former Indian State as privy purse on political considerations and under political sanctions and not under a right legally enforceable in any municipal court is strictly a political pension within the meaning of Section 6(1)(g) of the Code of Civil Procedure. The use of the expression "purse" instead of the expression 'pension" is due to historical reasons. The privy purse satisfies all the essential characteristics of a political pension, and as such, is protected from execution under Section 60(1)(g), Code of Civil Procedure. Moreover, an amount of the privy purse receivable from the Government cannot be said to a debt or other property over which or the proceeds of which he has disposing power within the main part of Section 60(1), Code of Civil Procedure. It follows that the third contention of Mr. Pathak must be accepted, and it must be held that the amounts of the privy purse are not liable to attachment or sale in execution of the respondent 's decree." (emphasis supplied) This case is an authority, for the proposition that it is a political pension. The question is whether this dictum has been overruled by Madhav Rao 's case (supra). 549 At page 145 of the said decision, it is held "On the coming into force of the Constitution of India, the guarantee for payment of periodical sums as privy purse is continued by Article 291 of the Constitution, but its essential political character is preserved by Article 363 of the Constitution and the obligation under this guarantee cannot be enforced in any municipal court. With all respect, it appears to me, that all the above was not strictly necessary for the decision of the case and it would have been enough to say that privy purse was a pension a word which according to the Oxford Dictionary means, "a periodical payment made specially by a Government, company, employer etc. ' which was political in nature because it was based on a political settlement. However it was not the expression of opinion of only one learned Judge but the unanimous view of three learned Judges of this Court. In Kanwar Shri Vir Rajendra Singh vs Union of India ; a Bench of another five learned Judges of this Court have pronounced on the non enfor ceability of the provision for payment of privy purse under Article 291 by resort to legal proceedings. In my view, on the reasoning already given by me it must be held that the payment of privy purse although placed on a pedestal which defies annihilation or fragmentation as long as the above mentioned constitutional provisions enure is still subject to the constitutional bar of non justiciability and cannot be upheld or secured by adjudication in a court of law including this Court. Further, at page 193 of the said decision, it is held "The learned Judges in that case had no occasion to consider nor did they go into the scope of Article 291 or Article 363. Every observation of this Court is no doubt, entitled to weight but an obiter, cannot take the place of the ratio. " A careful reading of the above shows what is overruled is the political character and not that the privy purse is not a political pension. Even 550 otherwise, if really, this dictum has been overruled, the very basis of the judgment of Usman Ali Khan 's case (supra) would disappear. Then the reasoning in relation to the attachability under Section 60 of Code of Civil Procedure would be incorrect. Be that so, what is argued by Mr. Soli J. Sorabjee is the guarantee under Article 291 is enforceable notwithstanding Article 363. Therefore, this discussion need not detain us. As to the scope of Article 363, it could be culled from Madhav Rao 's case (supra) at page 99 : "A dispute as to the right to receive the privy purse, is therefore not a dispute arising out of the covenant within the first limb of Article 363, nor is it a dispute with regard to a right accruing or obligation arising out of a provision of the Constitution relating to a covenant. But since the right to the privy purse arises under Article 291 the dispute in respect of which does not fall within either clause, the jurisdiction of the Court is not excluded in respect of disputes relating to personal rights and privileges which are granted by statutes. " One thing which must be borne in mind while appreciating the scope of Madhav Rao 's case (supra) is what occurs at page 75 as under: Scope of Scindia "whether the Parliament may by a constitutional amend,Ruling amendment abolish the fights and privileges accorded to the Rulers is not, and cannot be, debated in this petition, for no such constitutional amendment has been made. The petitioner challenges the authority of the President by an order purporting to be made under Article 366(22) to withdraw recognition of Rulers so as to deprive them of the rights and privileges to which they are entitled by virtue of their status as Rulers." (emphasis supplied) This Court had no occasion to go into the scope of constitutional amendment like the present one. Therefore, all reasons addressed for striking down the presidential order must be confined only to the authority of the President to issue the order under Article 366(22) of the Constitution. 551 BASIC STRU This takes us to the power of amendment conferred CTURE under Article 368. That power of amendment is unlimited except that the basic structure of the Constitution cannot be amended. What then is the basic structure ? In Kesavananda 's case (supra), Sikri CJ. stated at page 165 as under: whether "The learned Attorney General said that every Articles 291, provision of the Constitution is essential; otherwise, it would 362, 366(22) not has been put in the Constitution. This is true. But this does not place every provision of the Constitution in the same position. The true position is that every provision of the Constitution can be amended provided in the result the basic foundation and structure of the constitution remains the same. The basic structure may be said to consist of the following features : (i) Supremacy of the Constitution; (ii) Republican and Democratic form of Government; (iii) Secular character of the Constitution; (iv) Separation of powers between the Legislature, the executive and the judiciary; (v) Federal character of the Constitution. The above structure is built on the basic foundation, i.e. the dignity and freedom of the individual. This is of supreme importance. This cannot by any form of amend ment be destroyed. The above foundation and the above basic features are easily discernible not only from the preamble but the whole scheme of the Constitution, which I have already discussed." 552 Shelat & Grover, JJ. in the said judgment stated at page 280 as under: "The basic structure of the Constitution is not a vague concept and the apprehensions expressed on behalf of the respondents that neither the citizen nor the Parliament would be able to understand it are unfounded. If the historical background, the Preamble, the relevant provisions thereof including Article 368 are kept in mind there can be no difficulty in discerning that the following can be regarded as the basic elements of the constitutional structure. (These cannot be catalogued but can only be illustrated). The supremacy of the Constitution. Republican and Democratic form of Government and sovereignty of the country. Secular and federal character of the Constitution. Demarcation of power between the legislature, the executive and the judiciary. The dignity of the individual secured by the various freedoms and basic rights in Part III and the mandate to build a welfare State constrained in Part IV. 6. The unity and the integrity of the nation. " Hedge & Mukherjea, JJ. in the said judgment stated at page 314 as under : "We find it difficult to accept the contention that our Constitution makers after making immense sacrifices for achieving certain ideals made provision in the Constitution itself for the destruction of these ideals. There is no doubt as men of experience and sound political knowledge, they must have known that social economic and political chan ges are bound to come with the passage of time and the Constitution must be capable of being so adjusted as to 553 be able to respond to those new demands. Our Constitution is not a mere political document. It is essentially, a social document. It is based on a social philosophy and every social philosophy like every religion has two main features, namely, basic and circumstantial. The former remains constant but the latter is subject to change. The core of a religion always remains constant but the practices associated with it may change. Likewise, a Constitution like ours contains certain features which so essential that they cannot be changed or destroyed. In any event it cannot be destroyed from within. In other words, one cannot legally use the Constitution to destroy itself. Under Article 368 the amended Constitution must remain 'the Constitution ' which means the original Constitution. When we speak of the 'abrogation ' or 'repeal ' of the Constitution, we do not refer to any form but to substance. If one or more of the basic features of the Constitution are taken away to that extent the Constitution is abrogated or repealed. If all the basic features of the Constitution are repealed and some other provisions inconsistent with those features are incorporated, it cannot still remain the Constitution referred to in Article 368. The personality of the Constitution must remain unchanged." (emphasis supplied). Further, at page 322, it was stated as under 'On a careful consideration of the various aspects of the case we are convinced that the Parliament has no power to abrogate or emasculate the basic elements or fundamental features of the Constitution such as the sovereignity of India, the democratic character of the individual freedoms secured to the citizens. Nor has the Parliament the power to revoke the mandate to build a welfare State and egalitarian society. " Jaganmohan Reddy, J. in the said judgment stated at page 517 as,under: 554 "I will now consider the question which has been strenuously contended, namely, that there are no essential features, that every feature in the Constitution is essential, and if this were not so, the amending power under the Constitution will apply only to non essential features which it would be difficult to envisage was the only purpose of the framers in inscribing Article 368 and that, therefore, there is no warrant for such a concept to be read into the Constitution. The argument at first flush is attractive, but if we were to ask ourselves the question whether the Constitution has any structure or is structureless or is a "jelly fish" to use an epithet of the learned Advocate for the petitioner, the answer would resolve our doubt. If the Constitution is considered as a mechanism, or call it an organism or a piece of constitutional engineering, whichever it is, it must have a structure, or a composition or a base or foundation. What it is can only be ascertained, if we examine the provisions which the Hon 'ble Chief Justice has done in great detail after which he has instanced the features which constitute the basic structure. I do not intend to cover the same field once again. There is nothing vague or unascertainable in the preamble and if what is stated therein is subject to this criticism it would be equally true of what is stated in Article 39(b) & (c) as these are also objectives fundamental in the governance of the country which the State is enjoined to achieve for the amelioration and happiness of its people. The elements of the basic structure are indicated in the preamble and translated in the various provisions of the Constitution. The edifice of our Constitution is built upon and stands on several props, remove any of them, the Constitution collapses. These are: (1) Sovereign Democratic Republic; (2) Justice, social, economical and political; (3) Liberty of thought, expression, belief, faith and worship; (4) Equality of status and of opportunity. Each one of these is important and collectively they assure a way of fife to the people of India 555 which the Constitution guarantees. To withdraw any of the above elements the structure will not survive and it will not be the same Constitution, or this Constitution nor can it maintain its identity, if something quite different is substituted in its place, which the sovereign will of the people alone can do. " Palekar, J. in the said judgment would say at page 619 "Since the 'essential features and basic principles ' referred to Mr. Palkhivala are those culled from the provisions of the Constitution it is clear that he wants to divide the constitution into parts one of the provisions containing the essential features and the other containing non essential features. According to him the latter can be amended in any way the Parliament likes, but so far as the former provisions are concerned, though they may be amended, they cannot be amended so as to damage or destroy the core of the essential features. Two difficulties arise, who is to decide what are essential provisions and non essential provisions? According to Mr. Palkhivala it is the court which should do it. If that is correct, what stable standard will guide the court in deciding which provision is essential and which is no essential? Every provision, in one sense, is an essential provision, because if a law is made by the Parliament or the State Legislatures contravening even the most insignificant provision of the constitution, that law will be void. From that point of view the courts acting under the constitution will have to look upon its provisions with an equal eye. Secondly, if an essential provision is amended and a new provision is inserted which, in the opinion of the constituent body, should be presumed to be more essential than the one repealed, what is the yardstick the court is expected to employ? It will only mean that whatever necessity the constituent body may feel in introducing a change in the constitution, whatever change of policy that body may like to introduce in the constitution, the same is liable to be struck down if the court is not satisfied either about the 556 necessity or the policy. Clearly this is not a function of the courts. The difficulty assumes greater proportion when an amendment is challenged on the ground that the core of an essential feature is either damaged or destroyed. What is the standard? Who will decide where the core lies and when it is reached? One can understand the argument that particular provisions in the constitution embodying some essential features are not amendable at all. But the difficulty arises when it is conceded that the provision is liable to be amended, but no so as to touch its core '. Apart from the difficulty in determining where the 'core of an essential features ' lies, it does not appear to be sufficiently realised what fantastic results may follow in working the Constitution. Suppose an amendment of a provision is made this year. The mere fact that an amendment is made will not give any body the right to come to this Court to have the amendment nullified on the ground that it affects the core of an essential feature. It is only when a law is made under the amended provision and that law affects some individual 's right, that he may come to this Court. At that time he will first show that the amendment is bad because it affects the core of an essential feature and if he succeeds there, he will automatically succeed and the law made by the Legislature in the confidence that it is protected by the amended constitution will be rendered void. " Khanna, J. in the said judgment at page 720 stated as under "So far as the question is concerned as to whether the right to property can be said to pertain to basic structure or framework of the Constitution, the answer, in my opinion, should plainly be in the negative. , Mathew, J. in the said judgment at page 827 828 observed "But the question will still remain, even when the core or the essence of a Fundamental Right is found, whether the Amending Body has the power to amend it in such a way as to destroy or damage the core. I have already said 557 that considerations of justice, of the common good, or "the general welfare in a democratic society" might require abridging or taking away of the Fundamental Rights. I have tried, like Jacob of the Old Testament to wrestle all the night with the angel, namely, the theory of implied limitation upon the power of amendment. I have yet to learn from what source this limitation arises. Is it because the people who were supposed to have framed the Constitution intended it and embodied the intention in an unalterable framework? If this is so, it would raise the fundamental issue whether that intention should govern the succeeding generations for all time. If you subscribe to the theory of Jefferson, to which I have already referred and which was fully adopted by Dr. Ambedkar, the principal architect of our Constitution and that is the only same theory I think there is no foundation for the theory of implied limitations. Were it otherwise, in actual reality it would come to this: The representatives of some people the framers of our Constitution could bind the whole people for all time and prevent them from changing the constitutional structure through their representatives. And, what is this sacredness about the basic structure of the Constitution? Take the republican form of Government, the supposed cornerstone of the whole structure. Has mankind, after its wandering through history, made a final and unalterable verdict that it is the best form of government? Does not history show that mankind has changed its opinion from generation to generation as to the best form of Government? Have not great philosophers and thinkers throughout the ages expressed different views on the subject? Did not Plato prefer the rule by the Guardians? And was the sapient Aristotle misled when he showed his proclivity for a mixed form of government? If there was no consensus yesterday, why expect one tommorow?" Commenting on this case and Golaknath 's decision, Subba Rao, exhibit C.J.I. in 'The two judgments : Golaknath and Kesavananda Bharati" (supra) 558 says at page 18: "The result is that the Supreme Court by majority declared that the Parliament under the Indian Constitution is not supreme, in that it cannot change the basic structure of the Constitution. It also declared by majority that under certain circumstances, the amendment of the fundamental rights other than the right to property would affect the basic structure and therefore would be void. The question whether the amendment of the fundamental right to property would under some circumstances affect the basic structure of the Constitution is not free from doubt; the answer depends upon the view the Supreme Court takes hereafter of the impact of the opinion of Matthew, Beg, Dwivedi and Chandrachud, JJ. the funda mental rights are the basic features of the Constitution on the opinion of the six judges, who held that the core of the fundamental rights is part of the basic structure of the Constitution. One possible view is that together they form a clear majority on the content of the basic structure; another possible view is that their opinion should be read along with that the entire Constitution, except perhaps the bare machine of Government, could be repealed by amendment. " If this be the law, the question would be whether Articles 291,362 366(22) could ever be intended to form a basic structure. The answer should be in the negative. They have no overall applicability permeating through the entire Constitution that the absence of these provisions will change the nature and character of the Constitution. While examining the question whether these Articles constitute the basic structure, one must have regard to Article 363 of the Constitution. They are made enforceable in a Court of law. If really they are to form basic structure, would not a corresponding right as occurring under Article 32(4) have been provided? In Indira Nehru Gandhi 's case (supra), the following observations are found in para 663 : 559 "The preamble, generally, uses words of "passion and power" in order to move the hearts of men and to stir them into action. Its own meaning and implication being in doubt,the preamble cannot affect or throw fight on the meaning of the enacting words of the Constitution. Therefore, though our Preamble was voted upon as is a part of the Constitution, it is really "a preliminary statement of the reasons ' which made the passing of the Constitution necessary and desirable. As observed by Gajendragadkar, J. in In re Berubari Union vs Exchange of Enclaves, what Willoughby has said about the preamble to the American Constitution, namely, that it has never been regarded as the source of any substantive power, is equally true about the prohibitions and limitations. The preamble of our Constitution cannot therefore be regarded as a source of any prohibitions or limitations." Therefore, regard must be had to the scope of the preamble which states : "The concept of Rulership, with privy purses and special privileges unrelated to any current functions and social purposes, is incompatible with an egalitarian social order. Government have therefore decided to terminate the privy purses and privileges of the Rulers of former Indian States. It is necessary for the purpose, apart from amending the relevant provisions of the Constitution, to insert a new article therein so as to terminate expressly the recognition already granted to such rulers and to abolish privy purses and extinguish all rights liabilities and obligations in respect of privy purses. " If the 26th amendment aims to establish an egalitarian society which is in consonance with the glorious preamble, how could this provision be called a basic structure? No doubt, in Madhav Rao 's case (supra), it was held that these provisions are an integral part of the Constitution of this country. Apart from the fact that all these reasons were addressed against the power of the President under Article 366(22), this statement cannot tantamount to basic 560 structure. Nor would it mean the same as the basic structure. To determine whether these provisions constitute basic structure or not they cannot be viewed in the historic background. By repeal of the provisions the personality of the Constitution has not changed. India could still retain its identity and it can hardly be said that the personality has changed. The repudiation of the guarantees might result in the nullification of a just quid pro quo. But, if it is the will of the people to establish an egalitarian society that will be in harmony with the changing tunes of times. It cannot be denied that law cannot remain static for all times to come. The extract of Matthew, J. in Kesavananda 's case highlights this aspect as under : "But the question will still remain, even when the core or the essence of a Fundamental Right is found, whether the Amending Body has the power to amend it in such a way as to destroy or damage the core. I have already said that considerations of justice, of the common good, or 'the general welfare in a democratic society ' might require abridging or taking away of the Fundamental Rights. ' Weems vs United States, 54 Law Edition 801 quoted in Francis Coralie Mullin vs Administrator, Union Territory of Delhi & Ors., ; at page 617 succinctly states the law on this aspect as under : "Time works changes, brings into existence new conditions and purposes. Therefore, a principle, to be vital, must be capable of wider application than mischief which gave it birth. This is peculiarly true of Constitutions. They are not ephemeral enactments designed to meet passing occasions. They are, to use the words of Chief Justice Marshall "designed to approach immortality as nearly as human institutions can approach it". The future is their care, and provisions for events of good and bad tendencies of which no prophecy can be made. In the application of a Constitution, therefore, our contemplation cannot be only of what has been, but of what may be. Under any other rule a 561 Constitution would indeed be as easy of application as it would be deficient in efficacy and power. Its general principles would have little value, and be converted by precedent into impotent and lifeless formulas. Rights declared in the words might be lost in reality. And this has been recognised. The meaning and vitality of the Constitution have developed against narrow and restrictive construction." (emphasis supplied) Robert section Peck in "The Bill of Rights & the Politics of Interpretation" states at page 316 317 as under : "The Constitution, then, is not a beginning nor an end, but part of a timeless process. Any constitution "intended to endure for ages to come" (Mcculloch vs Maryland, 17 U.S. ; , 415(1819) cannot be a closed system or temporally bound. The Constitution is more properly seen as part of a stream of history. That stream is not always unbroken and has, frequently, taken radical turn, , That it is path has been winding is not surprising, since history is not a steady and predictable progression following earlier events. Still, constitutional rights must be viewed as traveling down a single historic stream. Today 's conclusions, to remain principled and persuasive, need to relate back to earlier origins. When cases come before the Courts, purposes and concerns of timeless character require translation into practical rules that apply to their most modern manifestations. In this role, courts perform a mediating function, harmonizing different strands into a coherent order. But the courts do not exercise an exclusive authority in giving coherence to constitutional law. Political leaders and political institutions have played this roles well, advancing both the law and the mechanisms available to promote constitutional liberty. "Great constitutional provisions must be administered with caution. ' Justice Oliver Wendell Holmes remained us. 'Some play must be allowed for the joints of the machine, and it must be remembered that legislatures are ultimate guardians of the liberties and welfare of the people in quite as great a 562 degree as the Courts. (Missouri, Kansas & Texas Rly Co. vs May, ; , 270 (1904)). the Courts are insulated from the political winds that buffer, motivate andsometimes disable a legislature. This independence from thelarger political world is critical to discharge of the tasks the successful discharge of the tasks we assign the judiciary Nevertheless, the courts operate in a political world of their own. In this variety of politics, courts must harmonize past with present, conflict with resolution, change with continuity. And they must contend with a variety of interest groups that influence the process by their actions and by the appeal of their arguments" In the words of the famous poet Jaames Russel Lowell New occasions teach new duties:Time makes ancient good uncouth: They must upward stilt and onward, who would keep abreast of Truth. " Nodoubt, unity and integrity of India would constitute the basic structureas laid down in Kesavananda 's case (supra) but it is too far fetched aclaim to state that the guarantees and assurances in these Articles have gone into the process of unification and integration of the country. One cannot lose sight of the fact that it was the will of the people and the urge to breathe free air of independent India as equal citizens that brought about the merger of these princely states. Therefore, the contention that the Articles 291 and 362 facilitated the organic unity of India is unacceptable. Next as to the violation of Article 14, it is true as laid down in Bhimsinghji 's case (supra) that if a particular provision of a constitution violates Article 14, it would affect the basic structure of the Constitution. This case dealt with the validity of Section 27(1) of the Urban Land (Ceiling and Regulation) Act, 1976. The relevant portion of the judgment in Bhimsinghji 's case (supra) can now be extracted 563 "Further, the restriction under Section 27(1) in the absence of any guidelines governing the exercise of the power on the competent authority in the matter of granting or ' refusing to grant the permission is highly arbitrary, productive of discriminatory results and,. therefore, violates the equality clause of Article 14. Which of the three objectives mentioned in the preamble should guide the exercise of power by the competent authority in. any given case is not clear and in any case no standard has been laid down for achieving the objectives of preventing concentration, speculation, and profiteering in urban land or urban property. Because of these reasons the provisions for appeal and revision under Sections 33 and 34 against the order passed by the competent authority under Section 27, would also not be of much avail to preventing arbitrariness in the matter of granting or refusing to grant the permission. Section 27 is thus ultra vires and unconstitutional. " Per Chandrachud, CJ. and Bhagwati J. (Krishna Iyer, J., concurring) 'Sub section (1) of Section 27 of the Act is invalid insofar as it imposes a restriction on transfer of any urban or urbanisable land with a building or a portion only of such building, which is within the ceiling area. Such property will, therefore, be transferable without the constrains mentioned in sub section (1) of the Act. * (paras 5,8, &10) Per Krishna Iyer, J (concuming) "I agree with the learned Chief Justice both regarding the constitutionality of the legislation and regarding partial invalidation of Section 27(1). " Per Seth J. "Sub sections (1), (2) and (3) of section 23 and the opening words 'subject to the provisions of sub sections 564 (1), (2) and (3) in Section 23(4) are ultra vires the Parliament and are not protected by Articles 31 B and 31 C of the Constitution and further, Section 27(1) is invalid insofar as it imposes a restriction on transfer of urban property for a period of ten years from the commencement of the Act, in relation to vacant land or building thereon within the ceiling limits. ' Krishna lyer, J. stated in the said judgment at page 186 as under : "The question of basic structure being breached cannot arise when we examine the vires of an ordinary legislation as distinguished from a constitutional amendment. Kesavananda Bharati, 1973 Supp. SCR cannot be the last refuge of the Propreitariate when benigh legislation takes away their 'excess ' for societal weal. Nor, indeed, can every breach of equality spell disaster as a lethal violation of the basic structure. Perioheral inequality is inevitable when large scale equalisation processes are put into action. If all the judges of the Supreme Court in solemn session sit and deliberate for half a year to produce a legislation for reducing glaring economic inequality their genius will let them down if the essay is to avoid even peripheral inequalities. Every, large cause claims some martyr, as sociologists will know. Therefore, what is a betrayal of the basic feature is not a mere violation of Article 14 but a shocking unconscionable or unscrupulous travesty of the quintessence of equal justice. If a legislation does go that far it shakes the democratic foundation and must suffer the death penalty. But to permit the Bharati (supra) ghost to haunt the corridors of the court brandishing fatal writs for every feature of inequality is judicial paralysation of parliamentary function. Nor can the constitutional fascination for the basic structure doctrine be made a Trojan horse to penetrate the entire legislative camp fighting for a new social order and to overpower the battle for abolition of basic poverty by the 'basic structure ' missile. Which is more basic? Eradication of die hard, deadly and per 565 vasive penury degrading all human rights or upholding of the legal luxury of perfect symmetry and absolute equality attractively presented to preserve the status quo ante ? To use the Constitution to defeat the Constitution cannot find favour with the judiciary I have no doubt that the strategy of using the missile of 'equality ' to preserve die hard, dreadful societal inequality is a stratagem which must be given short shrift by this Court. The imperatives of equality and development are impatient for implementation and judicial scapegoats must never be offered so that those responsible for stalling economic transformation with a social justice slant may be identified and exposed of Part IV is a basic goal of the nation and now that the Court upholds the urban ceiling law, a social audit of the Executive 's implementation a year or two later will bring to tight the gaping gap between verbal velour of the statute book and the executive slumber of law in action. The Court is not the anti hero in the tragedy of land reform, urban and agrarian. " In this case, the amendment does not either treat unequals as equals or in any manner violates Article 14. AD the privy purses holders are treated alike by the withdrawal of all those privileges. The next aspect of the matter is can the Court go into the morality in withdrawing these assurances and guarantees. The following extract from 'Law and Morality ' by Louis Blom Cooper Gavin Drewry at page 2 is very useful : "The relationship between law and morals is in effect quadripartite, but it is only the fourth part that engages our current interest. The first part is an historical and casual question. Has the law been influenced by moral principles? No one doubts the answer is affirmative; conversely law has influenced moral principle. The Suicide Act, 1961 no doubt accurately reflected the long standing moral view that to take one 's own life was not a crime against the law, a view which had not always been shared 566 by the judiciary (originally) for reasons having to do as much with property as with theological morality). The statutory abolition of the crime of suicide in its turn buttressed and affirmed the moral attitude. The second part questions whether law necessarily refers to morality at all; do morals and law overlap in practice, simply because both share the common vocabulary of rights and duties? It is here that the natural lawyers and legal positivists have engaged most fiercely in controversy. The antagonists have found temporary refuge in the sterile argument about whether law is open to moral criticism. Can a rule of law, 'properly ' derived (in constitutional terms) to be held to conflict with some moral principle? Those who witnessed Parliament, through the vehicle of the War Damage Act, 1965 reversing retrospectively the House of Lords ' decision in Burmah Oil Co. Ltd. vs Lord Advocate, ; and thus depriving a large cor poration of its fruits of litigation, would acknowledge readily the dissociation of law and political, if not social, morality. In any event, does it matter that the law is immorally enacted, if we are all bound by it? Its enforceability (if not its actual enforcement) is unlikely to be affected by such theoretical objections. Perhaps political morality can be defined only in terms of the franchise, and the efficacy of representative government though again the argument rests on a philosophical and psychological, rather than on an empirical plane. ' Then again, dealing with constraints on Constitutional interpretation.bent Greenwalt in conflicts of fits of Law and Morality ' 1987 Edition states at page as follows impugned 'Like ordinary legislation, constitutional provisions amendmentprotecting rights reflect the moral judgments of those who whether adopted them in this case complex judgments that certain coral activities should be put beyond the range of control by the 567 Political branches of the government. In constitutions, as in statutes, language may embody a compromise of competing moral claims, though nothing in out federal Constitution resembles the relatively precise accommodation of the criminal law rules governing use of force in selfdefence. The fact that the Constitution itself represents moral evaluations does not, of course, establish that moral evaluation is also the task of those who must decide if statutes and their applications fall a foul of constitutional restraints. Widespread agreement exists on the appropriateness of some other techniques of interpretation. The point if clearest for actions that the language of the Constitution, the intent of the Framers, and the decisions of earlier courts place squarely within the area of constitutional protection. For these actions, a modern court win rarely need to engage in any debatable moral evaluation. Usually it will apply the plain law, perhaps after determining that no overwhelming argument has been made contrary to the indications of these powerful sources. Even for harder cases, judicial interpretation is not simple moral evaluation; the implications of the textual language, the Framers ' intent, and the precedents count for something if they point in one direction or another. " To the same effect, Michael J. Perry in 'Morality Politics and law" 1988 Edn. states at page 129 as under : 'According to the view of democracy that underlies originalities, it is illegitimate for the judiciary to go beyond the enforcement of policy choices to the making of policy choices at least, it is illegitimate unless the judiciary is authorised to do so by the legislative and executive branches. And it is illegitimate in extremis for the undemocratic judiciary to oppose itself, in constitutional cases, to the democratic branches and agencie s of government on the basis of beliefs never constitutionality by the gratifiers. " 568 Therefore, this Court cannot concern itself with the moral aspect of the impugned amendment. The impugned amendment is the will of the people expressed through Parliament. In view of the foregoing discussion these petitions Are liable to be dismissed. Accordingly, these petition stand dismissed. V.P.R. petition dismissed.

The petitioner was a Co Ruler of an Ex Indian State of Kurundwad. His Co Ruler, on behalf of both, executed an instrument of accession under Section 5 of the Government of India Act, 1935 and their State became a part of the Dominion of India. A Merger Agreement was executed on the 19th February, 1948 and the administration of the State of the petitioner was also handed over to the Dominion Government on the 8th March, 1948. The case of the petitioner was that under the Merger Agreement he 480 481 was entitled to receive annually from the revenues of the State his privy purse as specified in the Merger Agreement. Certain groups of States entered Into covenants for the establishment of United States comprising the territories of the covenanting States and Talukas with a common executive, legislature and judiciary. On 13th October, 1949 the Constituent Assembly of India adopted inter alia two Articles namely, Article 291 relating to payment of privy purse and Article 362 relating to personal rights and privileges of the Rulers. The Rulers and Rajpramukhs of the States agreed to adopt the Constitution drafted by the Constituent Assembly of India. In pursuance of Article 366(22) of the Constitution of India, the petitioner was recognized as the Ruler of the Kurundwad State with effect from 26th January, 1950 and had been in the enjoyment of the privy purse, privileges, titles and dignities issued by Merger Agreement, and by the Constitution of India. The Parliament enacted the Constitution (Twenty Sixth Amend ment) Act of 1971, repealing Articles 291 and 362 of the Constitution, a new Article 363 A was inserted and new clause (22) to Article 366 was substituted. It resulted in depriving the Rulers of their recognition already accorded to them and declaring the abolition of the privy purse and extinguishing their rights and obligation in respect of privy purse. The petitioner filed the writ petition challenging the impugned Amendment Act as unconstitutional and violative and the fundamental rights of the petitioner guaranteed under Articles 14, 19(1)(f), 21 and 31(1),(2) of the Constitution. In the Writ Petition No. 351/72, I.A. Nos. 1 to 3 of 1992 were filed by the daughters of Late Maharaja of Mysore. WRIT PETITION NO. 798 OF 1992 The petitioner was the successor to the Ruler of Mysore also challenged the Constitution (26th Amendment) Act of 1971 on the same grounds as in Writ Petition No. 351/72. 482 The petitioner in W.P. No. 351/72 submitted that Articles 291, 362 and 366(22) of the Constitution were integral part of the constitutional scheme and formed the important basic structure since the underlying purpose of these Articles was to facilitate stabilization of the new order and ensure organic unity of India; that the deletion of the Articles damaged and demolished the very basic structure of the Constitution; that the covenants entered into were in the nature of contracts which was guaranteed constitutionally and affirmed by making the privy purse an expenditure charged under the Consolidated Fund of India; that the deletion of the Articles amounted to a gross breach of the principle of political justice enshrined in the preamble by depriving or taking away from the princes the privy purses which were given to them as consideration for surrendering all their sovereign rights and contributing to the unity and integrity of the country; that the Rulers acceded to the Dominion of India and executed Instruments of Accession and Covenants in consideration of the pledges and promises enshrined in Articles 291 and 362; that the impugned Amendment Act was beyond and outside the scope and ambit of the constitutional power of the Parliament to amend the Constitution as provided under Article 368 of the Constitution; that the Constitution (Twenty Sixth Amendment) Act was unconstitutional, null, void and violative of Articles 14, 19(1) (g), 21, 31 (1) and (2) of the Constitution; and that Articles 291 and 362 when incorporated were intended to grant recognition to the solemn promises on the strength of which the former Rulers agreed to merge with the Indian Dominion and the guarantee of privy purses and certain privileges was as a just quid pro quo for surrendering their sovereignty and dissolving their States. The petitioner in I.A. No. 3 submitted that the fact that the expression "guarantees" occurring both in Article 32 and Article 291 besides in Article 362 ( 'guarantee ') clearly demonstrated the mind of the Constitution makers that they intended the said provisions of Articles 291 and 362 to be the basic and essential structure of the Constitution. The petitioner in 1 A No. 1 contended that the erstwhile rulers of the princely States formed a class apart and there was real and substantial distinction between them and the citizenry of India; that the impugned amendment which violated the basic structure of the Constitution was unconstitutional that the Amendment Act was violative of the essential features contained in Articles 14 and 19(1)(f). 483 The petitioner in W.P. No. 798/92 added that the two Articles were not at all amendable on the principle of prohibition against impairment of the contractual obligations; that the impugned Amendment Act was an ugly epitome of immorality perpetrated by the India Parliament, that, too, In the exercise of its constituent powers and the said Amendment Act constituted an unholy assault on the spirit which was impermeable and that the principle of justice, fairness and reasonableness were beyond the amending powers of the Parliament; that the equality clause as interpreted by this Court in various decisions was the most important and indispensable feature of the Constitution and destruction thereof would amount to changing the basic structure of the Constitution and that the authority of the Parliament to amend the Constitution under Article 368 could be exercised only if the Amendment in the Constitution was justifiable and necessitated because of the socioeconomic reasons broadly referred to in the directive principles of the State Policy and that any Amendment unrelated to any genuine compulsion amounts to an abuse of the power and was therefore a fraud on the exercise of power itself Respondent Union of India contended that the Instruments of Accession were only the basic documents but not the individual agreements with the Rulers and therefore to attribute the agreements entered into by Rulers as a sacrifice by the Rulers was unfounded; that the nature of the covenants was not that of a contract because a contract was enforceable at law while these covenants were made non justiciable by the Constitution vide Article 363; that the covenants were political in nature and that no legal ingredients as the basis could be read into these agreements and that the guarantees and assurances embodied in Articles 291 and 362 were guarantees for the payment of privy purses; that such a guarantee could always be revoked in public interest pursuant to fulfilling a policy objective or the directive principles of the Constitution; that being so, the theory of sanctity of contract or unamendability of Articles 291 or 362 did not have any foundation; and that the theory of political justice was also not tenable because political justice meant the principle of political equality such an adult suffrage democratic form of Government etc. Dismissing the Writ Petitions and the I.As., this court, HELD : (By Full Court) ; The Constitution (Twenty Sixth Amendment) Act of 1971 is valid in its entirety. [529G] 484 Per section Ratnavel Pandian, J. on his behalf and on behalf of the Chief justice of India, B.P. Jeevan Reddy and S.P. Baucha, JJ.: 1.01. The only question is whether there is any change in the basic structure of the Constitution by deletion of Articles 291, 362 and by insertion of Article 363A and amendment of clause (22) of Article 366. The question is answered in the negative observing that the basic structure or the essential feature of the Constitution is /are in no way changed or altered by the Constitution (Twenty Sixth Amendment) Act of 1971. [529D] 1.02. In our democratic system, the Constitution is the supreme law of the land and all organs of the government executive, legislative and judiciary derive their powers and authority from the Constitution. A distinctive feature of our Constitution is its amendability. [518G] 1.03. The power of amendment is plenary and it includes within itself the power to add, after or repeal the various Articles of the Constitution including those relating to fundamental rights, but the power to amend does not include the power to alter the basic structure or framework of the Constitution so as to change its identity. In fact, there are inherent or implied limitations on the power of amendment under Article 368. [515G] 1.04. There are specific provisions for amending the Constitution. The amendments had to be made only under and by the authority of the Constitution strictly following the modes prescribed, of course, subject to the limitations either inherent or implied. The said power cannot be limited by any vague doctrine of repugnancy. There are many outstanding interpretative decisions delineating the limitations so that the Constitutional fabric may not be impaired or damaged. The amendment which is a change or alteration is only for the purpose of making the Constitution more perfect, effective and meaningful. But at the same time, one should keep guard over the process of amending any provision of the Constitution so that it does not result in abrogation or destruction of its basic structure or loss of its original identity and character and render the Constitution unworkable. [519B D] 1.05. The Courts are entrusted with important Constitutional responsibilities of upholding the supremacy of the Constitution. An amendment of a Constitution becomes ultra vires if the same contravenes or transgresses the limitations put on the amending power because there 485 is no touchstone outside the Constitution by which the validity of the exercise of the said powers conferred by it can be tested. [518H, 519A] 1.06. The Court is not concerned with the wisdom behind or propriety of the Constitutional amendment because these are the matters for those to consider who are vested with the authority to make the Constitutional amendment. All that the Court is concerned with are (1) whether the procedure prescribed by Article 368 is strictly complied with? and (2) whether the amendment has destroyed or damaged the basic structure or the essential features of the Constitution. [519D E] 1.07. If an amendment transgresses its limits and impairs or alters the basic structure or essential features of the Constitution then the Court has power to undo that amendment. [519F] 1.08. No principle of justice, either economic, political or social is violated by the Twenty sixth Amendment. Political justice relates to the principle of rights of the people, i.e., right to universal suffrage, right to democratic form of Government and right to participation in political affairs. Economic justice is enshrined in Article 39 of the Constitution. None of these rights are abridged or modified by this Amendment. [523C] 1.09. There is no question of change of identity on account of the Twenty sixth Amendment. The removal of Articles 291 and 362 has not made any change in the personality of the Constitution either in its scheme not in its basic features nor in its basic form nor in its character. The question of identity will arise only when there is a change in the form, character and content of the Constitution. 1527G] 1.10. A moral obligation cannot be converted into a legal obligation. Courts are seldom concerned with the morality which is the concern of the law makers. [527D E] 1.11. In a country like ours with so many disruptive forces of regionalism, communalism and linguism, it is necessary to emphasise and re emphasise that the unity and integrity of India can be preserved only by a spirit of brotherhood. India has one common citizenship and every citizen should feel that he is Indian first irrespective of other basis. In this view, any measure at bringing about equality should be welcome. There is no legitimacy in the argument in favour of continuance of princely 486 privileges. Abolition of privy purses is not violative of Article 14. [528F] 1.12. The Court cannot make surmises on 'ifs ' and 'buts ' and arrive to any conclusion that Articles 291 and 362 should have kept in tact as special provisions made for minorities in the Constitution. It is but a step in the historical evolution to achieve faternity and unity of the nation transcending all the regional, linguistic, religious and other diversities which are the bed rock on which the constitutional fabric has been raised. The distinction between the erstwhile Rulers and the citizenary of India has to be put an end to so as to have a common brotherhood. [529E F] Nawab Usmanali Khan vs Sagamial ; ; H.H. Maharajadhiraja Madhav Rao Jiwaji Rao Scindia Bahadur & Ors. vs Union of India; , ; Minerva Mills vs Union of India, ; ; His Holiness Kesavananda Bharati Sripadagalavaru vs State of Kerala and Another, [1973] 4 SCC 225; Shankari Prasad vs Union of India, ; ; Sajjan Singh vs State of Rajasthan, ; at 966; Golak Nath vs State of Punjab, ; ; Rustom Cawasjee Cooper vs Union of India, ; ; Waman Rao and Others vs Union of India and Others, ; at 588 89; Maharao Sahib Shri Bhim Singhji vs Union of India and Others, at 212; Madhav Rao vs Union, ; at 74 and 83; Indira Nehru Gandhi vs Raj Narain, ; Sanjeev Coke Manufacturing Company vs Bharat Cooking Coal Ltd., ; , Varinder Singh & Ors. vs State of U.P., ; at 435; Maneka Gandhi vs Union of India, [1978] 2 SCR 621; R.D. Shetty vs International Airport Authority of India, ; ; Kasturi Lal Lakshmi Reddy vs State of Uttar Pradesh, ; ; E.P. Royappa vs State of Tamil Nadu, ; ; Krishna Kumar vs Union of India, ; ; Mfd. Usman & Ors. vs State of Andhara Pradesh and Ors. , [1971] Suppl. SCR 549, Ramesh Prasad Singh vs State of Bihar & Ors., ; , rererred to. Report of the Joint Select Committee on Indian Constitutional Reforms (1933 34); Report of (he Expert Committee headed by Nalini Ranjan Sarkar (published in December, 1947), Report of the Indian States ' Finances Enquiry Committee, chaired by Sir V.T. Krishanamachary (appointed on 22nd October, 1948). Report of the Rau Committee chaired by Sir B.N. Rau (appointed in November, 1948); Dias: Jurisprudence, Fifth Edition, at pages 355 and 356; Bentham : Theory of Legislation, Chapter XII at page 60, referred to. 487 Per section Mohan, J. (Concurring) 1.01. One of the tests of identifying the basic feature is, whether the identity of the Constitution has been changed. [537A] 1.02. The personality of the Constitution must remain unchanged. It is not necessary that the constitutional amendment which is violative of a basic or essential feature should have an instant or immediate effect on the basic structure. It is enough if it damages the essential feature. [537B] 1.03. The test to be applied, therefore, is whether the amendment contravenes or runs counter to an imperative role or postulate which is an integral part of the Constitution. [537B] 1.04. Turning to basic structure, the proper test for determining basic feature is to find out what are not basic features. Rights arising out of covenants which were non justiciable cannot be regarded as basic feature. Where, therefore, Article 363 makes these features non justiciable, the question of basic feature does not arise. [539H, 540A] 1.05. The guarantees in Articles 291 and 362 are guarantees for the payment of privy purses. Such a guarantee can always be revoked in public interest; more so, for fulfilling a policy objective or the directive principles of the Constitution. This is precisely what the preamble to the impugned amendment says. That being so, the theory of sanctity of contract or the unamendability of Article 291 or 362 does not have any foundation. The theory of political justice is also not tenable since political justice means the principle of political equality such as adult suffrage, democratic form of Government, etc. [539D E] 1.06. If the 26th amendment aims to establish an egalitarian society which is in consonance with the glorious preamble, how could this provision be called a basic structure? No doubt, in Madhav Rao 's case, it was held that these provisions (Articles 291, 362, 366 (22) are an integral part of the Constitution. Apart from the fact that all these reasons were addressed against the President under Article 366(22), this Statement cannot tantamount to basic structure. Nor would it mean the same as the basic structure. 1559G H] 1.07. To determine whether these provisions constitute basic struc 488 ture or not, they cannot be viewed in the historic background. By repeal of these provisions the personality of the Constitution has not changed. India could still retain its identity and it can hardly be said that the personality has changed. [560A] 1.08.The repudiation of the guarantees might result in the nullification of a just quid pro quo. But, if it is the will of the people to establish an egalitarian society that will be in harmony with the changing of times. It cannot be denied that law cannot remain static for all times to come. [560C] 1.09 Unity and integrity of India would constitute the basic structure as laid down in Kesavananda 's case but it is too far fetched claim to state that the guarantees and assurances in these Articles have gone into the process of unification and integration of the country. One cannot lose sight of the fact that it was the will of the people and the urge to breathe free air of independent India as equal citizens that brought about the merger of these princely States. Therefore, the contention that the Articles 291 and 362 facilitated the organic unity of India is unacceptable. [562E F] 1.10 In this case, the amendment does not either treat unequals as equals or in any manner violates Article 14. All the privy purses holders are treated alike by the withdrawal of all those privileges. [565E] 1.11. This Court cannot concerns itself with the moral aspect of the impugned amendment. The impugned amendment is the will of the people expressed through Parliament. [568A] Virendra Singh and Others vs State of Uttar Pradesh, ; at 454; H.H. Maharajadhiraja Madhav Rao Jiwaji Rao Scindia Bahadur & Ors. vs Union of India, ; ; His Holiness Kesavananda Bharati Sripadagalavaru vs State of Kerala, [1973] Supp. SCR 1; Waman. Rao and Others vs Union of India and others; , at 588 89; Maltarao Sahib Shri Bhim Singh Ji vs Union of India & Ors., at 212; Indira Nehru Gandhi vs Raj Narain, [1975] Supp, SCC 1 at 252; Ajay Hasia vs Khalid Mujib Sehravardi, ; ; Minerva Mills Ltd. vs Union of India & Ors., ; & 119861 3 SCR 718; O.N. Mohindroo vs District Judge, Delhi, ; Mohanlal Jain vs His Holiness Maharaja Shri Swai Mari Singh Ji, [1962] 1 SCR 702; Ramesh Prasad Singh vs State of Bihar Another vs Vithal Rao & Ors., ; ; Usman Ali Khan vs Sagar 489 Mal ; ; Golak Nath vs State of Punjab, ; ; Weems vs United States, 54 Law Edition 801; Francis Coralie Mullin vs Administrator, Union Territory of Delhi & Ors., ; at 617, referred to. "The Framing of India 's Constitution ' : By B. Shiva Rao at page 520; Robert section Peck "The Bill of Rights & the Politics of Interpretation", at page 316 317; "Law and Morality" : By Louis Blom Cooper Gavin Drewry at page 2; Kent Greenawalt : "Conflicts of Law and Morality", 1987 Edition at page 338, referred to.

Civil Appeal No. 1389 of 1988. From the Judgment and order dated 6.7.1987 of the Orissa High Court in C.M.C. No. 375 of 1984. R.K. Mehta and Miss Mona Mehta for the Appellant. G.L. Sanghi and Vinoo Bhagat for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This is an appeal by special leave from the judgment and order of the High Court of orissa, dated 6th July, 1987. It arises out of a contract entered into between the State and the respondent for the construction of certain projects for irrigation. During 1973 74 the respondent was entrusted with the job of 'Construction of Ramaguda Minor Irrigation project in Kukudakhandi Block ' vide agreement No. 4 F 2. The value of the work was Rs.9,99,510. The work pursuant to the contract commenced on 4th May, 1973 and 4th November, 1974 was the stipulated date of com 566 pletion of the work. However, on 30th December, 1975 the work was actually completed. It is asserted by the appellant that the respondent contractor accepted the final payment and was duly paid a sum of Rs.23,74,001 for the work done by him including the extra work. Thereafter, no amount was due to the respondent, according to the appellant, and he did not raise any claim whatsoever before the Department. On 28th September, 1976 the last payment was alleged to have been made by the respondent. On 30th October, 1976 the last bill was prepared which was nil one. The respondent, thereafter, raised a claim and gave notice for appointment of an arbitrator. Consequently, the Chief Engineer appointed one Shri A.N. Nanda as the arbitrator in terms of the arbitration clause. However, on the application of the respondent the learned Subordinate Judge removed Shri A.N Nanda and appointed one Shri B. Patnaik as the arbitrator. It may be mentioned that the application was made for removal of the arbitrator Shri B. Patnaik but the same was ultimately dismissed. Before the arbitrator, the respondent filed the claim raising some claims which, according to the appellant, were fictitious and baseless. These claims were for the alleged extra work in respect of which the decision of the Superintending Engineer under clause 11 of the contract was final and the same was excluded from the purview of the arbitration clause. It was contended on behalf of the appellant that the arbitrator had no jurisdiction to deal with such claims. The appellant filed a counter claim for Rs.2,11,400, denying all the claims of the respondent. All the documents and relevant papers were produced before the arbitrator. It is stated that as the application for removal of Shri B. Patnaik as arbitrator was pending, an application had been made before Shri section Patnaik to adjourn the proceeding which was refused and the award was made. This award was claimed to have been made virtually ex parte. This, however, was not so and it appeared that the arbitrator on hearing the parties and considering the evidence produced before him made the award. The arbitrator made the said award on 18th March, 1983 but the same was a non speaking and nonreasoned award for a lump sum of Rs.15,23,657 plus interest @ 10% from 9.9.1975 till the date of payment or decree. Objections to the said award were filed in the Court. The learned Subordinate Judge upheld the objection to the award and set aside the award on 15th September, 1984. There was an appeal to the High Court and the High Court set aside the judgment of the learned Subordinate Judge and made the award of the arbitrator, rule of the Court. It also directed payment of further interest at 6%. 567 Being aggrieved thereby the State of Orissa has preferred this appeal. In support of this appeal, it was submitted that the award in question was a lump sum af money and it was without any reason, in favour of the respondent. It was also submitted that the validity of the non reasoned award is awaiting determination by a larger Bench of this Court. Hence, it was urged that this question should await decision of the larger Bench. In the facts and circumstances of the case, we are of the opinion that we would not be justified in acceding to this request on the part of the appellant. In this case the submission that the award was bad being an unreasoned one, was neither mooted before the learned Subordinate Judge nor before the High Court. This contention was also not raised in the objection to the award, filed originally. It is only in the special leave petition that such a plea has been raised for the first time. Arbitration is resorted to as a speedy method of adjudication of disputes. Stale and old adjudication should not be set at naught or examination of that question kept at bay on the plea that the point is pending determination by a larger Bench of this Court. Even if it is held ultimately that the unreasoned award per se is bad, it is not sure whether such a decision would upset all the awards in this country which have not been challenged so far. Certainly, in the exercise of our discretion under Article 136 of the Constitution and in view of the facts and circumstances of this case, we would not be justified in allowing the party to further prolong or upset adjudication of old and stale disputes. In that view of the matter, we think that the pendency of this point before the larger Bench should not postpone the adjudication and disposal of this appeal in the facts of this case. The law as it stands today is that award without reasons are not bad per se. Indeed, an award can be set aside only on the ground of misconduct or on an error of law apparent on the face of the award. This is the state of law as it is today and in that context the contention that the award being an unreasoned one is per se bad, has no place on this aspect as the law is now. This contention is rejected. It was next contended that in view of clause 11 of the contract the matters upon which the arbitrator has adjudicated were excluded and these were not arbitrable. It was submitted that clause 11 of the contract between the parties made on these matters the decision of the Engineer Incharge final and binding. Hence, inasmuch as the arbitrator has purported to act upon this field which was only to be decided by the Engineer in charge, the award was bad. The disputes over which the arbitrator has purported to make an award, were regarding 568 works covered by the agreement. lt was submitted that the provision to clause 11 af the agreement categorically provided that in the event of dispute over a claim for additional work, the decision of the Superintending Engineer of the Circle would be final and, hence, the arbitrator by entertaining the additional claim of the contractor had exercised a jurisdiction not vested in him and, as such, misconducted himself. In order to judge this contention, therefore, it is Imperative first to refer to clause 11 of the agreement. It provides as follows: "Clause 11 The Engineer in charge shall have the power to make any alteration in or additions to the original specifications, drawings designs, and instructions that may appear to him necessary or advisable during the progress of work and the contractor shall be bound to carry out the work in accordance with any instructions which may be given to him in writing signed by the Engineer in charge and such alteration shall not invalidate the contract. Any additional work which the contractor may be directed to do in the matter above specified as part of the work, shall be carried out by the contractor on the same conditions in all respects on which he agreed to do the main work and at the same rates as are specified in the tender for the main work. The time for the completion of the work shall be extended in the proportion that the additional work bears to the original contract work and the certificates of the Engineer in charge shall be conclusive as to such proportion and if the additional work includes any class of work shall be carried out at the rates entered in the sanctioned schedule of rates of the locality during the period when the work being carried on and if such last mentioned class of work is not entered in the schedule of the rate of the district, then the contractor shall within 7 days intimate the rate which it is his intention to charge for such class of work and if the Engineer in charge does not agree to this rate he shall by notice in writing be at liberty to cancel his order to carry out such class of work and arrange to carry such class of work and arrange to carry out in such manner as he may consider advisable. No deviation from the specification stipulated in the contract or additional items of work shall ordinarily be carried by the contractor and should any altered, additional or substituted work be carried out by him unless the rates of the substituted, altered or additional 569 items have been approved as fixed in writing by the Engineer in charge. The contractor shall be bound to submit his claim for any additional work done during any month or before the 15th day of the following months accompanied by the copy of the order in writing of the Engineer in Charge for the additional work and that the contractor shall not be entitled to any payment in respect of such additional work if he fails to submit his claim within the aforesaid period. Provided it always that if the contractor shall commence work or incur any expenditure in regard thereof before the rates will have been determined as lastly herein before mentioned, then in such case he shall only be entitled to be paid in respect of the determination of the rates as aforesaid accordingly to such rate of rates as shall be fixed by the Engineer in Charge. In the event of a dispute the decision of the Superintending Engineer of the Circle will be final. " This clause has to be read in conjunction with the arbitration clause i.e. clause 23, which provides as follows: "Clause 23: Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs and instructions hereinbefore mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right matter, or thing whatsoever in any way arising out of, or relating to the contract, designs, drawing specifications, estimates, instructions, orders or these conditions or otherwise concerning the works or the execution or failure to execute the same whether arising during the progress of work, or after the completion or abandonment thereof shall be referred to the sole arbitration of a Superintending Engineer of the Circle. It will be no objection to any such appointment that the arbitrator so appointed is a Government servant. The award of the arbitrator so appointed shall be final. conclusive and binding on all parties to this contract. The learned Subordinate Judge was inclined to hold that the 570 arbitrator had no jurisdiction to arbitrate on disputes which he has purported to do but in view of the Bench decision of the High Court of Orissa in State of orissa vs Gokulchandra Kanungo, , he held that he was not free to decide that the dispute was not arbitrable and rejected this plea. The High Court also did not entertain this objection. It was canvassed before us and submitted that in view of clause 11, the matters in dispute and the amount due for the alleged additional work, were not arbitrable at all. We have noticed clause 11 which makes the decision of the Engineer in Charge final in respect of some issues. In this connection, it is important to refer to the proviso of Clause 11 which states that in case of dispute about the rates and time for completion of the work and any dispute as to proportion that the additional work bears to the original contract work, the decision of the Superintending Engineer of the Circle would be final. The points upon which the arbitrator in the instant case has adjudicated are not those which are excepted or covered by Clause 11 of the agreement. In that view of the matter, this clause has no application in the instant controversy. Our attention was drawn to certain observations of this Court in Bombay Housing Board (Now the Maharashtra Housing Board) vs Karbhase Naik & Co., Sholapur, s ; There in view of clause 14 of the said contract, it was open to the respondent to make claim on the basis of the rates quoted. There, Clause 14 was more or less identical to Clause 11 in the present case. This particular contention, however, did not arise in that case. The Court held that the respondent there being contractor, was not bound to carry out additional or altered work and there was no reply to the notice stating the rates intended to be charged and the respondent there was not free to commence and complete the work on the basis that since the rates quoted were not accepted, it would be paid at such rates to be fixed by the Engineer in charge and that if it was dissatisfied with the rate or rates fixed by the Engineer in charge, it could raise a dispute before the Superintending Engineer and that the time limit for completion would be extended in all cases. This Court observed that only the rates were settled by the agreement. The respondents were under no obligation to carry out the additional or altered work but that is not the dispute before us in the present case. On the construction of Clause 11 of the contract, we are unable to accept the contention but on the points that the arbitrator has awarded in this case, were excluded by Clause 11 of the contract herein. Shri Mehta, however, strongly relied on certain observations of a Bench decision of Madhya Pradesh High Court in case of the Chief Administrator, Dandakaranya Project, 571 Koraput, Orissa & Anr. vs M/s. Prabartak Commercial Corpn. Ltd. Calcutta, , wherein while considering Clause 13A of the agreement there the High Court held that the dispute whether charges for stone chips could be adjudicated, was not arbitrable. That was a case of rates which was within the jurisdiction of the Engineer in charge by Clause 13A of the bargain between the parties. In the instant case it is not the rate which is in dispute. The Madhya Pradesh High Court referred to several decisions of this type and came to the conclusion on the construction of Clause 13A in that case that the dispute that had arisen between the parties in arbitration, was excluded by Clause 13A of the agreement. In view of the Clause in the instant case and the nature of the dispute which had arisen, we are of the opinion that such decisions also cannot give much assistance to the appellant. Reliance was also placed on certain observations of the Delhi High Court in the case of Food Corporation of India vs P.L. Juneja, AIR 1981 Delhi 43. There the Division Bench of the High Court was concerned with the questions which were to be decided by the Court and not by the arbitration. There also the Clause was very much dissimilar to the present one which is set out hereinbefore. Clause 15(c) provided that the question whether a particular service is or is not to be covered by any of the services specifically described and provided for the contract, or is or is not material to any such services shall be decided by the Regional Manager whose decision shall be final and binding. It was not the case whether any additional work was done and if so, the extent of such work. In the aforesaid view of the matter it is not possible to hold that in view of nature of instant dispute, the matters at issue were not excluded and the arbitrator did not commit any wrong in proceeding with the arbitration. It was next contended that an amount of Rs.15,23,657 has been granted for additional work over and above the payment of Rs.23,74,001 and this was disproportionately high and the award for this amount was per se bad. It is well settled that when the parties choose their own arbitrator to be the judge in dispute between them, they cannot, when the award is good on the face of it, object to the decision either upon law or on facts. Therefore, when arbitrator commits a mistake either in law or in fact in determining the matters referred to him, where such mistake does not appear on the face of the award and the documents appended to or incorporated so as to form part of it, the award will neither be remitted nor set aside. The law on this point is well settled. See in this connection the observations of this Court in Union of lndia vs Bungo Steel Furniture P. Ltd.; , and Allen Berry & Co. (P) Ltd. vs Union of India, 282. It was, however, contended that the amount of the award was shockingly high that it shocked the conscience of the Court and the award must be set aside. The fact that merely the award amount is quite high as commented by the High Court or that a large amount has been awarded, does not vitiate the award as such. In the instant case the original award was for Rs.9,99,510. Admittedly, additional work was done and payment for such work was determined at Rs.23,74,001 and claim for further additional work was made for Rs. 15,23,657. One has to judge whether the amount of the award was so disproportionately high to make it per se bad in the facts and circumstances of a particular case. It is clear from the facts that the arbitrator is a highly qualified person having several Indian and foreign Degrees and at the relevant time was acting as Chief Engineer in charge of the State Government. Having regard to the nature of claims involved and the fact that the additional work has been done for which large amounts have been paid and in this case it is evident that all due opportunities were given to the parties to adduce all evidence, we are unable to accept the submission that the award was so disproportionate as to shock the conscience of the Court and, as such, it cannot be held that the award was bad per se. In our opinion, the High Court was right in dismissing the challenge to the award on this ground. In support of the submission that the award must be held to be bad in this case, Mr. Mehta drew our attention to certain observations of Orissa High Court in State of Orissa & Ors. vs Gangaram Chhapolia & Anr., , where at page 279 the learned Judge observed the malady of the racket of arbitration was rampant in Orissa. Though the learned Judge was apparently heeding to the observations of Justice Holmes of America observed that the Court should take note of "the felt necessities of the time". In our opinion, the evidence of such state of affairs should make this Court scrutinise the award carefully in each particular case but that does not make the Court declare that all high amounts of award would be bad per se. As mentioned hereinbefore, it cannot be said that the amount of award was disproportionately high to hurt the conscience of the Court in this case. It is now well settled that the interest pendente lite is not a matter within the jurisdiction of the arbitrator. In this connection reference may be made to the observations of this Court in Executive Engineer (Irrigation), Balimela & Ors., vs Abhaduta Jena & Ors., [1988] 1 SCC 418 where this Court held that the arbitrator could not 573 grant interest pendente lite. In the aforesaid view of the matter this A direction in the award for the payment of such interest must be deleted from the award. The order of the High Court is modified to the extent that the award is confirmed subject to deletion of the interest pendente lite. We make it clear that in the facts of this case interest for the period from 26.9.81 to 18.3.83, the date of the award be deleted. The High Court has, however, granted interest from the date of the decree. That is sustained. The appeal is, therefore, dismissed except to the extent indicated above. In the facts and circumstances of the case the parties will pay and bear their own costs. G.N. Appeal dismissed.

The construction of the Irrigation Project was entrusted to the respondent. As per the contract the work commenced on 4th May, 1973 and was actually completed on 30th December, 1975, the stipulated date being 4th November, 1974. According to the appellant, the respondent accepted the final payment and was duly paid a sum of Rs.23,74,001 for the work done by him including the extra work. The last payment was alleged to have been made to the respondent in September, 1976. A 'nil ' bill was the last bill prepared. Thereafter, the respondent raised a claim and gave notice for appointment of an arbitrator. One Nanda was appointed as the arbitrator by the Chief Engineer. But on an application made by the respondent, the Subordinate Judge removed Nanda and appointed one Patnaik as the arbitrator. Again an application for removal of the arbitrator was made, but was dismissed. The Respondent filed his claims before the arbitrator. These claims were for the alleged extra work in respect of which the decision of the Superintending Engineer under clause 11 of the contract was final and the same was excluded from the purview of the arbitration 563 clause. The appellant initially contended that the arbitrator had no jurisdiction to deal with such claims but later filed a counter claim, and denied all the claims of the respondent. While the application for removal of the arbitrator was pending, an adjournment was sought for from the arbitrator and it was refused. After hearing the parties and considering the evidence produced, the arbitrator made a non speaking and non reasoned award for Rs.15,23,657 plus interest @ 10% in favour of the respondent. Objections to the award were filed in the Court. The Subordinate Judge upheld the objection and set aside the award. On appeal, the High Court set aside the judgment of the Subordinate Judge and made the award rule of the Court, and directed payment of future interest at 6%. In this appeal, by special leave, against the High Court judgment, the appellant State submitted that the award is without any reason. It also suggested that since the validity of the non reasoned award is being gone into by a larger Bench of this Court, that decision should be awaited. Dismissing the appeal, ^ HELD: 1.1 The law as it stands today is that award without reasons is not bad per se. Indeed, an award can be set aside only on the ground of misconduct or an error of law apparent on the face of the award. [567F] 1.2 In the instant case, the plea that the award was bad being an unreasoned one, was neither mooted before the learned Subordinate Judge nor before the High Court. It was also not raised in the objection to the award, filed originally. It is only in the special leave petition that such a plea has been raised for the first time. Arbitration is restored to as a speedy method of adjudication of disputes. Stale and old adjudication should not be set at naught, or examination of that question kept at bay on the plea that the point is pending determination by a larger Bench of this Court. Even if it is held ultimately that the unreasoned award per Se is bad, it is not sure whether such a decision would upset all the awards in this country which have not been challenged so far. Certainly, in the exercise of discretion under Article 136 of the Constitution, and in view of the facts and circumstances of the present case, it would not be justified in allowing the party to further prolong or upset adjudication of old and stale dispute. [567C E] 2. Clause 11 of the contract between the parties makes the deci 564 sion of the Engineer in Charge final in respect of some issues. Proviso of Clause 11 stipulates that in case of dispute about the rates and time for completion of the work and any dispute as to proportion that the additional work bears to the original contract work, the decision of the Superintending Engineer of the Circle would be final. The points upon which the arbitrator in the instant case has adjudicated are not those which are excepted or covered by Clause 11 of the agreement. ID that view of the matter, this clause has no application in the instant controversy. [570B D] Bombay Housing Board (now the Maharashtra Housing Board) vs Kharbase Naik & Co., Sholapur, ; ; Chief Administrator, Dandakaranya Project, koraput, Orissa & Anr. vs M/s. Prabartak Comercial Corpn. Ltd. Calcutta, and Food Corporation of India. vs P.L. Juneja, AIR 1981 Delhi 43 distinguished. State of orissa vs Gokulchandra Kanungo, referred to. 3.1 It is well settled that when the parties choose their own arbitrator to be the judge in the dispute between them, they cannot, when this award is good on the face of it, object to the decision either upon law or on facts. Therefore, when arbitrator commits a mistake either in law or in fact in determining the matters referred to him, where such mistake does not appear on the face of the award and the documents appended to or incorporated so as to form part of it, the award will neither be remitted nor set aside. [571F G] 3.2 The fact that merely the award amount is quite high or that a large amount has been awarded, does not vitiate the award as such. If ' there is any evidence of malady of racket of arbitration, the Court may scrutinise the award carefully in each such case. [572A B] 3.3 It is clear from the facts of this case that the arbitrator is a highly qualified person having several Indian and foreign Degrees and at the relevant time was acting as Chief Engineer in Charge of the State Government. Having regard to the nature of claims involved, and the fact that the additional work has been done for which large amounts have been paid in this case, it is evident that all due opportunities were given to the parties to adduce all evidence. It cannot be said that the award was so disproportionate as to shock the conscience of the Court leading it to hold that the award was bad per Se. The High Court was 565 right in dismissing the challenge to the award on this ground. [572C D] Union of India vs Bungo Steel Furniture Pvt. Ltd., ; and Allen Berry & Co. (P) Ltd. vs Union of India, ; relied on. State of Orissa & Ors. vs Gangaram Chhapolia & Anr., referred to. 4.1 It is now well settled that the interest pendente lite is not a matter within the jurisdiction of the arbitrator. [572G H] 4.2 In the instant case, the order of the High Court is modified to the extent that the award is confirmed subject to the deletion of the interest pendente lite. It is made clear that interest for the period from 26.9.1981 to 18.3.1983 (the date of the award) is deleted. However, the interest granted by the High Court from the date of the decree is sustained. [573A B] Executive Engineer (Irrigation), Balimella & Ors. vs Abhaduta Jena, [1988] 1 SCC 418, followed.

Appeal Nos. 199 and 200 of 1966. Appeals by special leave from the judgment and order dated May 20, 1964 of the Assam and Nagaland High Court in Sales Tax Reference No. 1 of 1963. Naunit Lal, for the appellant (in both the appeals). B. P. Maheshwari, for the respondent (in both, the appeals). The Judgment of the Court was delivered by Ramaswami, J. These appeals are brought, by special, leave, from the judgment of the High Court of Assam and Nagaland dated May 20, 1964 in Sales Tax Reference No. 1 of 1963. The respondent is a registered dealer under the Assam Sales Tax Act (Act 17 of 1947). For the two periods ending September 30, 1959 and September 30, 1960, the Sales Tax Officer assessed the 962 respondent to sales tax holding that hydrogenated oil was exempt from sales tax but the value of the containers should be assessed at Re. 1/ for each container of hydrogenated oil and at 2 annas for salt bag and a small mustard oil tin which are other exempted goods for the period ending September 30, 1959. For the other period ending September 30, 1960, the value of the containers of the exempted goods was estimated at Rs. 21, 5001. The respondent preferred appeals to the Assistant Commissioner of Taxes, but the appeals were dismissed. The respondent preferred second appeals before the Assam Board of Revenue which by its order dated June 17, 1963 also dismissed the appeals. The respondent thereafter filed an application under section 32 of the Assam Sales Tax Act, 1947 for reference of the following two questions of law to the High Court "(1) Whether delivery. of goods made to the Assam Rifles and NEFA, at Rowriah Air Port for consumption outside the State of Assam, constitutes a sale liable to Sales Tax under the Act ? (2) Whether the value of the containers of hydrogenated oil is assessable to Sales Tax under the Act though the oil itself is not taxable under it ?" By its judgment dated May 20, 1964 the High Court answered the first question against the assessee. With regard to the second question, the High Court held that the value of the containers was not assessable to sales tax "unless separate price has been charged for the containers". The High Court took the view that there was no evidence to show that actually separate price was, paid for the containers and hence there was no sale and there could not be any tax on the containers. The High Court accordingly answered the second question in favour of the assessee. The question presented for determination in these appeals is whether the value of containers of hydrogenated oil is assessable to sales tax under the Assam Sales Tax Act, 1947. On behalf of the appellant Mr. Naunit Lal contended that the High Court has erred in holding that unless a separate price has been charged for the containers the value of the containers is not assessable to sales tax. It was submitted that the parties may have intended in the circumstances to sell the hydrogenated oil apart from the containers; and the mere fact that the price of the containers was not separately fixed would make no difference to the assessment of sales tax. In our opinion, the argument put forward on behalf of the appellant is well founded and must be accepted as correct. It is well established that in order to con stitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods, the 963 agreement must be supported by money consideration, and that as a result of the transaction the property should actually pass in the goods. Unless all the ingredients are present in the transaction there could be no sale of goods and sales tax cannot be imposed [State of Madras vs Gannon Dunkerley and Co. [(Madras)](1). But the contract of sale may be express or implied. In Hyderabad Deccan Cigarette Factory vs The State of Andhra Pradesh(2). It was held by this Court that in a case of this description what the Sales tax authorities had to do was to ask and answer the question whether the parties, having regard to the circumstances of the case, intended to sell or buy the packing materials or whether the subjectmatter of the contracts of sale was only an exempted article, and packing materials did not form part of the bargain at all, but were used by the sellers as a convenient and cheap vehicle of transport. At page 628 of the Report Subba Rao, J., speaking for the Court,, observed as follows: "In the instant case, it is not disputed that there were no express contracts of sale of the packing materials between the assessee and its customers. On the facts, could such contracts be inferred ? The authority concerned should ask and answer the question whether the parties in the instant case, having regard to the circumstances of the case, inten ded to sell or buy the packing materials, or whether the subject matter of the contracts of sale was only the ciga rettes and that the packing materials did not form part of the bargain at all, but were used by the seller as a con venient and cheap vehicle of transport. He may also have to consider the question whether, when a trader in cigarettes sold cigarettes priced at a particular figure for a speci fied number and handed them over to a customer in a cheap card board container of insignificant value, he intended to sell the cardboard container and the customer intended to buy the same ? It is not possible to state as a proposition of law that whenever particular goods were sold in a container the parties did not intend to sell and buy the container also. Many cases may be visualized where the container is comparatively of high value and sometimes even higher than that contained in it. Scent or whisky may be sold in costly containers. Even cigarettes ' may be sold in silver or gold caskets. It may be that in such cases the agreement to pay an extra price for the container may be more readily implied. " The question as to whether there is an agreement to sell packing material is a pure question of fact depending, upon the circumstances found in each case. But the High Court answered the (1) ; (2) 17 section T. C. 624. 964 question of law referred to it by the Board of Revenue without addressing itself to the question whether there was an express or implied agreement for the sale of the containers of hydrogenated oil in the present case. We accordingly set aside the judgment of the High Court and direct that the answer to the second question should be that the value of containers of hydrogenated oil is assessable to salestax under the Act if there is an express OK, implied agreement for the sale of such containers. These appeals are, accordingly, allowed At the time of grant of special leave this Court made a condition that the appellant will pay the cost of the respondent in any event. Mr. Naunit Lal on behalf, of the appellant gave an under taking that if these appeals are allowed no further steps will be taken to tax the respondent for the containers for the periods covered in the present case. G.C. Appeals allowed.

The respondent was a registered dealer under the Assam Sales Tax Act, 1947. The Sales tax Officer assessed the respondent to Sales tax in respect of the containers of hydrogenated oil and other exempted goods. Appeals to the Assistant Commissioner of Taxes failed as also second ap peals to the Assam Board of Revenue. In reference the High Court held that the value of the containers was not assessable to sales tax "unless separate price has been charged for the containers. " This finding was based on the view that there was no evidence to show that actually separate price was paid for the containers and hence there was no sale and there could not be any tax on the containers. In appeal to this Court by the Commissioner of Taxes it was urged that the parties may have intended in the circumstances to sell the hydrogenated oil apart from the containers the mere fact that the price of the containers was not separately fixed would make no difference HELD : The question as to whether there is an agreement to sell packing material is a pure question of fact depending upon the circumstances found in each case. The High Court was in error when it answered the question of law referred to it without addressing itself to the question whether there was an express or implied agreement for the sale of the containers of hydrogenated oil in the present case. [963 HI Hyderabad Deccan Cirgrette Factory vs State of Andhra Pradesh, 17 S.T.C. 624, relied on.

Civil Appeal No. 1599 of 1968. Appeal by Special Leave from the Judgment and Order dated the 16th February 1968 of the Calcutta High Court in Civil Rule No. 1030 of 1967. D. N. Mukherjee and N. R. Chaudhury for the Appellants. Sukumar Ghosh for the Respondent. The Judgment of the Court was delivered by GUPTA, J. This appeal by special leave is directed against a Judgment of the Calcutta High Court setting aside in revision the finding of the trial court on the issue whether the relationship of landlord and tenant subsisted between the parties in a suit for ejectment. The issue which arises on the interaction of two statutes, the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950 and the West Bengal Premises Tenancy Act, 1956, which repeals the earlier Act but keeps it alive for proceedings pending on the date of repeal, involves the question, is the right conferred on the sub tenant by the 1956 Act of being declared a tenant directly under the superior landlord available to a sub tenant against whom a suit for ejectment was pending when that Act came into force ? The appeal turns on the answer to this question. The material facts leading to the impugned order are these. The respondent was a tenant of premises No. 17/1E Gopal Nagar Road, Alipore, Calcutta, and his landlord was one Jagabandhu Saha, the owner of the house, Dilip Narayan Roy Chowdhury was a sub tenant under the respondent in respect of the ground floor flat paying a monthly rent of Rs. 75/ . The respondent instituted a suit in the Munsif 's court at Alipore on March 21, 1956 when the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950 was in force, seeking to evict Roy Choudhury on the ground that he was a defaulter in payment of rent. This Act was a temporary statute due to expire on March 31, 1956, but on that date the West Bengal Premises Tenancy Act, 1956 was brought into operation repealing the 597 temporary Act before it expired. The material part of section 40 of the 1956 Act which repealed the 1950 Act is as follows: "Repeal and savings. (1) The West Bengal Premises Rent Control (Temporary Provisions) Act, 1950 (in this section referred to as the said Act), is hereby repealed. (2) Notwithstanding the repeal of the said Act: (a) any proceeding pending on the 31st day of March, 1956, may be continued, or, (b) x x x x x as if the said Act had been in force and had not been repealed or had not expired :" Section 16 of the 1956 Act confers on the sub tenant the right to become a tenant directly under the landlord. Sub section (2) of section 16 provides inter alia that where before the commencement of this Act, the tenant, with or without the consent of the landlord, has sublet any premises either in whole or in part, the tenant and every sub tenant must give notice to the landlord of such subletting within the prescribed period. Sub section (3) of section 16 provides that in any such case where the landlord had not consented in writing or denies that he gave oral consent, the Rent Controller on an application made to him either by the landlord or the sub tenant shall make an order declaring that the tenant 's interest in so much of the premises as has been sublet shall cease and that the sub tenant shall become a tenant directly under the landlord from the date of the order. The Rent Controller is also required to fix the rent payable by the sub tenant to the landlord from the date of the order. Sub tenant Roy Choudhury served a notice under section 16(2) of the 1956 Act upon the superior landlord and applied under section 16(3) for being declared a tenant directly under him. On July 31, 1956 the Rent Controller recorded a finding on this application that Roy Choudhury was entitled to the declaration asked for overruling the objections raised by the respondent. On February 23, 1957 the Rent Controller concluded the proceeding under section 16(3) by finally declaring that the sub tenant was a tenant directly under the superior landlord with effect from that date, and fixing the rent payable by him. The appeal preferred by the respondent from this order was dismissed by the appellate authority. In the meantime, on August 21, 1956 the respondent had made an application under section 14(4) of the 1950 Act in the suit for eviction which was pending. Section 14(4) of the 1950 Act permitted the landlord to make an application in the suit for an order on the tenant to deposit month by month the rent at the rate at which it was last paid and also the arrears of rent, if any, and provided that on failure to deposit the arrears of rent or the rent for any month within the period prescribed for such deposits, the court would make an order striking out the tenant 's defence against ejectment so that the tenant would be in he same position as if he had not defended the claim to 598 ejectment. On this application the Munsif on September 26, 1956 directed the appellant to deposit a certain sum as arrears of rent and also rent month by month at the rate of Rs. 75/ . After the declaration of tenancy under section 16(3), Roy Choudhury was permitted to amend his written statement in the suit by adding a paragraph questioning the relationship of landlord and tenant between the respondent and himself. It is unnecessary to refer to the various proceedings in the suit that followed, in the course of which the High Court was moved more than once by either party. On January 24, 1965 Roy Choudhury died and the present appellants were substituted in his place in the suit as his heirs and legal representatives. On November 1, 1965 the Munsif framed an additional issue, being issue No. 9, which was as follows: "Has the alleged relationship of landlord and tenant between the parties been determined by final orders dated 31 7 56 and 23 2 57 passed by the R. C. (Rent Controller) Calcutta in Case No. 243B of 1956 ?" The Munsif took up for consideration the application under section 14(4) and the additional issue No. 9 together and by his order dated February 20, 1967 found that the Rent Controller had jurisdiction to pass the order under section 16(3) declaring the defendant to be a direct tenant under the superior landlord, and that the relationship of landlord and tenant between the parties ceased by virtue of the order made under section 16(3). The additional issue No. 9 was accordingly decided in favour of the defendant and the application under section 14(4) of the 1950 Act was dismissed. The plaintiff moved the High Court in revision against this order. The revision case was disposed of on February 16, 1968, the learned Judge maintained the order rejecting the application under section 14(4) but set aside the finding on issue No. 9 and held that "for the purposes of the present suit for ejectment there is a relationship of landlord and tenant". The propriety of this order is challenged by the tenant defendants. In the course of his Judgment the learned Judge recorded the following findings: (i) "The validity or the binding nature of the order under section 16(3) of the 1956 Act cannot be challenged nor can it be found in this suit to be inoperative". (ii) The rights arising out of a valid proceeding under section 16(3) cannot be overlooked in spite of the non obstante clause in section 40 of the 1956 Act and the effect of the order under section 16(3) has to be considered in the suit. (iii)As the proceeding under section 16(3) was started during the pendency of the suit, the principle underlying section 52 of the Transfer of Property Act should apply to this case and "the decision made in the proceeding under section 16(3) would not control the decision in the ejectment suit". 599 It thus appears that the High Court was of the view that in spite of section 40 providing that a pending proceeding would continue to be governed by the provisions of 1950 Act as if that Act had not been repealed or had not expired, the order made under section 16(3) of the 1956 Act must be given effect to. The High Court however held that the proceeding under section 16(3) having been initiated during the pendency of the suit, the principle of lis pendens should apply and accordingly the order under section 16(3) would not govern the suit Before us, counsel for the respondent did not rely on section 52 of the Transfer of Property Act, but sought to support the decree on the ground that in view of section 40, the entire proceeding under section 16(3) was without jurisdiction. The doctrine of lis pendens can of course have no application to this case. Section 52 of the Transfer of Property Act forbids alienations pendente lite providing inter alia that the property forming the subject matter of a pending suit cannot be transferred or otherwise dealt with by any party to the suit so as to affect the rights of any other party under any decree or order which may be made therein, except under the authority of the court and on such terms as it may impose. The doctrine of lis pendens means that no party to the litigation can alienate the property in dispute so as to affect the other party, and rests "upon this foundation, that it would plainly be impossible that any action or suit could be brought to a successful termination if alienations pendente lite were permitted to prevail". [observation of Turner L. J. in Belamy vs Sabine, ; (584) quoted with approval by the Privy Council in Faiyaz Husain Khan vs Munshi Prag Narail & others, 34 I.A. 102 (105).] But a sub tenant who avails of the provisions of section 16(3) which extinguishes the tenant 's interest in the portion of the premises sublet and confers on the sub tenant the right to hold the tenancy directly under the superior landlord, cannot be said to have alienated proporty pendente lite. Section 5 of the Transfer of Property Act defines transfer of property as an act by which a living person conveys property to another. When the legislature in exercise of its sovereign powers regulates the relations of landlord and tenant, altering or abridging their rights, what it does is not transfer of property attracting the doctrine of lis pendens. As stated already, counsel for the respondent put his case on the provisions of section 40 of the 1956 Act. According to him the suit must continue to be governed by the 1950 Act even after its repeal in view of section 40, unaffected by the provisions of the 1956 Act Section 40 of the 1956 Act keeps alive a proceeding pending on the date when the 1950 Act was repealed as if it is still in force and has not been repealdd. This however does not mean that even if the 1956 Act created a new right in favour of the sub tenant, he would be denied this right because a suit for ejectment was pending against him when the Act came into force. 'Tenant ' as defined in section 2(h) of the 1956 Act includes a person continuing in possession after the termination of his tenancy until a decree or order for eviction has been made against him. A sub tenant is also a tenant, and when the order under section 16(3) was made no decree or order for eviction had been passed against him. That being so, we do not see why he 600 should not be entitled to the benefit conferred by section 16(3). The intention of the legislature, which is paramount, is clear to upgrade the subtenant and make him a tenant directly under the superior landlord. This is a new right given to the sub tenant, and though the pending proceeding may continue to be regulated by the repealed statute in view of section 40, there is nothing in that section to suggest that the sub tenant against whom a suit was pending will be denied this additional right. The High Court has held that the effect of the order under section 16(3) must be considered in the suit. Thus the suit may continue in spite of the repeal of the 1950 Act, but the right acquired by the sub tenant under the 1956 Act has to be given effect to and the suit decided accordingly. It must therefore be held that the relationship of landlord and tenant ceased between the parties on the date when the order under section 16(3) was made. The appeal is allowed, the order of the High Court appealed from is set and that of the trial court restored. The appellants will be entitled to their costs in this Court and in the High Court. P.H.P. Appeal allowed.

The respondent was the tenant of the suit premises and Dilip Narayan Roy Choudhury was his sub tenant. The tenant instituted a suit against the subtenant when the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950 was in force seeking to evict the sub tenant on the ground that he was a defaulter in payment of rent. After the suit was instituted. West Bengal Premises Tenancy Act, 1956, was brought into operation. Section 40 of the subsequent Act repealed the 1950 Act and further provided that not withstanding the repeal of the said Act any proceedings pending on the date of the repeal may be continued as if the said Act had been in force and had not been repealed or had not expired. Section 16 of the 1956 Act confers on the sub tenant, on his complying with certain conditions the right to become a tenant directly under the landlord and authorise the Rent Controller to pass necessary orders directing that the sub tenant shall become tenant directly under the landlord from the date of the order. The sub tenant adopted proceedings under section 16 of the Act against the superior landlord and in February, 1957, the Rent Controller held that the sub tenant was entitled to the declaration asked for over ruling the objections raised by the tenant. An appeal filed by the tenant against the said order was dismissed. Thereafter, the sub tenant amended his written statement in the suit for eviction filed by the tenant against him and pleaded that the relationship of the landlord and tenant between the tenant and the sub tenant no longer subsisted. The Munsiff dismissed the application for eviction filed by the tenant on the ground that in view of he order passed under the 1956 Act declaring the sub tenant to be a direct tenant under the landlord the relationship of landlord and tenant between the parties ceased. In a revision, the High Court maintained the order rejecting the application for eviction but set aside the finding that the relationship of the landlord and tenant between the tenant and the sub tenant ceased. The High Court held that in spite of section 40 of the repealing Act, section 16(3) of the Repealing Act must be given effect to. The High Court, however, took the view that the proceedings under section 16(3) having been initiated during the pendency of the suit the principle of lis pendens would apply and, accordingly, the order under section 16(3) would not govern the suit. In an appeal by special leave by the heirs of the sub tenant, the counsel for the respondent did not rely on section 52 of the Transfer of Property Act but sought to support the decree on the ground that in view of section 40 of the Repealing Act the entire proceedings under section 16 was without jurisdiction. Allowing the appeal, ^ HELD: (1) The doctrine of lis pendens can have no application to this case. The doctrine of lis pendens means that no party to the litigation can alienate the property in dispute so as to affect the other party and rests upon the foundation that it would plainly be impossible that any action or suit could be brought to a successful termination after alienation pendente lite. Section 596 5 of the Transfer of Property Act defines transfer of property as an act by which a living person conveys property to another. When the Legislature in exercise of its sovereign powers regulates or alters the rights of landlord and tenant, what it does is not transfer of property attracting the doctrine of lis pendens. [599B, C F] (2) It is true that in view of section 40 of the Repealing Act a pending proceeding may be continued as if the Repealing Act was not passed. This, however, does not mean that even if the 1956 Act created a new right in favour of the tenant, he would be denied this right because a suit for ejectment was pending against him when the Act came into force. The intention of the Legislature, which is paramount, is clear to upgrade the sub tenant and make him a tenant directly under the superior landlord. A sub tenant is a tenant within the meaning of section 2(h) of the Repealing Act. Thus, the suit must continue under the 1950 Act but the right acquired by the sub tenant under 1956 Act has to be given effect to and the suit decided accordingly. Therefore, the relationship of landlord and tenant ceased between the parties on the date when the order under section 16 was made. [599F H, 600B C]

Civil Appeal No. 548 of 1958. Appeal by Special Leave from the judgment and order dated March 27, 1957, of the Patna High Court in Misc. Judicial Case No. 315 of 1956. B. Sen, P. W. Sahasrabudhe and A. C. Ratnaparkhi. for the Appellant K. L. Hathi and R. H. Dhebar, for Respondent No. 1. N. C. Chatterjee and section N. Mukerji, for Respondent No. 2. 1961. October 9. The Judgment of the Court was delivered by SARKAR, J. on September 25, 1947, the appellant was appointed by respondent No. 2, the Tata Iron and Steel Co., Ltd. (hereafter called the Company) as the Chief Labour officer of its collieries of which it appears to have a few, and he worked 33 under the Company till the latter terminated his services by a notice dated December 5,1955. On such discharge, the appellant , claiming to be a Welfare Officer of a mine within r.74(2) of the Mines Rules 1955, which rule we shall later ser out, filed an appeal before respondent No.1, the Chief Inspector of Mines in India, under that rule questioning the validity of his discharged by the Company. The Chief Inspector held that the appellant was not a Welfare Officer within that rule and refused to entertain his appeal. The appellant then moved the High Court at Patna under article 226 of the Constitution for an appropriate writ directing the chief inspector to decide the appeal. The High Court dismissed the appellant 's petition agreeing substantially with the view taken by the Chief Inspector. The appellant has now appealed to this Court against the judgment of the High Court. The Mines Rules; 1955 were framed under the , and came into force on July 2, 1956. We are principally concerned with the proviso for. 74(2) but this has to be read with r.72. The relevant portions of these rules are set out below. Rule 72. (1) In every mine wherein 500 or more persons are ordinarily employed there shall be appointed at least one Welfare Officer: Provided that if the number of persons ordinarily employed exceeds 2000, there shall be appointed additional Welfare Officer on a scale of one for every 2000 persons or fraction thereof (2) No person shall as a Welfare Officer of a mine unless he possesses (Here certain qualifications are specified) Provided that in case of a person already in service as a Welfare Officer in a mine the 34 above qualifications may, with the approval of the Chief Inspector be relaxed. (3). . . . . (4) A written notice of ever y such appointment. . and of the date thereof shall be sent by the owner, agent or manager t o the Chief Inspector within 7 days from the date of such appointment. . . Rule 73. Duties of Welfare officers: . . . . . . . . . . (Here certain duties are prescribed) Rule 74. (1). . . . . . . (2) The condition of service of a Welfare Officer shall be the same as of other members of the staff of corresponding status in the mine; Provided that in the case of discharge or dismissal, the Welfare Officer, shall have a right of appeal to the Chief Inspector whose decision thereon shall be final and binding upon the owner, agent or manager of the mine as the case may be. The Chief Inspector mentioned in these Rules is the Chief Inspector of Mines in India. If the appellant was not a Welfare officer within the proviso to r. 74(2) as the company contends, then, of course, no appeal by him lay under it. He would then clearly not be entitled to the writ he asked. The question therefore is whether the appellant was a Welfare Officer within the rule and is really one of construction of it. We desire now to point out certain facts as to which there is no controversy. First, both the Act and the Rules came into force long after the appellant had been appointed by the Company. Secondly no relaxation of qualifications had been sought from or granted by the Chief Inspector with respect to 35 The appellant under the proviso to sub r. (2) of r. 72 after the Rules came in to force. Thirdly, no notice as contemplated in r. 72(4) had been given concerning the appellant. It appears that the Chief Inspector found that the appellant "was performing duties akin to those of Welfare officers contemplated by rule 73 and he was qualified to work as a Welfare officer. " We propose to deal with this appeal on the basis of these findings. Dealing with the contention noticed by the Chief Inspector and the High Court that a Welfare Officer under r. 74(2) is one who is appointed after the Rules came into force, Mr. Sen for the appellant said that a person like the appellant who had the requisite qualifications and was discharging the duties prescribed for a Welfare officer from before the Rules came into force, would be a Welfare officer within them. He pointed out that the proviso to sub r. (2) of r. 72 clearly contemplated the continuance of the service of such a person as a Welfare officer with relaxation where such was necessary and was granted. He also said that sub r. (4) of r. 72 was inapplicable to Such a person because he had been appointed long ago and because the proviso to r. 72(2) indicated that its application was not intended. We do not think it necessary to pronounce on this question in the present case. In our view, the appeal must fail even if Mr. Sen 's contention is right and that for another reason . We observe that the Rules do not define the term "Welfare officer". But we think it is beyond doubt and indeed the contrary has not been contended that the Welfare officer mentioned in the proviso to r. 74(2) is the same officer as is mentioned in sub r (1) of r. 72. Now it is, in our view, perfectly plain that the Welfare officer contemplated by r. 72(1) is such an officer of one mine. The rule says that there shall be at least one Welfare officer for every mine employing between 500 and 2000 persons and this makes any other view impossible 36 As we understood Mr. Sen, he also accepted that the Welfare officer contemplated is one appointed in respect of one mine. Now, the appellant was on his own case, the Welfare Officer of several mines of the Company and not of one of such mines only. Therefore, we think that he was not a Welfare officer within r. 72(1) and hence not within the proviso to r. 74(2). But Mr. Sen contends that the appellant might be considered as having been severally and independently appointed the Welfare officer of each of the Company 's several collieries in his charge. We think that would be an impossible view to take. One appointment cannot be treated as several appointments and it is not in dispute that the appellant had only one appointment for all the Company 's collieries. We think that this appeal fails and we dismiss it with costs. Appeal dismissed.

The appellant was appointed as the Chief Labour officer by the Company in 1947. In December; 1955, the company terminated his services The appellant, claiming to be a Welfare officer, preferred an appeal to the Chief Inspector of Mines under r. 74(2) of the Mines Rules, 1955. ^ Held, that the appellant was not a Welfare officer and as such could not prefer an appeal under r. 74 (2). The Welfare officer mentioned in r. 74 (2) is the same officer as is mentioned in r. 72 (1) which rule contemplates a Welfare officer appointed in respect of one mine. But the appellant was an officer of several mines of the Company and not of one of such mines only.

iminal Appeals Nos. 84 and 85 of 1952. Appeals by Special Leave granted by the Supreme Court of India on the 17th September, 1951, from the Judgment and Order dated the 6th June, 1951, of the High Court of Judicature at Calcutta in Criminal Appeals No. 175 and 176 of 1950, respectively arising 33 out of the Judgment and Order dated the 29th August, 1950, of the Special Court of Alipur, Calcutta, in Case No. 2 of 1949. N.C. Chatterjee (section N. Mukherjee and P. N. Mehta, with him) for the appellant in Cr. Appeall No. 84 of 1952. Ajit Kumar Dutt and Arun Kumar Dutt for the appellant in Cr. Appeal No. 85 of 1952. C. K. Daphtary, Solicitor General for India (B. Sen, with him) for the respondent in both the appeals. May 22. The Judgment of the Court was delivered by PATANJALI SASTRI C. J. These are connected appeals by special leave from the order of the High Court of Judicature at Calcutta dated January 6, 1951, confirming the conviction of the appellants and the sentences imposed on them by the Special Court, Alipur, Calcutta, constituted under the West Bengal Criminal Law Amendment (Special Courts) Act, 1949. The first appellant was at all material times the proprietor of the firm of Kedar Nath Mohanlal, Managing Agents of Shiva Jute Press Ltd., an incorporated company having a number of godowns at Cossipore in West Bengal, and the second appellant was the Area Land Hiring and Disposals Officer in the service of the Government of India. Some of the godowns belonging to the company were requisitioned by the Govern ment for military purposes in 1943 and were released in December, 1945. The appellants, along with two others who were given the benefit of doubt and acquitted, were charged, with having conspired to cheat, and having cheated, the Government by inducing their officers to pay Rs. 47,550 to the first appellant on behalf of the company as compensation for alleged damage to the godowns on the basis of an assessment made by the second appellant which was false to the knowledge of both the appellants. It was also alleged that the second appellant recommended 34 the payment of Rs. 1,28,125 to the company for damage caused to the jute stored in the godowns by leakage of rain water through cracks in the roof which the military authorities neglected to repair. This claim, however, had not been paid as the second appellant 's recommendation was not accepted by the higher authorities who referred it to the Claims Commission for investigation. The appellants were accordingly charged with having committed offences under sections 120B and 420 of the Indian Penal Code and section 5(2) of the Prevention of Corruption Act (Act No. 11 of 1947). The West Bengal Criminal Law Amendment Act (hereinafter referred to as " the Act ") came into force on June 23, 1949, and, by notification No. 5141 J dated September 16, 1949, the West Bengal Government allotted the case against the appellants and two others to the Special Court constituted by the Government under section 3 of the Act. The trial commenced on January 3, 1950, and nine prosecution witnesses were examined in chief before January 26, 1950, when the Constitution came into force. , After some more witnesses were examined, the charges were framed on February 27, 1950. On June 9, 1950, prosecution evidence was closed and the appellants were examined under section 342 of the Criminal Procedure Code. On August 29, 1950, the Special Judge delivered judgment convicting the appellants on all the counts and sentenced them to varying terms of rigorous imprisonment and fine. In addition to the sentences imposed under the ordinary law the first appellant was fined Rs. 50,000 including the sum of Rs. 47,550 received by him, as required by section 9(1) of the Act. Though the constitutionality of the Act was not challenged in the High Court, Mr. Chatterjee on behalf of the appellants made it the principal issue in these appeals. He contended that the Special Court had no jurisdiction to try and convict the appellants inasmuch as section 4 of the Act, under which the case was allotted by the State Government to the Special Court offended against article 14 of the Constitution in that 35 it enabled the Government to single out a particular case for reference to the Special Court for trial by the special procedure which denied to persons tried under it certain material advantages enjoyed by those tried under the ordinary procedure. Learned counsel placed strong reliance on the majority decision of this court in Anwar Ali Sarkar 's case(1) and, indeed, claimed that that decision ruled the present case. He further urged that the offence under section 5(2) of the Prevention of Corruption Act was triable exclusively by the court of session under item (1) of the last heading of Schedule 11 to the Criminal Procedure Code as the offence is made punishable under that section with imprisonment for seven years, with the result that the trial which was held in Calcutta would have been by jury in the High Court had the ordinary procedure been followed. Though the trial by the Special Court began before the commencement of the Constitution, its continuance without a jury after the Constitution came into force vitiated the whole trial, as it would riot be possible to introduce the jury at any subsequent stage. In support of this view he relied on certain observations in the majority judgment of this court in Qasim Razvi 's case(2). These observations were made by way of explaining the majority decision in Lachmandas Kewalram Ahuja 's case(3) where it was held that proceedings taken prior to the commencement of the Constitution before a Special Court constituted under section 12 of the Bombay Public Safety Act, which was in the same terms as section 5(1) of the West Bengal Act, remained unaffected by the Constitution, though the special procedure provided by the Act was held to be discriminatory following Anwar Ali Sarkar 's case(1). On the other hand, the Solicitor General on behalf of the Government maintained that the decision was clearly distinguishable and had no application to this case which is governed by the principles enunciated in the Saurashtra case(4). Before considering the constitutional validity of the Act in the light of the rulings referred to above, (1) ; (2) (3) ; (4) ; 36 it is necessary to have a look at the provisions of the Act in order to ascertain the underlying policy and purpose of the legislation, what evil it seeks to remedy and what means it employs to that end. The Act is entitled " an Act to provide for the more speedy trial and more effective punishment of certain offences" and the preamble declares that " it is expedient to provide for the more speedy trial and more effective punishment of certain offences " which are set out in the schedule annexed to the Act. The Provincial Government is empowered to constitute Special Courts of criminal jurisdiction for specified areas and to appoint persons with prescribed qualifications as Special Judges to preside over such courts (sections 2 and 3). Section 4 defines the jurisdiction of Special Judges and reads as follows: "4. (1) The Provincial Government may, from time to time by notification in the Official Gazette, allot cases for trial to a Special Judge, and may also from time to time by like notification transfer any case from one Special Judge to another and withdraw any case from the jurisdiction of a Special Judge or make such modifications in the description of a case (whether in the name of the accused or in the charges preferred or in any other manner) as may be considered necessary. (2)The Special Judge shall have jurisdiction to try the cases for the time being allotted to him under subsection (1) in respect of such of the charges for the offences specified in the schedule as may be preferred against the several accused, and any such case which is at the commencement of this Act or at the time of such allotment pending before any Court or another Special Judge shall be deemed to be transferred to the Special Judge to whom it is allotted. (3)When trying any such case as aforesaid, a Special Judge may also try any offence whether or not specified in the schedule which is an offence with which the accused may, under the Code of Criminal Procedure, 1898, be charged at the same trial." 37 Section 5 provides for the procedure and powers of Special Judges. They are empowered to take cognisance of offences without the accused being committed to their court for trial and are required to follow the procedure prescribed by the Criminal Procedure Code for the trial of warrant cases. The Special Judges may, for reasons to be recorded, refuse to summon any witness, if satisfied after examination of the accused, that the evidence of such witness will not be material and shall not be bound to adjourn any trial for any purpose unless such adjournment is, in their opinion, necessary in the interests of justice. Except as aforesaid the provisions of the Code are made applicable so far as they are not inconsistent with the Act, and for the purposes of the said provisions the Special Court is to be deemed to be a court of session trying cases without a jury and without the aid of assessors. By section 6 the High Court is given all the powers conferred on a High Court by Chapters XXXI and XXXII of the Code as if the court of the Special Judge were a court of session. Section 7 bars the transfer of any case from a Special Judge, and section 8 lays down certain special rules of evidence to be applied in the trial of offences specified in the schedule. Section 9 enacts certain special provisions regarding punishment. Sub section (1) provides that a Special Judge shall impose in addition to any sentence authorised by law a further fine which shall be equivalent to the amount of money or value of other property found to have been procured by the offender by means of the offence, and sub section (4) requires the amount of such fine when recovered to be paid to the Government to which the offence caused loss or if there is more than one such Government to distribute the amount among them in proportion to the loss sustained by each. Section 10 makes the provisions of the Prevention of Corruption Act, 1947, applicable to trials under the Act. The schedule sets out eight categories of offences triable by the Special Judges. Paragraphs 1, 2, 3 and 4 relate to offences in which public servants are concerned or loss of Government property or money is involved. Paragraph 5 relates 38 to offences of forgery,falsification of accounts and such like. Paragraph 6 includes offences punishable under the Essential Supplies Act, 1946, and paragraph 7 includes those punishable under section 5 of the Prevention of Corruption Act, 1947, while paragraph 8 relates to conspiracies and attempts to commit, and abetments of, any of the offences specified in the earlier paragraphs. Before examining whether the present case is governed by the ruling in Anwar Ali Sarkar 's case(1) as urged by Mr. Chatterjee or by the principles laid down in the Saurashtra case(2) as the Solicitor General maintained, it will be convenient to dispose of the contention of Mr. Chatterjee about his clients having been denied the advantage of a jury trial after January 26, 1950. The contention, supported as it is by the observations in Qasim Razvi 's case (3) to which reference has been made, does not, however, carry the appellant 's case far enough, for, the question still remains whether the legislation impugned in the present case was obnoxious to article 14 as section 5(1) of the West Bengal Act was held to be in Anwar Ali Sarkar 's case (1). This brings us to the main question referred to above which we now proceed to examine. Now, it is well settled that the equal protection of the laws guaranteed by article 14 of the Constitution does not mean that all laws must be general in character and universal in application and that the State is no longer to have the power of distinguishing and classifying persons or things for the purposes of legislation. To put it simply, all that is required in class or special legislation is that the legislative classification must not be arbitrary but should be based on an intelligible principle having a reasonable relation to the object which the legislature seeks to attain. If the classification on which the legislation is founded fulfils this requirement, then the differentiation which the legislation makes between the class of persons or things to which it applies and other persons or things left (1)[1932] S.C.R. 284. (3)[1953] S.C.R. 589. (2)[1952] S.C.R. 435. 39 outside the purview of the legislation cannot be regarded as a denial of the equal protection of the law, for, if the legislation were all embracing in its scope, no question could arise of classification being based on intelligible differentia having a reasonable relation to the legislative purpose. The real issue, therefore, is whether having regard to the underlying purpose and policy of the Act as disclosed by its title, preamble and provisions as summarised above, the classification of the offences, for the trial of which the Special Court is set up and a special procedure is laid down, can be said to be unreasonable or arbitrary and, therefore, violative of the equal protection clause. In considering this question it is hardly necessary to invoke the accepted principle that " If any state of facts can reasonably be conceived to sustain a classification, the existence of that state of facts must be assumed " [see per Fazl Ali J. in Chiranjit Lal 's case (1), quoting from Constitutional Law by Willis]. In the present case, it is well known that during the post war period various organisations and establishments set up during the continuance of the war had to be wound up, and the distribution and control of essential supplies, compulsory procurement of food grains, disposal of accumulated stores, adjustment of war accounts and liquidation of war time industries had to be undertaken. These undertakings gave special opportunities to unscrupulous persons in public services placed in charge of such undertakings to enrich themselves by corrupt practices and antisocial acts thereby causing considerable loss to the Government. Viewed against this background, it will be seen that by and large the types of offences mentioned in the schedule to the Act are those that were common and widely prevalent during this period, and it was evidently to prevent, or to place an effective check upon, the commission of such offences that the impugned legislation was considered necessary. It is manifestly the policy of the Act to impose, in addition to the penalties prescribed under the ordinary law, deterrent punishment that would make the offender disgorge the (1) ; , 877. 40 ill gotten gains procured by him by means of the offence, and where such gains were obtained at the expense of Governments, to distribute the amount recovered among them in proportion to the loss caused to them by the offence. This legislative purpose :is indicated clearly not only in the preamble to the Act but also in section 9 which provides for special compensatory fines equal in value to the amount procured by the offender by means of the offence and, as cases involving such offences were known to be numerous at the time, a speedier trial of such cases than was possible under the normal procedure was presumably considered neces sary. Hence the system of Special Courts to deal with the special types of offences under a shortened and simplified procedure was devised, and it seems to us that the legislation in question is based on a perfectly intelligible principle of classification having a clear and reasonable relation to the object sought to be attained. Mr. Chatterjee argues that the offences listed in the schedule do not necessarily involve the accrual of any pecuniary gain to the offender or the acquisition of other property by him or any loss to any Government, and that the classification cannot, therefore, be said to be based on that consideration. Counsel referred in particular to the offences included in the fifth paragraph, namely, forgery, making and possessing counterfeit seals, falsification of accounts, etc., as instances in point. It may, however, be observed that section 9(1), which makes it obligatory on the Special Court to impose on persons tried and convicted by it an additional compensatory fine of the kind mentioned above, indicates that only those offences, which, either by themselves or in combination with others mentioned in the schedule, are suspected to have resulted in such pecuniary gain or other advantage and, therefore, to merit the compensatory fine, are to be allotted to a Special Court for trial. It is well known that acts which constitute the offences mentioned in paragraph 5 are often done to facilitate the perpetration of the other offences specified in the schedule, and they may well have been included as ancillary offences. Article 14 doer, not insist that legislative classification should be 41 scientifically perfect or logically complete and we cannot accept the suggestion that the classification made in the Act is basedon no intelligible principle and is, therefore, arbitrary. It has been further contended that even assuming that the scheduled offences and the persons charged with the commission thereof could properly form a class in respect of which special legislation could be enacted, section 4 of the Act is discriminatory and void, vesting, as it does, an unfettered discretion in the Provincial Government to choose any particular "case " of a person alleged to have committed an offence falling under any of the specified categories for allotment to the Special Court to be tried under the special procedure, while other offenders of the same category may be left to be tried by ordinary courts. In other words, section 4 permits the Provincial Government to make a discriminatory choice among persons charged with the same offence or offences for trial by a Special Court, and such absolute and unguided power of selection, though it has to be exercised within the class or classes of offences mentioned in the schedule, is no less discriminatory than the wider power of selection from the whole range of criminal law conferred on the State Government by the legislation impugned in Anwar Ali Sarkar 's case (1). The vice of discrimination, it is said, consists in the unguided and unrestricted power of singling out for different treatment one among a class of persons all of whom are similarly situated and circumstanced, be that class large or small. The argument overlooks the distinction between those cases where the legislature itself makes a complete classi fication of persons or things and applies to them the law which it enacts, and others where the legislature merely lays down the law to be applied to persons or things answering to a given description or exhibiting certain common characteristics, but being unable to make a precise and complete classification, leaves it to an administrative authority to make a selective application of the law to persons or things within the, (1) ; 6 42 defined group, while laying down the standards or at least indicating in clear terms the underlying policy and purpose, in accordance with, and in fulfilment of, which the administrative authority is expected to select the persons or things to be brought under the operation of the law. A familiar example of this type of legislation is the , which, having indicated in what classes of cases and for what purposes preventive detention can be ordered, vests in the executive authority a discretionary power to select particular persons to be brought under the law. Another instance in point is furnished by those provisions of the Criminal Procedure Code which provide immunity from prosecution without sanction of the Government for offences by public servants in relation to their official acts, the policy of the law being that public officials should not be unduly harrassed by private prosecution unless in the opinion of the Government, there were reasonable grounds for prosecuting the public servant which accordingly should condition the grant of sanction. It is not, therefore, correct to say that section 4 of the Act offends against article 14 of the Constitution merely because the Government is not compellable to allot all cases of offences set out in the schedule to Special Judges but is vested with a discretion in the matter. Whether an enactment providing for special procedure for the trial of certain offences is or is not discriminatory and violative of article 14 must be determined in each case as, it arises, for, no general rule applicable to all cases can safely be laid down. A practical assessment of the operation of the law in the particular circumstances is necessary. There are to be found cases on each side of the line: Anwar Ali Sarkar 's case(1) is an authority on one side; the Saurashtra case (2) is on the other. Apart from dicta here and there in the course of the judgments deliver ed in these cases and the decisions based on them, there is no real Conflict of principle involved in them. The majority decision in Anwar Ali Sarkar 's case(1) proceeded on the view that no standard was laid down (1) ; (2) ; 43 and no principle or policy was disclosed in the legislation challenged in that case, to guide the exercise of discretion by the Government in selecting a " case" for reference to the Special Court for trial under the special procedure provided in the Act. All that was relied on as indicative of a guiding principle for selection was the object, as disclosed in the preamble of the West Bengal Act, of providing for the " speedier trial of certain offences ", but the majority of the learned judges brushed that aside as too indefinite and vague to constitute a reasonable basis for classification. "Speedier trial of offences", observed Mahajan J., " may be the reason and motive for the legislation but it does not amount either to a classification of offences or of cases. . In my opinion it is no classification at all in the real sense of the term as it is not based on any characteristics which are peculiar to persons or to cases which are to be subject to the special procedure prescribed by the Act" (page 314). Mukherjea J. said, " I am definitely of opinion that the necessity of a speedier trial is too vague, uncertain and elusive a criterion to form a rational basis for the discrimination made. The necessity for speedier trial may be the object which the legislature had in view or it may be the occasion for making the enactment. In a sense quick disposal is a thing which is desirable in all legal proceedings. This is not a reasonable classification at all but an arbitrary selection" (page 328). Similar observations are to be found in the judgments of Das and Chandrasekhara Aiyar JJ. at pages 328 and 352 respectively. It will be seen that the main reasoning of the majority judges in Anwar Ali Sarkar 's case (1) as disclosed in the passages extracted above is hardly applicable to the statute here in question which is based on a classification which, in the context of the abnormal post war economic and social conditions is readily intelligible and obviously calculated to subserve the legislative purpose. The case, in our opinion, falls on the same side of the line as the Saurashtra ruling(1) where Anwar Ali Sarkar 's case (1) was distinguished (1) ; (2) ; 44 by three of the learned Judges who were parties to the majority decision in the earlier case. Fazl Ali J. observed: " There is however one very important difference between the West Bengal Act and the present Ordinance which, in my opinion, does afford such justification (for upholding the Ordinance), and I shall try to refer to it as briefly as possible. I think that a distinction should be drawn between discrimination without reason and discrimination with reason. The main objection to the West Bengal Act was that it permitted discrimination without reason or without any rational basis The mere mention of speedier trial ' as the object of the Act did not 'cure the defect ', as the expression afforded no help in determining what cases required speedier trial The clear recital (in the Saurashtra Ordinance) of a definite objective furnishes a tangible and rational basis of classification to the State Government for the purpose of applying the provisions of the Ordinance and for choosing only such offences or cases as affect public safety, maintenance of public order and the preservation of peace and tranquillity. Thus under section 11, the State Government is expected only to select such offences or class of offences or class of cases for being tried in a Special Court in accordance with the special procedure, as are calculated to affect the public safety, maintenance of public order etc. " (pages 448 449). Almost the whole of this reasoning would apply mutatis mutandis to the legislation impugned in the present case. Mukherjea J., after distinguishing Anwar Ali Sarkar 's case(1) on similar grounds, said: "The object of passing this new Ordinance is identically the same for which the earlier Ordinance was passed, and the preamble to the latter, taken along with the surrounding circumstances, discloses a definite legislative policy which has been sought to be effectuated by the different provisions contained in the enactment. If special courts were considered necessary to cope with an abnormal situation, it cannot be said that the vesting of authority in the State Government to select offences for trial 45 by such courts is in anyway unreasonable." (Page 463. Italics mine). The last sentence aptly applies to the present case. It will be recalled that section 11 of the Saurashtra Ordinance was in the same terms as section 5(1) of the West Bengal Special Courts Act. Answering the objection that it committed to the absolute and unrestricted discretion of the executive government the duty of making the selection or classification of cases to be 'placed before the Special Court, the learned Judge observed: "A statute will not necessarily be condemned as discriminatory, because it does not make the classification itself but, as an effective way of carrying out its policy, vests the authority to do it in certain officers or administrative bodies." (Page 459). . . In my opinion, if the legislative policy is clear and definite and, as an effective method of carrying out that policy, a discretion is vested by the statute upon a body of administrators or officers to make selective application of the law to certain classes or groups of persons, the statute itself cannot be condemned as a piece of discriminatory legislation. . . In such cases the power given to the executive body would import a duty on it to classify the subject matter of legislation in accordance with the objective indicated in the statute. The discretion that is conferred on official agencies in such circumstances is not an unguided discretion; it has to be exercised in conformity with the policy to effectuate which the discretion is given, and it is in relation to that objective that the propriety of the classification would have to be tested." (Page 460). Das J. no doubt laid stress on the fact that although section 1 1 of the Saurashtra Ordinance was in the same terms as section 5(1) of the West Bengal Act, the court had to consider the discriminatory character of the latter enactment in so far as it empowered the West Bengal Government to refer an individual case to the special court for trial, whereas the Saurashtra Government, having by the notification issued under the Ordinance referred only certain offences, the court was called upon to consider the constitutionality of 46 that part of section 1 1 which enabled the executive government to refer "offences, classes of offences and classes of cases". As regards these three categories, however, the learned Judge held that in the preamble of the old Ordinance, in which the impugned provisions were inserted by way of amendment, there was sufficient indication of policy to guide the executive government in selecting offences or classes of offences or classes of cases for reference to a special court, and concluded thus: "In my judgment this part of the section, properly construed and understood, does not confer an uncontrolled and unguided power on the State Government. On the contrary, this power is controlled by the necessity for making a proper classifi cation which is to be guided by the preamble in the sense that the classification must have a rational relation to the object of the Act as recited in the preamble. It is therefore not an arbitrary power. The legislature has left it to the State Government to classify offences or classes of offences or classes of cases for the purpose of the Ordinance, for the State Government is in a better position to judge the needs and exigencies of the State, and the court will not lightly interfere with the decision of the State Government." (Page 474). Among the minority Judges both Mahajan and Chandrasekhara Aiyar JJ. took the view that the preamble which merely referred to the need to provide for public safety, maintenance of public order and the preservation of peace and tranquillity in the State of Saurashtra indicated no principle of classification, as the object was a general one which had to be kept in view by every enlightened Government or system of administration and that every law dealing with commission and punishment of offences was based on this need. Accordingly, in their view, the decision of the majority in the Saurashtra case(1) marked a retreat from the position taken up by the majority in the earlier case of Anwar Ali Sarkar(2). However that may be, the majority decision in the Saurashtra case(1) would seem to lay down the principle that if the (1) ; (2) (1952] S.C.R. 284. 47 impugned legislation 'indicates the policy which inspired it and the object which it seeks to attain, the mere fact that the legislation does not itself make a complete and precise classification of the persons or things to which it is to be applied, but leaves the selective application of the law to be made by the executive authority in accordance with the standard indicated or the underlying policy and object disclosed is not a sufficient ground for condemning it as arbitrary and, therefore, obnoxious to article 14. In the case of such a statute it could make no difference in principle whether the discretion which is entrusted to the executive Government is to make a selection of individual cases or of offences, classes of offences or classes of cases. For, in either case, the discretion to make the selection is a guided and controlled discretion and not an absolute or unfettered one and is equally liable to be abused, but as has been pointed out, if it be shown in any given case that the discretion has been exercised in disregard of the standard or contrary to the declared policy and object of the legislation, such exercise could be challenged and annulled under article 14 which includes within its purview both executive and legislative acts. Mr. Chatterjee brought to our notice in the course of his argument a decision of the Calcutta High Court in J. K. Gupta vs The. State (1) where a Special Bench (Harries C. J., Das and Das Gupta JJ.) inclined to the view that the Act now under challenge did not create a valid class or classes of offences, and held that even if the classification were held to be proper, section 4(1) was ultra vires article 14 of the Constitution in that a discretionary power was given to the State to allot cases to the Special Court or not as the State Government felt inclined, and thus to discriminate between persons charged with an offence falling within the same class. We are unable to share this view. There may be endless variations from case to case in the facts and circumstances attending the commission of the same type of offence, and in many of those cases there may be nothing that justifies or calls (1) 48 for the application of the provisions of the special Act. For example, sections 414 and 417 of the Indian Penal Code are among the offences included in the Schedule to the Act, but they are triable in a summary way under section 260 of the Criminal Procedure Code where the value of the property concerned does not exceed fifty rupees. It would indeed be odd if the Government were to be compelled to allot such trivial cases to a Special Court to be tried as a warrant case with an appeal to the High Court in case of conviction. The gravity of the particular crime, the advantage to be derived by the State by recoupment of its loss, and other like considerations may have to be weighed before allotting a case to the Special Court which is required to impose a compensatory sentence of fine on every offender tried and convicted by it. It seems reasonable, if misuse of the special machinery provided for the more effective punishment of certain classes of offenders is to be avoided, that some competent authority should be invested with the power to make a selection of the cases which should be dealt with under the special Act. For all these reasons we hold that section 4 of the Act, under which the appellants ' case was allotted by the State Government to the Special Court at Alipur is constitutionally valid, and the Special Court had jurisdiction to try and convict the appellants. As regards the fine of Rs. 50,000, inflicted on the first appellant, Mr. Chatterjee objected that it could not stand to the extent of Rs. 47,550 found to have been received by the first appellant by the commission of the offence, as it is in contravention of article 20 of the Constitution which provides, inter alia, that no person shall be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence. The offences for which the first appellant has been convicted were all committed in 1947, whereas the Act which authorised the imposition of the additional punishment by way of fine equivalent to the amount of money or value of other property found to 49 have been procured by the offender by means of the offence came into force in June, 1949. Mr. Chatterjee urged that article 20 on its true construction prohibits the imposition of such fine even in cases where the prosecution was pending at the commencement of the Constitution. This question, which turns on the proper construction of the article, was recently considered and decided in Rao Shiv Bahadur Singh and Another vs The State of Vindhya Pradesh(1), and according to that decision the sentence of fine to the extent of Rs. 47,550 will be set aside in any event. The appeal will be heard in due course on the merits, and it would be open to the court, in case the conviction is upheld, to, impose such appropriate fine as it should think fit in addition to the sentence of imprisonment. BOSE J. It is with the deepest regret that I again find myself compelled to dissent. While this was still virgin land there was wide scope for many different points of view, but as decision has followed decision the room for divergencies of view has narrowed down to a small field. I respectfully and loyally accept the decisions of this court which have gone before and I have no desire to reopen matters which must now be taken to be settled. But these fundamental provisions of the Constitution are, in my opinion, of such deep and far reaching importance and my views about them are so strong that I cannot in all conscience yield a single inch of ground except where compelled to do so. So far as I am concerned, the only point in this case is where and how far the matters which arise for decision here have been settled by previous authority. The West Bengal Criminal Law Amendment (Special Courts) Act, 1949, was enacted and came into force before the Constitution. At that date, the fundamental provisions were not in force and no question of the equal protection clauses arose. By reason of the ratio decidendi in the previous decisions of this court I respectfully agree that article 14 has no retrospective (1) ; 7 50 operation. I concede therefore that up to the 26th of January, 1950, the impugned Act was good law, that the Special Court which was constituted to try this case was validly constituted and that the singling out of the appellants by the Provincial Government for trial by the Special Judge in the Special Court under its special procedure was lawful and proper however much this might have savoured of discrimination after the Constitution. AR that I accept. Then, as regards the continuation of the trial after the Constitution, I accept on the basis of Habeeb Mahamed 's case(1) and Qasim Razvi 's case(2), where the previous decisions of this court have been examined and explained, that the continuation of the trial after the Constitution can only be impugned if the procedure followed after that date was substantially discriminatory. In my opinion it was in this case in at least one vital particular. Had the normal procedure been followed the appellants would have had a jury trial in the High Court at Calcutta. In Qasim Razvi 's case(2), the majority dealt with the matter thus: "We may mention here that the impossibility of giving the accused the substance of a trial according to normal procedure at the subsequent stage may arise not only from the fact that the discriminatory provisions were not severable from the rest of the Act and the court consequently had no option to continue any other than the discriminatory procedure; or it may arise from something done at the previous stage which though not invalid at that time precludes the adoption of a different procedure subsequently. Thus, if the normal procedure is trial by jury or with the aid of assessors, and as a matter of fact there was no jury or assessor trial at the beginning, it would not be possible to introduce it at any subsequent stage. Similarly having once adopted the summary procedure, it is not possible to pass on to a different procedure on a later date. In such cases the whole trial would have to be condemned as bad. " That, in my view, covers this case, (1) (2) , 51 On the question of punishment also there is discrimination but that is severable and would in any event be covered by article 20. I am also compelled to dissent from the view that the impugned Act does not fall foul of the Constitution. I am aware that this Act has been repealed and so cannot be used again. But we are now laying down a pattern for the future and I am apprehensive of other Acts being framed along the same lines at some future date because of our decision in this case. The ratio decidendi of the majority proceeds on the assumption that this Act would have been good even if it had been enacted after the Constitution. I must with the very greatest respect record a strong and emphatic dissent. I bow with respect to the wisdom of my colleagues who have laid down the classification test, and indeed I have myself agreed that that is one of the matters to be borne in mind in any given case. In so far therefore as the Act makes provision for the setting up of Special Courts and of Special Judges, and in so far as it selects classes of offences which can be tried by them, it is, I think, on the basis of our previous decisions, good. Where, in my opinion, it is bad is in section 4(1) where it empowers the Provincial Government to pick out cases from among the specified classes and to send them to Special Courts and thus discriminate between man and man in the same class. I am not concerned here with reasonableness in any abstract sense, nor with the convenience of administration nor even with the fact, which may well be the case here, that this will facilitate the administration of justice. The solemn duty with which I am charged is to see whether this infringes the fundamental provisions of the Constitution; and though I recognise that there is room for divergencies of view, as indeed there must be in the case of these loosely worded provisions, and deeply though I respect the views of my colleagues, I am nevertheless bound in the conscientious discharge of my duty to set out my own strong views so long as there is, in my opinion, scope still left for a divergence of view. 52 In my opinion, the West Bengal legislature could not, and indeed Parliament itself could not, have selected case A and case B and case C and accused X and Y and Z and sent them to the Special Courts for trial leaving others, similarly placed in the same class, for trial by the ordinary courts of the land; and what the legislature itself could not do cannot be done by a delegated authority. Having made a classification, having given reasons for it, the legislature could not, in my judgment, without assigning reasons for a subclassification, arbitrarily select A, B and C and set them as a class apart in the classification already made. It is, in my view, as objectionable to make an arbitrary sub classification out of a good classification as it is to make an arbitrary classification in the first instance; and to pick out A, B and C from an already classified class and set them apart for special treatment is nothing more nor less than a fresh classification. If it is not arbitrary; if it falls within the rules laid down in our previous decisions: good. If it does not: then bad. I am clear on the strength of previous authority that if the legislature had done this the Act would have been bad, at any rate to that extent. It is in my judgment equally bad when the discrimination is left to a lesser power. I do not think the preventive detention laws afford a proper guide to interpretation here. They are a class apart and have been engrafted as an exception to the fundamental rights in the very chapter on those rights. I feel all this is fraught with the gravest danger. We cannot have Star Chambers or their prototypes in this land; not that these tribunals have any resemblance to Star Chambers as yet. But we are opening a dangerous door and paving a doubtful road. If we wish to retain the fundamental liberties which we have so eloquently proclaimed in our Constitution and remain a free and independent people walking in the democratic way of life, we must be swift to scotch at the outset tendencies which may easily widen, as precedent is added to precedent, into that which in the end will be the negation of freedom and equality. To 53 this extent and with the deepest regret I express my respectful dissent. In my view, the convictions cannot be upheld and there should be a retrial in the normal way. Appeals dismissed. Agent for the appellant in C.A. No. 84: Sukumar Ghose. Agent for the appellant in C.A. 'No,. 85: R. R. Biswas.

Whether an enactment Providing for special procedure for the trial of certain offences is or is not discriminatory and violative of article 14 of the Constitution must be determined in each case as it arises, for no general rule applicable to all cases can safely be laid down. The West Bengal Criminal Law Amendment (Special Courts) Act, 1949, which was entitled an Act to provide for the more speedy trial and more effective punishment of certain offences, and the preamble of which declared that it was expedient to provide for the more speedy trial and the more effective punishment of certain offences which were set out in the Schedule to the Act, empowered the Provincial Government (by sections 2 and 3) to constitute Special Courts of criminal jurisdiction for specified areas and to appoint Special Judges to preside over such courts. Section 4 31 of the Act provided that the Provincial Government may, from to time, allot cases for trial to a Special Judge, that the Special Judge shall have jurisdiction to try the cases for the time being allotted to him in respect of such of the charges for offences specified in the Schedule as may be preferred against the accused. The procedure laid down for trial by the Special Judges varied in several particulars from the ordinary trials. It was contended on behalf of the appellants who were convicted and sentenced by a Special Judge under the Act that section 4 of the Act was void as it contravened article 14 of the Constitution in that it enabled the Government to single out a particular case for reference to the Special Court for trial by a special procedure which denied to the persons tried under it certain material advantages enjoyed by those tried under the ordinary procedure : Held, per PATANJALI SASTRI C.J., MUKHERJEA, GHULAM HASAN and JAGANNADHA DAS JJ. (VIVIAN BOSE J. dissenting): (i) that when a law like the present one is impugned on the ground that it contravenes article 14 of the Constitution, the real issue to be decided is whether, having regard to the underlying purpose and policy of the Act as disclosed by its title, preamble and provisions, the classification of the offences for the trial of which the Special Court is set up and a special procedure is laid down can be said to be unreasonable or arbitrary and therefore violative of the equal protection clause; (ii) having regard to the fact that the types of offences specified in the Schedule to the Act were very common and widely prevalent during the post war period and had to be chocked effectively and speedily tried, the legislation in question must be regarded as having been based on a perfectly intelligent principle of classification, having a clear and reasonable relation to the object sought to be achieved, and it did not in any way contravene article 14 of the Constitution ; (iii)the impugned section cannot be said to contravene article 14 merely because the Government was vested with a discre tion to allot any particular case to the Special Judge and is not required to allot all cases of offences set out in the Schedule, to the Special Court, for if the impugned legislation indicates the policy which inspired it and the object which it seeks to attain, the mere fact that the legislation does not itself make a complete and precise classification of the persons or things to which it is to be applied, but leaves the selective application of the law to be made by the executive authority in accordance with the standard indicated or the underlying policy and object disclosed, is not a sufficient ground for condemning it as arbitrary and therefore obnoxious to article 14. In the case of such a statute it makes no difference in principle whether the discretion which is entrusted to the executive Government is to make a selection of individual cases or of offences, classes of offences or classes of cases. For, in either case, the discretion to make the selection is a guided 32 and controlled discretion and not an absolute or unfettered one and is equally liable to be abused but if it be shown in any given case that the discretion has been exercised in disregard of the standard or contrary to the declared policy and object of the legislation, such exercise could be challenged and annulled under article 14 which includes within its purview both executive and legislative acts. VIVIAN BOSE J. (i) Up to the 26th of January, 1950, the impugned law was a good law and the Special Court which was constituted to try the present case was therefore validly constituted and the allotment of this case to a Special Judge for trial was also lawful. But the continuation of the trial after the 26th January, 1950, when the new Constitution came into force was illegal as the procedure followed after that date was discriminatory at least in one vital particular, namely, the accused did not have the benefit of a trial by jury which they would have had if the normal procedure had been followed. (ii)The impugned Act in so far as it makes provision for the setting up of Special Courts and of Special Judges and in so far as it selects classes of offences which can be tried by them is, on the basis of the previous decisions of this court, valid, but section 4(1) of the Act is bad in so far as it empowers the Provincial Government to pick out cases from among the specified classes and to send them to the Special Courts and thus discriminate between man and man in the same class. Held also, by the Court, that under article 20 of the Constitution the accused could not be subjected to any fine greater than that which might have been imposed on them under the law in force when the offence was committed, even though the Act of 1949 empowered the Court to inflict a greater fine. Rao Shiv Bahadur Singh and Another vs The State of Vindhya Pradesh ([1953] S.C.R. 1188) followed. Anwar Ali Sarkar 's case ([1952] S.C.R. 284), Quasim Ravi 's case , Lakshmandas Kewalram Ahuja 's case ([1952] S.C.R. 710) explained. Saurashtra case ([1952] S.C.R. 435) applied.

Appeal No. 596 of 1966. Appeal by special leave from the judgment and order dated January 27, 1964 of the Allahabad High Court in Special Appeal No. 270 of 1958. section T. Desai and C. P. Lal, for the appellant. C. B. Agarwala and J. P. Agarwal, for the respondent. The Judgment of the Court was delivered by Sikri, J. This appeal by special leave is directed against the judgment of the High Court of Allahabad accepting a petition under article 226 of the Constitution and directing the District Board, Moradabad, not to levy upon M/s Nundan Sugar Mills,, Amroha, respondent before us, circumstances and property tax for any one year exceeding the sum of Rs. 200. The High Court held that no special resolution of the Board had been passed, nor had a notification been made imposing the tax, under section 119 and section 120, respectively, of the United Provinces District Boards Act, 1922 (U. P. Act of 1922) hereinafter referred to as the Act. The relevant facts out of which this appeal arises are these On July 28, 1925, it was notified under sub section (2) of section 120 of the Act that the District Board of Moradabad, in exercise of the powers conferred by section 108, sub section (2), of the Act has imposed the following tax, with effect from September 1, 1925: "A tax on. all persons ordinarily residing or carrying on business in the rural area of the Moradabad District according to their circumstances and property, at the rate of four pies per rupee on the total taxable income; provided that the total amount of tax imposed on any person shall not exceed Rs. 200. Provided also that no income once assessed shall be reassessed". On May 28, 1927, the District Board took action upon a memo randum prepared by the Chairman of the District Board. The memorandum of the Chairman pointed out: ". . the maximum amount of tax recoverable from an assessee should be raised from Rs. 200/ to Rs. 500/ P.A. Hence proposal (c) framed under section 115 sanctioned by G. 0. No dated 28 7 25 so be modified as to read as under: "That there shall be a rate of tax 4 pies in the rupee. provided that the total amount of tax imposed on any person shall not exceed Rs. 5001 The resolution of the Board was in these terms: "The bye laws be modified accordingly after necessary publication and sanction. The assessing officer to assess them at 2 pies (sic) in anticipation of final sanction". 3 On January 11, 1928, the Government of United Provinces issued a, notification amending the rules for the assessment and collection of a tax on circumstances and property in the rural areas of the Moradabad District. The following rule 16 was added: "16. The total amount of tax imposed on any person shall not in any year exceed the sum of Rs. 5001 . " On August 31, 1931, the Board passed another resolution approving the following memorandum: ". . The words and figures 'Rs. 500 ' be substituted by 'Rs. 2,000 ' in rule 16 of the rules for the assessment and collection of a tax on circumstances and property in the rural area of the Moradabad district published with Government Notification No. . dated 11 1 1928". The exact terms of the resolution were: "Resolved unanimously that thememo. be approved and necessary action be taken on it. If publication is required, it be done and Government be moved to accord sanction for the same". On March 18, 1932, the Government of United Provinces issued a notification amending rule 16. The amendment it was in the following terms: "In Rule 16 published with notification No. 33/IX185(14 24) dated January 19, 1928 'Rs. 2,000 ' shall be substituted for 'Rs. 500". It appears that no further action was taken by the District Board to enforce this amendment in rule 16 or the amendment dated January 11, 1928. Further action is contemplated by sections 119 and 120, read with section 12 1, of the Act. These sections may be reproduced in full. " 119. Resolution of board directing imposition of tax Upon receipt of the copy of the rules sent under the preceding section, the board shall by special resolution direct the imposition of the tax with effect from a date (to be specified in the resolution) not less than six weeks from the date of such resolution". " 120. Imposition of tax (1) A copy of the resolution passed by the board under Section 119 shall be submitted to the State Government. (2) Upon receipt of the copy of the resolution the State Government shall notify in the official Gazette the imposition of the tax from the appointed date, and the imposition of a tax shall in all cases be sub ject to the condition that it has been so notified. (3) A notification of the imposition of a tax Linder sub section (2) shall be conclusive proof that the tax has been imposed in accordance with the provisions of this Act". 4 "121. Procedure for altering taxes The procedure for abolishing or suspending a tax, or for altering a tax in respect of the matters specified in clauses (b) and (c) of sub section (1) of Section 115 shall, so far as may be, be the procedure prescribed by Sections 115 to 120 for the imposition of a tax". Clauses (b) and (c) of sub section (1) of section 115, referred to in section 121, read: "(b) the persons or class of persons to be made liable and the description of the property or other taxable thing or circumstances in respect of which they are to be made liable, except where and in so far as any such class ,or description is already sufficiently defined under clause (a) or by this Act , (c) the amount or rate leviable from each such person or class of persons;" It is common ground that the procedure laid down in sections II 5 to 118 has been followed by the Board. The only dispute between the parties is whether it is necessary that a resolution should be passed under section 119 and a notification issued under section 120 before effect can be given to a notification made under section 118 altering the rules. In other words, was it necessary to pass a resolution under section 119 after the issue of the notification dated March 18, 1932, or the notification dated January 11, 1928, referred to above? Both the learned Single Judge, and the Division Bench who heard the appeal from the learned Single Judge, have come to the conclusion that without a resolution under section 119 and a notification under section 120, no tax can be levied in pursuance of the notification dated March 18, 1932, or notification dated January 11, 1928. It may be mentioned that the High Court directed the District Board not to levy upon the petitioner circumstances and property tax for any year exceeding the sum of Rs. 200/ . There is no dispute that the Board could levy upon the petitioner tax up to the sum of Rs. 200/ . The learned counsel for the appellant contends that if the procedure laid down in sections 115 to 118 has been followed, it is not necessary that there should be a resolution under section 119 and a notification under section 120. He says that rules can be made under section 172, read with section 1.76, of the Act, and once rules are made there is nothing more to be done. But there is one fallacy underlying the argument of the learned counsel, and that is that it misses the object of sections 119 and 120 which is to fix the date from which the tax can be imposed. If no date is fixed, no tax can be imposed. Once the Board passes a special resolution under section 119, it has to go to the Government under section 120, and then the Government notifies the imposition of tax from the appointed date. It is then that the notification becomes conclusive proof of the fact that the 5 tax has been imposed in accordance with the provisions of this Act. Sub clause (3) of section 120 clearly proceeds on the basis that the imposition of tax takes place on a notification issued under section 120 and not on the issue of a notification under section 118. The learned counsel invited our attention to Raza Buland Sugar Co. Ltd. vs Municipal Board, Rampur(1) but we are unable to see how that case assists him. No question of sections 119 and 120 being directory arises in this case because, in our view, without a resolution under section 119 and a notification under section 120, no tax can be imposed. The learned counsel also urges that: (a) no writ petition is maintainable challenging a preConstitution matter, and (b) the respondent not having appealed under section 128 of the Act, the petition was not maintainable. In our view, there is no merit in these contentions. The respondent is being charged tax now. He is entitled not to be taxed except under the authority of law, vide article 265 of the Constitution. There is no question of challenging any pre Constitution matter. The respondent is challenging a post Constitution action on the ground that there is no authority of law for the action. Regarding the second point, the High Court held that an appeal to the District Magistrate under section 128 was not likely to be of much assistance to the petitioner and rejected the contention. It is well settled that a, provision like section 128 does not oust the jurisdiction of the High Court to entertain a petition under article 226 and it is for the High Court to exercise its discretion whether to entertain the petition or not. The learned counsel has not pointed out anything to us to show that the discretion has not been properly exercised. In the result the appeal fails and is dismissed with costs.

In July 1925 it was notified under section 120(2) of the U. P. District Boards Act, 1922 that the District Board of Moradabad in exercise of powers conferred by section 108(2) of the Act had imposed a tax with effect from September 1, 1925, on the residents of the District according to their circumstances and property at the rate of 4 pice per rupee on the total taxable income subject to a maximum of Rs. 200. In May 1927 the District Board passed a resolution increasing the maximum from Rs. 200 to Rs. 500 and thereafter the State Government issued a notification in January 1928, amending the rules for the assessment and collection of tax so as to increase the maximum to Rs. 500. In August 1931, the Board passed another resolution in creasing the maximum further to Rs. 2,000 and the State Government issued a notification in March 1932 further amending the rules so as to incorporate the new maximum. No further action was taken by the District Board to enforce these amendments of the rules. Upon a writ filed by the respondents under Act, 226 of the Constitution, the High Court directed the District Board, Moradabad, not to levy upon the respondent a tax in excess of Rs. 200 per year on the ground that no special resolution of the Board had been passed nor a notification issued by the State under sections 119 and 120 respectively of the Act imposing the tax with revised maximum limits. In appeal to the Supreme Court it was contended on behalf of the appellant that when the procedure laid down in sections 1.15 to 118 had been followed whereby the amendments had been approved by resolutions and notified, it was not necessary that there should be a further resolution and notification under section 119 and section 120 respectively. Held: The tax with the revised maximum limits introduced in 1928 and 1932 could not be imposed without a resolution under section 119 and a notification under section 120. [5B] The object of sections 119 and 120 is to fix the date from which the tax can be imposed. If no date is fixed, no tax can be imposed. Once the Board passes a special resolution under, section 119, it has to go to the Government under section 120, and then the Government notifies the imposition of tax from the appointed date. It is then that the notification becomes conclusive Proof of the fact that the tax has been imposed in accordance with the provisions of this Act Sub clause (3) of section 120 clearly proceeds on the basis that the imposition of tax takes place on a notification issued under section 120 and not on the issue of a notification under section 118. [4G 5A] Raza Buland Sugar Co. Ltd. vs Municipal Board, Rampur, ; ; referred to. N)1SCI 2

No. XLII of 1950. Appeal from the judgment of the Calcutta High Court (Harries C.J. and Chakravarthi J.) in Appeal from Original Order No. 78 of 1948. N.C. Chatterjee (B. Sen, with him), for the appellants. A.N. Grover, for the respondents. November 30. The judgment of Fazl Ali and Patanja li Sastri JJ. was delivered by FAZL ALI J. This is an appeal from a judgment of a Bench of the High Court of Judicature at Calcutta in West Bengal, reversing the decision of a single Judge of that Court, who had refused to set aside an award given by the arbitration tribunal of the Bengal Chamber of Commerce on a submission made by the respondents. The facts of the case are as follows. On the 25th January, 1946, the appellants entered into a contract with the respondents for the sale of 5,000 mounds of jute, which was evidenced by a "sold note" (Exhibit A), which is in the form of a letter addressed to the respond ents, commencing with these words: "We have this day sold by your order and for your account to the undersigned, etc. " The word "undersigned" admittedly refers to the appellants, and, at the end of the contract, below their signature, the word "brokers" is written. On the same day, a "bought note" (Exhibit B) was addressed by the appellants to the Bengal Jute Mill Company, with the following statement: "We have this day bought by your order and. for your account from the undersigned, 794 etc. " In this note also, the word "undersigned" refers to the appellants and underneath their signature, the word "brokers" appears, as in the "sold note" There are various provisions in the sold note, relating to delivery of jute, non delivery of documents, nonacceptance of documents, claims, etc., but the most material provisions are to be found in paragraphs 10 and 11. paragraph 10 provides that the sellers may in certain cases be granted an extension of time for delivering the jute for a period not exceeding thirty days from the due date free of all penalties, and if the contract is not implemented within the extended peri od, the buyers would be entitled to several options, one of them being to cancel the contract and charge the sellers the difference between the contract rate and the market rate on the day on which the option is declared. In the same para graph, there is another provision to the following effect: "Sellers shall notify Buyers that goods will or will not be shipped within such extended period referred to in (a) and in the case of sellers intimating that they will be unable to ship within the extended time Buyers shall exercise their option within 5 working days of receiving notice and notify Sellers. In the absence of any such notice from Sellers it shall be deemed that the goods have not been shipped and Buyers shall exercise their option within 5 working days after expiration of extended date and notify Sellers. " The 11th paragraph provides among other things that "all matters, questions, disputes, differences and/or claims arising out of and/or concerning and/or in connection and/or in consequence of or relating to this Contract whether or not obligations of either or both parties under this contract be subsisting at the time of such disputes and whether or not this contract has been terminated or purport ed to be terminated or completed shall be referred to the arbitration of the Bengal Chamber of Commerce under the rules of its Tribunal of Arbitration for the time being in force and according to such rules the arbitration shall be conducted. " 795 It is common ground that the respondents delivered 2,256 maunds of jute under the contract, but the balance of 2,744 maunds could not be delivered within the stipulated period, and, by mutual agreement, time was extended up to the 30th June, 1946. On the 2nd July, 1946, the respondents addressed a letter to the appellants stating that the balance of jute could not be despatched owing to lack of wagons, and "exten sion" was requested for a period of one month. In reply to this letter, which was received by the appellants on or about the 3rd July, 1946, time was extended till the 31st July, 1946. On the same day on which the reply was received by the respondents, i.e., on the 9th July, 1946, they ad dressed a letter to the appellants pointing out that the extension of time had not been intimated within the 5th working day as provided in the contract and therefore the contract was automatically cancelled. After this letter, some further correspondence followed between the two par ties, and finally a bill of difference amounting to Rs. 4,116 was submitted by the appellants to the respondents, who, in their turn, denied their liability to pay the sum. The appellants thereupon claimed arbitration under clause 11 of the sold note and submitted the dispute between them and the respondents to the Bengal Chamber of Commerce. On the 6th February, 1947, the Tribunal of Arbitration made an award to the effect that the due date of contract had been extended by mutual agreement up to the 31st July, 1946, and accordingly the respondents should pay to the appellants a sum of Rs. 4,116 together with interest at the rate of 4% per annum from the 10th August, 1946, until the date of the award. A sum of Rs. 210 was also held to be payable by the respondents on account of costs. Nearly a year later, on the 19th February, 1949, a petition was presented by the re spondents under the Indian , to the High Court at Calcutta, in its ordinary original civil jurisdiction, praying inter alia that the award may be adjudged to be without jurisdiction and void and not binding on the respondents, and that it may be set aside. The main point raised by the 796 respondents in the petition was that it was not open to the appellants to invoke the arbitration clause, as the Bengal Jute Mill Company and not the appellants were the real party to the contract and the appellants had acted as mere bro kers. The appellants asserted in reply that the allegation made by the respondents in regard to there being no privity between them and the appellants was wrong, and in paragraph 16 of their affidavit they stated as follows : "With regard to paragraph 7 of the petition I crave reference to the said contract for its true construction and effect. I say as I have already stated that according to the custom or usage or practice of the trade the respondent is entitled to charge brokerage and also to enforce the terms of the said contract. " The case was heard by Sinha J., who dismissed the peti tion on the ground that the contract was directly between the respondents and the appellants. The learned Judge also observed that if the right of the appellants to enforce the contract depended upon the existence of custom it would have been necessary to take evidence and the arbitrators would have had jurisdiction to decide the question of the exist ence of custom. The respondents being dissatisfied with the judgment of Sinha J., preferred an appeal, which was heard and disposed of by a Division Bench of the High Court consisting of the learned Chief Justice and Chakravarthi J. The learned Judges held that having regard to the fact that the appellants ' own contention was that they had entered into the contract as brokers and were entitled to enforce its terms by reason of the usage or custom of the trade, it was not open to Sinha J. to treat them as principals, and the award was liable to be set aside on the ground that the arbitration tribunal had no jurisdiction to make an award at the instance of a per son who was not a principal party to the contract. The appellants thereafter having obtained a certificate from the High Court under section 109 (c) of the Code of Civil Proce dure, preferred this appeal. 797 It seems to us that this appeal can be disposed of on a short ground. We have carefully read the affidavit filed on behalf of the appellants in the trial court, and we are unable to hold that their case was that they were not par ties to the contract or that they had asked the court to proceed on the sole ground that they were entitled to en force the contract by virtue of the custom or usage of the trade. In our opinion, the position which was taken up by them may be summed up as follows : (1) They did not accept the allegations made by the respond ents that they were not parties to any arbitration agreement with the respondents. (2) They asked the Court to construe the contract and its effect and asserted that they were entitled to enforce it. (3) They also stated that they were entitled to enforce the contract according to the custom or usage of the trade. The principal dispute raised in this case was whether the extension of time for delivery was granted within the time limited in the contract. That dispute is certainly covered by the arbitration clause. The further dispute that the brokers (appellants) were not parties to the contract in their own right as principals but entered into the contract only on behalf of the Bengal Jute Mill Company does not appear to have been raised until the matter went to the arbitrators. Assuming that at that stage it was open to the respondents to raise such an objection, after the other dispute which clearly fell within the arbitration clause was referred to the arbitrators, this further dispute is also one which turns upon the true interpretation of the con tract, so that the respondents must have recourse to the contract to establish their claim that the appellants were not bound as principals while the latter say that they were: If that is the position, such a dispute, the determination of which turns on the true construction of the contract, would also seem to be a dispute, under or arising out of or concerning the contract. In a 798 passage quoted in Heyman vs Darwins Ltd.(1), Lord Dunedin propounds the test thus: " If a party has to have recourse to the contract, that dispute is a dispute under the con tract ". Here, the respondents must have recourse to the contract to establish their case and therefore it is a dispute falling within the arbitration clause. The error into which the learned Judges of the appellate Bench of the High Court appear to have fallen was their regarding the dispute raised by the respondent in respect of the position of the appellants under the contract as having the same consequence as a dispute as to the contract ever having been entered into. If, therefore, we come to the conclusion that both the disputes raised by the respondents fail within the scope of the arbitration clause, then there is an end of the matter, for the arbitrators would have jurisdiction to adjudicate on the disputes, and we are not concerned with any error of law or fact committed by them or any omission on their part to consider any of the matters. In this view, it would not be for us to determine the true construction of the contract and find out whether the respondents ' contention is correct or not. Once the dispute is found to be within the scope of the arbitration clause, it is no part of the province of the court to enter into the merits of the dispute. In the result, we allow this appeal, set aside the judgment of the appellate Bench of the High Court and re store the order of Sinha J. The appellants will be entitled to their costs throughout. MAHAJAN J. I agree with my brother Fazl Ali that this appeal be allowed with costs. Appeal allowed.

The appellants, a firm of brokers, entered into a contrct for the sale and purchase of a quantity of jute under a "sold note" addressed to the respondents which they signed as "A & Co., brokers" and a "bought note" of the same date and for the same quantity of jute addressed to a third person in which also they signed as "A & C0. , brokers ". The" sold note" contained the usual arbitration clause under which all matters, questions, disputes, differences and/or claims, arising out of and/or concerning, and/or in connec tion and/or in consequence of, or relating to, the contract . . shall be referred to the arbitration of the Bengal Chamber of Commerce. " A dispute having arisen with regard to a matter which admittedly arose out of the contract evidenced by the sold note, the appellants referred the dispute for arbitration. The respondents raised before the arbitrators the further contention that as the appel lants were only brokers they were not entitled to refer the matter to arbitration. The arbitrators made an award in favour of the appellants. The respondents made an applica tion to the. High Court under the Indian Arbitration Act for setting aside the award: Held that, assuming that it was open to the respondents to raise this objection at that stage, inasmuch as this further dispute 793 was also one which turned on the true interpretation of the contract and the respondents must have recourse to the contract to establish their claim, this was also a dispute arising out of or concerning the contract and as such fell within the arbitration clause, and the award could not be set aside under the Indian , on the ground that it was beyond jurisdiction and void. Heyman vs Darwins Ltd. ([1942.] A.C. 356) referred to.

81, 62, 63 & 3 of 1959. Petition under article 32 of the Constitution of India for enforcement of Fundamental rights. K. M. Munshi, N. C. Chatterjee, L. R. Das Gupta, G. K. Munshi, D. N. Mukherjee and R. Gopalakrishnan, for the petitioners. C. K. Daphtary, Solicitor General of India, H. N. Sanyal, Additional Solicitor General of India, B. R. L. Iyengar, R. H. Dhebar and T. M. Sen, for respondents Nos. 1 to 10 (in Petn. No. 81 of 59), Nos. 1 to 3 (in Petn. No. 62 of 59), No. 1 (in Petns. Nos. 63 and 3 of 59) and Nos. 2 and 3 (in Petn. No. 3 of 59). G.N. Dikshit and C. P. Lal, for respondent No. 11 (in Petn. No. 81 of 59) and No. 2 (in Petn. No. 63 of 59). R. Gopalakrishnan, for the intervener. December 18. The Judgment of the court was delivered by KAPUR, J. These petitions under article 32 of the Constitution raise the question of the constitutionality of the Drug and Magic Remedies (Objectionable Advertisement) Act (XXI of 1954) hereinafter referred to as the Act. As the petitions raise a common question of law they may conveniently be disposed of by one judgment. 86 674 The allegation of the petitioners was that various actions had been taken against them by the respond which violated their fundamental rights under article 19(1)(a) and 19(1)(f) & (g). They also challenged the Act because it contrvened the provisions of article 14 and articles 21 and 31. The Act passed on April 30, 1954, came into force on April 1, 1955, along with the rules made thereunder. As provided in its preamble it was "An Act to control the advertisement of drugs in certain cases, to prohibit the advertisement for certain purposes of remedies alleged to possess magic qualities and to provide for matters connected therewith." The petitioners in Writ Petition No. 81 of 1959, the Hamdard Dawakhana (Wakf) and another, alleged that soon after the Act came into force they experienced difficulty in the matter of publicity for their products and various objections were raised by the authorities in regard to their advertisements. On December 4, 1958, the Drugs Controller, Delhi, intimated to the petitioners that the provisions of section 3 of the Act had been contravened by them and called upon them to recall their products sent to Bombay and other States. As a result of this, correspondence ensued between the petitioners and the authorities. On December 4, 1958, the Drugs Controller, Delhi State, stopped the sale of forty of their products set out in the petition. Subsequently, objection was taken by the Drugs Controller to the advertisements in regard to other drugs. Similarly objections were taken by the Drugs Controllers of other States to various advertisements in regard to medicines and drugs prepared by the petitioners. They submitted that the various advertisements which had been objected to were pre pared in accordance with the Unani system and the drugs bore Unani nomenclature which had been recognised in the whole world for several centuries past. The Act is assailed on the ground of discrimination under article 14, excessive delegation and infringement of the right of free speech under article 19(1)(a) and their right to carry on trade and business under 675 article 19(1)(f) & (g). Objection is also taken under articles 21 and 31. The petitioners therefore prayed for a declaration that the Act and the Rules made there under were ultra vires and void as violative of Part III of the Constitution and for the issuing of a writ of Mandamus and Prohibition and for quashing the proceedings and the notices issued by the various authorities the respondents. In their counter affidavit the respondents submitted that the method and manner of advertisement of drugs by the petitioners and others clearly indicated the necessity of having an Act like the impugned Act and its rigorous enforcement. The allegations in regard to discrimination and impairment of fundamental rights under article 19(1)(a), (f) & (g) and any infringement of articles 21 and 31 were denied and it was stated : " The restriction is about the advertisement to the people in general. I say that the main object and purpose of the Act is to prevent people from self medicating with regard to various serious diseases. Self medication in respect of diseases of serious nature mentioned in the Act and the Rules has a deleterious effect on the health of the community and is likely to affect the well being of the people. Having thus found that some medicines have tendency to induce people to resort to self medication by reason of elated advertisements, it was thought necessary in the interest of public health that the puffing up of the advertisements is put to a complete check and that the manufacturers are compelled to route their products through recognised sources so that the products of these manufacturer could be put to valid and proper test and consideration by expert agencies. " It was also pleaded that the advertisements were of an objectionable character and taking into consideration the mode and method of advertising conducted by the petitioners the implementation of the provisions of the impugned Act was justified. Along with their counter affidavit the respondents have placed on record Ext. A, which is a copy of the literature which 676 accompanied one of the various medicines put on sale by the petitioners and/or was stated on the cartons in which the medicine was contained. In their affidavit in rejoinder the petitioners reiterated that Unani and Ayurvedic systems had been discriminated against; that self medication had no deleterious effect on the health of the community; on the contrary it " is likely to affect the well being of the people, in the context of effective household and domestic remedies based on local herbs popularly known to them in rural areas. Self medication has its permission (?) limits even in America and Canada where unlicensed itinerant vendors serve the people effectively. " For the petitioners in all the petitions Mr. Munshi raised four points: (1) Advertisement is a vehicle by means of which freedom of speech guaranteed under article 19(1)(a) is exercised and the restrictions which are imposed by the Act are such that they are not covered by cl. (2) of article 19 ; (2)That Act, the Rules made thereunder and the schedule in the rules impose arbitrary and excessive restrictions on the rights guaranteed to the petitioners by article 19(1)(f) & (g); (3) Section 3 of the Act surrenders unguided and uncanalised power to the executive to add to the diseases enumerated in section 3; (4) Power of confiscation under section 8 of the Act is violative of the rights under articles 21 and 31 of the Constitution. In Petitions Nos. 62 and 63 of 1939 which relate to two branches of Sadhana Ausadhalaya at Poona and Allahabad respectively, Mr. N. C. Chatterjee, after giving the peculiar facts of those petitions and the fact that the petitioners ' Poona branch was raided without a warrant, a number of medicines had been seized, and a complaint filed against the petitioners in that petition, submitted that section 3(b) of the Act was meant to strike down abnormal sexual activities, that advertisements in that case merely mentioned the names of the diseases and suggested the drug for the treatment 677 of those diseases, that the prohibition of such adver tisements was an unreasonable restriction on their fundamental right; that there was nothing indecent in saying that their medicine was a cure for a particular disease and that the Act was an undue interference with cure and treatment of diseases. We now proceed to consider the vitality of the arguments raised on behalf of the petitioners. Firstly it was submitted that the restriction on advertisements was a direct abridgement of the right of free speech and advertisements could not be brought out of the guaranteed freedom under article 19(1)(a) because no dividing line could be drawn and freedom of speech could not be curtailed by making it subject to any other activity. The learned Solicitor General on the otherhand, contended that it was necessary to examine the pith and substance of the impugned Act and if it was properly considered it could not be said to have in any way curtailed, abridged or impaired the rights guaranteed to the petitioners under Art, 19(1)(a). He also contended that the prohibited advertisements did not fall within the connotation of " freedom of speech ". The doctrine of pith and substance,, submitted Mr. Munshi, was created for the purpose of determining the legislative competence of a legislature to enact a law and he sought to get support from the following observation of Venkatarama Aiyar, J., in A. section Krishna vs State of Madras (1) : ". and the Privy Council had time and again to pass on the constitutionality of laws made by the Dominion and Provincial legislatures. It was in this situation that the Privy Council evolved the doctrine, that for deciding whether an impugned legislation was intra vires regard must be had to its pith and substance. " Though the doctrine of ' pith and substance ' was evolved to determine the constitutionality of an enactment in reference to the legislative competence of a legislature particularly under a federal constitution with a distributive system of powers it has been used in other contexts in some cases, e.g., in connection (1) ; ,406,410. 678 with the determination of the constitutionality of statutes restricting the rights to carry on certain activities and the consequent infringement of article 19(1)(g) : by Mahajan, C.J., in Cooverjee B. Bharucha vs The Excise Commissioner & The Chief Commissioner of Ajmer (1) in the case of Excise Regulation of 1915 regulating the import, export, transport, manufacture, sale and possession of intoxicating drugs and liquor and imposing duties thereon; by Das, C.J., in State of Bombay vs R. M. D. Chamarbughwala (2) in connection with a statute which was held not to be interference with trade, commerce or intercourse as such but to save it from anti social activities. It is unnecessary to decide in the present case whether in its scope it extends to the determination of the constitutionality of an enactment with reference to the various sub clauses of cl. (1)of article 19. A more appropriate approach to the question is, in our opinion, contained in the dictum of Mahajan, J. (as he then was) in M/s. Dwarka Prasad Laxmi Narain vs The State of Uttar Pradesh (3). There he held that " in order to decide whether a particular legislative measure contravenes any of the provisions of Part III of the Constitution it is necessary to examine with some strictness the substance of the legislation in order to decide what the legislature has really done. Of course the legislature cannot bypass such constitutional prohibition by employing indirect methods and therefore the Court has to look behind the form and appearance to discover the true character and nature of the legislation. " Therefore, when the constitutionality of an enactment is ,challenged on the ground of violation of any of the articles in Part 111 of the Constitution, the ascertainment of its true nature and character becomes necessary, i.e., its subject matter, the area in which it is intended to operate, its purport and intent have to be determined. In order to do so it is legitimate to take into consideration all the factors such as history of the legislation, the purpose thereof, the (1) ; , 877. (2) ; (3) ; , 682. 679 surrounding circumstances and conditions, the mischief which it intended to suppress, the remedy for the disease which the legislature resolved to cure and the true reason for the remedy; Bengal Immunity Company Ltd. vs The State of Bihar (1); R.M.D. Chamarbaughwala vs The Union of India (2) Mahant Moti Das & Ors. vs section P. Sahi ( 3). Another principle which has to borne in mind in examining the constitutionality of a statute is that it must be assumed that the legislature understands and appreciates the need of the people and the laws it enacts are directed to problems which are made manifest by experience and that the elected representatives assembled in a legislature enact laws which they consider to be reasonable for the purpose for which they are enacted. Presumption is, therefore, in favour of the constitutionality of an enactment. Charanjit Lal Chowdhuri vs The Union of India & Ors.(4); The State of Bombay vs F.N. Bulsara (5); Mahant Moti Das vs section P. Sahi (3). What then was the history behind the impugned legislation and what was the material before the Parliament upon which it set to enact the impugned Act. (1) In 1927 a resolution was adopted by then Council of State recommending to the Central and Provincial Governments to take immediate measures to control the indiscriminate use of medical drugs and for standardisation of the preparation and for the sale of such drugs. In August 1930, in response to the public opinion on the subject and in pursuance of that resolution the Government of India appointed the Drugs Enquiry Committee with Sir R. N. Chopra as its Chairman to enquire into the extent of the quality and strength of drugs imported, manufactured or sold in India and to recommend steps for controlling such imports, manufacture and sale in the interest of the public. This Committee made a report pointing out the necessity of exercising control over import, (1) , 632 & 633. (2) ; , 936. (3) A.I.R. (1959) S.C. 942, 948. (4) ; , (5) ; , 708. 680 manufacture and sale of patent and proprietary medicines in the interest of the safety of the public and public health. The report pointed out in paragraph 256 259 how in other countries control was exercised and restrictive laws to achieve that end had been enacted. In the Appendix to this Report was given a list of a number of samples of advertisements of patent and proprietary medicines dealing with cures of all kinds of diseases. (2) As a result of the Chopra Committee Report the `Drugs act, was passed in 1940. (3)In 1948 The Pharmacy Act was passed to regulate the provisions of pharmacy. As a result of these two enactments the State Governments were given the responsibility of controlling the manufacture of drugs and pharmaceuticals and their sales through qualified personnel and the Central Government was given the control on quality of drugs and pharmaceuticals imported into the country. (4)The Chopra Committee Report dealt with the popularity of the patent and proprietary medicines in the following words: "The pride of place must be accorded to ingenious propaganda clever and attractive dissemination of their supposed virtues and wide and alluring advertisements. The credulity and gullibility of the masses, especially when 'certain cures ' are assured in utterly hopeless cases, can well be imagined. Perusal of the advertisements of cures ' produces a great effect on patients who have tried treatment by medical men without success. Such patients resort to any and every drug that comes in their way. In an infinitesimal small number of cases spontaneous cures are also effected. Widest publicity is given to these and the preparations become invested with miraculous virtues. The reassurances of cure, the force of argument advanced to guarantee it and the certificates of persons said to have been cured which are all set out in advertisements make a deep impression, especially on those with weak nerves. The love of mystery and secrecy inherent in human nature, the natural disinclination and 681 shyness to disclose details of one 's illness especially those involving moral turpitude, the peculiar temperament of the people who, high and low, rich and poor, demand 'something in a bottle ' for the treatment of every ailment and poverty of the people who cannot afford to pay the doctor 's bills or the high prices current for dispensed medicines, ' have all been enlarged upon as tending to self diagnosis and self medication by patent and proprietary medicines." (5)Evidence was led before the Chopra Committee deprecating the increasing sale of proprietary medicines particularly those with secret formulae as such drugs were positively harmful and were a serious and increasing menace. There were advertisements and pamphlets issued in connection with these medicines which showed fraudulent practices and extravagant claims for these medicines. (6)The Chopra Committee Report had also made a recommendation for a strict measure of control over proprietary medicines. (7) The Bhatia Committee was set up in pursuance to a resolution No. CI 1(12)/52 dated February 14, 1953, and between March 1953, and end of that year it examined a large number of witnesses in different towns of India some of whom represented chemists and druggists, some were leading medical practitioners and some were State Ministers for Health. The Bhatia Committee issued a Questionnaire to various organisations and witnesses. It contained questions in regard to advertisement of drugs and therefore one of the objects of this Committee which was inaugurated by the Health Minister on March 12, 1953, was amongst other things to look into the control to be exercised over objectionable and unethical advertisements. (8) There were a large number of objectionable advertisements in the Press in regard to patent medicines which were after the Act came into force pointed out by the Press Commission Report but it cannot be said that this fact was unknown to Parliament as this Committee also examined a number of witnesses. 87 682 (9) The Indian Medical Association had suggested to this Press Committee which was presided over by the late Mr. Justice Rajadhyaksha the barring of advertisements of medicines which claim to cure or alleviate any of the following diseases: Cancer, Bright 's disease, Cataract, Diabetes, Epilepsy, Glaucoma, Locomotor ataxia, Paralysis, Tuberculosis. (10) In the United Kingdom, advertisements of drugs or treatment for these diseases are governed by the Cancer Act of 1939 and the Pharmacy and Medi. cines Act of 1941. (Advertisement relating to the treatment of venereal diseases are governed by the Venereal Diseases Act of 1917). (11) Wyndham E.B. Lloyd in his book ' Hundred years of medicine ' published in 1936 wrote about the outstanding evils which arise from the use of secret remedies and nostrums. It also drew attention to the dangers of advertisements in regard to them and what the British Medical Association had said about them. (12)The British Medical Association had in a book entitled 'Secret Remedies What they cost and contain ' exposed ruthlessly the harmful effects of such remedies. The council on Pharmacy and Chemistry of American Medical Association had also given its opinion on the harmful effects of indiscriminate self medication by the public and the grave danger which ensued from such misdirected and inadequate treatment, and the failure to recognise seriousness of the disease only when it was too late. It is not necessary to refer to the recommendations of the Bhatia Committee or the Press Enquiry Committee because they were published in June and July 1954 respectively. In England as far back as 1889, an Act called the Indecent Advertisements Act (52 and 53 Viet. 18) was passed to suppress indecent advertisements in which advertisements relating to syphilis, gonorrhoea, nervous debility or other complaints or infirmity arising from intercourse was prohibited. In 1917 the Venereal Diseases Act (7 and 8 Geo. 21) was passed in England. This placed restrictions on 683 advertisements relating to treatment for venereal diseases. In 1941, The Pharmacy and Medicine Act, 1941 (4 and 5 Geo. VI Ch. 42) was passed which corres ponds in material particulars to the impugned Act. It cannot be said that there was no material before Parliament on the basis of which it proceeded to enact the impugned legislation. This material shows the bistory of the legislation, the ascertained evil intended to be cured and the circumstances in which the enactment was passed. In Shri Ram Krishna Dalmia vs Shri Justice section R. Tendolkar (1), Das, C.J., observed : " that in order to sustain the presumption of con stitutionality the court may take into consideration matters of common knowledge, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation;" Thus it is open to the court for the purpose of determining the constitutionality of the Act to take all these facts into consideration and in the present case we find that there was the evil of self medication, which both in this country and in other countries, the medical profession and those, who were conversant with its dangers, had brought to the notice of the people at large and the Government in particular. They had also warned against the dangers of self medication and of the consequences of unethical advertisement relating to proprietary medicines particularising those diseases which were more likely to be affected by the evil. There is reason, therefore, for us to assume that the state of facts existed at the time of the legislation which necessitated the Act. These facts we have already set out and it is not necessary to reiterate them. With this background in view we proceed to examine the provisions of the Act and ascertain the predominant purpose, true intent, scope and the object of the Act. The preamble shows that the object of the Act was to control the advertisement of drugs in certain cases, i.e., diseases and to prohibit advertisements relating to remedies pretending to have magic qualities and provide for other matters connected therewith, (1) ; , 297. 684 The title of the Act also shows that it is directed against objectionable advertisements. The definition section (section 2) in cl. (a) defines advertisements and in cl. (b) drugs which include (i) medicines for use of human beings and animals, (ii) substances for use of diagnosis, treatment or prevention of diseases in human beings and animals, (iii) articles other than food which affect the organic functions of the body of human beings or animals and (iv) articles intended for use as a component of any medicine etc. (c) defines magic remedies to include a talisman, mantra, kavacha and other charms and (d) relates to the publication of any advertisement and (e) what a venereal disease is. Section 3 prohibits advertisement of drugs for treatment of diseases and disorders. Clause (a) of section 3 deals with procurement of miscarriage in women for prevention of conception; cl. (b) with maintenance or improvement of capacity of human beings for sexual pleasure; cl. (c) with diagnosis and cure of venereal and other diseases. Section 4 prohibits misleading advertisements relating to drugs. Section 5 similarly prohibits advertisements of magic remedies efficacious for purposes specified in section 3. Section 6 prohibits the import into and export from India of certain advertisement. Section 14 is a saving clause which excludes registered practitioners, treatises or books,, advertisements sent confidentially to medical practitioners, wholesale or retail chemists for distribution among registered medical practitioners or to hospitals or laboratories. It also excludes advertisements printed or published by Government or with the previous sanction of the Government. Section 15 gives the Government the power to grant exemptions from the application of sections 3, 4, 5 and 6 in certain cases. As already stated when an enactment is impugned on the ground that it is ultra vires and unconstitutional what has to be ascertained is the true character of the legislation and, for that purpose regard must be had to the enactment as a whole, to its objects, purpose and true intention and to the scope and effect of its provisions or what they are directed against and what they aim at (A. section Krishna vs State of Madras (1)). Thus (1) ; , 4060 410. 685 examined it cannot be said that the object of the Act was merely to put a curb on advertisements which offend against decency or morality but the object truly, and properly understood is to prevent self medication or treatment by prohibiting instruments which may be used to advocate the same or which tend to spread the evil. No doubt in section 3 diseases are expressly mentioned which have relation to sex and disorders peculiar to women but taken as a whole it cannot be said that the object of the Act was to deal only with matters which relate to indecency or immorality. The name and the preamble are indicative of the purpose being the control of all advertisements relating to drugs and the use of the word animals in cl. (b) of the definition section negatives the object being merely to curb the emphasis on sex and indecency. Section 4 further suggests that the legislature was trying to stop misleading advertisements relating to drugs. Section 5 also tends to support the object being prohibition of advertisements suggesting remedies for all kinds of diseases. Section 6 also points in the same direction, i.e., to stop advertisements as to drugs. Sections 14 and 15 are a clearer indication that there should be no advertisements for drugs for certain diseases in order that the general public may not be misled into using them for ailments which they may imagine they are suffering from and which they might believe to be curable thereby. That this is so is shown by the fact that such advertisements can be sent to medical practitioners, hospitals and laboratories. The exclusion of Government advertisements and the power to give exemption all point to the objective being the stopping of advertisements of drugs for the object above mentioned and not merely to stop advertisements offending against morality and decency. Mr. Munshi 's argument was that section 3 was the key to the Act and that the object and direct effect of the Act was to stop advertisements and thereby impair the right of free speech by directly putting a prohibition on advertisement. If the contention of Mr. Munshi were accepted then the restriction to be valid, must fall within cl. (2) of article 19 of the Constitution. In 686 other words it must have relationship with decency or morality because the other restrictions of that clause have no application. If on the other hand the submission of the learned Solicitor General is accepted then the matter would fall under sub cls. (f) and (g) and the restriction under article 19(6). The object of the Act as shown by the scheme of the Act and as stated in the affidavit of Mr. Merchant is the prevention of self medication and self treatment and a curb on such advertisements is a means to achieve that end. Objection was taken that the preamble in the Act does not indicate the object to be the prevention of treatment of diseases otherwise than by qualified medical practitioners as the English Venereal Diseases Act 1917 does. In this Court in many cases affidavits were allowed to be given to show the reasons for the enactment of a law, the circumstances in which it was conceived and the evils it was to cure. This was done in the case of Shri Ram Krishna Dalmia vs Shri Justice section R. Tendolkar (1). Similarly, in Kathi Raning vs The State of Saurashtra (2 ) and in Kavalap para Kottarathil Kochunni vs The State of Madras (3) affidavits were allowed to be filed setting out in detail the circumstances which led to the passing of the respective enactments. In support of his argument that any limitation of his right to advertise his goods was an infringement of his freedom of speech because advertisement was a part of that freedom Mr. Munshi relied upon Alma Lovell vs City of Griffin (4). In that case the objection was taken to the validity of a municipal ordinance prohibiting the distribution without a permit of circulars, handbooks, advertising or literature of any kind on the ground that such ordinance violated the first and the 14th amendment by abridging the freedom of the Press and it was held that such prohibition was invalid at its face as infringing the constitutional freedom of the Press and constitutional guarantee of such freedom embraced pamphlets and leaflets. The actual violation which was complained of in that case consisted of the (1) ; (2) ; (3) ; (4) ; ; 687 distribution without the required permission of pamphlets and magazines in the nature of religious tracts. Chief Justice Hughes, said : " The ordinance in its broad sweep prohibits the distribution of "circulars, handbooks, advertising or literature of any kind. " It manifestly applies to pamphlets, magazines and periodicals. " No doubt the word advertisement was used both in the ordinance as well as in the opinion by the learned Chief Justice but the case actually related to the distribution of pamphlets and magazines. Mr. Munshi also relied on Express Newspapers (Private) Ltd. vs The, Union of India (1), where the cases dealing with freedom of speech were discussed by Bhagwati, J., but the question of advertisements as such did not arise in that case. An advertisement is no doubt a form of speech but its true character is reflected by the object for the promotion of which it is employed. It assumes the attributes and elements of the activity under article 19(1) which it seeks to aid by bringing it to the notice of the public. When it takes the form of a commercial advertisement which has an element of trade or commerce it no longer falls within the concept of freedom of speech for the object is not propagation of ideas social, political or economic or furtherance of literature or human thought ; but as in the present case the commendation of the efficacy, value and importance in treatment of particular diseases by certain drugs and medicines. In such a case, advertisement is a part of business even though as described by Mr. Munshi its creative part, and it was being used for the purpose of furthering the business of the petitioners and had no relationship with what may be called the essential concept of the freedom of speech. It cannot be said that the right to publish and distribute commercial advertisements advertising an individual 's personal business is a part of freedom of speech guaranteed by the Constitution. In Lewis J. Valentine vs F. J. Chrestensen (2). It was held that the constitutional right of free speech is not infringed by (1) ,123 133. (2) ; 688 prohibiting the distribution in city streets of handbills bearing on one side a protest against action taken by public officials and on the other advertising matter. The object of affixing of the protest to the advertising circularwas the evasion of the prohibition of a city ordinance forbidding the distribution in the city streets of commercial and business advertising matter. Mr. Justice Roberts, delivering the opinion of the court said: " This court has unequivocally held that the streets are proper places for the exercise of the freedom of communicating information and disseminating opinion and that, though the states and municipalities may appropriately regulate the privilege in the public interest, they may not unduly burden or proscribe its employment in these public thoroughfares. We are equally clear that the Constitution imposes no such restraint on government as respects purely commercial advertising. If the respondent was attempting to use the streets of New York by distributing commercial advertising, the prohibition of the Code provisions was lawfully invoked against such conduct. " It cannot be said therefore that every advertisement is a matter dealing with freedom of speech nor can it be said that it is an expression of ideas. In every case one has to see what is the nature of the advertisement and what activity falling under article 19(1) it seeks to further. The advertisements in the instant case relate to commerce or trade and not to propagating of ideas; and advertising of prohibited drugs or commodities of which the sale is not in the interest of the general public cannot be speech within the meaning of freedom of speech and would not fall within article 19(1)(a). The main purpose and true intent and aim, object and scope of the Act is to prevent self medication or self treatment and for that purpose advertisements commending certain drugs and medicines have been prohibited. Can it be said that this is an abridgement of the petitioners ' right of free speech. In our opinion it is not. Just as in Chamarbaughwalla 's ease (1) it was said that activities undertaken and (1) ; 689 carried, on with a view to earning profits e.g. the business of betting and gambling will not be protected as falling within the guaranteed right of carrying on business or trade, so it cannot be said that an advertisement commending drugs and substances as appropriate cure for certain diseases is an exercise of the right of freedom of speech. Das, C.J., in State Bombay vs R.M.D. Chamarbaughwala 's (1) case said at, page 920: "We have no doubt that there are certain activities which can under no circumstances be regarded as trade or business or commerce although the usual forms and instruments are employed therein. To exclude those activities from the meaning of those words is not to cut down their meaning at all but to say only that they are not within the true meaning of those words. " One has only to substitute for the words "trade or business or commerce" the phrase "freedom of speech" to see how it applies to the present case. Freedom of speech goes to the heart of the natural right of an organised freedom loving society to "impart and acquire information about that common interest". If any limitation is placed which results in the society being deprived of such right then no doubt it would fall within the guaranteed freedom under article 19(1)(a). But if all it does is that it deprives a trader from commending his wares it would not fall within that term. In John W. Rast vs Van Deman & Lewis Company (2), Mr. Justice McKenna, dealing with advertisements said: "Advertising is merely identification and description apprising of quality and place. It has no other object than to draw attention to the article to be sold and the acquisition of the article to be sold constitutes the only inducement to its purchase. " As we have said above advertisement takes the same attributes as the object it seeks to promote or bring to the notice of the public to be used by it. Examples can be multiplied which would show that advertisement dealing with trade and business has relation (1) ; (2) ; , 690, 88 690 with the item "business or trade" and not with "freedom of speech". Thus advertisements sought to be banned do not fall under article 19(1)(a). It was also contended that the prohibition against advertisements of the petitioners was a direct abridgement of the right of freedom of speech and Alice Lee Grosjean vs The American Press Co. (1) was relied upon. That was a case in which a tax was levied based on gross receipts for the privilege of engaging in the business of public advertisements in newspapers, magazines etc. having a specified circulation and it was there held that such a statute abridged the freedom of the press because its effect was not merely to reduce revenue but it had tendency to curtail circulation. This subject was discussed in Express Newspapers ' case (2) at pages 128 to 133 where the question was whether the Wage Board Act specifying the wages and conditions of service of the working journalists and thus imposing certain financial burden on the press was an interference with the right of freedom of Press and Bhagwati, J., said at page 135: " Unless these were the direct or inevitable consequences of the measures enacted in the impugned Act, it would not be possible to strike down the legislation as having that effect and operation. A possible eventuality of this type would Dot necessarily be the consequence which could be in the contemplation of the legislature while enacting a measure of this type for the benefit of the workmen concerned. " In considering the constitutionality of a statute the Court has regard to substance and not to mere matters of form and the statute must be decided by its operation and effect; J.M. Near vs State of Minnesota(3). In the present case therefore (1) the advertisements affected by the Act do not fall within the words freedom of speech within article 19(1)(a); (2) the scope and object of the Act its true nature and character is not interference with the right of freedom of speech (1) ; (2) , 123 133. (3) 75 La Ed. 1357, 1363 4. 691 but it deals with trade or business; and (3) there is no direct abridgement of the right of free speech and a mere incidental interference with such right would no alter the character of the law; Ram Singh vs The State of Delhi (1); Express Newspapers (Private) Ltd. vs The Union of India(2). It is not the form or incidental infringement that determines the constitutionality of a, statute in reference to the rights guaranteed in article 19(1), but the reality and substance. The Act read as a whole does not merely prohibit advertisements relating to drugs and medicines connected with diseases expressly mentioned in section 3 of the Act but they cover all advertisements which are objectionable or unethical and are used to promote self medication or self treatment. This is the content of the Act. Viewed in this way, it does not select any of the elements or attributes of freedom of speech falling within article 19(1)(a) of the Constitution. It was next argued that assuming that the matter was within clauses (f) & (g) of article 19(1), the restraint was disproportionate to the purpose of the Act, the object sought to be achieved and the evil sought to be remedied. It was further argued that it could not be said that the restrictions imposed by the Act were in the interest of the general public. The basis of this argument was (1) the very wide definition of the word 'advertisement 'in section 2(a); (2) the use of the word 'suggest ' in section 3; (3) the uncanalised delegated power to add diseases to the schedule; (4) the existence of section 14(c) read with rule 6 of the Rules and (5) the procedural part in s.8 of the Act; all of which, according to counsel, showed that it was beyond ' all allowable limits of restraint under cl. 6 of article 19. 'Advertisement ' in the Act, it was argued, included not only advertisements in newspapers and periodicals and other forms of publication but also on. cartons, bottles and instructions inside a carton. Without this latter kind of advertisement, it was submitted, the user would be unable to know what the medicine was, what it was to be used for and how ? If the purpose (1) [1951] S.C.R.451, 455. (2) , 123,133. 692 of the Act is to prevent objectionable and unethical advertisements in order to discourage self medication and self treatment it cannot be said that the definition is too wide keeping in view the object and the purpose of the Act which have been set out above. It is these evils which the Act seeks to cure and if the definition of the word ' advertisment ' was not so broad and inclusive it would defeat the very purpose for which the Act was brought into existence. The argument that the word 'suggest ' is something subjective is, in our 'opinion, also not well founded. 'Suggest ' has many shades of meaning and in the context it means commendatory publication. It connotes a direct approach and its use in section 3 does not support the contention. that the restraint is disproportionate. In another part of the judgment we shall discuss the constitutionality of the power of delegation reasonableness of the range of diseases added in the schedule and it is unnecessary to go over the same field here. Then we come to section 14(c) and r. 6, i.e., prohibited advertisement is to be sent confidentially by post to a registered medical practitioner or to a wholesale and retail chemist or a hospital and laboratory and the following words have to be inscribed on the outside of every packet containing the advertisement, i.e., " for the use only of registered medical practitioners or a hospital or a laboratory ". If the purpose is to discourage self medication and encourage treatment by properly qualified medical practitioners then such a regulatory provision cannot be considered an excessive restraint. The mere fact that in the corresponding English Act certain other persons are also mentioned and that such advertisements can be published in certain medical journals and scientific treatises is not a ground for holding the restriction to be disproportionate. It is not a proper method of judging the reasonableness of the restrictions to compare every section of the Act with the corresponding English Act and then to hold it unreasonable merely because the corresponding section of the two Acts are different. The evil may be the same but the circumstances and 693 conditions in the two countries in regard to journals may be different and there are bound to be differences in the degree of restrictiveness in the operativeportions of the two Acts. The policy behind the Act is that medication should be on the advice of qualified medical practitioners. Merely because the legislature thought that it would not exclude advertisements in medical journals of the country would not be indicative of the disproportion of the restraint. Objection was then taken to the procedural part in section 8 and it was submitted that the power seizure and detention was unfettered and and there is no proper procedure laid down Criminal Procedure Code or the Drugs Act are no rules and safeguards in regard warrants or entry into premises as there Code of Criminal Procedure or the Drugs Act. In another part of the judgment we shall deal with this question and it is not necessary to do so here. It was next contended that the Act was not in the interest of the general public as it could not be said that the mention of the names of diseases or instructions as to the use of particular medicines for those diseases was not in the interest of the general public. Besides, it would prevent the medicines being brought to the notice of the practising medical practitioners or distributing agencies. It would also prevent a properly worded advertisement suggesting cure of diseases to people who for the sake of prestige and other understandably valid reasons do not like to confide to any person the nature of their diseases and that it would prevent medical relief in a country where such relief is notoriously inadequate. We have already set out the purpose and scope of the Act, the conditions in which it was passed and the evils it seeks to cure. If the object is to prevent self medication or self treatment, as it appears to be then these are exactly the evils which such advertisements would subserve if a piece of legislation like the Act did not exist. It has not been shown that the restrictions laid down in the Act are in any manner disproportionate to the object sought to be attained by the Act nor has it been of 694 shown that the restrictions are outside the permissible limits. Mr. Chatterjee in dealing with this point drew our attention to the test of reasonablenses as laid down in Chintaman Rao vs The State of Madhya Pradesh (1) where it was said by Mahajan, J. (as he then was) at pages 762 and 763: " The question for decision is whether the statute under the guise of protecting public interests arbitrarily interferes with private business and imposes unreasonable and unnecessarily restrictive regulations upon lawful occupation; in other words ' whether the total prohibition of carrying on the business of manufacture of bidis within the agricultural season amounts to a reasonable restriction on the fundamental rights mentioned in article 19(1)(g) of the Constitution. " It has not been shown in the present case that under the guise of protecting public interest the Act arbitrarily interferes with private business or imposes unreasonable restrictions. If the true intention of the Act is, as indeed it is, to stop objectionable and unethical advertisements for the purpose of discouraging self medication no question of unreasonable restrictions arises. Mr. Chatterjee also relied upon the observation of Bose, J., in Dwarka Das Srinivas of Bombay vs The Sholapur Spinning & Weaving Company Limited (2) where the learned Judge said that " the provisions in the Constitution touching fundamental rights must be construed broadly and liberally in favour of those on whom the rights have been conferred ". With this statement we are in accord. The interpretation should be such as to subserve the protection of the fundamental rights of the citizen but that is subject to limitations set out in article 19 itself which are for the general welfare of all ,citizens taken as a whole and are therefore for the interest of the general public. Mr. Chatterjee further contended that the restraint was excessive because the prohibition of a mere mention of the name of a disease and the suggestion of a cure for that could (1) (2) ; , 733. 695 not be a reasonable restriction. As submitted by the learned Solicitor General the objection is not to the names but to the advertisements commending certain medicines as a cure for the same and this is what the Act is endeavouring to eliminate. In our opinion it cannot be said that the restrictions either excessiveor disproportionate or are not in the interest of the general public. The third point raised by Mr. Munshi was that thewords 'or any other disease or condition which maybe specified in the rules made under this Act ' in cl.(d) of section 3 of the Act are delegated legislation and do not lay down any certain criteria or proper standards,and surrender unguided and uncanalised power to theexecutive to add to diseases in the schedule. Thelearned Solicitor General in reply supported theschedule as a case of conditional legislation and not the exercise of delegated legislative power and he further contended that even if it was held to be thelatter it was within the limits recognised by judicial decisions. The distinction between conditional legislation and delegated legislation is this that in the former the delegate 's power is that of determining when a legislative declared rule of conduct shallbecome effective; Hampton & Co. vs U.S. (1) and thelatter involves delegation of rule making power which constitutionally may be exercised by the admin istrative agent. This means that the legislature having laid down the broad principles of its policy in the legislation can then leave the details to be supplied by the administrative authority. In other words by delegated legislation the delegate completes the legislation by supplying details within the limits prescribed by the statute and in the case of conditionallegislation the power of legislation is exercised by the legislature conditionally leaving to the discretion of an external authority the time and manner of carrying its legislation into effect as also the determination of the area to which it is to extend; (The Queen vs Burah (2 ); Russell vs The Queen (3); King Emperor vs (1) ; (2) , 835. 696 Benoarilal Sarma (1); Sardar Indar Singh vs State of Rajasthan (2). ) Thus when the delegate is given the power of making rules and regulations in order to fill in the details to carry out and subserve the purposes of the legislation the manner in which the requirements of the statute are to be met and the rights therein created to be enjoyed it is an exercise of delegated legislation. But when the legislation is complete in itself and the legislature has itself made the law and the only function left to the delegate is to apply the law to an area or to determine the time and manner of carrying it into effect, it is conditional legislation. To put it in the language of another American case: " To assert that a law is less than a law because it is made to depend upon a future event or act is to rob the legislature of the power to act wisely for the public welfare whenever a law is passed relating to a state of affairs not yet developed, or to things future and impossible to fully know. " The proper distinction there pointed out was this: " The legislature cannot delegate its power to make a law, but it can make a law to delegate a power to determine some fact or state of things upon which the law makes or intends to make its own action depend. There are many things upon which wise and useful legislation must depend which cannot be known to the law making power, and must therefore be subject of enquiry and determination outside the hall of legislatures (In Lockes Appeal ; Field vs Clark 143 U. section 649.) But the discretion should not be so wide that it is impossible to discern its limits. There must instead be definite boundaries within which the powers of the administrative authority are exercisable. Delegation should be not be so indefinite as to amount to an abdication of the legislative function Schwartz American Administrative Law, page 21. In an Australian case relied upon by the learned Solicitor General the prohibition by proclamation of (1) (1944) L.R. 72 I.A. 57, (2) , 697 goods under section 52 of the Customs Act 1901 was held to be conditional legislation: Baxter vs Ah Way (1) According to that case the legislature has to project its mind into the future and provide as far as possible for all contingencies likely to arise in the application of the law, but as it is not possible to provide for all contingencies specifically for all cases,, the legislature resorts to conditional legislation leaving it to some specified authority to determine in what circumstances the law should become operative or to what its operation should be extended, or the particular class of persons or goods to which it should be applied: Baxter 's case (1) at pp. 637 & 638. Broadly speaking these are the distinguishing features of the two forms of delegation and these are their characteristics. The question is in which compartment does the power given in the Act fall. The power given to the authority under that provision (section 3) of the Act is contained in cl. (d) in the following words: S.3 " Subject to the provisions of this Act, no person shall take any part in the publication of any advertisement referring to any drug in terms which suggest or are calculated to lead to the use of that drug for . . . . . . . . . . . . . . . . . . . . . . . . . . (d) the diagnosis, cure, mitigation, treatment or prevention of any venereal disease or any other disease or condition which may be specified in rules made under this Act." And power to make rules is laid down in section 16 which is as follows: section 16 (1) "The Central Government may by notification in the official gazette make rules for carrying out the purposes of this Act. (2) In particular and without prejudice to the generality of the foregoing power, such rules may (a) specify any disease or condition to which the provisions of section 3 shall apply; (1) , 634, 637, 638. 698 (b) prescribe the manner in which advertisement of articles or things referred to in cl. (c) of sub section (1) of section 14 may be sent confidentially. " For the petitioner it was argued that section 3(d) is delegated legislation and not conditional legislation as the power delegated therein is only to specify conditions and diseases in the rules. The interdiction under the Act is applicable to conditions and diseases set out in the various clauses of section 3 and to those that may under the last part of clause (d) be specified in the rules made under section 16. The first 'sub section of is. 16 authorises the making of rules to carry out the purposes of the Act and cl. (a) of sub section (2) of that section specifically authorises the specification of diseases or conditions to which the provisions of section 3 shall apply. It is the first sub section of section 16 which confers the general rule making power, i.e., it delegates to the administrative authority the power to frame rules and regulations to subserve the object and purpose of the Act. Clause (a) of the second sub section is merely illustrative of the power given under the first sub section; King Emperor vs Sibnath Banerji (1). Therefore, sub section 2(a) also has the same object as sub section (1), i.e, to carry out the purposes of the Act. Consequently, when the rule making authority specifies conditions and diseases in the schedule it exercises the same delegated authority as it does when it exercises powers under sub section (1) and makes other rules and therefore it is delegated legislation. The question for decision then is, is the delegation constitutional in that the administrative authority has been supplied with proper guidance. In our view the words impugned are vague. Parliament has established no criteria, no standards and has not prescribed any principle on which a particular disease or condition is to be specified in the Schedule. It is not stated what facts or circumstances are to be taken into consideration to include a particular condition or disease. The power of specifying diseases and conditions as given in section 3(d) must therefore be held to be going beyond permissible boundaries (1) (1945) L.R. 72 I.A. 241. 699 of valid delegation. As a consequence the Schedule in the rules must be struck down. But that would not affect such conditions and diseases which properly fall within the four clauses of section 3 excluding the portion of cl. (d) which has been declared to be unconstitutional. In the view we have taken it is unnecessary to consider the applicability of Baxter vs Ah Way (1). We are of the opinion therefore that the words " or any other disease or condition which may be specified in the rules made under this Act " confer uncanalised and uncontrolled power to the Executive and are therefore ultra vires. But their being taken out ' of cl. (d) of section 3 does not affect the constitutionality of the rest of the clause or section as they are severable; R. M. D. Chamarbaughwala vs The Union of India (2). The constitutionality of section 8 of the Act was challenged on the ground that it violated the petitioners ' right under articles 21 and 31. That section when quoted runs as follows: " Any person authorised by the State Government in this behalf may, at any time, seize. . and detain any document, article or thing which such person has reason to believe ' contains any advertisement which contravenes any of the provisions of this Act and the court trying such contravention may direct that such document (includingall copies thereof) article or thing shall be forfeited to the Government". It was pointed out by Mr. Munshi that there was nolimitation placed on, no rules and regulations made for and no safeguards provided in regard to the powers of a person authorised in that behalf by Government to seize and detain any document, article or anything which in the opinion of such person contains any advertisement contravening any of theprovisions of the Act. It was also submitted that in the corresponding English Act of 1939, in section 10 there are proper safeguards provided in regard to the exercise of the power of seizure etc. The first part of section 8 of the Act dealing with seizure and detention received slender support from the Solicitor General. It may (1) , 634, 637, 638, (2)[1957] S.C.R. 930. 700 be, he contended, that having regard to the purpose and object of the Act the Indian legislature did not think it necessary to provide any safeguards and that the legislature thought that nobody would be prejudiced by reason of the want of safeguard previous to the seizure, In our opinion this portion of the section goes far beyond the purpose for which the Act was enacted and, the absence of the safeguards which the legislature has thought it necessary and expedient in other statutes, e.g., the Indian Drugs Act, is an unreasonable restriction on the fundamental rights of the petitioners and therefore the first portion of the section, i.e., " any person authorised by any of the provisions of this Act" is unconstitutional. What then is the consequence of this unconstitutionality ? If this portion is excised from the rest of the section the remaining portion is not even intelligible and cannot be upheld. The whole of the section 'must therefore be struck down. By a portion of cl. (d) of section 3 and the whole of B. 8 being declared unconstitutional the Act is not thereby affected as they are severable from the rest of the Act. As a consequence of excision of that portion and of section 8 from the Act the operation of the remaining portion of the Act remains unimpaired. R. M. D. Chamarbaughwala vs The Union of India(1). As a result of section 8 being declared invalid, all the goods seized from the petitioners having been seized without the authority of law must be returned to the respective petitioners. It will be for the Government to take such action in regard to the proceedings taken or prosecutions commenced as is in accordance with the law laid down in this Judgment. We declare the portion of cl. (d) of section 3 indicated above and section 8 unconstitutional and direct therefore that a writ of mandamus shall issue directing the respondents to return the goods seized. As the petitioners ' challenge to the constitutionality of the Act is partially successful the proper order as to costs is that the parties do pay their own costs. Petitions partly allowed.

When an enactment is challenged on the ground of violation of fundamental rights it is necessary to ascertain its true nature and character, i.e., its subject matter, the area in which it is intended to operate, its purport and intent. In order to do so it is legitimate to take into consideration all the factors such as the history of the legislation, the purpose thereof, the surrounding circumstances and conditions, the mischief intended to be suppressed, the remedy proposed by the legislature and the true reason for the remedy. Initially, there is a presumption in favour of the constitutionality of an enactment. Bengal Immunity Company Ltd. vs The State of Bihar, , R. M. D. Chamarbaughwala vs The Union of India, ; , Mahant Moti Das & Others vs section P. Saki, A.I.R. 1959 S.C. 942, Charanjit Lal Chowdhuri vs The Union of India & Others, ; and The State of Bombay vs F. N. Bulsara, ; , referred to. On examining the history of the legislation, the surrounding circumstances and the scheme of the Act it was clear that the object of the Drugs and Magic Remedies (Objectionable Advertisement) Act, 1954, was the prevention of self medication and self treatment by prohibiting instruments which may be used to advocate the same or which tended to spread the evil. Its object was not merely the stopping of advertisements offending against morality and decency. Advertisement is no doubt a form of speech, but its true character is reflected by the object for the promotion of which it is employed. It is only when an advertisement is concerned with the expression or propagation of ideas that it can be said to relate to freedom of speech. But it cannot be said that the right 672 to publish and distribute commercial advertisements advertising an individual 's personal business is a part of the freedom of speech guaranteed by the Constitution. The provisions of the Act which prohibited advertisements commending the efficacy, value and importance in the treatment of particular diseases of certain drugs and medicines did not fall under article 19(1)(a) of the Constitution. The scope and object of the Act its true nature and character was not interference with the right of freedom of speech but it dealt with trade and business. Lewis J. Valentine vs F. J. Chrestensen, ; ; R. M. D. Chamarbaughwala vs The Union of India, ; , State of Bombay vs R. M. D. Chamarbaughwala, ; ; John W. Rast vs Van Deman & Lewis Company, ; , Alice Lee Grosjean vs The American Press Co., ; , Express Newspapers (P) Ltd. vs The Union of India, and J. M. Near vs State of Minnesota, ; , referred to. The definition of " advertisement " which included labels on cartons and bottles and instructions inside cartons was not too wide in view of the object of the Act. If the definition was not so broad and inclusive it would defeat the very purpose for which the Act was brought into ' existence. The use of the word " suggest " in section 3 did not support the contention that the restraint placed by that section was disproportionate. The provisions Of section 14(c) and r. 6 which allowed the prohibited advertisements to be sent confidentially by post to a registered medical practi tioner, to a wholesale or retail chemist, to a hospital or a laboratory only when the words " for the use only of registered medical practitioners or a hospital or a laboratory " had been inscribed on the outside of every packet containing the advertisement did not impose excessive restraint. The provisions of the Act were in the interests of the general public and placed reasonable restrictions on the trade and business of the petitioners and were saved by article 19(6). Chintaman Rao vs The State of Madhya Pradesh, [1950] S.C.R. 759 and Dwarka Das Srinivas of Bombay vs The Sholapur Spinning & Weaving Company Limited, ; , referred to. The words " or any other disease or condition which may be specified in the rules made under this Act " in cl. (d) Of section 3 which empowered the Central Government to add to the diseases falling within the mischief Of section 3 conferred uncanalised and uncontrolled power on the executive and were ultra vires. The legislature had established no criteria or standards and had not prescribed any principle on which a particular disease or condition was to be specified. As a consequence the Schedule to the rules also become ultra vires. But the striking down of the impugned words did not affect the validity of the rest of cl. (d) or of the other clauses of section 3 as these words were severable. 673 The first part of section 8 which empowered any person authorised by the State Government in this behalf to seize and detain any document, article or thing which such person had reason to believe contained any advertisement contravening the provisions of the Act imposed an unreasonable restriction on the fundamental rights of the petitioners and was unconstitutional. This portion of section 8 went far beyond the purpose for which the Act was enacted and failed to provide proper safeguards in regard to the exercise of the power of seizure and detention as had been provided by the legislature in other statutes. If this portion was excised from the section the remaining portion would be unintel ligible and could not be upheld. By a portion of cl. (d) of section 3 and the whole of section 8 being declared unconstitutional, the operation of the remaining portion of the Act remained unimpaired as these were severable. R. M. D. Chamarbaughwala vs Union of India [1957] S.C.R. 930, referred to.

Appeal No. 1743 of 1967. Appeal by Special Leave from the judgment and Decree dated 15th October, 1958 of the Patna High Court in Appeal from Appellate Decree No. 552 of 1953. V. section Desai and D. Goburdhan, for the appellants. Sarjoo Prasad, R. K. Jain and E.C. Agarwal, for respondents Nos. 2 to 12. The Judgment of the Court was delivered by BEG, J. In this appeal by special leave the short question involved relates to an application of Sec. 141 of the Indian Succession Act to the facts of the case. This section reads as follows : "141. If a legacy is bequeathed to a person Who is named an executor of the will, be shall not take the legacy, 431 unless he proves the will or otherwise manifests an intention to, act as executor". "Illustration: A legacy is given to A, who is named an executor. A orders the funeral according to the directions contained in the will, and dies a few days after the testator, without having proved the will. A has manifested an intention to act as executor". The plaintiffs appellants before us claim as the heirs of Sham Narain Singh who died issueless in August 1913. One Achhaiber Singh, a collateral of Shyam Narain Singh, had made a will on 3rd July, 1912, under which he gave life interests in the properties owned by him to his three daughters in law Deolagan Kuer, Chapkali Kuer, and Alodhan Kuer. He laid down that, after the death of these three ladies, a half share in the properties would go to the two daughters of Alodhan Kuer, and another half to the above mentioned Shyam Narain Singh, a grandson of the testator 's first cousin: Achhaiber Singh died in November, 1912. It was found by all the Courts that Shyam Narain Sing took part in the cremation ceremony, of Achhaiber Singh. Apparently, the members of the family in which Achhaiber Singh had been adopted were not well disposed towards him. It was, therefore, not surprising that Shyam Narain Singh, with, whom he was well pleased, should tight the funeral pyre as his agnate in the absence of his sons who had predeceased him. It has also been found that Chapkali Kuer and Alodhan Kuer had applied for the Probate of the will of Achhaiber Singh after the death of Shyam Narain Singh. Hence, Shyam Narain Singh could not possibly join them at that time. He had died before the will could be duly proved. He was also said to have looked after the properties of the two ladies. The question before us is whether by taking part in cremation ceremonies and by helping two daughters in law to manage properties, Shyam Narain Singh manifested his inten tion to act as an executor so as to be covered by Sec. 141 of the Indian Succession Act, and, therefore, to claim his legacy. We may mention here that there was some previous litigation also between the parties. In suit No. 144 of 1946, brought by the heirs of Shyam Narain Singh, against some of the defendants in the suit before us, the precise question before us for decision had arisen, but the High Court had not decided it. It had dismissed the suit on the ground that the, plaintiffs had not locus standi. On the strength of that decision the bar of res judicata is relied upon by the Defendants Respondents before us as it was in the Courts below. But, as this appeal can be disposed of on the first question, already mentioned by us, relating to the application of section 141 Indian Succession Act. we need not deal with the plea of res judicata. The suit before us was filed by the heirs of Shyam Narain Singh for a declaration of the rights of Shyam Narain Singh in the property bequeathed, and for a declaration that the compromise decree in suit No. 74 of 1944 was fraudulent, collusive, invalid, and not binding upon 432 the plaintiffs. The Trial Court and then the Additional District Judge of Patna, on the first appeal of the Defendants Respondents before us, had decreed the plaintiffs ' suit. The Additional District Judge had held that, by taking part in the cremation ceremonies and by helping the two legatees daughters in law of the testator, Shyam Narain Singh had manifested an intention to act as an executor before he died. The Additional District Judge had also taken into account the fact that the heirs of Shyam Narain Singh had taken some interest in the properties left by Achhaiber Singh by litigating for it. He thought that this was only possible if Shyam Narain Singh had himself manifested an interest in his right, , under the will. This evidence was considered sufficient for holding that Shyam Narain Singh had manifested an intention to act as executor. The High Court of Patna had allowed the second appeal of defendants on the ground that the findings of fact recorded by Courts below were not enough to attract the application of Section 141 of the Indian Succession Act. The conduct of the relations of Shyam Narain Singh, in litigating for the properly left by Achhaiber Singh was, as the High Court rightly pointed out, not relevant for determining the intentions of Shyam Narain Singh. Nor was the fact that he looked after the proprieties of the two co legatees, who were widows, a manifestation of his own intention to assert his own rights as an executor. What was most important was the provision in the will itself which had been overlooked by the first two courts. Achhaiber Singh had laid down in the will : "That on the death of me, the executant, the aforesaid executors, should perform the Shradh ceremonies of me, the executant according to the means and custom in the family". The High Court had accepted the contention that there was no evidence that Shyam Narain Singh had performed Shradh ceremonies of Achhaiber Singh in accordance with "the means and the custom in the family". The only contention which could be advanced before us on behalf of the plaintiffs appellants was that cremation ceremonies do not end with actual cremation of the testator, but include other ceremonies such as Sraddha ceremonies which come later. In reply, we have been referred to the meaning of the term "Sraddha" given in Sir M. Monier Williams ' Sanskrit English Dictionary (p. 1097) as follows ". .a ceremony in honour and for the benefit of dead relatives observed with great strictness at various fixed periods and on occasions of rejoicing as well as mourning by the surviving relatives (these ceremonies are performed by the daily offering of water and on stated occasions by the offering of Pindas or balls of rice and meal to three paternal and three maternal forefathers, i.e. to father, grand father, and great grandfather, it should be borne in mind that a Sraddha is not a funeral ceremony (antyeshti) but a supplement to such a ceremony; it is an act of reverential homage to a deceased person performed by relatives, and is moreover supposed to supply the dead with strengthening nutriment after the performance of the previous funeral ceremonies has endowed 433 the with ethereal bodies; indeed until those antyeshti or funeral rites ' have been performed, and until the succeeding first Sraddha has, been celebrated the deceased relative is a prata or restless, wandering ghost, and has no real body (only a lingrasarira, q.v.); it is not until the first Sraddha has taken place that he attains a position among the Pitris or Divine Fathers in their blissful abode called Pitri loka, and the Sro is most desirable and efficacious when performed by a son;" Thus, it is clear that there is a distinction between cremation ceremonies and Sraddha ceremonies which are periodic. It is also evident that what the testator desired his executors to do was that they should perform his Sraddha ceremonies. The manner in which he refers to Shyam Narain Singh in his will, almost as a substitute for a son, shows that he expected Shyam Narain Singh to perform his Sraddha ceremonies as his 'own sons had predeceased him. There is no evidence whatsoever on record that Shyam Narain Singh ever performed any such ceremony. The conclusion reached by the High Court is, therefore, correct. Accordingly, we dismiss this appeal with costs. There is also a Civil Miscellaneous Petition No. 4146 of 1968 before us for an amendment of the plaint in case we order a remand of the case. We see no reason to allow this application which is also dismissed. Appeal dismissed.

A made a will giving life interest in his properties to three daughters in law '. After the death of the three ladies, half share of the property was to go to two daughters of one of the daughters in law and the other half to one S, collaterally related to A. S was appointed as one of the executors of the will. One of the terms of the will was "that on the death of me, executant the aforesaid executors should perform the Shradh ceremonies of the executant according to the means and customs in the family." S performed the cremation ceremonies and helped the two daughters in law to manage properties. There was no evidence to show that he performed the Shradh as well. S died before the will was duly proved. The principal question in the suit filed by the heirs of S was whether there was adequate manifestation of an intention to act as an executor on the part of section The two lower Courts held that the intention to act as an executor was apparent from the facts while the High Court held that, since there was no evidence of Shradh being performed by there was no 'manifestation ', as required by Sec. 141 of the Indian Succession Act. Dismissing the appeal, HELD : There is a distinction between the cremation ceremonies and shradh ceremonies which are periodic. It is also evident that what the testator desired his executors to do was that they should perform his shradh ceremonies. The manner in which the testator has referred to S in his will, almost as a substitute for a son, shows that he expected S to perform his shradh ceremonies as his own sons, who had predeceased him, would have preformed these. There is no evidence whatsoever on record that S ever performed any such ceremony. The conclusion reached by the High Court, therefore, is correct. [433 C]

Appeal No. 1218 of 1968. Appeal from the judgment and order dated November 29, 1966 of the Punjab High Court in Civil Writ No. 271 of 1966. M. C. Setalvad and R. N. Sachthey, for the appellant. The respondent did not appear. 268 The Judgment of the Court was delivered by Hegde, J. On September 12, 1963, the Government of Punjab passed the following order : "Subject : Reservation for the members of Scheduled Castes, Scheduled Tribes and Backward Classes in promotion cases. Sir, I am directed to refer you to the subject noted above and to say that at present reservation for Scheduled Castes, Scheduled Tribes and other Backward Classes is applicable to new appointments and not to promotions which are governed by consideration of merit and seniority alone. Since those castes/classes are poorly represented in various services in the upper grades under the State Govt. it has been under the active consideration of Government that some reservation in higher grade posts as well should be made for them. It has now been decided that except in the case of All India Services 10 per cent of the higher posts to be filled by promotion should be reserved for the members of Scheduled Castes, Scheduled Tribes and Backward Classes (9 per cent for the ' members of Scheduled Castes and Scheduled Tribes and 1 per cent for the Backward Classes) subject to the following conditions : (a) the persons to be considered must possess the minimum necessary qualification; and (b) they should have at least a satisfactory record I of service." Up till that date reservation for Scheduled Castes. Scheduled Tribes and Backward Classes was confined to initial recruitment. The first out of every five initial recruitments was reserved for, Scheduled Castes, Scheduled Tribes or other Backward Classes. On January 14, 1964, the Government clarified its order dated September 12, 1963. In this case we are not concerned with the first paragraph of that clarification. The second paragraph of that clarification reads thus : "Government have since been receiving references from several quarters seeking clarification in regard to the implementation of the said decision. After careful consideration of the matter, it has now been decided that : (a) The said decision should be applied to all promotion posts already vacant on 12th September, 1963, or falling vacant thereafter. 269 (b) The reservation should not imply that 10 per cent of the total posts reserved for promotion in any cadre have to be filled by Scheduled Castes personnel in the sense that all existing/ future vacancies will be filled up by Scheduled Castes/Tribes and other Backward Classes candidates until their share in higher services comes up to 1 0 per cent. (c) This provision of reservation applies to all State. services including Class 1, II, III, and IV posts, the only exception being All India Services. (d) This reservation should apply even in the case of short term leave vacancies unless it is likely to involve unnecessary dislocation of work in different offices and avoidable expenditure and inconvenience due to mid year transfers etc. (e) So far as Scheduled Castes/Tribes are concerned, the very first vacancy existing on/arising after the 12th September, 1963, should retreated as reserved for them and only if no such official is available for promotion against the vacancy reserved for them in the first block of 10 vacancies, a candidate belonging to other Backward Classes may be selected in preference to the remaining officials against one such post only out of one hundred, since the reservation for other Backward Classes may not exceed I per cent. However, if Sheduled Castes/ Tribes candidates are available to fill one out of every ten vacancies, the specific reservation in favour of other Backward Classes should be the, 51st vacancy. (f) One reserved vacancy should be carried over to the next block of ten vacancies in case it cannot be filled up within any block of ten posts. Thus, if no Scheduled Castes/Tribes/Backward Classes candidate is promoted against any of the first 10 vacancies the number of vacancies available to such candidates in the following block will betwo. (g) In case an out of turn promotion has already been given to a candidate belonging to Scheduled Castes/Tribes or Backward Classes against a reserved vacancy and then in the same block it happens to be the turn of a candidate belonging 270 to the said castes/classes for promotion, such candidate should not be ignored on the ground that 10 per cent reservation has already been exhausted." Thereafter by another letter of March 18, 1964, the Government issued further clarification of their aforementioned com munications. That clarification reads "To illustrate the above point if there is an official of the Scheduled Castes placed at a position say 73rd in a list prepared for promotion to the higher parts and a vacancy arises therein, he would have precedence over the other 72 officials to benefit out of the first vacancy that occurs on or after 12th September, 1963. Ms turn would not be withheld merely for the fact that his number on the select list is not in the first ten." Respondents Nos. 1 and 3 to this appeal were both working in the Forest Department of the Government as Head Assistants. Respondent No. 1 was senior to Respondent No. 3 Respondent No. 3 belonged to a Scheduled Caste. Hence in view of the order of the Government, Respondent No. 3 was promoted tem porarily as Superintendent ignoring the claim of Respondent No. 1. 'Aggrieved by that order Respondent No. 1 moved the High Court of Punjab to quash the promotion of Respondent No. 3 and direct the Government to promote him as Superin tendent in the place of Respondent No. 3. The High Court has quashed the promotion of Respondent No. 3. The State of Punjab (now substituted by the State of Haryana) has brought this appeal after obtaining a certificate from the High Court under article 133(1)(c) of the Constitution. In the opinion of the High Court reservation made for the .Scheduled Castes, Scheduled Tribes and Barckward Classes is not impermissible under the Constitution in view of article, 16(4) of the Constitution as interpreted by this Court in The General Manager, Southern Railway vs Rangachari.(1) But the Government has violated article 16(1) by reserving the first out of a group of 10 posts for the Scheduled Castes, Scheduled Tribes and Backward Classes. The High Court was persuaded by the Counsel for the first respondent to visualise various hypothetical cases under which reservation of the type impugned in the present case could lead to various anomalies such as the person getting the 'benefit of the reservation may jump over the heads of several of his Seniors not only in his own grade but even in the higher grades. They visualised the possibility of Head Assistant leaping ,over the heads of several seniors of his in the grade of Head (1) [1962] 2.S.C.R.586. 271 Assistants and thereafter in the grade of Superintent; subsequently in the grade of Under Secretaries, Deputy Secretaries and so on and so forth. It is not the finding of the High Court that in any of the grades to which the impugned orders apply, the possibilities visualised by the High Court are imminent or even likely. article 16(1) is an extension of article 14. It provides "There shall be equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State." But the equality contemplated by this clause is not an embo died equality. It is subject to several exceptions and one of the exceptions is that provided in article 16(4) which says : "Nothing in this Article shall prevent the State from making any provision for the reservation of appointments or posts in favour of any backward class of citizens which, in the opinion of the State is not adequately represented in the services under the State. " In Rangachari 's case(1) this Court ruled that the reservation contemplated by article 16(4) can be made not merely to initial recruitment but also to posts to which the promotions are to be made. This is what Gajendragadkar J. (as he then was) speaking for the majority observed (at pp. 604 & 605) : "We must in this connection consider an alternative argument that the word posts must refer not to selection posts but to posts filled by initial appointments. On this argument reservation of appointments means re servation of certain percentage in the initial appointments and reservation of posts means reservation of initial posts which may be adopted in order to expedite and make more effective the reservation of appointments themselves. On this construction the use of the word posts appears to be wholly redundant. In our opinion, having regard to the fact that we are construing the relevant expression 'reservation of appointments ' in a constitutional provision it would be unreasonable to assume that the reservation of appointments would not include both the methods of reservation, namely, reservation of appointments by fixing a certain percentage in that behalf as well as reservation of certain initial posts in order to make the reservation of appointments more effective. That being so, this alternative argument which confines the word 'posts ' to initial posts (1) [1962] 2S.C.R.586. 272 seems to us to be entirely unreasonable. On the other hand under the construction by which the word 'posts ' includes selection posts the use of the word 'posts ' is not superfluous but serves a very important purpose. It shows that reservation can be made not only in re gard to appointments which are initial appointments but also in regard to selection posts which may fall to be find by employees after their employment. This construction has the merit of interpreting the words ' appointments ' and 'posts ' in their broad and liberal sense and giving effect to the policy which is obviously the basis of the provisions of article 16(4). Therefore, we are disposed to take the view that the power of reservation which is conferred on the State under article 16(4) can be exercised by the State in a proper case not only by provided for reservation of appointments but also by providing for reservation of selection posts. This construction, in our opinion, would serve to give effect to the intention of the Constitution markers to make adequate safeguard for the advancement of backward classes and to secure for their adequate representation in the services. " The extent of reservation to be made is primarily a matter for the State to decide. By this we do not mean to say that the decision of the State is not open to judicial. review. The reservation must be only for the purpose of giving adequate representation in the services to the Scheduled Castes, Scheduled Tribes and Backward Classes. The exception provided in article 16(4) should not make the rule embodied in article 16(1) meaningless. But the burden of establishing that a particular reservation made by the State is offensive to article 16(1) is on the person who takes the plea. The mere fact that the reservation made may give extensive benefits to some of the persons who have the benefit of the reservation does not by itself make the reservation bad. The length of the leap to be provided depends upon the gap to be covered. As observed by the majority in Rangachari 's case(1) : "The condition precedent for the exercise of the powers conferred by article 16(4) is that the State ought to be satisfied that any backward class of citizens is not adequately represented in its services. This condition precedent may refer either to the numerical inadequacy of representation in the services or even to the qualitative inadequacy of representation. The advancement of the socially and educationally backward classes requires (1) ; 273 not only that they should have adequate representation in the lowest rung of services but that they should aspires to secure adequate representation in selection posts in the services as well. In the context the expression 'adequately represented ' imports; considerations of 'size ' as well as 'values ', numbers as well as the nature of appointments held and so it involves not merely the numerical test but also the qualitative one. It is thus by the operation of the numerical and a qualitative test that the adequacy or otherwise of the representation of backward classes in any service has to be judged; and if that be so, it would not be reasonable to hold that the inadequacy of representation can and must be cured only by reserving a proportionately higher percentage of appointments at the initial stage. In a given case the State may well take the view that a certain percentage of selection posts should also be reserved. for reservation of such posts may make the representation of backward classes in the services adequate, the adequacy of such representation being considered qualitatively. " It is true that every reservation under article 16(4) does in troduce an element of discrimination particularly when the question of promotion arises. It is an inevitable consequence of any reservation of posts that junior officers are allowed to take a march over their seniors. This circumstance is bound to displease the senior officers. It may also be that some of them will get frustrated but then the Constitution makers have thouht fit in the interes 's of the society as a whole that the backward class of citizens of this country should be afforded certain protection as observed by this Court in A. Peeriakaruppan etc. V. State of Tamil Nadu(1): "It cannot be denied that unaided many sections of this country cannot compete with the advanced sections of the Nation. Advantages secured due to historical reasons should not be considered as fundamental rights. Nation 's interest will be best served taking a long range view if the backward classes are helped to march forward and take their place in line with the advanced sections of the people. " There was no material before the High Court and there is no material before us from which we can conclude that the impugned order is violative of article 16(1). Reservation of appointments under article 16(4) cannot be struck down on hypothetical (1) [1971] 2 S.C.R.430. 807Sup. CI/71 274 grounds or on imaginary possibilities. He who assails the reservation under that article must satisfactorily establish that there has been a violation of. article 16(1). For the reasons mentioned above this appeal is allowed and the order of the High Court set aside. Respondent No. 1 who was the petitioner before, the High Court is not represented before this Court. In the circumstances of this case we make no order as to costs. V. P. section Appeal allowed.

The appellant State issued an Order according to which reservation of posts for Scheduled castes. tribes and backward classes was made applicable not only to initial recruitment but also to promotions. Respondents 1 and 3 were in the 'State Government service and the former was the senior. But since the latter belonged to a scheduled caste he was promoted over. the first respondent as per the Order. The High Court quashed the promotion on the basis that such reservation might lead to various anomalies. In appeal to this Court, HELD : Article 16(1) provides for equality of opportunity to all citizens in relation to appointment to any office in the service of the State subject to the exception in article 16(4) that the State may make reservations in favour of backward classes. The reservation contemplated by article 16(4) can be made not merely to initial recruitment but also to Posts to which promotions are to be made. Every such reservation under article 16(4) does introduce an element of discrimination and promotion of junior officers over seniors; but the Constitution makers thought fit, in the interests of society as a whole, that backward classes should be afforded some protection. If, however, the reservation under article 16(4) makes the rule in article 16(1) meaningless the decision of the State would be open to judicial review; but the burden of establishing that a particular reservation is offensive to article 16(1) is on the person who takes the plea. [271 C, E, 272 D G, 273 D F] In the present case, there was no material from which it could be concluded that the impugned Order violated article 16(1). The reservation could not be struck down on hypothetical grounds or on imaginary possibilities. [273 H] General Manager, Southern Railway vs Rangachari, ; and A. Peeriakarupan etc. vs State of Tamil Nadu, [1971] 2 S.C.R. 430, followed.

ons Nos.112 and 113 of 1961 etc. Petition under article 32 of the Constitution of India for enforcement of, Fundamental rights. N. A. Palkhivala, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the petitioners (in W.P. Nos. 112 and 113 of 61 and 79 to 80 of 1962). M. C. setalvad, D. P. Singh, m. K. Ramamurthi, R. K. Garg and section C. Agarwal. for the respondents (in W.P. Nos. 112 and 113 of, 1961). 887 section V. Gupte, Additional Solicitor General, N. section Bindra and R. H. Dhebar, for the respondents (in W.P. Nos. 79 and 80 of 62). G. section Pathak, B. Dutta, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the petitioners (in W.P. Nos. 202 204/1961). A. Ranganadham Chetty and T. V. R. Tatachari, for the respondents (in W.P. Nos. 202 and 203 of 1961). Lal Narain Sinha, M. K. Ramamurthi, R. K. Garg and section C. Agarwal, for the respondent (in W.P. 204 of 1961). February 25, 1964. The Judgment of the Court was delivered by GAJENDRAGADKAR, C.J. These writ petitions have been placed for hearing before us in a group, because they raise a common question of law in regard to the validity of the demand for sales tax which has been made against the respective petitioners by the Sales tax Officers for different areas. The facts in respect of each one of the writ petitions are not the same and the years for which the demand is made are also different; but the pattern of contention is uniform and the arguments urged in each one of them are exactly the same. Broadly stated. the case for the petitioners is that the appropriate authorities purporting to act under the different Sales Tax Acts are attempting to recover from the petitioners sales tax in respect of transactions to which the petitioners were parties, though the said transactions are not taxable under article 286 of the Constitution. article 286(1) (a) provides that no law of a Sales shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place outside the State; and the argument is that the sales in question are all sales which took place outside the State and as such, are entitled to the protection of article 286(1) (a). The authorities under the respective Sales Tax Acts have rejected the petitioners ' contention that the transactions in question are inter State sales and have held that article 286(1)(a) is not applicable to them. A similar finding has been recorded against the petitioners under article 286(2). The petitioners ' grievance 888 is that by coming to this erroneous conclusion, a tax is being levied against them in respect of transactions protected by article 286(1)(a) and that constitutes a breach of their fundamental rights under article 3 1 (1). It is this alleged infringement of their fundamental rights that they seek to bring before this Court under article 32(1). It has been urged on their behalf that the right to move this Court under article 32(1) is itself a fundamental right, and so, under article 32(2) an appropriate order should be passed setting aside the directions issued by the Sales tax Authorities calling, upon the petitioners either to pay the sales tax, or to comply with other directions issued by them in that behalf. For dealing with the points raised by these writ petitions, it is not necessary to set out the facts in respect of each one of them. For convenience we will refer to the facts set out by the Tata Engineering & Locomotive Co. Ltd., the petitioner in W.Ps. Nos. 112 and 113 of 1961. The peti tioner is a company registered under the Indian Companies Act, 1913 and carries on the business of manufacturing, inter alia, Diesel Truck and Bus chassis and the spare parts and accessories thereof at Jamshedpur in the State of Bihar. The company sells these products to dealers, State Transport Organisations and others doing business in various States of India. The registered office of the petitioner is in Bombay. In order to promote its trade throughout the country, the petitioner has entered into Dealership Agree ments with different persons. The modus adopted by the petitioner in carrying on its business in different parts of India is to sell its products to the dealers by virtue of the relevant provisions of the Dealership Agreements. Accordingly, the petitioner distributes and sells its vehicles to dealers, State Transport Organisations and consumers in the manner set out in the petition. The petitioner contends that the sales in respect of which the present petitions have been filed were effected in the course of inter State trade and as such, were not liable to be taxed under the relevant provisions of the Sales Tax Act. The Sales tax Officer, on the other hand, has head that the sales had taken place within the State of Bihar and were intra State sales and as such, were liable to assessment under the Bihar Sales Tax 889 Act. In accordance with this conclusion, further steps are threatened against the petitioner in the matter of recovery of the sales tax calculated by the appropriate authorities. The petitioner is a company and a majority of its share holders are Indian citizens, two of whom have joined the present petitions. The petitioners in W.Ps. 79 and 80/ 1962 are the Automobile Products of India Ltd. and Another. The majority of the share holders of this company are also citizens of India and one of them has joined the petitions. Writ petitions Nos. 202 204/1961 have been filed by the State Trading Corporation of India Ltd. The shareholders of this Corporation are the President of India, and two Additional Secretaries, Ministry of Commerce and Industry, Government of India; one of these Secretaries, has joined the petitions. It may incidentally be stated at this stage that these writ petitions were heard by a Special Bench of this Court on the 26th July, 1963 in order to determine the constitutional question as to whether the State Trading Corporation Ltd. can claim to be a citizen within the meaning of article 19 of the Constitution. The majority decision rendered in these writ petitions on the preliminary, issue referred to the Special Bench was that the petitioner as a State Trading Corporation is not a citizen under article 19, and so, could not claim the protection of the fundamental rights guaranteed by the said Article [vide State Trading Corporation of India Ltd. vs The Commercial Tax Officer and Others(1)]. That is why this petitioner along with other petitioners have made the petitions in the names of the companies as well as one or two of their shareholders respectively. It is argued on behalf of the petitioners that though the company or the Corporation may not be an Indian citizen under article 19, that should not prejudice the petitioners case, because, in substance, the Corporation is no more than an instrument or agent appointed by its Indian share holders and as such, it should be open to the petitioners either acting themselves as companies or acting through (1) ; , 890 their shareholders to claim the relief for which the present petitions have been filed under article 32. These petitions are resisted by the respective States on the ground that the petitions are not competent under article 32. The respondents contend that the main attack of the petitioners is against the findings of the Sales tax Officers in regard to the character of the impugned sale transactions and they urge that even if the said findings are wrong, that cannot attract the provisions of article 32. The validity of the respective Sales tax Acts is not challenged and if purporting to exercise their powers under the relevant provisions of the said Acts, the appropriate authorities have, during the course of the assessment proceedings, come to the conclusion that the impugned transactions are intra State sales and do not fall under article 286(1)(a), that is a decision which is quasi judicial in character and even an erroneous decision rendered in such assessment proceedings cannot be said to contravene the fundamental rights of a citizen which would justify recourse to article 32. In other words, the alleged breach of the petitioners ' fundamental rights being referable to a quasi judicial order made by a Tribunal appointed under a valid Sales tax Act, does not bring the case within article 32. That is the first preliminary ground on which the competence of the writ petitions is challenged. In support of this plea, reliance is placed by the respondents on a recent decision of a Special Bench of this Court in Smt. Ujjam Bai vs State of Uttar Pradesh(1). There is another preliminary objection raised by the respondents against the, competence of the writ petitions, and that is based upon the decision of this Court in the case of the State Trading Corporation of India Ltd. (2). It is urged that the decision of this Court that the State Trading Corporation is not a citizen, necessarily means that the fundamental rights guaranteed by article 19 which can be claimed only by citizens cannot be claimed by such a Corporation, and so, there can be no scope for looking at the substance of the matter and giving to the shareholders indirectly the right which the Corporation as a separate (1) [1963] 1 S.C.R. 778. (2) ; 891 legal entity is not directly entitled to claim. The respondents have urged that in dealing with the plea of the petitioners that the veil worn by the Corporation as a separate legal entity should be lifted and the substantial character of the Corporation should be determined without reference to the technical position that the Corporation is a separae entity, we ought to bear in mind the decision of this Court in the case of the State Trading Corporation of India Ltd.(1). Basing themselves on this contention, the respondents have also argued that if the fundamental rights guaranteed by article 19 are not available to the petitioners, then their plea that the sales tax is being collected from them contrary to article 31(1) must fail and in support of this contention reliance is placed upon a recent decision of this Court in the case of Indo China Steam Navigation Co. Ltd. vs The Additional Collector of Customs and Others(2). Logically, the second preliminary objection would come first, because if the petitioners cannot claim the status of citizens and are not, therefore, entitled to base their petitions on the allegation that their fundamental rights under article 19 have been contravened, that would be the end of the petitions. It has been conceded before us by all the learned counsel appearing for the petitioners that it is only if both the preliminary objections raised by the respondents are over ruled that the hearing of the writ petitions would reach the stage of considering the merits of their pleas that the sales which are sought to be taxed fall under article 28 6 (1) (a) of the Constitution. If the respondents succeed in either of the two preliminary objections raised by them, the writ petitions would fail and there would be no occasion to consider the merits of the pleas raised by them. Since we have come to the conclusion that the second preliminary objection raised by the respondents must be upheld, we do not propose to pronounce any decision on the first preliminary objection. However, as the point covered by the said objection has been elaborately argued before us, we would prefer to indicate briefly the broad arguments urged fry both the parties in that behalf. (1) ; (2) ; 892 The controversy between the parties as to the scope and effect of the provisions contained in article 32 on which the validity of the first preliminary objection rests, substantially centres round the question as to what is the effect of the decision of this Court in Smt. Ujjam Bai 's case(1). The petitioners argue that though the majority view in that case was that the writ petition filed by Ujjam Bai was incompetent, it would appear that the reasons given in most of the judgments support the petitioners ' case that where the fundamental rights of a citizen are contravened, may be by a quasi judicial order, in pursuance of which a tax is attempted to be recovered from a citizen, the erroneous conclusion in regard to the nature of the transaction must be held to contravene the fundamental right of the citizen, and as such, would justify the petitioners in moving this Court under article 32. On the other hand, the respondents urge that the effect of the decision. in Ujiam Bai 's case plainly tends. to show that if a quasi judicial decision has determined a matter in regard to the taxability of a given transaction, there can be no question about the breach of fundamental rights which would justify an application under article 32. The argument is that the intervention of a quasi judicial order changes the complexion of the dispute between the parties, and in cases of that character, the only remedy available to an aggrieved citizen is to take recourse to the appeals and other proceedings prescribed by the taxing statute in question. article 32 is not intended to confer appellate jurisdiction on this Court so as to review or examine the propriety of quasi judicial orders passed by appropriate authorities purporting to exercise their powers and jurisdictions under the several taxing statutes. It may be that after exhausting the remedies by way of appeals and revisions prescribed by the statute, the party may come to this Court under article 136, but article 32 is inapplicable in such cases. In Ujjam Bai 's case(1), the first issue which was referred to the Special Bench was whether an order of assessment made by an authority under a taxing statute which is intra vires is open to challenge as repugnant to (1) [1963] 1 S.C.R. 778. 893 article 19 (1)(g), on the sole ground that it was based on a misconstruction of a provision of the Act or of a notification issued thereunder; and the second question was, can the validity of such an order be questioned in a petition under article 32 of the Constitution? The majority view expressed in this case was against the petitioner. section K. Das J. who delivered the main judgment on behalf of the majority view observed that where a quasi judicial authority makes an ,order in the undoubted exercise of its jurisdiction in pursuance of a provision of law which is intra vires, an error of law or fact committed by that authority cannot be impeached otherwise than on appeal, unless the erroneous determination relates to a matter on which the jurisdiction of that body depends; and so, he held that if the impugned order of assessment is made by an authority under a valid taxing statute in the undoubted exercise of its jurisdiction it cannot be challenged under article 32 on the sole ground that it is passed on a misconstruction of a provision of the Act or of a notification issued thereunder. Subba Rao J., on the other hand, took the view that article 32 confers wide jurisdiction on this Court to enforce the fundamental rights, and he held that it is the duty of this Court to entertain a writ petition wherever a fundamental right of a citizen is alleged to have been contravened, irrespective of whether the question raised involves a question of jurisdiction, law, or fact; this is the minority view pronounced in Ujjam Bai 's case. Hidayatullah J., who agreed broadly with the majority view, expressed the opinion that if a quasi judicial tribunal embarks upon an action wholly outside the pale of the law he is enforcing, a question of jurisdiction would be involved and that would justify an application under article 32. Ayyangar J. held that if it appeared that the impugned order of assessment was based upon a plain and patent misconstruction of the provisions of the taxing statute, that itself would give rise to a plea that the authority was acting beyond its jurisdiction and in such a case, a petition under article 32 may be justified. Proceeding on this view, the learned Judge held that the construction placed by the taxing authority was not shown to be patently erroneous. 894 and so, he was not prepared to grant any relief to Ujjam Bai. That is how the learned Judge agreed with the majority decision. Mudholkar J., who also agreed with the majority decision, was disposed to make an exception in cases where an erroneous construction of the law would lead to the recovery of a tax which is beyond the competence of the legislature, or is violative of the provisions of Part III or of any other provisions of the Constitution. It would, thus, be seen that though the majority decision was that Ujjam Bai 's petition should be dismissed, the reasons given in the judgments pronounced by the learned Judges who agreed with the majority decision are not all uniform and do not disclose an identity of approach or of reasons, and that naturally has given rise to the arguments in the present writ petitions, both parties suggesting that the majority decision in the case of Ujjam Bai supports the rival views for which they contend. Mr. Setalvad has strongly urged that if a misconstruction of the notification on which Ujjam Bai rested her case, was not held to justify a petition under article 32, that would necessarily mean that the misconstruction of the nature of the transaction would be no better, even though in this 'latter case, the wrong decision on the question as to the character of the sale transaction may involve taxing a transaction which is protected by article 286(1) (a). One can understand the argument, said Mr. Setalvad, that a breach of the fundamental rights, however it is caused would justify recourse to article 32; that would be consistent and logical; but once it is held that a breach of the fundamental rights alleged to have been caused by a misconstruction of a notification or a statute placed by an appropriate authority acting under the provisions of a valid taxing law does not attract article 32, it is not logically possible to urge that another kind of breach alleged to have been caused by a misappreciation of the nature of the transaction and an erroneous conclusion as to its taxable character would make any difference. In the first case, the erroneous construction of the notification violates the provisions of article 265 of the Constitution and thereby brings in the breach of article 895 31 (1); in the other case, the misconstruction as to the taxable character of the transaction violates article 28 6 (1 ) (a) and thereby brings in article 31 (1). Therefore, it is urged that he necessary consequence of the decision in Ujjam Bai is that even if the Sales tax Officer has held wrongly that the impugned transactions are not inter State transactions, the remedy of petition under article 32 is not open to the aggrieved citizen. On the other hand, Mr. Palkhivala has strenuously urged that the decision in Ujjam Bai rested on the basis that the misinterpretation of the notification did not involve the violation of any constitutional limitations or prohibitions and he has referred us to some passages in the judgments of Das, Kapur and Mudholkar JJ. In support of his argument that where an erroneous decision of a salestax officer results in the violation of a constitutional prohibition or limitation, different considerations would arise and an aggrieved citizen would be entitled to move this Court under article 32, Mr. Palkhivala has emphasised the fact that whereas Das J. expressly held that the view taken in Kailash Nath vs State of U.P.(1) was not right, he approved of the other decisions which were cited at the Bar and exhaustively discussed on the ground that those decisions 'fall under the category in which an executive authority acts without authority of law, or a quasi judicial authority acts in transgression of a constitutional prohibition and without jurisdiction"(2). These decisions are: Thakur Amar Singhji vs State of Rajasthan(3); M/s. Mohanlal Hargovind Dass vs The State of Madhya Pradesh(4); Y. Mahaboob Sheriff vs Mysore State Transport Authority(5); J. V. Gokar & Co. (Private) Ltd. vs The Assistant Collector of Sales tax (Inspection) (6); and Universal Imports Agency vs Chief Controller of Imports and Exports ( 7 ) . To the same effect is the observation made by Kapur J. when the learned Judge stated that in the case of M/s. Mohanlal Hargovind Dass ( 4 ) ':he dispute did not turn upon a misconstruction of any statute by any quasi judicial authority, but that was a case (1) A.I.R. 1957 S.C. 790(2) [1963] 1 S.C.R. at 842. (3) ; [1955] 8 S.C.R. 303.(4) (5) ; (7) ; 896 in which the very transaction was outside the taxing powers of the State and any action taken by the taxing authorities was one without authority of law. In support of the same argument, both Mr. Pathak and Mr. Palkhivala strongly relied upon the two subsequent decisions of this Court where writ petitions filed under article 32 were entertained on grounds somewhat similar to those on which the present writ petitions are founded, The State Trading Corporation of India Ltd. and Another vs The State of Mysore and Another(1) and The State Trading Corporation of India Ltd. and Others vs The State of Mysore and Another(2). Basing himself on these decisions, Mr. Pathak has argued that the question as to whether a particular transaction of sale attracts the protection of article 286(1) (a) is a collateral fact the decision of which confers jurisdiction on the Sales tax Officer; and he contends that the decision of the Sales tax Officer, who is a Tribunal of limited jurisdiction, on a collateral jurisdictional point can always be challenged under article 32 of the Constitution if the said decision impinges upon the citizen 's right protected by article 28 6 (1) (a). Mr. Palkhivala urged the argument of jurisdiction in a slightly different way. He contended that the concept of jurisdiction on which he relied was not based on the view that jurisdiction means authority to decide. According to him, the concept of jurisdiction was of a different category and was of a vital character when constitutional limitations or prohibitions were involved in the decision of any case brought before a Sales tax Officer. On the other hand, Mr. Setalvad has urged that the Sales tax Officer is not a Tribunal of limited jurisdiction and the charging sections in the respective Sales tax Acts leave it to the Sales tax Officer and the heirarchy of officers contemplated by them to decide the question about the taxability of any given transaction and impose a tax on it in accordance with the provisions of the Acts. Where a tribunal is entitled to deal with transactions which fall (1) 14 S.T.C. 188. (2) 14 S.T.C. 416. 897 under the charging sections of the statute, it would be erroneous to contend that the decision of the Tribunal on the said question about the taxability of the transaction is the decision on a collateral jurisdictional fact. If the said argument is accepted, logically, it may mean that all questions the decision of which inevitably precedes the imposition of the tax, would be collateral jurisdictional fact; and that clearly cannot be the effect of the charging sections of the different Acts. In regard to the point of constitutional limitations and prohibitions raised by Mr. Palkhivala, Mr. Setalvad contends that if the provisions of article 286(1) (a) makes the decision of the Sales tax Officer on the character of the sale trans action one of jurisdiction, then it is difficult to see why his decision on other points should also not partake of the same character. In that connection, he emphasised the fact that the provisions of article 286(1) (a) cannot be distinguished from the provisions of article 265. As we have already indicated, having regard to the fact that we have come to the conclusion that the other preliminary objection urged by the respondents must be upheld, we do not propose to express any opinion on this part of the controversy between the parties. That takes us to the question as to whether the petitioners, some of whom are companies registered under the Indian Companies Act and one of whom is the State Trading Corporation, can claim to file the present writ petitions under article 32 having regard to the decision of this Court in the case of the State Trading Corporation of India Ltd. (1). The petitioners argue that the said decision merely held that the State Trading Corporation of India Ltd. was not a citizen. The question as to whether the veil of the Corporation can be lifted and the rights of the shareholders of the said Corporation could be recognised under article 19 or not, was not decided, and it is on this aspect of the question that arguments have been urged before us in the present writ petitions. The true legal position in regard to the character of a corporation or a company which owes its incorporation to (1) ; 134 159 S.C. 57 898 a statutory authority, is not in doubt or dispute. The corporation in law is equal to a natural person and has a legal entity of its own. The entity of the corporation is entirely separate from that of its shareholders; it bears its own name and has a seal of its own; its assets are separate and distinct from those of its members; it can sue and be sued exclusively for its own purpose; its creditors cannot obtain satisfaction from the assets of its members; the liability of the members or shareholders is limited to the capital invested by them; similarly, the creditors of the members have no right to the assets of the corporation. This position has been well established ever since the decision in the case of Salomon vs Salomon & Co. (1) was pronounced in 1897; and indeed, it has always been the well recognised principle of common law. However, in the course of time, the doctrine that the corporation or a company has a legal and separate entity of its own has been subjected to certain exceptions by the application of the fiction that the veil of the corporation can be lifted and its face examined in substance. The doctrine of the lifting of the veil thus marks a change in the attitude that law had originally adopted towards the concept of the separate entity or personality of the corporation. As a result of the impact of the complexity of economic factors, juidical decisions have sometimes recognised exceptions to the rule about the juristic personality of the corporation. It may be that in course of time these exceptions may grow in number and to meet the requirements of different economic problems, the theory about the personality of the corporation may be confined more and more. But the question which we have to consider is whether in the circumstances of the present petitions, we would be justified in acceding to the argument that the veil of the petitioning corporations should be lifted and it should be held that their shareholders who are Indian citizens should be permitted to invoke the protection of article 19, and on that basis, move this Court under article 32 to challenge the validity of the orders passed by the Sales tax Officers in respect of transactions which, it is alleged, are not taxable. (1) ; H.L. 899 Mr. Palkhivala has very strongly urged before us that having regard to the fact that the controversy between the parties relates to the fundamental rights of citizens, we should not hesitate to look at the substance of the matter and disregard the doctrinaire approach which recognises the existence of companies as separate juristic or legal persons. If all the shareholders of the petitioning companies are Indian citizens, why should not the Court look at the substance of the matter and give the shareholders the right to challenge that the contravention of their fundamental rights should be prevented. He does not dispute that the shareholders cannot claim that the property of the companies is their own and cannot plead that the business of the companies is their business in the strict legal sense. The doctrine of lifting of the veil postulates the existence of dualism between the corporation or company on the one hand and its members or shareholders on the other. So, it is no good emphasising that technical aspect of the matter in dealing with the question as to whether the veil should be lifted or not. In support of his plea, he has invited our attention to the decision of the Privy Council in The English and Scottish Joint Co operative Wholesale Society Ltd. vs Commissioner of Agricultural Income tax, Assam(1), as well as the decision of the House of Lords in Daimler Company Ltd. vs Continental Tyre and Rubber Company (Great Britain) Ltd.(2). It is unnecessary to refer to the facts in these two cases and the principles enunciated by them, because it is not disputed by the respondents that some exceptions have been recognised to the rule that a corporation or a company has a juristic or legal separate entity. The doctrine of the lifting of the veil has been applied in the words of Palmer in five categories of cases : where companies are in the relationship of holding and subsidiary (or sub subsidiary) companies; where a shareholder has lost the privilege of limited liability and has become directly liable to certain creditors of the company on the ground that, with his knowledge, the company continued to carry on business six months after the number of its members was reduced (1) (2) 900 below the legal minimum; in certain matters pertaining to the law of taxes, death duties and stamps, particularly where the question of the "controlling interest" is in issue; in the law relating to exchange control; and in the law relating to trading with the enemy where the test of control is adopted(1). In some of these cases, judicial decisions have no doubt lifted the veil and considered the substance of the matter. Gower has similarly summarised this position with the observation that in a number of important respects, the legislature has rent the veil woven by the Salomon case. Particularly is this so, 'says Gower, in the sphere of taxation and in the steps which have been taken towards the recognition of enterprise entity rather than corporate entity. It is significant, however, that according to Gower, the courts have only construed statutes as "cracking open the corporate shell" when compelled to do so by the clear words of the statute; indeed they have gone ' out of their way to avoid this construction whenever possible. Thus, at present, the judicial approach in cracking open the corporate shell is somewhat cautious and circumspect. It is only where the legislative provision justifies the adoption of such a course that the veil has been lifted. In exceptional cases where courts have felt "themselves able to ignore the corporate entity and to treat the individual shareholders as liable for its acts",(2) the same course has been adopted. Summarising his conclusions, Gower has classified seven categories of cases where the veil of a corporate body has been lifted. But it would not be possible to evolve a rational, consistent and inflexible principle which can be invoked in determining the question as to whether the veil of the corporation should be lifted or not. Broadly stated, where fraud is intended to be prevented, or trading with an enemy is sought to be defeated, the veil of a corporation is lifted by judicial decisions and the shareholders are held to be the persons who actually work for the corporation. That being the position with regard to the doctrine of the veil of a corporation and the principle that the said (1) Palmer 's Company Law 20th Ed. p. 136. (2) Gower" Modern Company Law, 2nd Ed. pp. 193 & 195. 901 veil can be lifted in some cases, the question which arises for our decision is; can we lift the veil of the petitioners and say that it is the shareholders who are really moving the Court under article 32, and so, the existence of the legal and juristic separate entity of the petitioners as a corporation or as a company should not make the petitions filed by them under article 32 incompetent? We do not think we can answer this question in the affirmative. No doubt, the complaint made by the petitioners is that their fundamental rights are infringed and it is a truism to say that this Court as the guardian of the fundamental rights of the citizens will always attempt to safeguard the said fundamental rights; but having regard to the decision of this Court in State Trading Corporation of India Ltd. (1) we do not see how we can legitimately entertain the petitioners ' plea in the present petitions, because if their plea was upheld, it would really mean that what the corporations or the companies cannot achieve directly, can be achieved by them indirectly by relying upon the doctrine of lifting the veil. If the corporations and companies are not citizens, it means that the Constitution intended that they should not get the benefit of article 19. It is no doubt suggested by the petitioners that though article 19 is confined to citizens, the Constitution makers may have thought that in dealing with the claims of corporations to invoke the provisions of article 19, courts would act upon the doctrine of lifting the veil and would not treat the attempts of the corporations in that behalf as falling outside article 19. We do not think this argument is well founded. The effect of confining article 19 to citizens as distinguished from persons to whom other Articles like 14 apply, clearly must be that it is only citizens to whom the rights under article 19 are guaranteed. If the legislature intends that the benefit of article 19 should be made available to the corporations, it would not be difficult for it to adopt a proper measure in that behalf by enlarging the definition of 'citizen ' prescribed by the Citizenship Act passed by the Parliament by virtue of the powers conferred on it by Articles 10 and 11. On the other hand, the fact that the Parliament has not chosen to make any such provision indicates that it was not the intention of the (1) ; 902 Parliament to treat corporations as citizens. Therefore, it seems to us that in view of the decision of this Court in the case of the State Trading Corporation of India Ltd.(1) the petitioners cannot be heard to say that their shareholders should be allowed to file the present petitions on the ground that, in substance, the corporations and companies are nothing more than associations of shareholders and members thereof. In our opinion, therefore, the argument that in the present petitions we would be justified in lifting the veil cannot be sustained. Mr. Palkhivala sought to draw a distinction between the right of a citizen to carry on trade or business which is contemplated by article 19(1)(g) from his right to form associations or unions contemplated by article 19 (1) (c). He argued that article 19(1)(c) enables the citizens to choose their instruments or agents for carrying on the business which it is their fundamental right to carry on. If citizens decide to set up a corporation or a company as their agent for the purpose of carrying on trade or business, that is a right which is guaranteed to them under article 19(1)(c). Basing himself on this distinction between the two rights guaranteed by article 19(1)(g) and (c) respectively, Mr. Palkhivala somewhat ingeniously contended that we should not hesitate to lift the veil, because by looking at the substance of the matter, we would really be giving effect to the two fundamental rights guaranteed by article 19(1). We are not impressed by this argument either. The fundamental right to form an association cannot in this manner be coupled with the fundamental right to carry on any trade or business. As has been held by this Court in All India Bank Employees ' Association vs National Industrial Tribunal and Others(2), the argument which is thus attractively presented before us overlooks the fact that article 19, as contrasted with certain other articles like articles 26, 29 and 30, guarantees rights to the citizens as such, and associations cannot lay claim to the fundamental rights guaranteed by that Article solely on the basis of their being an aggregation of citizens, that is to say, the right of the citizens composing the body. The respective rights guaranteed by article 19(1) (1) ; (2) ; 903 Cannot be combined as suggested by Mr. Palkhivala, but must be asserted each in its own way and within its own limits; the sweep of the several rights is no doubt wide, but the combination of any of those two rights would not justify a claim such as is made by Mr. Palkhivala in the present petitions. As soon as citizens form a company, the right guaranteed to them by article 19(1)(c) has been exercised and no restraint has been placed on that right and no infringement of that right is made. Once a company or a corporation is formed, the business which is carried on by the said company or corporation is the business of the company or corporation and is not the business of the ,citizens who get the company or corporation formed or incorporated, and the rights of the incorporated body must be judged on that footing and cannot be judged on the assumption that they are the rights attributable to the business of individual citizens. Therefore, we are satisfied that the argument based on the distinction between the two rights guaranteed by article 19(1)(c) and (g) and the effect of their combination cannot take the petitioners ' case very far when they seek to invoke the doctrine that the veil of the corporation should be lifted. That is why we have come to the conclusion that the petitions filed by the petitioners are incompetent under article 32, even though in each of these petitions one or two of the shareholders of the petitioning companies or corporation have joined. The result is, the second preliminary objection raised by the respondents is upheld and the writ petitions are dismissed as being incompetent under article 32 of the Constitution. There would be no order as to costs. Petitions dismissed.

The petitioners were ordered to pay sales tax on account of certain transactions made by them in the State of Bihar. Their contention was that the sales in question took place outside the state and hence they were entitled to the protection of article 286(1)(a). Their plea was rejected by the Sales tax authorities and it was held that article 286(1)(a) did not apply to them. The petitioners challenged the orders of the sales tax authorities by writ petitions filed by them under article 32 of the Constitution. A preliminary objection was taken on behalf of respondents that the petitions were not competent as those were filed by corporations or companies and the provisions of article 19 did not apply to them as corporations were not citizens. Dismissing the writ petition, Held. The petitions under article 32 were incompetent although in each of them one or two of the share holders of the petitioning companies or corporations had also joined. Article 19 guarantees rights to citizens as such and associations cannot lay claim to the fundamental rights guaranteed by that Article solely on the basis of their being an aggregation of citizens. Once a company or a corporation is formed, the business which is carried on by the said company or corporation is the business of the company or corporation and is not the business of the citizens who got the company or corporation formed or incor porated and the rights of the incorporated body must be judged on that footing and cannot be judged on the assumption that they are the right attributable to the business of individual citizens. The petitioners cannot be heard to say that their share holders should be allowed to file the present petitions on the ground that in substance, the corporations and companies are nothing more than association of share horders and members thereof. If their contention is accepted, it would really mean that what the corporations or companies cannot achieve directly, they can achieve indirectly by relying upon the doctrine of lifting the veil. If the corporations and companies are not citizens, it means that the Constitution intended that they should not get the benefit of article 19. 886 The position of a corporation is that it is in law equal to a natural person and has a legal entity of its own. That entity is entirely separate from that of its shareholders. It bears its own name and has a seal of its own. Its assets are separate and distinct from those of its members. It can sue and be sued exclusively for its own purpose. Its creditors cannot obtain satisfaction from the assets of its members. The liability of the members or share holders is limited to the capital invested by them. The creditors of the members have no right to the assets of the corporation. However. there are some exceptions to the rule that the corporation or a company has a jurisfic or legal entity and the doctrine of lifting the veil of a corporation and examining its face in substance has been applied in many cases but the same does not apply in the present case. State of Trading Corporation of India Ltd. vs The Commercial Tax Officer & Ors. ; , Smt. Ujjam Bai vs State of Uttar Pradesh. [1963] 1 S.C.R. 778, Indo China Steam Navigation Co. Ltd. vs Additional Collector of Customs. ; , Kailash Nath vs State of U.P. A.I.R. 1957 S.C. 790, Thakur Amar Singhji V. State of Rajasthan, ; , M/s. Mohanlal Hargovind vs State of Madhya Pradesh. ; , Y. Mahaboob Sheriff V. Mysore State Transport Authority. [1960] 2 S.C.R. 146, J. V. Gokar & Co. (P) Ltd. vs Assistant Collector of Sales tax (inspection), ; , Universal Imports Agency vs Chief Controller of Imports & Exports , State Trading Corporation of India Ltd. vs State of Mysore, 14 S.T.C. 188, State Trading Corporation of India Ltd. vs State of Mysore. 14 S.T.C. 416, Salomon vs Salomon & Co. ; , H.L. The English & Scottish Joint Co operative Wholesale Society Ltd. vs Commissioner of Agricultural Income tax Assam. , Daimler Company Ltd. vs Continental Tyre and Rubber Co. (Great Britain) Ltd. and All India Bank Employees ' Association vs National Industrial Tribunal & Ors. ; , referred to.

iminal Appeal No. 98 of 1960. Appeal by special leave from the judgment and order dated January 20, 1960 of the Punjab High Court in Criminal Appeal No. 683 of 1957. I. M. Lall and B. N. Kirpal, for the appellant. B. K. Khanna and R. N. Sachthey, for the respondent. August 28, 1963. The Judgment of the Court was delivered by DAS GUPTA J. Sajjan Singh, son of Chanda Singh, joined the service of the Punjab Government in January 1922 as an Overseer in the Irrigation Department. He continued as Overseer till July 1944 when he became a Sub divisional Officer in the Department. From the date till May 1947 he worked as Sub Divisional Officer in that part of Punjab which has now gone to West Pakistan. From November 30, 1947 to September 26, 1962 he was employed as Sub Divisional Officer of Drauli Sub Division of the Nangal Circle, except for a short break from November 8, 1950 to April 3, 1951, when he was on leave. The work of excavation for the Nangal Project 632 within the Drauli Sub Division was carried out by several contractors, including Ramdas Chhankanda Ram and M/s. Ramdas Jagdish Ram. On December 7, 1952, the General Manager, Bhakra Dam, made a complaint in writing to the Superintendent of Police, Hoshiarpur, alleging that Sajjan Singh and some other officials subordinate to him had by illegal and corrupt means and by abusing their position as public servants, dishonestly and fraudulently, obtained illegal gratification from the contractors Ramdas Chhankanda Ram and M/s. Ram Das Jagdish Ram by withholding their payments and putting various obstacles in the smooth execution of the work entrusted to them. A case under section 45(2) of the Prevention of Corruption Act, 1947 was registered on the basis of this complaint, which was treated as a first information report and after sanction of the Government of Punjab had been obtained for the prosecution of Sajjan Singh under section 5(2) of the Prevention of Corruption Act and section 161/165 of the Indian Penal Code, Sajjan Singh was tried by the Special Judge, Ambala, on a charge under section 5(2) of the Act. The learned Special judge convicted him under section 5(2) of the Prevention of Corruption Act and sentenced him to rigorous imprisonment for one year and a fine of Rs. 5000/in default of payment of fine, he was directed to undergo rigorous imprisonment for six months. The conviction and sentence were confirmed by the Punjab High Court, on appeal. The High Court however rejected the State 's application for enhancement of the sentence. The present appeal is by Sajjan Singh against his conviction and sentence under section 5(2) of the Prevention of Corruption Act by special leave of this Court. The prosecution case is that after work had been done by the firm Ramdas Chhankandas for several months, and some 'running ' payments had been received without difficulty, the appellant demanded from Ram Das, one of the partners of the firm, his commission on the cheques issued to the partenrship firm. It is said that Ram Das at first refused. But, ultimately when the appellant started unnecessary criticism of the work done by them and even withholding some running payments the partners of the firm decided to pay commission to him as demanded. The 633 first payment, it is said, was made on March 21, 1949 and further payments were thereafter made from time to time. The case is that the partnership paid altogether a sum of Rs. 10,500/ in cash as commission to the appellant, besides paying Rs. 2,000/ to him for payment to the Executive Engineer and Rs. 241/12/ made up of small sums paid on different occasions on behalf of the accused. All these payments made to the appellant were fully entered in the regular Rokar and Khata Bhais of the partnership under a fictitious name of Jhalu Singh, Jamadar, though a few of the later payments were entered in these books in Sajjan Singh 's own name. In order to allay suspicion some fictitious credit entries were also made in the books. The prosecution also alleged payment to the appellant of Rs. 1,800/ by another firm M/s. Ram Das Jagdish Ram. But as that has not been found to be proved it is unnccessary to mention details of the allegations in that connection. To prove its case against the appellant the prosecution relied on the testimony of three partners of the firm who claimed to have made payments and on various entries in the several books of account of the firm. The prosecution also tried to prove the guilt of the accused by showing that the pecuniary resources and property that were in the ap pellant 's possession or in the possession of his wife, Dava Kaur, and his son, Bhupinder Singh, on his behalf we are disproportionate to the appellant 's known sources of income. The learned Special judge mentioned the possession of pecuniary resources and property disproportionate to his known sources of income in the charge framed against the accused. According to the prosecution the total assets held by the appellant, and his wife, Dava Kaur, and his son Bhupinder Singh on his behalf, on December 7, 1952 amounted to Rs. 1,47,502/12/ , while his total emoulments upto the period of the charge would come to about Rs. 80,000/ . The main defence of the appellant as regards this allegation of possession of pecuniary resources and property disproportionate to his known sources of income was that the property and pecuniary resources held by his wife and son were not held on his behalf and that what, was in his possession amounted to less than Rs. 50,000/ and can by no means be said to be disproportionate to his known 41 2 section C. India/64. 634 sources of income. In denying the charge against him the appellant also contended that false evidence had been given by the three partners and false and fictitious books prepared by them in support of their own false testimony. The learned Special judge rejected the defence contention that the account books on which the prosecution relied had not been kept regularly in the course of business and held the entries therein to be relevant under section 34 of the Indian Evidence Act. He accepted the defence contention that evidence of the partners who were in the position of accomplices required independent corroboration and also that the account books maintained by themselves would not amount to independent corroboration. Independent corroboration was however in the opinion of the learned Judge furnished by the fact that some admitted and proved items of payment were interspersed in the entire account books. The learned judge also accepted the prosecution story as regards the possession of pecuniary resources and property by the appellant 's wife and his son on his behalf and adding these to what was in the appellant 's own possession he found that the total pecuniary resources and property in his possession or in the possession of his wife and son were disproportionate to his known sources of income, and that such possession had not been satisfactorily accounted for. He concluded that the presumption under section 5(3) of the Prevention of Corruption Act was attracted. On all these findings he found the appellant guilty of the charge for criminal misconduct in the discharge of his duties and convicted and sentenced him as, stated above. The two learned judges of the Punjab High Court who heard the appeal differed on the question whether pecuniary resources and property acquired before March 11, 1947, when the Prevention of Corruption Act came into force, could be taken into consideration for the purpose of section 5 (3) of the Act. In the opinion of Mr. Justice Harbans Singh these could not be taken into consideration . Taking into consideration the assets acquired by the appellant after January 1948 the learned judges held that these came to just above Rs. 20,000/ and could not be held to be disproportionate to his known sources of income. The other learned Judge, Mr. Justice 635 Capoor, was of opinion that pecuniary resources and property acquired prior to March 11, 1947 had also to be taken into consideration in applying section 5 (3) of the Prevention of Corruption Act if they were in the possession of the accused or anybody on his behalf, on the date when the complaint was lodged. He agreed with the Special judge that certain assets possessed by Daya Kaur and Bhupinder Singh were possessed by them on behalf of the appellant and that those possessed by him, or by his wife and son on his behalf were much in excess of his known sources of income, even without making any allowance for his house hold expenses. Mr. justice Capoor further held that if the pecuniary resources or property acquired during the period April 1, 1947 to June 1, 1950 as suggested on behalf of the appellant were considered such assets held by the appellant or any other person on his behalf were more than double of the known sources of his income without making any allowance whatever for the appellant 's house hold expenses. In the opinion of the learned judge a presumption under subsection 3 of section 5 of the Act therefore arose that the appellant had committed the offence, as the appellant had not been able to prove to the contrary. Both the learned judges agreed that the witnesses who gave direct evidence about the payment of illegal gratification could not be relied upon without independent corroboration and that the entries in the books of account did by themselves amount to such corroboration, but that the fact of admitted and proved items being interspersed in the entire account furnished the required corroboration. In the result, as has been already stated, the learned judges affirmed the conviction and sentence. In support of the appeal Mr. 1. M. Lall has attacked the finding that the books of account were kept regularly in the course of business and has contended that the entries therein were not relevant under section 34 of the Indian Evidence Act. He further contended that even if they be relevant evidence the Special judge as also the High Court while rightly thinking that they by themselves did not amount to independent corroboration, were in error when they thought that the fact of certain admitted entries being interspersed through the books of account furnished the 636 necessary independent corroboration. Mr. Lall has also argued that the Special Judge as well as Mr. justice Capoor in the High Court were wrong in drawing a presumption under section 5(3) of the Prevention of Corruption Act. We shall first consider the question whether on the evidence on the record a presumption under section 5(3) of the Prevention of Corruption Act arose. It is useful to remember that the first sub section of section 5 of the Prevention of Corruption Act mentions in the four clauses a, b, c and d, the acts on the commission of which a public servant is said to have committed an offence of criminal misconduct in the discharge of his duties. The second subsection prescribes the penalty for that offence. The third subsection is in these words: "In any trial of an offence punishable under sub section (2) the fact that the accused person or any other person on his behalf is in possession, for which the accused person cannot satisfactorily account, of pecuniary resources or property disproportionate to his known sources of income may be proved, and on such proof the court shall presume, unless the contrary is proved, that the accused person is guilty of criminal. misconduct in the discharge of his official duty and his conviction therefor shall not be invalid by reason only that it is based solely on such presumption. " This sub section thus provides an additional mode of proving an offence punishable under sub section 2 for which any accused person is being tried. This additional mode is by proving the extent of the pecuniary resources or property in the possession of the accused or any other person on his behalf and thereafter showing that this is disproportionate to his known sources of income and that the accused person cannot satisfactorily account for such possession. If these facts are proved the section makes it obligatory on the Court to presume that the accused person is guilty of criminal misconduct in the discharge of his official duty, unless the contrary, i.e., that he was not so guilty is proved by the accused. The section goes on to say that the conviction for an offence of criminal misconduct shall not be invalid by reason only that it is based solely on such presumption. 637 This is a deliberate departure from the ordinary principle of criminal jurisprudence, under which the burden of proving the guilt of the accused in criminal proceedings lies all the way on the prosecution. Under the provision of this subsection the burden on the prosecution to prove the guilt of the accused must be held to be discharged if certain facts as mentioned therein arc proved; and then the burden shifts to the accused and the accused has to prove that in spite of the assets being disproportionate to his known sources of income, he is not guilty of the offence. There can be no doubt that the language of such a special provision must be strictly construed. if the words are capable of two constructions, one of which is more favorable to the accused than the other, the Court will be justified in accepting the one which is more favourable to the accused. There can be no Justification however for adding any words to make the provision of law less stringent than the legislature has made it. Mr. Lall contends that when the section speaks of the accused being in possession of pecuniary resources or pro perty disproportionate to his known sources of income only pecuniary resources or property acquired after the date of the Act is meant. To think otherwise, says the learned Counsel, would be to give the Act retrospective operation and for this there is no 'Justification. We agree with the learned Counsel that the Act has no retrospective operation. We are unable to agree however that to take into consideration the pecuniary resources or property in the possession of the accused or any other person on his behalf which are acquired before the date of the Act is in any way giving the Act a retrospective operation. A statute cannot be said to be retrospective "because a part of the requisites for its action is drawn from a time antecedent to its passing". (Maxwell on interpretation of Statutes, 11th Edition, p. 211; See also State of Maharashtra vs Vishnu Ramchandra(l)). Notice must be taken in this connection of a suggestion made by the learned Counsel that in effect sub section 3 of section 5 creates a new offence in the discharge of official duty, different from what is defined in the four clauses of section 5(l). It is said that the act of being in possession of pecuniary resources or pro (1) ; 638 perty disproportionate to known sources of income, if it cannot be satisfactorily accounted for, is said by this sub section to constitute the offence of criminal misconduct in addition to those other acts mentioned in cls. a, b, c and d of section 5(l) which constitute the offence of criminal mis conduct. On the basis of this contention the further argu ment is built that if the pecuniary resources or property acquired before the date of the Act is taken into consi deration under sub section 3 what is in fact being done is that a person is being convicted for the acquisition of pecuniary resources or property, though it was not in vio lation of a law in force at the time of the commission of such act of acquisition. If this argument were correct a conviction of a person under the presumption raised under the section 5(3) in respect of pecuniary resources or property acquired before the Prevention of Corruption Act would be a breach of fundamental rights under article 20(l) of the Constitution and so it would be proper for the Court to construe section 5(3) in a way so as not to include possession of pecuniary resources or property acquired before the Act for the purpose of that subsection. The basis of the argument that section 5(3) creates a new kind of offence of criminal misconduct by a public servant in the discharge of his official duty is however unsound. The sub section does nothing of the kind. It merely prescribes a rule of evidence for the purpose of proving the offence of criminal misconduct as defined in section 5(1) for which an accused person is already under trial. It was so held by this Court in C.D.S. Swamy vs The State(1) and again in Surajpal Singh vs State of U.p.(2). It is only when a trial has commenced for criminal misconduct by doing one or more of the acts mentioned in cls. a, b, c and d of section 5(l) that sub s 3 can come into operation. When there is such a trial, which necessarily must be in respect of acts committed after the Prevention of Corruption Act came into force, sub section 3 places in the hands of the prosecution a new mode of proving an offence with which an accused has already been charged. Looking at the words of the section and giving them their plain and natural meaning we find it impossible to say that pecuniary resources and property acquired before (1) ; (2) [1961] 1 2 S.C.R. 971. 639 the date on which the Prevention of Corruption Act came into force should not be taken into account even if in possession of the accused or any other person on his behalf. To accept the contention that such pecuniary resources or property should not be taken into consideration one has to read into the section the additional words "if acquired after the date of this Act" after the word "property". For this there is no justification. It may also be mentioned that if pecuniary resources or property acquired before the date of commencement of the Act were to be left out of account in applying subs. 3 of section 5 it would be proper and reasonable to limit the receipt of income against which the proportion is to be considered also to the period after the Act. On the face of it this would lead to a curious and anomalous position by no means satisfactory or helpful to the accused himself. For, the income received during the years previous to the commencement of the Act may have helped in the acquisition of property after the commencement of the Act. From whatever point we look at the matter it seems to us clear that the pecuniary resources and property in the possession of the accused person or any other person on his behalf have to be taken into consideration for the purpose of sub section 3 of section 5, whether these were acquired before or after the Act came into force. Mention has next to be made of the learned Counsel 's submission that the section is meaningless. According to the learned Counsel, every pecuniary resource or property is itself a source of income and therefore it is a contradic tion in terms to say that the pecuniary resources or pro perty can be disproportionate to the known sources of income. This argument is wholly misconceived. While it is quite true that pecuniary resources and property are themselves sources of income that does not present any difficulty in understanding a position that at a particular point of time the total pecuniary resources or property can be regarded as assets, and an attempt being made to see whether the known sources of income including, it may be, these very items of property in the past could yield such income as to explain reasonably the emergence of these assets at this point of time. Lastly it was contented by Mr. Lall that no presump 640 tion under section 5(3) can arise if the prosecution has adduced other evidence in support of its case. According to the learned Counsel, section 5(3) is at the most an alternative mode of establishing the guilt of the accused which can be availed of only if the usual method of proving his guilt by direct and circumstantial evidence is not used. For this astonishing proposition we can find no support either in principle or authority. Mr. Lall sought assistance for his arguments from a decision of the Supreme Court of the United States of America in D. Del Vecchio vs Botvers(1). What fell to be considered in that case was whether a presumption created by section 20(d) of the Longshoremen 's and Harbor Workers ' Compensation Act that the death of an employee was not suicidal arose where evidence had been adduced by both sides on the question whether the death was suicidal or not. The Court of Appeal had held that as the evidence on the issue of accident or suicide was in its judgment evenly balanced the presumption under section 20 must tip the scales in favour of accident. This decision was reversed by the learned Judges of the Supreme Court. Section 20 which provided for the presumption ran thus: "In any proceedings for the enforcement of a claim for compensation. it shall be presumed, in the absence of substantial evidence to contrary that the injury was not occasioned by the wailful intention of the injured employee to injure or kill himself or another. " On the very words of the section the presumption against suicide would arise only if substantial evidence had not been adduced to support the theory of suicide. It was in view of these words that the learned judges observed: .lm15 "The statement in the act that the evidence to overcome the effect of the presumption must be substantial adds nothing to the well understood principle that a finding must be supported by evidence. Once the employer has carried his burden by offering testimony sufficient to justify a finding of suicide, the presumption falls out of the case. It never had and cannot acquire the attribute of evidence in the claimant 's favour. Its only office is to control the result where (1)296 U.S. 280 : 80 L. ed. 229. 641 there is an entire lack of competent evidence. If the employer alone adduces evidence which tends to support the theory of suicide, the case must be decided upon that evidence. Where the claimant offers substantial evidence in opposition, as was the case here, the issue must be resolved upon the whole body of proof pro and con. " The whole decision turns upon the words 'in the absence of substantial evidence". These or similar words are conspicuous by their absence in sub section 3 of section 5 of the Prevention of Corruption Act, and consequently, Del Vec chio 's Case(1) is of no assistance. Mr. Lall then drew our attention to an observation of Lord Denning in Bratty vs Attorney General for Northern Ireland(2) where speaking about the presumption that every man has sufficient mental capacity to be responsible for his crimes, the Lord Justice observed that the presumption takes the place of evidence. Similarly, argues Mr. Lall, the presumption under section 5(3) of the Prevention Corruption Act also merely "takes the place" of evidence. So, he says, it can arise only if no evidence has been adduced. We are not prepared to agree however that when the Lord Justice used the words "a presumption takes the place of evidence" he meant that if some evidence had been offered by the prosecution the prosecution could not benefit by the presumption. We see no warrant for the proposition that where the law provides that in certain circumstances a presumption shall be made against the accused the pro secution is barred from adducing evidence in support of its case if it wants to rely on the presumption. Turning now to the question whether the facts and circumstances proved in this case raise a presumption under section 5(3), we have to examine first whether certain pecuniary resources or property in possession of Daya Kaur and those in possession of Bhupinder Singh were possessed by them on behalf of the appellant as alleged by the prosecution. On December 7, 1952, Bhupinder Singh has been proved to have been in possession of: (1) Rs. 28,998/7/3/ in the Punjab National Bank; (2) Rs. 20,000/ in fixed deposit with the Bank of Patiala at Doraha (3) Rs. 5,577/ (1)226 U.S. 280. (2) [1961] 3 All. E.R. p. 523 at 535. 642 in the Imperial Bank of India at Moga; (4) Rs. 237/8/3/in the Savings Bank Account in the Bank of Patiala at Doraha; and (5) Half share in a plot of land in Ludhiana of the value Rs. 11,000/ . Bhupinder Singh has given evidence (as the 11th witness for the defence) and has tried to support his father 's case that none of the properties were held by him on behalf of his father. Bhupinder Singh has been in military service since 1949 and was at the time when he gave evidence a Captain in the Indian Army. If the bank deposits mentioned above had been made by him after he joined military service there might have been strong reason for thinking that they were his own money. That however is not the position. Out of the sum of Rs. 28,998/ with the Punjab National Bank a part is admittedly interest; the remainder, viz., about Rs. 26,000/ was deposited by Bhupinder Singh in his account long before 1949 when he joined military service. His explanation as to how he got this money is that Rs. 20,200/ was received by him from Udhe Singh in December 1945 and Rs. 6,000/ was given to him by his grand father Chanda Singh. Udhe Singh has given evidence in support of the first part of the story and has said that he paid Rs. 20,200/ to Bhupinder Singh in payment of what he owed to Bhupinder Singh 's grandfather Chanda Singh and to his father Sajjan Singh. When asked why he made the payments to Bhupinder Singh, son of Sajjan Singh instead of to Chanda Singh or to Chanda Sing 's son Surjan Singh, Udhe Singh replied that he did so "because my account was with Sardar Sajjan Singh." Udhe Singh it has to be remembered is a close relation of Sajjan Singh, Sajjan Singh 's father Chanda Singh being Udhe Singh 's mother 's brother. On a careful consideration of the evidence of these two witnesses, Bhupinder Singh and Udhe Singh and also the registered letter which was produced to show that a pucca receipt was demanded for an alleged payment of Rs. 20,200/ we have come to the conclusion that the Special Judge has rightly disbelieved the story that this sum of Rs. 20,000/ was paid by Udhe Singh to Bhupinder Singh. It has to be noticed that even if this story of payment was believed that would not improve the appellant 's case. For, according to Udhe Singh this payment was 643 made by him to Bbupinder Singh on behalf of his father. In any case, therefore, this amount of Rs. 20,200/ was Sajjan Singh 's money. As regards the other amount of Rs. 6000/ which formed part of the deposits in the Punjab National Bank and a further sum of Rs. 20,000/in fixed deposit with the Bank of Patiala the defence case as sought to be proved by Bhupinder Singh was that these were received by him from his grand father Chanda Singh. The learned Special judge disbelieved the story and on a consideration of the reasons given by him we are of opinion that his conclusion is correct. When it is remembered that Bhupinder Singh was at the relevant dates a student with no independent income or property of his own the reasonable conclusion from the rejection of his story about these amount is, as held by the Special Judge, that these were possessed by him on behalf of his father, Sajjan Singh. We are also convinced that the Special Judge was right in his conclusion that Rs. 5,577/ in the Imperial Bank of India at Moga, Rs. 237/8/3 in the Savings Bank Account in the Bank of Patiala at Doraha and the half share in a plot of land in Ludhiana of the value of Rs. 11,000/ standing in the name of Bhupinder Singh were held by Bhupinder Singh on behalf of his father, Sajjan Singh. It has to be mentioned that Mr. Justice Capoor in the High Court agreed with these conclusions, while the other learned judge (Mr. Justice Harbans Singh) did not examine this question at all being wrongly of the opinion that the properties acquired prior to March 11, 1947 should not be taken into consideration. Thus even if we leave out of account the amount of Rs. 26,500/ standing in the name of appellant 's wife Daya Kaur which according to the prosecution was held by her on behalf of her husband, Sajjan Singh, it must be held to be clearly established that the pecuniary resources or property in possession of Sajjan Singh and his son, Bhupinder Singh, on his behalf amounted to more than Rs. 1,20,000/ . The question then is: Was this disproportionate to the appellant 's known sources of income? As was held by this Court in Swamy 's Case(1) "the expression 'known sources of income ' must have reference to (1) ; 644 sources known to the prosecution on a thorough investigation of the case" and that it could not be contended that 'known sources of income ' meant sources known to the accused. In the present case the principal source of income known to the prosecution was what the appellant received as his salary. The total amount received by the appellant throughout the period of his service has been shown to be slightly less than Rs. 80,000/ . The appellant claimed to have received considerable amounts as traveling allowance a Overseer and S.D.O. and also as horse and conveyance allowance. For the period of his service prior to May 1947, the records which would have shown what the accused drew as traveling allowance were not available. The Special judge found that from May 1947 upto January 1953 the appellant got Rs. 6,504/6/ as traveling allowance. On that basis he also held that for the period of service as S.D.O. prior to May 1947 he may have got about Rs. 5,000/ at the most. For the period of his service as Overseer, the learned Special judge held that, the appellant did not get more than Rs. 100/ a year as travelling allowance, including the horse allowance. No reasonable objection can be taken to the conclusion recorded by the Special Judge as regards the travelling allowance drawn by the appellant for the period of his service as S.D.O. It was urged however that Rs. 100/ a year ,is travelling allowance is too low an estimate for his services as Overseer. As the relevant papers are not available it would be proper to make a liberal estimate under this head favourable to the appellant. Even at the most liberal estimate it appears to us that the total receipts as travelling allowance as Overseer could not have exceeded Rs. 5,000/ . One cannot also forget that much of what is received as travelling allowance has to be spent by the officer con cerned in travelling expenses itself. For many officers it 'IS not unlikely that travelling allowance would fall short of these expenses and they would have to meet the deficit from their own pocket. The total receipt that accrued to the appellant as the savings out of travelling allowance inclusive of horse allowance and conveyance allowance, could not reasonably be held to have exceeded Rs. 10,000/at the most. Adding these to what he received as salary and also as Nangal Compensatory allowance the total in 645 come received during the years would be about Rs. 93,000/ . It also appears that income by way of interest was earned by the appellant on his provident fund and also the bank deposits standing in his own name or in the name of his son, Bhupinder Singh. The income under this head appears to be about Rs. 10,000/ . The total receipts by the appellant from his known sources of income thus appears to be about Rs. 1,03,000/ . If nothing out of this had to be spent for maintaining himself and his family during all these years from 1922 to 1952 there might have been ground for saying that the assets in the appellant 's possession, through himself or through his son (Rs. 1,20,000/ ) were not disproportionate to his known sources of income. One cannot however live on nothing; and however frugally the appellant may have lived it appears to us clear that at least Rs. 100/ per month must have been his average expenses throughout these years taking the years of high prices and low prices together. These expenses therefore cut a big slice of over Rs. 36,000/ from what he received. The assets of Rs. 1,20,000/ have therefore to be compared with a net income of Rs. 67,000/ . They are clearly disproportionate indeed highly disproportionate. Mr. Lall stressed the fact that the legislature had not chosen to indicate what proportion would be considered disproportionate and he argued on that basis that the Court should take a liberal view of the excess of the assets over the receipts from the known sources of income. There is some force in this argument. But taking the most liberal view, we do not think it is possible for any reasonable man to say that assets to the extent of Rs. 1,20,000/ is anything but disproportionate to a net income of Rs. 1,03,000/ out of which at least Rs. 36,000/ must have been spent in living expenses. The next question is : Has the appellant satisfactorily accounted for these disproportionately high assets? The Speical judge has examined this question carefully and rejected as untrustworthy the appellant 's story of certain receipts from one Kabul Singh, his son Teja Singh, and from his father, Chanda Singh. These conclusions appear to us to be based on good and sufficient reasons and we can see nothing that would justify us in interfering with these. 646 The prosecution has thus proved facts on which it becomes the duty of the Court to assume that the accused has committed the offence with which he is charged, unless the contrary is proved by him. Mr. Lall has submitted that if the other evidence on which the prosecution relied to prove its case against the appellant is examined by us, he will be able to satisfy us that evidence is wholly insufficient to prove the guilt of the accused. It has to be remembered however that the fact assuming it to be a fact in this case that the prosecution has failed to prove by other evidence the guilt of the accused, does not entitle the Court to say that the accused has succeeded in proving that he did not commit the offence. Our attention was drawn in this connection to this Court 's decision in Surajpal Singh 's Case(1) where this Court set aside the conviction of the appellant Surajpal Singh on the basis of the presumption under section 5(3). What happened in that case was that though the accused had been charged with having committed the offence of criminal misconduct in the discharge of his duty by doing the acts mentioned in cl. (c) of sub section 1 of section 5, the Special Judge and the High Court convicted him by invoking the rule of presumption laid down in sub section 3 of section 5, of an offence under cl. (d) of section 5(l). This Court held that it was not open to the Courts to do so. This case is however no authority for the proposition that the courts could not have convicted the accused for an offence under section 5 ( 1) (c) for which he had been charged. On the contrary it seems to be a clear authority against such a view. After pointing out that the charge against the appellant was that he has dishonestly and fraudulently misappropriated or otherwise converted for his own use property entrusted to him, this Court observed: "It was not open to the learned Special Judge to have convicted the appellant of that offence by invoking the rule of presumption laid down in sub section (3). He did not however to do so. On the contrary he acquit ted the appellant on that charge. Therefore, learned Counsel has submitted that by calling in aid the rule of presumption in sub section 3 the appellant could not be found guilty of any other type of criminal misconduct (1) ; 647 referred to in cls. (a), (b) or (d) of sub section (1) in respect of which there was no charge against the appellant. We consider that the above argument of learned Counsel for the appellant is correct and must be accepted. " The appellant 's Counsel is not in a position to submit that there is evidence on the record which would satisfy the Court that the accused has "proved the contrary", that is, that he had not committed the offence with which he was charged. We have therefore come to the conclusion that the facts proved in this case raise a presumption under section 5(3) of the Prevention of Corruption Act and the appellant 's conviction of the offence with which he was charged must be maintained on the basis of that presumption. In this view of the matter we do not propose to consider whether the High Court was right in basing its conclusion also on the other evidence adduced in the case to prove the actual payment of illegal gratification by the partners of the firm M/s. Ramdas Chhankanda Ram. Lastly, Mr. Lall prayed that the sentence be reduced. The sentence imposed on the appellant is one year 's rigorous imprisonment and a fine of Rs. 5,000/ . Under section 5(2) the minimum sentence has to be one year 's imprisonment, subject to the proviso that the Court may for special reasons to be recorded in writing, impose a sentence of imprisonment of less than one year. We are unable to see anything that would justify us in taking action under the proviso. In the result, the appeal is dismissed. Appeal dismissed.

The appellant was an overseer and then became a Sub Divi sional Officer in the Irrigation Department. On the basis of a complaint, a case was registered against him and after sanction by the Government had been obtained for his prosecution under section 5(2) of the Prevention of Corruption Act and section 161/165 of the Indian Penal Code he was tried by the special judge on a charge under section 5(2) of the Act. The allegation made was that the appellant demanded his commission from the contractors on the cheques issued to them and on are Used he started with holding their payments and putting obstacles in the smooth execution of the work entrusted to them. The commission was then paid from time to time and the payments were fully entered in the regular Rokar and Khata Bhais. The trial court accepted the prosecution case and found that the total pecuniary resources and property in appellant 's possession or in the possession of his wife and son were disproportionate to his known sources of income and that such possession had not been satisfactorily accounted for. On these findings the presumption under section 5(3) of the Prevention of Corruption Act was raised and the appellant was convicted and sentenced to rigorous imprisonment for one year and a fine of Rs. 5,000/ in default, rigorous imprisonment for six months. On appeal, the conviction and sentence were confirmed by the High Court. The two learned judges of the High Court, however, differed on the question whether pecuniary resources and property acquired before the Prevention of Corruption Act came into force, could be taken into consideration for the purpose of section 5(3) of the Act. Held, that to take into consideration the pecuniary resources or property in the possession of the accused or any other person on his behalf which were acquired before the date of the Act, was in no way giving the Act a retrospective operation. Maxwell on Interpretation of statutes, 11th Edition, P. 210 and State of Bomaby vs Vishnu Ramchandra, [1961] 2 S.C.R. 26, relied on. Sub section 3 of section 5 does not create a new kind of offence. It merely prescribes a rule of evidence for the purpose of proving the offence of criminal misconduct as defined in section 5(l) for which an accused person is already under trial. C.S.D. Swamy vs The State, [196 of 1 S.C.R. 461 and Surajpal Singh vs State of U.P. ; , relied on. 631 On proper construction of the words of the section and giving them their plain and natural meaning, it is clear, that the pecuinary resources and property in possession of the accused person or any other person on his behalf have to be taken into consideration for the purpose of section 5(3), whether these were acquired before or after the Act came into force. While it is quite true that pecuniary resources and property are themselves sources of income, that does not present any difficulty in understanding a position that at a particular point of time the total pecuniary resources or property can be regarded as assets, and an attempt being made to see whether the known sources of income, including, it may be, these very items of property, in the past, could yield such income as to explain reasonably the emergence of these assets at this point of time. There is no warrant for the proposition that where the law provides that in certain circumstances a presumption shall be made against the accused, the prosecution is barred from adducing evidence in support of its case if it wants to rely on the presumption. D. Del Vecchio vs Bowers, ; ; 80 L. ed. 229 and Bratty vs Attorney General for Northern Ireland, ; , held inapplicable. The facts proved in this case raise a presumption under section 5(3) of the Act and the appellant 's conviction must be maintained on the basis of that presumption.

vil Appeal Nos. 1893 and 1894 of 1989. From the Judgment and Order dated 24.9. 1987 of the Andhra Pradesh High Court in C.C.C.A. No. 152 of 1984 and C.C.C.A. No. 150 of 1984. K. Parasaran, Shanti Bhushan, A.D.N. Rao and A. Subba Rao for the Appellants. M.C. Bhandare, K. Madhava Reddy, Subodh Markandeya, Mrs. Chitra Markandeya, W.A. Nomani, G.S. Giri Rao, A.K. Raina and D. Prakash Reddy for the Respondents. The Judgment of the Court was delivered by KASLIWAL, J. The Plaintiffs by Special Leave have filed these appeals against the Judgment of Andhra Pradesh High Court, Hyderabad, dated 24th September, 1987. The four plaintiffs who are brothers filed the present suit on 17th July, 1979 for specific performance of oral contract for sale of a building known as "Roshan Manzil" located in an area of 4165 .sq. yards in Saifabad, Hydera bad. M/s. Gopi Hotel was the tenant in the premises. Accord ing to the case as set up in the plaint the first plaintiff Brij Mohan learnt some time in the first week of April, 1979 that the defendant No. 1 Smt. Mahboobunnisa Begum (since deceased) was contemplating the sale of the property in question and that Shri Arif Ali, her Advocate and income tax practitioner was assisting her in finding a purchaser. Shri Arif Ali had mentioned the above intention of the first defendant to Sh. Ibrahim Moosa of M/s. J. Moosa & Company who was known to the first plaintiff. On learning from Shri Ibrahim Moosa the first and second plaintiffs, namely, Brij Mohan and Jagmohan along with Sh. Ibrahim met Sh. Arif Ali. Arif Ali gave the details of the property and also showed the plans of the property to them. Arif Ali stated that the defendant was expecting the price of Rs. 10,00,000. The plaintiffs Nos. 1 and 2 offered Rs.7,00,000. Shri Arif stated that he will ascertain from the defendant her reaction to the said offer. A fortnight later i.e. in the third week of April, 1979 the plaintiffs Nos. 1 and 2 along with Sh. Ibrahim Moosa and Sh. Arif Ali went to the residence of the defendant, who was insisting on the payment of Rs. 10,00,000 as the sale price. At the said meeting the husband of the defendant was also present. The plaintiffs Nos. 1 and 2 418 increased their price from Rs.7,00,000 to Rs.8,00,000. The first defendant said that she would think over and inform the plaintiffs Nos. 1 and 2 through Sh. Arif Ali. On 3rd May, 1979 the plaintiffs Nos. 1 and 2 along with Shri Ibra him Moosa met Sh. Arif Ali. Arif Ali stated that the defend ant was agreeable to sell the property to plaintiffs only for Rs. 10,00,000 and not a pie less. Thereupon the plain tiffs agreed to pay Rs. 10,00,000 as the sale price. Shri Arif Ali after getting the confirmation of acceptence of the said offer of the plaintiffs Nos. 1 and 2 from the first defendant said that the plaintiffs Nos. 1 and 2 should meet the defendants on 6th May, 1979 and that she would in the meanwhile purchase the stamp papers for making the formal agreement for sale incorporating the oral agreement arrived at. It was further alleged in the plaint that on 6th May, 1979 the first and second plaintiffs along with Shri Ibrahim Moosa met the first defendant and her husband in the presence of the said Sh. Arif Ali. In the said meeting the amount of earnest money to be paid, time for registration of the sale deed etc., were decided. The said Shri Arif Ali prepared in his own handwriting a draft of the receipt incorporating the terms of the orally concluded agreement for sale. The draft was scrutinised by the husband of the first defendant who suggested some alterations. The said Shri Arif Ali thereupon prepared final draft of the receipt in his own hand. He handed over the first and the final draft to the first plaintiff to get the later typed and duly stamped. He also delivered the stamp papers to the first plaintiff for being used for typing of the formal agreement of sale. It was further stated in the plaint that during the said meeting held on 6th May, 1979, the plaintiffs Nos. 1 and 2 were permitted to proceed with the publication of the no tices in the newspapers. Accordingly, the contents of the publication were got prepared by them bonafidely anticipat ing that the first defendant will execute the receipt after receiving the stipulated earnest money in the course of the day, ie. 6.5.79. However, for reasons known to herself the first defendant deliberately and wantonly evaded meeting the first and second plaintiffs to receive the advance and execute the receipt. It was further stated in the plaint that after the public notice was published in the newspapers taking advan tage of her wanton and deliberate act of evasion, the first defendant got a reply notice published in the newspaper and got issued a legal notice dated 8.5.79 through her Advocate, falsely alleging that there was no agreement for sale. Thereafter the first and second plaintiff made sincere and repeated attempts 419 to convince the first defendant that the false and baseless pleas taken by her were detrimental to the interest of all concerned and there is inexistence a concluded contract for sale of the suit property and that the execution of the agreement of sale was a mere formality as well the receipt for the advance. Since the first defendant persisted in her illegal conduct. the plaintiffs got issued a final notice dated 27th June, 1979 calling upon the first defendant to execute the agreement, receive the earnest money and issue a valid receipt within three days of the receipt of the notice thus giving the first defendant one more opportunity. The plaintiffs neither received any reply nor the first defend ant complied with the demands made in the notice. It was further alleged in the plaint that the plaintiffs Nos. 1 and 2 had negotiated for the purchase of the property on behalf of themselves and plaintiffs Nos. 3 and 4 who were their younger brothers. The concluded contract for sale entered into with the first defendant was for the benefit of all the four plaintiffs. Hence all the four plaintiffs had joined in the filing of the suit. The second defendant was M/s Gopi Hotel who was the tenant of the first defendant in the suit premises. The plaintiffs further averred that they have been and are ready and willing to pay to the first defendant the sale consider ation of Rs. 10,00,000. The plaintiffs undertake to deposit the same in the court at any time during the pendency of the suit or within a time fixed by the Hon 'ble Court for the deposit of the same after passing the decree or at the time of execution and registration of the sale deed. The plain tiffs on the above allegations sought the relief of specific performance of the agreement of sale in respect of the suit property after payment of sale consideration of Rs. 10,00,000 The first defendant Smt. Mahaboobunnisa Begum filed a written statement on 21st January, 1980 stating that certain negotiations took place between her and plaintiffs Nos. 1 and 2, but no contract was finalised with them and the negotiations failed. According to her, under an agreement of sale dated 22nd June, 1979 she agreed to sell the property in question to defendants Nos. 3 and 4, namely, Smt. Sugra Begum and Smt. Saira Banu. It was submitted in the reply that it was wholly incorrect to suggest of an oral contract of sale on 3rd May, 1979 in respect of sale of the suit property, in favour of the plaintiffs. There was a proposal of sale of the suit property and plaintiffs did approach for negotiations. However, the allegation of the plaintiffs approaching during first week of April, 1979 with Arif Ali, Income Tax practitioner, was wholly erroneous. In fact plaintiff No. 1 approached 420 No. 1 with Arif Ali and Ibrahim Moosa for negotiations, and plaintiffs Nos. 1 and 2 came along with them somewhere during the last week of April, 1979 and tried to negotiate, and thereafter, again they approached on 6th May, 1979, but negotiations could not be finalised and the answering de fendant did not agree to sell the suit property to the plaintiffs Nos. 1 and 2. In fact, details have been men tioned in the counter, filed in I.A. pertaining to injunc tion bearing No. 679/79, which may be read as part of the written statement. There was no concluded or enforceable contract, arrived at on 3rd May, 1979, as alleged and con tended. It was further alleged that there was no price settled or agreed and even the payment for advance was not settled and other terms and conditions were not agreed upon, even on 6th May, 1979 and the negotiations failed and noth ing was settled. There was no concluded contract and the plaintiffs had no cause of action to file the present suit for specific performance. The parties never intended to have an oral agreement, and the negotiations if any, never re sulted in a concluded contract, and even if the negotiations had been finalised, it had to be reduced into a written agreement, and the writing contemplated was not formal as alleged and contended by the plaintiffs, but was a condition and a term of contract. The plaintiffs with ulterior motive had taken the plea of oral contract It was further submitted in the written statement that it was true that plaintiffs Nos. 1 and 2 did approach the answering defendant on 6th May, 1979 along with Ibrahim and Arif, and even in the said meeting negotiations failed and the parties did not and could not arrive at a concluded contract; and even in the said negotiations on 6th May, 1979 matters remained unsettled and were not concluded. It was plaintiff No. 1 who attempted to prepare receipt, it was wholly erroneous to suggest of any draft receipt or a final receipt being prepared after scrutiny made by the husband of the answering defendant. There was no final document pre pared and there was no final settlement of terms and condi tions of contract. The answering defendant was not aware of the purchase of stamp paper and she never asked for the purchase of the stamp papers. The blank stamp papers and incomplete and unsigned draft receipts in no way spell out a concluded contract and the suit is untenable. It was also alleged in the reply that even on 6th May, 1979 there was no completed or concluded contract and nego tiations failed. Consequently, the plaintiffs took away the blank incomplete papers, and rushed with utmost haste to get it published in the newspaper, making false allegations of having paid Rs.50,000 as advance under the sale 421 agreement etc., and immediately, the answering defendant sent a suitable reply contradicting the said allegations. There was no bonafides in their action. It was done with ulterior motive to cause loss and damage to the defendant. When no earnest money had been paid or received, the plain tiffs Nos. 1 and 2 had no right to make false allegations and mislead the public and consequently the answering de fendant suffered heavy loss. The second defendant M/s. Gopi Hotel only took the plea in the written statement that he was a tenant in the build ing. Defendants Nos. 3 and 4 supported the case of the first defendant and claimed ownership in the suit property by virtue of a registered sale deed dated 19th November, 1979 executed in their favour. It may be made clear at this stage that according to defendant No. 1 an agreement to sell the property in question was made by the first defendant in favour of defendants Nos. 3 and 4 on 22.6.79. After the injunction being vacated by the High Court the first defend ant sold the suit property for a sum of Rs. 10,00,000 in favour of defendants Nos. 3 and 4 by a registered sale deed dated 19th November, 1979. Defendant No. 1 died on 3rd November, 1982 during the pendency of the suit as such defendants Nos. 5 to 9 were impleaded as legal representa tives of defendant No. 1. The Learned Trial Court recorded the summary of the findings which are reproduced in its own words. Summary of the findings: "On the facts and circumstances of the case, it is estab lished that the plaintiffs entered into an oral contract of sale with D. 1 on 3.5.79. The terms settled were that D. 1 should sell the suit property for a sum of Rs. 10,00,000 and D. 1 should obtain permissions from the authority under Land Ceiling Act and also income Tax Act. The sale deed should be executed within six months from 6.5.79. It is also settled that vacant possession was not to be given on the date of contract of sale, and the parties are aware that the defend ant No. 2 was only a tenant in the premises. The only aspect left open on 3.5.79 is that mode of payment should be fixed on 6.5.79. On 6.5.79 it was agreed that D.1 should receive Rs.50,000 as advance and these terms were reduced into writing in Ems. A. 1 and A. 2, but, before the ink could dry, the defendant No. 1 on the evening of 422 6.5.79, refused to receive the amount. This resulted in the breach of contract on the part of D. 1. So the plaintiffs are entitled to specific performance of oral contract of sale concluded on 3.5.79. Subsequent sale to defendants 3 and 4 do not create any rights in favour of them and in order to prevent D. 3 and D. 4 from claiming any rights in future, they should also be made to join D. 5 to D. 9 in executing the registered sale deed. Defendant No. 2 is admittedly not entitled to any proprietary rights in the property and he is only a tenant. As to whether D. 2 is liable to be evicted or not it is held that the Plaintiffs are entitled to seek eviction at an appropriate time when they become full owners of the property. Defendants 3 and 4 shall not be liable to contribute any thing towards expenses for the executing of the registered sale deed and defendants 5 to 9 as legal representatives of D. 1 are bound to perform their part of contract by obtaining permission required under the Urban Land Ceiling Acts and Income Tax act and any other Act required execute the sale deed and register the sale upon receiving the entire consideration of Rs. 10,00,000. The expenses for registration of the sale deed shall be borne out in equal halls by defendants 5 to 9 on the one hand and the plaintiffs on the other hand". As a result of the above findings the trial court de creed the plaintiffs suit for specific performance. Two separate appeals, one by defendants Nos. 5 to 9 and the other by defendants Nos. 3 and 4 were filed in the High Court challenging the decree passed by the trial court. A Division Bench of the High Court by Judgment dated 24th September, 1987 allowed both the appeals and set aside the decree passed by the trial court. As two separate appeals Nos. 150 and 152 of 1984 were disposed of by one single order the plaintiffs filed the above two civil appeals before this Court by Special Leave. The High Court observed that the only question which arose for consideration in both the appeals was whether there was a concluded oral contract between the parties, namely, plaintiffs 1 and 2 on one side and the first defend ant on the other, on 3rd May, 1979 as alleged by the plain tiffs? According to the High Court to decide this question, the only available oral evidence was that of P.W. 1 Brij Mohan, P.W. 3 Jagmohan and D.W. 2 Arif Ali. As regard the negotiations which took place between the parties in the third week of April, 1979, the High court observed that the negotiations which took place between the 423 parties in the third week of April, 1979 were not in dispute and which were to the effect that when the first defendant was insisting on payment of Rs. 10,00,000, plaintiffs 1 and 2 increased their offer from Rs.7,00,000 to Rs.8,00,000 and the first defendant promised them to think over and inform the plaintiffs through Arif Ali. The High Court then consid ered the bargain that took place between the parties on 3rd May, 1979. The plaintiffs apart from their own statements as P.W. 1 and P.W. 3 had also examined P.W. 2, the Income Tax Inspector B Ward Circle No. 4, Hyderabad to show that de fendant No. 1 was an income tax and wealth tax assessee and Sh. Arif Ali, Advocate and Income tax practitioner used to look after her tax matters. The plaintiffs had also examined P.W. 4, Mohd Yusuf a stamp vendor to prove Exhibit X 25 sales register of stamps and Exhibit X 26 an entry of sale of exhibit A. 3 non judicial stamps for Rs.5 to defendant No. 1 Smt. Mahboobnissa Begum. Similarly plaintiffs had examined P.W. 5 Sheikh Ismail another stamp vendor for having sold a stamp Exhibit A 4 to one Abdul Khalik on behalf of Smt. Mehboobnissa Begum vide entry exhibit X 27 in the register of stamps. The plaintiffs by the aforesaid evidence wanted to establish that one stamp was purchased by Smt. Mehboobnissa Begum herself and another through Mohd. Khalik for executing the agreement for sale in favour of plaintiffs. The High Court in this regard observed that it was not necessary to discuss the evidence of P.W. 4 as to whether the first defendant personally went to him and purchased the stamp paper. The first defendant who is a lady from aristocratic family would not have gone all the way to Chotta Bazar to purchase a non judicial stamp worth Rs.5. P.W. 4 deposed that he cannot identify whether the person who came for purchase of the stamp paper was Smt. Mehboobnissa Begum or not. It may be that some person by name Smt. Mehboobnissa purchased the stamp papers. P.W. 5 simply stated that he sold exhibit A 4 to one Adbul Khalik on behalf of Smt. Mehboobnissa Begum. D.W. 2, Arif Ali however said that neither any transaction nor talks took place between the plaintiffs 1 and 2 and himself on 3rd May, 1979. The High Court did not agree with the submission of the Learned counsel for the plaintiffs made before them that the pur chased of the stamps Exhibit A 3 and A 4 was a strong cri cumstance in favour of a concluded contract. The High Court in this regard observed that first of all it was not firmly established that the purchase of the stamps was for the purpose of this transaction only. In view of the evidence of D.W. 2 much weight cannot be given to the evidence of P.Ws. 4 and 5. The High Court further observed that even assuming that these two stamps were purchased pursuant to the talks that took place between D.W. 2 and P.Ws. 1 and 3 it would not improve the case of the plaintiffs. The 424 stamps were blank and nothing was engrossed on them. This circumstances, at the most would show that meeting on 6th May, 1979 was fixed between the plaintiffs 1 and 2 and the first defendant for further negotiations. The High Court then observed that as regards the meeting which took place on 6th May, 1979 and the fact that the negotiations fell through was admitted by both the parties. Therefore, the crucial question for determination was whether all the terms of the oral contract were entered into between the parties on 3rd May, 1979 or any terms were left open to be dis cussed and determined in the meeting to be held on 6th May, 1979. The High Court then considered the argument of the plaintiffs according to whom Exhibit A 1 draft receipt was written by D.W. 2 Sh. Arif Ali on 6th May, 1979 stating that the suit premises was agreed to be sold for Rs. 10,00,000 and the permission for Urban Land Ceiling Authority will be obtained by the first defendant and the registration will be completed within six months from that date. The plaintiffs further case was that the first defendant 's husband who was present suggested some alterations basing on which Exhibit A 2 fair draft was prepared and that when the plaintiffs took the agreed advance amount of Rs.50,000 in the evening, the first defendant refused to accept the advance amount and resiled from the contract. As against the above contentions of the plaintiffs, D.W. 2 Sh. Arif Ali who is the represen tative of the first defendant deposed that in the meeting between the parties which took place in April, 1979 the vendor did not take the responsibility of obtaining ,clear ance under the Urban Land Ceiling Act. He denied the sugges tion that in the third week of April, 1979 the first defend ant offered to sell the suit property for Rs. 10,00,000 and that she would obtain the clearance under the Urban Land Ceiling Act. On the other hand he deposed that when the plaintiffs offered Rs.8,00,000 the first defendant told them that she would consider and communicate her view through D.W. 2 some time later. The High Court in this regard clear ly observed that the contention of the plaintiffs that even in the third week of April, 1979 before the parties could agree upon the sale price for the suit building, there was discussion about the obtaining of clearance under the Urban Land Ceiling Act and that the first defendant undertook to obtain that clearance certificate cannot be believed. The High Court further observed as under: "As seen from their own evidence, by the 3rd week of April, 1979 plaintiffs 1 and 2 increased theft offer from Rs.7,00.000 to Rs.8,00,000. At the time of the earlier 425 negotiations when the plaintiffs offered Rs.7,00,000 (seven lakhs) and the 1st defendant was not willing to accept that offer, there was no stipulation as to who should obtain the clearance under the Urban Land Ceiling Act. If so, it is unbelievable that in the 3rd week of April, 1979 when still there was a wide gap of Rs.2,00.000 in the price payable for the suit building, the parties would have stipulated about the condition as to who should obtain the permission under the Urban Land Ceiling Act. Therefore, the evidence of P.Ws. 1 and 3 can be believed to the extent that they approached Arif Ali on 3.5. 1979 and Arif Ali in his turn communicated their willingness to pay the price of Rs. 10,00,000 for the suit premises and the 1st defendant accepted that offer. " The High Court on the basis of the above finding then held that in order to determine the binding nature of the contract between the parties, the mere acceptance of sale price is not sufficient. It was not the case of the plain tiffs that the other terms of the contract were also dis cussed by D.W. 2 over the phone and their acceptance was communicated to them by the 1st defendant through D.W. 2. It was obviously for that reason that a further meeting was fixed at the house of the 1st defendant in the morning of 6th May, 1979 which had admittedly taken place. The High Court further held that it must be remembered that this agreement is in respect of a valuable property and the main intention was to reduce the terms of agreement into writing and when the parties are very much relying on the alleged oral agreement dated 3rd May, 1979, there would definitely have been a reference in Exhibits A 1 and A 2 to the oral agreement said to have taken place on 3rd May, 1979. The absence of the same in Exhibits A 1 and A 2 against throws a serious doubt about the alleged agreement, dated 3rd May, 1979. In any event the mere fact that there was a meeting between the plaintiffs Nos. 1 and 2 and D.W. 2 on 3rd May, 1979 does not establish that there was a con cluded contract between the parties on that day because admittedly the first defendant was not present at that time. What all had happened according to P.Ws. 1 and 3 is that they offered to pay Rs. 10,00,000 for the suit building and D.W. 2 having contacted the 1st defendant over the phone conveyed to them her acceptance of the price fixed. In the absence of evidence that the other terms also were discussed over the phone and settled at that time and the 1st defend ant agreed for the terms, it cannot be said that there is a con 426 cluded contract on 3rd May, 1979. The fixation of price is only one of the terms of the contract and by mere acceptance of the price it cannot be said that there is a concluded contract between the parties in the absence of proof of fixation of other conditions mentioned in Exhibits A 1 and A 2, viz., undertaking by the 1st defendant to obtain per mission from Urban Land Ceiling Authority and the amount of advance to be paid. It is not the case of the plaintiffs 1 and 2 that prior to 6.5.79 there was an agreement between the parties as to the amount of advance to be paid. The High Court thus held that in the absence of any consensus being arrived at between the two contracting parties about these important aspects of the agreement it cannot be said that there is a concluded oral contract between the parties on 3.5.79. It is important to note that even exhibit B 4 an agree ment of sale dated 22.6.79 executed between the 1st defend ant and defendants Nos. 3 and 4 does not impose the condi tion that the 1st defendant, the vendor, should obtain the clearance from the Urban Land Ceiling Authority within the stipulated period of six months. The High Court in this regard observed that this evidence showed that the conten tion of the 1st defendant that the agreement fell through by reason of the plaintiffs insisting on her obtaining the permission from the Urban Land Ceiling Authority and the expression of her inability to comply with that demand appeared to be correct. The High Court clearly held that there was no clinching evidence to show that this stipula tion was thought of by the parties on any day prior to 6.5.79. The High Court, therefore, did not agree with the contention of the Learned Counsel for the plaintiffs that all the terms of contract including the stipulation with regard to the payment of advance amount and that the vendor alone should obtain the permission from the Urban Land Ceiling Authority were settled by 3.5.79 and what was left to be done on 6.5.79 was merely to incorporate the terms already arrived at into a formal document on Exhibits. A 3 and A 4 stamp papers. It was further observed that had there been a meeting between plaintiffs Nos. 1 and 2 and the first defendant on 3.5.79 and there was a direct conversation between them, there may be a possibility for drawing such an inference. But, as observed already, what all had happened on 3.5.79 was that plaintiffs Nos. 1 and 2 expressed their willingness to pay a consideration of Rs. 10,00,000 for the suit building and the first defendant expressed her accept ance of that offer through D .W. 2. The other terms could not have been settled between the parties in the third week of April, 1979 because by that time there was no agreement between the parties with respect to the sale consideration. Without the price being settled, and especially when there was a gap of Rs.2,00,000 427 in the price accepted by the first defendant and the price offered by the first plaintiff, the parties would not have discussed the other terms of the agreement such as the advance money to be paid and the responsibility of the vendor to obtain the permission from the Urban Land Ceiling Authority. It was submitted by the learned counsel for the appel lants that the High Court itself has arrived to a finding that D .W. 2 Sh. Arif Ali on 3.5.79 after having a talk with defendant No. 1 on phone had conveyed her acceptance to sell the property for a sum of Rs. 10,00,000. It was submitted that an agreement for sale of immovable property could be made orally and so far as mode of payment of consideration is concerned, can be settled subsequently. It was submitted that in the facts and circumstances of the present case all the fundamental and vital terms of the contract were settled and concluded on 3.5.79 itself and even if the other details like mode of payment of consideration, obtaining of no objection certificate from Land Ceiling Authorities etc. remained unsettled, the same could be determined in accord ance with Sec. 55 of the Transfer of Property Act. Oral contract is permissible and so far as other terms which remain unsettled, the same can be determined by operation of law. It was contended that the only vital terms for a valid agreement of sale of an immovable property were the identity of the property and the price. Both these vital terms were settled and concluded on 3.5.79 and when the plaintiffs were always ready and willing to perform their part of the con tract, a decree for specific performance should have been passed in their favour. It was further contended that the stand taken by the defendant No. 1 and tried to be supported by Sh. Arif Ali D.W. 2 that no meeting took place on 3.5.79 at all was held not believable by the High Court itself. It was further contended that the act of purchasing stamps on 3.5.79 by defendant No. 1 and the draft receipts Exhibits A 1 and A 2 prepared by Sh. Arif Ali D.W. 2 himself clearly lend support to the case of the plaintiffs. Reliance in support of the above contention was placed on Kollipara Sriramulu vs T. Aswathanarayana & Ors., ; and Nathulal vs Phoolchand, [1970] 2 SCR 854. On the other hand it was contended on behalf of the respondents that no vital or fundamental terms of the con tract were discussed, agreed or settled on 3.5.79. It was contended that even if the case of the plaintiffs is be lieved, all that happened on 3.5.79 was that plaintiffs had agreed to purchase the property for Rs. 10 lakhs to which the defendant N. 1 had conveyed her acceptance through D.W. 2. Neither 428 any earnest/advance money to be paid was settled, nor, any time for the payment of such money or time for execution of agreement of sale or final sale deed and its registration, was settled. It was argued that even if the time may not be an essence of a term of contract for sale of immovable property, it is a vital term without which no concluded contract can be arrived at. Admittedly no meeting was held on 3.5.79 in the presence of the defendant No. 1 and it was agreed to have a meeting of the plaintiffs and defendant No. 1 on 6.5.79. It was also an admitted position that neither any consideration passed nor any documents were signed by the parties on 3.5.79. So far as 6.5.79 is concerned admit tedly the negotiations failed between the parties on that day. It was further contended that if the terms had already settled on 3.5.79 itself where was the necessity of execut ing draft receipts on 6.5.79 and in any case if it was a mere formality then the plaintiffs should have brought a typed agreement on the stamps for formal signature of the parties. It was also argued that the plaintiffs failed to examine Ibrahim Moosa who was an independent and a very important witness in the whole transaction and an adverse inference should be drawn against the plaintiffs for not examining Ibrahim Moosa. The defendant No. 1 had produced a counter affidavit Exhibit C 1 dated 27.7.79 in reply to injunction application filed by the plaintiffs and she had taken a clear stand that no terms were settled or concluded on 3.5.79. It was further argued that admittedly the plain tiffs had not paid any earnest/advance money to the defend ant No. 1 towards the alleged transaction but still they malafidely stated in the notice of 7.5.79 published in the Newspaper that an amount of Rs.50,000 had been paid to defendant No. 1. The defendant No. 1 in these circumstances had immediately got published a contradiction on 8.5.79 and this clearly goes to show the malafide and ulterior motive of the plaintiffs. It was also argued that any agreement in the third week of April, 1979 to the effect that defendant No. 1 would bring the no objection certificate from the Urban Land Ceiling Authorities was found not proved by the High Court and as such there is no question of applying any principles contained in Sec. 55 of the Transfer of Property Act. It was also contended that the findings recorded by the High Court are supported by evidence and this Hon. Court should not interfere against such finding in the exercise of its jurisdiction under Article 136 of the Constitution of India. It was also argued that Sh. Arif Ali was not holding general power of attorney on behalf of defendant No. 1 and he had no authority to settle or conclude any terms in respect of a transaction of immovable property on behalf of defendantlll No. 1. No objection certificate was necessary to be obtained from Urban Land Ceiling Authorities and the defendant No. 1 and her husband being old person 429 had clearly taken the stand that they would not bring such certificate and no final and concluded contract took place on any date. We have given our careful consideration to the arguments advanced by Learned Counsel for the parties and have thor oughly perused the record. We agree with the contention of the Learned counsel for the appellants to the extent that there is no requirement of law that an agreement or contract of sale of immovable property should only be in writing. However, in a case where the plaintiffs come forward to seek a decree for specific performance of contract of sale of immovable property on the basis of an oral agreement alone, heavy burden lies on the plaintiffs to prove that there was consensus ad idem between the parties for a concluded oral agreement for sale of immovable property. Whether there was such a concluded oral contract or not would be a question of fact to be determined in the facts and circumstances of each individual case. It has to be established by the plaintiffs that vital and fundamental terms for sale of immovable property were concluded between the parties orally and a written agreement if any to be executed subsequently would only be a formal agreement incorporating such terms which had already been settled and concluded in the oral agree ment. Now we shall examine the facts and circumstances of the present case in order to find whether the plaintiffs have been able to prove that there was a concluded oral agreement between the parties on 3.5.79 in order to seek decree for specific performance of contract in their favour. Admitted facts of the case are that the transaction in question related to a sale of an immovable property for no less than a sum of Rs. 10,00,000 in May, 1979.3.5.79 is the crucial date on which the oral agreement is alleged to have been concluded. Admittedly on that date even earnest/advance money had not been settled. It was also not settled as to when the earnest/advance amount and the balance amount of sale consideration would be paid. It was also not settled as to when the final sale deed would be executed and regis tered. No talk with regard to any terms of the oral agree ment took place in the presence of the vendor defendant No. 1 on 3.5.79. It was also not decided whether actual posses sion or only symbolical possession of the premises in ques tion would be given by the vendor. No consideration actually passed even on 6.5.79 and negotiations failed. Apart from the above admitted facts of the case we would consider as to what happened on 3.5.79. The plaintiffs have alleged in the plaint that in the 3rd week of April, 1979 plaintiffs Nos. 1 and 2 along with Sh. Ibrahim Moosa and Sh. Arif Ali went to the residence of the defendant who 430 was insisting on the payment of Rs. 10,00,000 as the sale price. At the said meeting the husband of the defendant was also present. The plaintiffs Nos. 1 and 2 increased their price from Rs.7,00,000 to Rs.8,00,000. The first defendant said that she would think over and inform the plaintiffs Nos. 1 and 2 through Sh. Arif Ali. On 3.5.79 the plaintiffs 1 and 2 along with Shri Ibrahim Moosa met Shri Arif Ali. He stated that the defendant was agreeable to sell the plan schedule property to plaintiffs only for Rs, 10,00,000 and not a pie less. Thereupon the plaintiffs agreed to pay Rs. 10,00,000 as the sale price. Shri Arif Ali after getting the confirmation of acceptance of the said offer of the plain tiffs No. 1 and 2 from the first defendant said that the plaintiffs Nos. 1 and 2 should meet the defendants on 6.5.79 and that she would in the meanwhile purchase the stamp papers for making the formal agreement for sale incorporat ing the oral agreement arrived at. Then there is an averment with regard to the meeting of 6.5.79 between the first and second plaintiffs along with Shri Ibrahim Moosa and the first defendant and her husband in the presence of Sh. Arif Ali. It has been alleged that in the said meeting of 6.5.79 the amount of earnest money to be paid, time for registra tion of the sale deed etc. were decided. Now it is an admit ted case of the plaintiffs themselves that negotiations failed on 6.5.79 and the defendant No. 1 resiled to sign any of the receipts nor accepted any earnest/advance money nor any agreement was even typed on the stamp papers nor signed by defendant No. 1. In the oral evidence P.W. 1 Shri Brij Mohan, plaintiff No. 1 stated that in the meeting arranged in the 3rd week of April, 1979 Shri Ibrahim and Shri Arif Ali came to the plaintiff 's shop and then they all went to the residence of defendant No. 1. The second plaintiff also accompanied them. The husband of defendant No. 1 Shri Yunus was also present at the meeting. He was introduced to them as the retired Law Secretary. Defendant No. 1 insisted for Rs. 10,00,000 as consideration of the suit property and told the plaintiffs that she would obtain the permission from the ceiling au thority. Shri Brij Mohan then stated that they raised their offer to Rs.8,00,000 defendant No. 1 told them that she would think over for two or three days and inform them through Shri Arif Ali, Thereafter Shri Brij Mohan states regarding the bargain held on 3.5.79. According to him he himself, second plaintiff and Mr. Ibrahim Moosa went to Shri Arif Ali on 3.5.79. Shri Arif Ali told them that defendant No. 1 was not willing to sell the suit property for less than Rs. 10,00,000. And if they were willing to purchase for Rs. 10,00,000 then they were welcome to do so at any time. Shri Brij Mohan then said that they agreed to purchase the suit property for Rs. 10,00,000 and asked Shri Arif Ali to get the confirmation from 431 defendant No. 1. Shri Arif Ali spoke to defendant No. 1 on telephone and then informed that defendant No. 1 was willing to sell the property to them for Rs. 10,00,000. Shri Arif Ali then said that they would buy the stamps for agreement and fixed 6.5.79 morning for a meeting with defendant No. 1. From a perusal of the above evidence it would be abundantly clear that nothing was settled on 3.5.79 except the fact that the plaintiffs had conveyed their approval to purchase the suit property for Rs. 10,00,000 and Shri Arif Ali after speaking to defendant No. 1 was willing to sell the property for Rs. 10,00,000. Admittedly at the same time a meeting was fixed with defendant No. 1 on the morning of 6.5.79. Accord ing to the case set up by defendant No. 1 she had never agreed to obtain the permission from the ceiling Authority. It would be important to note that no averment was made in the plaint that defendant No. 1 had agreed to obtain the permission from the ceiling Authority in the meeting held in the third week of April, 1979. However, Shri Brij Mohan plaintiff has sought to introduce this fact for the first time in his statement in the Court that defendant No. 1 had told them in the meeting held in the third week of April, 1979 that she would obtain the permission from the ceiling Authority. We are unable to accept the above statement of Shri Brij Mohan that in the meeting held in the third week of April, 1979 itself the defendant No. 1 had agreed that she would obtain the permission from the ceiling Authority. It is an admitted position that till the meeting held in the 3rd week of April, 1979 the plaintiffs had offered Rs.8,00,000 and the first defendant had told them that she would consider and communicate her views through Shri Arif Ali some time later. We agree with the conclusion of the High Court in this regard that without first determining the sale price, it was quite unlikely that the parties would have bargained as to who should obtain the clearance under the Urban Land Ceiling Act. It was known. to the parties that until the clearance under the Urban Land Ceiling Act and the Income Tax clearance, the property will not be registered. The High Court was right in concluding that it is unbelievable that in the third week of April, 1979 when still there was a wide gap of Rs. 2,00,000 in the price payable for the suit building the parties would have stipu lated about the condition as to who should obtain the per mission under the Urban Land Ceiling Act. It is further pertinent to mention that even in Exhibits A 1 and A 2 which are drafts of agreement of sale there is no reference to the oral agreement said to have taken place on 3.5.79. In case all the terms had already been concluded in the oral con tract between the parties on 3.5.79 and only a formal agree ment was to be reduced in writing on 6.5.79, then in that case there ought to have been a mention in the draft agree ment exhibits A 1 and A 2 regarding the oral agreement of 432 3.5.79. According to the statement of Shri Brij Mohan plain tiff No. 1 ,himself, nothing was discussed with defendant 'No. 1 herself and for that reason a further meeting was fixed at the house of the first defendant in the morning of 6.5.79. Shri Arif Ali may have been an Income Tax Advocate looking after the income tax and wealth tax matters of defendant No. 1 but he was not a General Power of Attorney holder to negotiate or settle any terms with regard to any transaction of immovable property belonging to defendant No. 1. It is further important to note that even in the agree ment to sell exhibit B 4 dated 22.6.79 between defendent No. 1 and defendants Nos. 3 and 4, no responsibility had been taken by the defendant No. 1 for obtaining the clearance from the Urban Land Ceiling Authority. The High Court in these circumstances rightly believed the contention of the defendant No. 1 that the agreement fell through because the plaintiffs insisted that defendant No. 1 should obtain the permission from the Urban Land Ceiling Authority while defendant No. 1 did not agree for the same. There was no clinching evidence to show that this stipulation was thought of by the parties on any day prior to 6.5.79. Thus in the above circumstances when the parties were consciously nego tiating about the bringing of no objection certificate from the Urban Land Ceiling Authority and the case put forward by defendant No. 1 in this regard has been believed there is no question of applying the principle contained in Section 55 of the Transfer of Property Act. The general principle contained in Sec. 55 of the Transfer of Property Act regard ing rights and liabilities of buyer and seller can only apply in the absence of a contract to the contrary and not in a case where the parties consciously negotiated but failed in respect of any term or condition, as a result of which the agreement itself could not be settled or conclud ed. Once it is held, established in the present case that no agreement was finally concluded or settled on 6.5.79 and negotiations failed and before this date it was never set tled that defendant No. 1 would bring the no objection certificate from Urban Land Ceiling Authority, there is no question of applying general principles contained in Sec. 55 of the Transfer of Property Act. In Kollipara Sriramula vs T. Aswathanarayana & Ors. (supra) was a case where in 1953 respondent No. 1 filed a suit alleging that all the partners of the firm except the appellant had entered into an oral agreement with him on July 6, 1952 to sell 137 shares in the site except the 23 shares belonging to appellant No. 1, that 98 shares had actually been sold to him, that 39 shares had not been sold to him and had been instead sold to appellant No. 1. Re spondent No. 1 in these circumstances claimed specific performance of the agreement to sell the 433 aforesaid 39 shares by their owners and contended that the sale of those shares in favour of appellant No. 1 was not binding upon him. The Trial Court decided against respondent No. 1 but the High Court decided in his favour. On the basis of above facts this Court held that the High Court was right in holding that there was an agreement to sell 137 shares in the site to respondent No. 1. A mere reference to a future formal contract does not prevent the existence of a binding agreement between the parties unless the reference to a future contract is made in such terms as to show that the parties did not intend to be bound until a formal contract is signed. The question depends upon the intention of the parties and the special circumstances of each particular case. The evidence did not show that the drawing up of a written agreement was a pre requisite to the coming into effect of the oral agreement, nor did the absence of a specific agreement as to the mode of payment necessarily make the agreement ineffective, since the vital terms of the contract like the price and area of the land and the time for completion of the sale were all fixed. The facts of the above case clearly show that it related to sale of 137 shares and that in pursuance of the agreement partners who owned 98 shares had already executed sale deeds in favour of the plaintiffs/respondents and the other partners owning 39 shares did not do so. The High Court as well as this Court believed the evidence of the plaintiff/respondent for con veying the entire 137 shares by an oral agreement dated July 6, 1952. This Court also found that the plaintiff respond ents had built a valuable cinema theatre building on the disputed site and yet very strong reasons to make an out right purchase of the site otherwise he would be placed in a precarious legal position Negotiations for purchase were going on for several years passed and considering this background, the case of the respondent with regard to the oral agreement appeared highly probable. In the above background this Court on Page 394 observed as under: "It is, therefore, not possible to accept the contention of the appellant that the oral agreement was ineffective in law because there is no execution of any formal written docu ment. As regards the other point, it is true that there is no specific agreement with regard to the mode of payment but this does not necessarily make the agreement ineffective. The mere omission to settle the mode of payment does not affect the completeness of the contract because the vital terms of the contract like the price and area of the land and the time for completion of the sale were all fixed. " 434 Thus even in the above case the time for completion of the sale was considered as one of the vital terms ' of the contract. Further in the above case part of the agreement had been performed i.e. partners having 98 shares had al ready executed sale deeds and this Court had believed the oral agreement for sale of 137 shares. Thus the above case is totally distinguishable and renders no assistance to the appellants in the case before us. Thus we find no force in these appeals and the same are dismissed. In the facts and circumstances of the case we make no order as to costs. R.S.S. Appeals dis missed.

The appellants plaintiffs are ' four brothers. They filed a suit against defendant No. 1, Smt. Mahboobunnisa. Begum, (Since deceased and represented by legal heirs) for specific performance of oral contract of sale of a building in Hyd erabad The property was later sold by defendant No.1 to defendants Nos. 3 and 4. The plaintiffs ' case was that plaintiffs Nos. 1 and 2, on behalf of themselves and their younger brothers, plain tiffs Nos. 3 and 4, had preliminary negotiations for the purchase of the suit property through Shri Arif Ali, advo cate; that eventually on 3rd May, 1979 they met Arif Ali and offered to pay Rs. 10,00,000, which was the price demanded by the owner; that Arif Ali, after getting the confirmation of the said offer from the first defendant on phone, said that the plaintiffs should meet the first defendant on 6th May, 1979 and that she would in the meanwhile purchase the stamp papers for making the formal agreement of sale incor porating the oral agreement arrived at on 3rd May, 1979; that on 6th May, 1979 the plaintiffs met the first defendant in the presence of Arif Ali and other, wherein the amount of earnest money to be paid, time for registration of the sale deed etc. were decided; that at that meeting Shri Arif Ali, prepared first and the final drafts of the receipt in his own handwriting and handed over these drafts to the first plaintiff to get the final draft typed and duly stamped; that Arif Ali also delivered the stamp papers to the first plaintiff for typing the formal agreement of sale; that at the meeting held on 6th May, 1979 the plaintiffs Nos. 1 and 2 were also permitted to proceed with the publication of the notices in the newspapers; that after the public notice was published, the first defendant got a reply notice published and got 414 issued a legal notice dated 8.5.79 through her advocate, alleging that there was no agreement for sale; that thereaf ter, the first and second plaintiffs made sincere and re peated attempts to convince the first defendant that there was in existence a concluded contract for sale of the suit property, and that the execution of the agreement of sale was a mere formality. On these allegations, the plaintiffs sought the relief of specific performance of the agreement. The first defendant in her written statement stated that certain negotiations had taken place between her and plain tiffs Nos. 1 and 2, but the negotiations had failed. It was further stated that there was no concluded or enforceable contract between the parties; that no price was settled or agreed upon and even the condition for advance payment and other terms and conditions were not agreed upon; that no final receipt or document had been prepared; and that the first defendant never asked for the purchase of stamp pa pers. The Trial Court found that on the facts and circum stances of the case, it was established that the plaintiffs had entered into an oral contract of sale with the first defendant on 3.5.79. The Trial Court accordingly decreed the plaintiffs ' suit for specific performance. Two separate appeals were filed in the High Court. A Division Bench of the High Court allowed the appeals and set aside the decree passed by the trial court. The High Court held that in order to determine the binding nature of a contract between the parties, the mere acceptance of sale price was not sufficient. The High Court further observed that in the absence of evidence that the other terms also were discussed over the phone and settled on 3.5.79, it could cot be said that there was a concluded contract on 3rd May, 1979, and that it was obviously for that reason that a further meeting was fixed at the house of the 1st defendant on 6th May, 1979.The High Court did not agree with the contention of the plaintiffs that all the terms of contract, including the stipulation with regard to the payment of advance amount and the vendor 's responsibility to obtain the permission from the Urban Land Ceiling Authority, had been settled by 3.5.79 and what was left to be done on 6.5.1979 was merely to incorporate the terms already arrived at into a formal document on stamp paper. Before this Court lit was contended on behalf of the appellants that an agreement for sale of immovable property could be made orally; that in the facts and circumstances of the case all the fundamental and vital terms of the contract were settled and concluded on 3.5.1979 itself and 415 even if the other details like mode of payment of considera tion, obtaining of no objection certificate from Land Ceil ing Authorities etc. remained unsealed, the same could be settled subsequently or determined in accordance with sec. 55 of the Transfer of Property Act; that the only vital terms for a valid agreement of sale of an immovable property were the identity of the property and the price; that both these vital terms were settled and concluded on 3.5.79; and that the act of purchasing stamps on 3.5.79 by defendant No. 1 and the draft receipts, prepared by Shri Arif Ali, clearly lent support to the case of the plaintiffs. Kollipara Sriramulu vs T. Aswathanarayana & Ors., ; and Nathulal vs Phoolchand, [1970] 2 SCR 854, relied upon. On the other hand, it was contended on behalf of the respondents that no vital or fundamental terms of the con tract were discussed, agreed or settled on 3.5.79; that neither any earnest/advance money to be paid was settled, nor, any time for the payment of such money or time for execution of agreement of sale or final sale deed and its registration, was settled; that even if time may not be an essence of a term of contract for sale of immovable proper ty, it was a vital term without which no concluded contract could be arrived at; that any agreement in the third week of April, 1979 to the effect that defendant No. 1 would bring the no objection certificate from the Urban Land Ceiling Authorities was found not proved by the High Court and as such there was no question of applying the principles con tained in section 55 of the Transfer of Property Act; that a no objection certificate was necessary to be obtained from Urban Land Ceiling Authorities and the defendant No. 1 and her husband being old persons had clearly taken the stand that they would not bring such certificate; and that there fore no final and concluded contract took place on any date. Dismissing the appeals, this Court, HELD: (1) There is no requirement of law that an agree ment or contract of sale of immovable property should only be in writing. However, in a case where the plaintiffs come forward to seek a decree for specific performance of con tract of sale of immovable property on the basis of an oral agreement along, heavy burden lies on the plaintiffs to prove that there was consensus ad idem between the parties for a concluded oral agreement for sale of immovable proper ty. Whether there was such a concluded oral contract or not would be a question of fact to be determined in the facts and circumstances of each individual case. It 416 has to be established by the plaintiffs that vital and fundamental terms for sale of immovable property were con cluded between the parties orally and a written agreement if any to be executed subsequently would only be a formal agreement incorporating such terms which had already been settled and concluded in the oral agreement. [429B D] (2)From a perusal of the evidence it would be abun dantly clear that nothing was settled on 3.5.79 except the fact that the plaintiffs had conveyed their offer to pur chase the suit property for Rs. 10,00,000 and Shri Arif Ali, after speaking to defendant No. 1 on phone conveyed that she was willing to sell the property for Rs. 10,00,000. [431B] (3) No averment was made in the plaint that defendant No. 1 had agreed to obtain the permission from the Urban Land Ceiling Authority in the meeting held in the third week of April, 1979. The High Court was right in concluding that it was unbelievable that in the third week of April, 1979 when still there was a wide gap of Rs.2,00,000 in the price payable for the suit building, the parties would have stipu lated about the condition as to who should obtain the per mission under the Urban Land Ceiling Act. [431C F] (4) The High Court rightly believed the contention of defendant No. 1 that the agreement fell through because the plaintiffs insisted that defendant No. 1 should obtain the permission from the Urban Land Ceiling Authority while defendant No. 1 did not agree for the same. [432C] (5) The general principles contained in section 55 of the Transfer of Property Act regarding rights and liabili ties of buyer and seller can only apply in the absence of a contract to the contrary and not in a case where the parties consciously negotiated but failed in respect of any term or condition, as a result of which the agreement itself could not be settled or concluded. [432E] (6) Once it is held/established in the present case that no agreement was finally concluded or settled on 6.5.79 and negotiations failed, as before this date it was never set tled that defendant No. 1 would bring the no objection certificate from Urban Land Ceiling Authority, there was no question of applying general principles contained in section 55 of the Transfer of Property Act. [432F] Kollipara Sriramulu vs T. Aswathanarayana & Ors. , ; , distinguished.

Appeals Nos. 131 and 132 of 1960. Appeals from the judgment and decree dated April 4, 1952, of the Madras High Court in Appeal No. 816 of 1947 and No. 83 of 1948. A. V. Yiswanatha Sastri, R. Ganapathy Iyer, K. Parasaran and G. Gopalakrishnan, for the appellants. K. Bhimassankaran, Durgabai Deshmukh, A. Narayana Swami and R. Thiagarajan, for the respondents 2 to 4. R. Gopalakrishnan, for respondent No. 2 (In C. A. No. 132 of 1960). November 19. The judgment of the court was delivered by SUBBA RAO, J. These appeals filed by a certificate issued by the High Court of judicature at Madras raise a question of Hindu Law pertaining to marriage in 'Asura form '. The material facts may be briefly stated : To appreciate the, facts and the contentions of the parties the 247 following genealogy may be usefully extracted Muthusami Naicker | | | Senior wife Junior wife | | Konda Bommu Naicker Kamayasami Naicker (died 23.10.1873) (died 31. 7. 1901) | | | | Kandaswami Naicker Ponnuthayee Naicker (died 31. 7. 1881) (died 13.3 1938) | Banmuga Valla | Konda Bommu Naicker | (died 21.1 1901) | | | | | | | Dorairaja Muthusami Kama Parama | alias (2nd Plff) yasami sivam Married | Thanipuli (3rd Plff)(4th Plff) Errammal | chami (died 2.2.1933) | (1st Plff) | | Bangru Ammual | (died 14.12.1930) | | | married also 8 other wise of whom the last to die were: (a) Meenakshi Ammual (died 5.6. 1938) (b) Krishna Ammual (died 10.11.1938) (c) Vellayammal alias Chinathayammal (died 2.5. 1940). 248 Thevaram is an ancient impartible zamindari in Madurai District. Shanumugavalla Konda Bommu Naicker was zamindar from 23.8.1876 to 20.1.1901. On his death on January 21, 1901 Bangaru Ammal, his daughter, got his entire estate under the will executed by him. To discharge the debts incurred by her father Bangaru Ammal executed on March 13, 1913 a mortgage of her properties for a sum of Rs. 2,15,000/ in favour of one Chidambram Chettiar. On his death his son Veerappa Chettiar filed on April 16, of 1925 against Bangaru Ammal in the Subordinate judge 's Court, Dindigul for the recovery of a sum of Rs. 5,49,6338 7 being the balance of the amount due under the said mortgage. The suit was compromised and on July 28, 1928, a compromise decree was passed therein. Under the compromise decree the mortgaged properties were divided into three Schedules A, B & C and it was provided that if a sum of Rs. 3,75,000/ was paid by July 31, 1931, the mortgage must be deemed to have been fully discharged but in default the properties in Schedule A of the decree were to become the absolute properties of the plaintiff. B Schedule properties i.e., some of the pannai lands and the C Schedule properties, i.e., those already alienated by Bangaru Ammal were released from the mortgage. One K. V. Ramasami Iyer, the Manager of the estate was appointed Receiver of the A Schedule properties and he was directed to deposit the surplus income into court towards the payment of the amount due under the compromise decree. Before the expiry of the period prescribed under the said decree Bangaru Ammal died on December 14, 1930, and her mother Errammal claiming to be her heir on the ground that Bangaru Ammal 's marriage was held in 'Asura form ' filed I.A. No. 190 of 1931 in the court of the Subordinate judge, Dindigul, for directing the Receiver to hand over the estate to her. Veerappa Chettiar in his turn filed I.A.No.170 of 1932 for 249 directing the Receiver to deliver possession of A Schedule properties on the ground that the term prescribed under the compromise decree had expired and the balance of the amount due under the decree was not paid to him. In the petition filed by Errammal she raised the question of the validity and the binding nature of the compromise decree on her. After elaborate inquiry on February 1, 1933, the learned Subordinate judge, though he held that the marriage of Bangaru Ammal was in 'Asura form ', dismissed her petition for the reason that the mortgage was valid and binding on her and allowed the petition filed by Veerappa Chettiar directing the delivery of the possession of A Schedule properties to him. On February 2, 1933, Veerappa Chettiar had taken delivery of A Schedule properties and on July 19, 1933 he was registered as proprietor of Thevaram estate by the Collector of Madura. On February 2, 1933, Errammal died executing a will dated January 30, 1933, in favour of her nephew Thangachami Naicker. It may also be mentioned that three of the co widows of Shanmugavalla survived Errammal. They died one after another and the last of them Vellayammal passed away on May 2, 1940. Thangachami Naicker along with one of the widows filed appeals to the High Court against the said judgments but those appeals were dismissed by the High Court on the ground that they were not maintainable. As Thangachami Naicker interfered with the right of Veerappa Chettiar with regard to certain tanks and water courses in Zamindari he filed 0. section 2 of 1934 in the Subordinate judge 's court of Dindigul against Thanchami Naicker and obtained a decree declaring his right to the said tanks. The appeal filed by Thanchami Naicker against that decree was also dismissed with costs on April 10, 1940. In execu tion of the decree for costs Veerappa Chettiar got the property alleged to be in possession of Thanchami 250 Naicker attached. One section Michael (son of Thanchami Naicker) objected to the attachment of the said property on the basis of a sale in his favour by the alleged reversioners to the estate of Bangaru Ammal. That petition was dismissed on August 23, 1944. The said claimant section Michael filed 0. section No. 52 of 1944 in the court of the Subordinate judge, Dindigul for setting aside the said claim order. To that suit Veerappa Chettiar and Thangachami Naicker were made party defendants. On January 31, 1945 the alleged reversioners to the estate of Bangaru Ammal filed 0. section 14 of 1,945 in the Court of the Subordinate judge, Dindigul against Veerappa Chettiar, his younger brother and defendants 3 & 9 who were alleged to be the tenants in possession of some of the items of the plaint Schedule properties. The plaintiffs in that suit are the grandsons of one Kandaswamy Naicker shown in the genealogy a paternal uncle of Shanmugavalla Konda Bommu Naicker. They claimed that they are the reversioners to the estate of Bangaru Ammal on the ground that Bangaru Ammal was married in 'Asura form '. It is alleged in the plaint that succession opened in their favour when Vellayammal died on May 2, 1940 and that the compromise decree passed against Bangaru Ammal was not binding on them and that in any view the property set out in Schedule C and C 1 attached to the plaint did not pass to Veerappa Chettiar under the said decree. The contesting defendants in both the suits pleaded that the marriage of Bangaru Ammal was not in 'Asura form ', and therefore the plaintiffs in 0. section 52 of 1944 were not the reversioners to the estate of Bangaru Ammal, that the compromise decree was binding on the estate and that C and C 1 Schedule properties also passed to the decree holder thereunder and that in any view the suit was barred by time. 251 It is seen from the foregoing narration of facts that the same questions of fact and law arise in both the suits for the title of the plaintiffs in 0. section No. 52 of 1944 was derived under a sale deed from the plaintiffs ' in 0. section No. 14 of 1945. Therefore the plaintiffs ' claim in the former suit will stand or fall on the plaintiffs ' title in the latter suit. For that reason both the suits were heard together by the Subordinate judge and appeals arising from his common judgment by the High Court. The learned Subordinate judge held on the evidence that the marriage of Bangaru Ammal with the Mannarkottai zamindar was in Asura form as Mannarkottai zamindar had spent Rs. 300/ to Rs. 575 for Bangaru Ammal 's marriage and that circumstance was in view of certain decisions of the High Court would make it an Asura marriage. He further held that the aforesaid compromise decree was binding on the plaintiffs. As regards C and C. 1 Schedule properties lie held that they had passed to Veerappa Chettiar under the compromise decree as part of the Thevaram Zamindari and that the plaintiffs were not in possession within 12 years of the suit in regard to item 70 of the C Schedule. On those findings he dismissed O.S. No. 14 of 1945 with costs. In O.S. 52 of 1944 he held that the plaintiff therein acquired a valid title as he purchased the land in dispute therein from the plaintiffs in the other suit who are the reversioners to the estate of Bangaru Ammal and that the decree in execution of which the said property was attached was not binding on the estate of said Bangaru Ammal. In that view he decreed the said suit. As against the decree passed in O.S. 52 of 1944, Veerappa Chettiar filed an appeal in the High Court of Madras being A.S. No. 816 of 1947. As against decree in O.S. 14 of 1945 dismissing the 252 plaintiffs ' suit they filed an appeal to the High Court being A.S. 83 of 1948. Veerappa Chettiar filed cross objections therein. Both the appeals were heard together by the High Court. The High Court held that in Bangaru Ammal 's marriage the practice of giving Kambu or flour or what is called the taking of Mappetti (millet flour box) before the betrothal was followed and that the marriage expenses were entirely borne by the Mannarcottai Zamindar presumably in pursuance of the practice existing in the community or in pursuance of an arrangement between the parties and therefore the marriage was Asura. The High Court further held that under the compromise decree only Melwaram right in C and C. 1 Schedule properties passed to Veerappa Chettiar but as there was no clear evidence as to who was in actual possession of the said lands and as the persons in actual occupation of the land were not impleaded in the suit, it was necessary in the interest of the parties to reserve the right of the plaintiffs to recover possession of C and C. I Schedule lands in an appropriate proceedings instituted for the purpose. In regard to item No. 70 of C. Schedule land the High Court agreed with the finding of the Subordinate judge. The High Court also negatived the plea of limitation, with the result A.S. No. 816 of 1947 was dismissed with costs and A.S. No. 83 of 1948 subject to the said modification was dismissed with costs. Hence the appeals. Both the appeals were heard together as they raised common points. The arguments of Mr. A.V. Viswanatha Sastri, the counsel for the appellant, may be summarised thus : The marriage of Bangaru Ammal with a Mannarcottai Zamindar was not held in Asura form and therefore the plaintiffs in O.S. 52 of 1944 being her father 's uncle 's grand children were not reversioners to her estate. According to Hindu Dharamshastras the main distinction between Brahma, and Asura form of marriages is that while in the 253 former there is a gift of the bride, in the latter there is a sale of the bride. Except a bare allegation in the plaints that the said marriage was held in Asura form the plaintiffs did not give any particulars or set tip any custom in the community to which the parties to the marriage belonged. They have adduced evidence to the effect that a sum of Rs. 1,000/ was paid as parisam by the Mannarcottai Zamindar to the bride 's father for taking the bride but both the courts having rightly held that the said payment was not established by the evidence erred in making out a case of a different consideration for the marriage. The first court held wrongly that the fact that Mannarcottai Zamindar spent Rs. 300/ to Rs. 575/for the marriage expenses would make it an asura marriage while the High Court went further and erroneously held that there was a general custom in the community to pay the bride 's price by way of giving Kambu grain and Kambu flour at the time of the settlement of marriage and that for the bridegroom 's party to bear the expenditure for celebrating the marriage and that in the case of Bangaru Ammal 's marriage the said Kambu was given and that the expenditure for the marriage was incurred by the Mannarcottai Zamindar presumably in pursuance of the practice existing in the community or in pursuance of an arrangement between the parties. Apart from the fact that no such custom was pleaded, there was no evidence to sustain the said custom. That apart the mere giving of Kambu as a ceremonial relic of the past or the bearing of the expenditure on the marriage wholly or partly by the bridegroom 's party could not be a bride 's price as contemplated by the Sastras, for the bride 's father in those events could not be said to have received any price for the bride. In short the learned counsel attacks both the legal and the factual findings arrived at by the High Court. The gist of the learned counsel for the Mr. Bheemasankaran 's contention may 254 be briefly stated thus: According to Dharam Shastras there were eight forms of marriage in Hindu Law, four approved and four unapproved. But as centuries rolled by most of them became obsolete and at present there are only two forms of marriage, Brahmu and Asura. Whatever may have been their comparative merits in the bygone days, they have now come to be recognized as two valid 1, forms of marriage that can be followed without any sense of inferiority by all the castes. Though in remote antiquity the Asura form of marriage night have involved a real sale transaction, at present it would be enough to constitute such a marriage if a ritual form was observed indicating the consciousness of the community or the parties contracting the marriage that it was an Asura marriage. This consciousness may be indicated by the ceremonial giving of Kambu at the time of betrothal or by the bridegroom 's party meeting the expenses wholly or substantially of the marriage. Thai apart in the present case there is clear evidence that the practice in the community to which Bangaru Ammal and her husband belonged that Kambu is given by the bridegroom 's party to the bride 's party at the time of betrothal and the bridegroom 's party bears the expenditure of the marriage which clearly indicate that the bride 's father or in his absence by the bride 's relatives entitled to give her away in marriage get a clear benefit for giving the bride, and further there is evidence that the said practice was followed in the case of Bangaru Ammal 's marriage. What is more to constitute a Brahmu marriage there should be a 'Kanyadhan ' but in this case it has been found that there was no 'Kanyadhan ' and therefore if the marriage of Bangaru Ammal could not have been in 'Brahma form ' it could have been only in the alternative form, namely Asura form. Before we advert to the arguments advanced we would like to make some general observations. 255 We are not concerned here with the relatives importance of the said two forms of marriages at the present day but only with the conditions laid down by Shastras for the said two forms of marriage and with a question as to which form was adopted in Bangaru Ammal 's marriage. Nor are we concerned with a question whether the institution of marriage in Brahmu form is now maintained in its original purity. We are also in these appeals not concerned with any customary form of marriage but only with a marriage sanctioned by Hindu Law, for no custom was pleaded in derogation of Hindu Law. But there may be a custom in a community not in derogation of the Hindu Law but in regard to the manner of complying with a condition laid down by Hindu Law. that is to say if the criterion for an Asura marriage was that there should be a sale of the bride, there may be a custom in a community in regard to the manner of paying the consideration ' for the sale. It may be mentioned that in this case the learned counsel for the respondents does not rely upon any custom even in the later sense but only on the practice obtaining in the community in support of the evidence that the said practice was followed in Bangaru Ammal 's marriage. The main question therefore is what are the ingredients of an Asura form of marriage. As the Manu Samhita has always been treated by sages and commentators from the earliest time as being of a paramount authority, let us look to it for guidance. The following verses from Manu Samhita as translated by Manmatha Nath Dutt Shastri read as follows: CHAPTER III, Verse 21: They (different types of marriages) are known as the Brahma, Daiva A 'raha, Prajapatya, A 'sura, Gandharva, Rakshasa and Paisacha, which forms the eighth. 256 Verse 24: The four forms of marriage the seers have ordained as proper for Brahmanas : only the Rakshasa form as proper for Kshatriyas, and the A 'sura form as proper for Vais 'yas and S 'udras. Verse 25: Thus out of these five forms of marriage, three are lawful, and two are sinful (unlawful). Let a man never marry a wife either in the Pisacha or in the A 'sura form since these two forms are prohibited. Verse 27: The form (of marriage) in which well attired bride, decorated with ornaments, is given in marriage to an erudite, good charactered bridegroom especially invited by the bride 's father himself to receive her, is called Brahma. Verse 31: The form, in which the bridegroom, on paying money to her father and to herself, out of the promptings, of his own desire, receives the bride in marriage, is called A 'sura. Verse 51 : An erudite father of a girl shall not take anything by way of Sulka from her bridegroom. By taking a dowry out of greed, he becomes the seller of his off spring. Verse 53: Even the acceptance of abovine pair (by the father of the bride from the bridegroom) is designated as a dowry by certain authorities, (the acceptance of) 257 a dowry be it costly, or be it of insignificant value, constitutes the sale of the girl. Verse 54 : A marriage in which the bride 's relations do accept the dowry (voluntarily presented by the bridegroom 's father, etc.) is no sale (of the bride), since such a present is but an adoration of the bride done out of love or affection. Verse 98 (of Chapter IX) Even a S 'udra must not take any price it. duty or pecuniary consideration) for the hands of his daughter when giving her away in marriage. Such acceptance of money constitutes a sale of the girl in disguise. The gist of the verses is that before Manu Smriti came into existence the A 'sura form was considered to be proper for Vaishs and Sudras but it was prohibited for the Brahmins and Kashatriyas. But Manu was emphatic that the said form of marriage was sinful for all castes including the Shudras. There is no ambiguity in the verses in regard to the general prohibition to all castes ' for Verse No. 98 emphasizes that even a S 'udra must not take any price for the hand of his daughter when giving away in marriage. The next question is what is the criterion of an A 'sura marriage according to Manu. A contrast between the terminology in the definition of Brahma marriage and that of A 'sura marriage brings out clearly his intention. The following words stand out in the definitions. They are 'dana ' (giving) 'Kanyapradanam ' (the taking of the bride), "Dravina ' (wealth), 'dattava ' (after having given), 'Saktitah ' (as much as he can), 'Svacchandya ' (as according to his will). The word 'Apradana ' is used in the 258 definition of A 'sura marriage in contradistinction to the word 'dana ' in Brahmu form of marriage, while a, in the Brahmu form of marriage the father makes a gift of the bride, in the A 'sura form the bridegroom takes the bride otherwise than by a gift. In the former the father gives the bride decorated with ornaments, while in the latter the bridegroom takes the bride after giving wealth to the father of the bride and the bride. While in the former the father voluntarily gives the bride in the latter the bridegroom out of his own will pays as much money as he can to the father and takes his bride. The words Saktitah ' and 'Svacchandya ' imply that the payment is made because the bridegroom can and the girl is taken because he wills that is to say a bridegroom who seeks the hand of a bride takes her as he can afford to buy her from her father. The transaction is equated to that of a sale, for all the ingredients of sale were present. If there is any ambiguity that is dispelled by Verse 51 and Verse 54. In Verse 51 Manu makes it clear that by taking a dowry out of greed the father becomes the seller of his off spring. 'Sulka ' means the taking of a gratuity or price. The expression 'dravina ' in Verse 31 is clarified by the use of the word 'Sulka ' in Verse 51. What is prohibited is Sulka or the price for the bride. Verse 54 brings out the distinction between 'Sulka ' or 'dravina ' paid by the bridegroom as a price for the bride and the dowry given for the bride as a present out of love or affection or in adoration of the bride. Verse 98 further empbasizes that what Manu prohibits is the sale of a bride for price. A 'sura marriage, according to Manu, is a transaction of sale in which the girl is sold for a price. Practically the same meaning though expressed in different phraseology is given by other Hindu Law givers. The following translations given by Max Muller in the "Sacred Books of the East ', of 259 the various sages may now be extracted Baudhayana text 1, II, 20 (7) '(If the bridegroom receives a maiden) after gladdening (the parents) by money (that is) the rite of the Asuras (asura). ' Verse 2 : 'Now they quote also (the following verses) It is declared that a female who has been purchased for money is not a wife. She cannot (assist) as sacrifices offered to the Gods or the manes. Kasyapa has stated that she is a slave. ' Baudhayana Prasad Adhyaya 11, Kandika 21 Verse 3 : 'Those wicked men who, seduced by agreed, give away a daughter for a fee, who (thus) fall (after death) into a dreadful place of punishment and destroy their family down to the seventh (generation). Moreover they will repeatedly die and be born again. All (this) is declared (to happen), if a fee (is taken ). , Vasishtha Chapter I Verse 35. 'If, after making a bargain (with the father, a suitor) marries (a damsel) purchased for money, that (is called) the Manusha rite. ' Narada Chapter XII Ver8e 42. When a price is (asked for the bride by the father and) taken (by him), it is the form termed Asura. 'Gautama, 'Chapter IV Verse 11. The form of marriage in which a bride is purchased for money, is called the A 'suram. ' 260 Vishnu Chapter XXIV Verse 24. If the damsel is sold (to the bridegroom), it is called an Asura marriage. 'Yagngavalkya ' : 'The asura by largely giving of money ; the Gandharva by mutual consent; the Rakshasa by forcible taking by waging war and Paisacha by deceiving the girl ' Translation of Srisachandra Vidyaamava : 1918 Edition page 126 : In the Mitakshara the said text is commented upon thus : .lm15 " The Asura marriage is that in which money is largely given (to the father and others in exchange for the girl). 'Apastamba ':"If the suitor pays money (for his bride) and marries her (afterwards) that (marriage is called) the Asura rite. ' 'Kautilya ': Arthasastra: Sulkadanat Asura ' the word used is "Sulka" Medhatithi, in his commentary on Verse 54 of Manu Samhita points out that the receipt of money or money 's worth for the benefit of the girl (Kanyarthe) does not amount to her sale, and is desirable as it tends to enhance her self esteem and also raises her in the estimation of others, and concludes with the observation that receipt of a dowry for the girl (kanyartham danagrahanam) is prescribed by thus stating the good arising from it (arthavadena) : Vide at 772. Apte 's Dictionary : page 239 : Col. III. Asura is explained thus : 'One of the eight forms of marriage in which the bridegroom purchase ; the bride from her father or other paternal kinsmen ' Manu 331 and Yagnayavalkya 1.61 are cited 261 The said sages and commentators accepted the view expressed by Manu and in effect described A 'sura marriage as the transaction where a bridegroom purchases a girl for a price paid to the father of the girl or to kinsmen who are en titled to give her in marriage. The distinction between the bride 's price and the presents to the bride is also recognized. The learned judges of the High Court relying upon the text of Apasthamba observed that 'the payment to the bride 's father is for the purpose of complying with Dharma and not as a consideration for an commercial transaction. The interpretation may explain away on Dharmic principles the sordid nature of the transaction, but does not detract from its essential incidents. We, therefore, hold that A 'sura marriage is nothing more than a transaction of marriage whereunder a bridegroom takes a bride for the price paid by him to the bride 's father or others entitled to give her and therefore in substance it is a sale of the bride. It is said that the incurring of the expenditure of the marriage by the bridegroom is also a consideration for giving the bride. In this context reliance is placed on the Law and Custom of Hindu Castes by Arthur Steel. This book was written in 1868. The author appears to have collected the laws and customs obtaining in the Presidency of Bombay, and had compiled them for the purpose of convenience of reference. At page 24 the author says: 'There are eight kinds of marriages recognized in the Sastras : 1, Brahm, where the charges are incurred solely by the girl 's father; x x x x x 5, Usoor, where she is taken in exchange for wealth, and married; this species is peculiar in the Wys and Soodra castes, B.S.(Mit), See Munoo, 3.20,34. It is considered as Uscorwiwuha, and stree soolk, and the money, if unpaid, is an unlawful debt, B 2, 199. The definition of Asura by the author does not carry the matter further, for it is consistent with that 262 given in the Hindu law Texts but what is relied upon is his definition of Brahmu marriage as one where charges are incurred solely by the girl 's father. From the said definition a converse proposition is sought to be drawn viz : that marriage would be Asura marriage if the charges were incurred mainly by the bridegroom 's father. Firstly the definition of Brahmu marriage by the learned Author does not conform with the definition of the said marriage by the lawgivers. Secondly it does not follow from the passage that if the bridegroom 's father incurs the expenditure the marriage is an Asura marriage. If that be so, the author would have stated in his definition of Asura marriage that such incurring of the expenditure would make a marriage an Asura marriage. This valuable compilation of the laws and customs of the day does not throw any light on the question now raised before us. Let us now see whether there is any merit in the contention that the concept of sale for a price has by progress of time lost its content and that at the present time a mere form of sale irrespective of a real benefit to the bride 's father would meet the requirements of an Asura , marriage. No text or commentary taking that view has been cited to us. Indeed the case law on the subject does not countenance any such subsequent development. The earliest decision on the subject cited to us is that ofthe Divisional Bench of the Bombay High Court "Jaikisondas Gopaldas vs Harkisondas Hulleshandas '.Green j, defines the Asura marriage at page 13 'The essential characteristic of the Asura form ofmarriage appears to be the giving of money or presents by the bridegroom or his family to the father or parental kinsmen of the bride,, or, in tact, a sale of the girl by her father or other relation having the disposal of her in marriage in (1) Bom. 9. 263 consideration of money or money 's worth paid to them by the intended husband or his family. ' In 'Vijarangam and Damodhar vs Lakshuman and Lakshmi ' (1) West j . gives in interesting background to the origin of the institution of the Asura marriage and observes: "Of the several Shastras called by the plaintiffs and the defendants in this case, all agree that the giving and receiving of money for the bride is the distinctive mark of the Asura form of marriage. " In 'Muthu Aiyar vs Chidambara Aiyar, the money was paid by the bridegroom 's people to the bride 's father to meet expenses of marriage. The Subordinate judge found on the evidence that the bride 's father received the money for his own purposes and not for bride 's benefit and therefore the marriage was an Asura one. The High Court in a short judgment accepted the finding and said. "it being found that a money payment was made to Thailu 's father we are not prepared to differ from the courts below in their opinion as to the nature of the marriage. " This decision is relied upon in support of the contention that where the bridegroom incurs the expenditure of the marriage such a marriage is Asura marriage. But this decision is not a considered one. The appeal being a second appeal, the learned judges accepted the finding of fact given by the Subordinate Judge, namely that the money payment was made to the bride 's father and were not prepared to differ from it. The disinclination of the learned judges to interfere in the second appeal on a question of fact cannot throw any light on the point that has directly arisen before us. Chandavarkar J. in 'Chunilal vs Surajram '(3) accepted the aforesaid definition when he said: 'Where the person who gives a girl in marriage received (1) (1871) 8 Born. F. C. Reports 244. (2) (3) Bom. 264 money consideration for it, the substance of the transaction makes it, according to Hindu Law, not a gift but a sale of the girl. The money received is what is called bride price; and that is the essential element of the Asura form. The fact that the rites prescribed for the Brahmu form are gone through cannot take it out of that category, if there was pecuniary benefit to the giver of the girl. The Hindu law givers one and all condemn such benefit and the Shastras, regarding it as an ineradicable sin, prescribe no penance for the sale of a bride. " The learned judge also accepted the presumption that every marriage under the Hindu Law is according to the Brahma form but it can be rebutted by evidence. In 'section Authikesavulu Chetty vs section Ramanujan Chetty ' (1) at the betrothal ceremony a married woman of the caste to which the parties belonged proceeded from the bridegroom 's house to the house of the bride carrying certain presents consisting of cocoanuts, betel and nut, garlands, black beads, saffron red powder, etc. in a tray. There was also a pagoda and a fanam in it. There was also an arrangement at that time that the bridegroom 's father had to pay certain amount to the bride and the bride 's father had also to give some jewels to the bridegroom. It was contended that the marriage was an Asura marriage. The learned judges said that the distinctive mark of the Asura marriage was the payment of money for the bride, and that the payment of a pagoda and 2 1/2 annas could not have been intended to be the consideration for the bride where the bride 's father spent thousands of rupees himself and gave presents of considerable value to the bride and the bridegroom. This decision, therefore, emphasises that mere payment of small amounts as a compliment to one of the parents cannot be treated as a consideration for the sale of the bride. It also lays down that all the circumstances of the case will have to be looked into to ascertain whether any amount was paid as price for the bride. (1) Mad. 265 A Divisional Bench of the Madras High Court in 'Gabrielnathaswmi vs Valliammai Ammal ' (1) negatived the contention that the mere fact that a bride 's parents received what is known as 'parisam ' it would lead to the conclusion that the marriage of the girl took place in Asura form and not in Brahma form. The learned judges observed: "It may be that parisum is a relic of what in old days was regarded as the price for the bride. x x x x The real test is whether in the community or among the parties the payment of 'parisam ' was tacitly understood as being substantially a payment for taking the girl in marriage. That will depend generally upon the evidence in the case. " They also reaffirmed the presumption under Hindu Law in; the following words : 'Ordinarily the presumption is that whatever may be the caste to which the parties belong, a marriage should be regarded as being in the Brahma form unless it can be shown that it was in the Asura form '. This decision deals with 'parisam ' with which we are also concerned in these appeals. This is an authority for the proposition that the use of the word 'parisam ' is not decisive of the question that it is a bride 's price, but that it must be established in each case whether the payment small or large, in cash or kind, is made as a bride 's price i. c. as consideration for the bride. In "Ratnathanni vs Somasundara Mudaliar" (2) a sum of Rs. 200/ was paid to the bride 's mother for the expenses of the marriage as a term of the contract of the marriage. On that finding Ramesam. ' J. concluded that the payment was made for the benefit of the bride 's mother as in the absence of the payment, she would have had to find the amount in some other way, by borrowing or pledging her jewels or other properties and therefore the marriage was in Asura form. The learned judge relied upon Steel 's observation that the parents should incur the expenditure of the marriage in the Brahma form and presumably (1) A.I.R. 1920 Mad. 884. (2) 266 drew a contrary inference that if the bridegroom 's party met the expenditure it would be an Asura marriage. The learned judge also relied upon that decision in 'Muthu Aiyar vs Chidambara Aiyar '(1). Spencer, J. in a separate judgement agreed with him. As we have pointed out we do not see any justification in the Hindu Law texts in support of the view that the bearing of the expenditure of the marriage by the bridegroom is a test of an Asura marriage. The fact that the expenditure of the marriage is borne by bridegroom 's party cannot in any sense of the term be a consideration given to the father for taking the bride. Ramesam J. sitting singly in 'Samu Asari vs Anachi Ammal ' (2) restated his view in a more emphatic form. He observed: 'It seems to me immaterial whether it is the whole of the expenses of the marriage or a substantial portion of it. To the extent the bride 's father gets contribution of that kind from the bridegroom 's father, he benefits by it; though he does not pocket it, but he spends for the marriage. . At the same time the learned judge observed that under certain circumstances payments made to the bride 's parents which are either small or relatively small having regard to the scale in which the expenses of the marriage are incurred do not make a marriage an Asura marriage. This decision therefore makes a distinction between courtesy presents given to the bride 's parents and whole or substantial portion of the expenditure incurred by the bridegroom 's father. While we agree that courtesy presents to the bride 's parents cannot by themselves conceivably make a marriage an Asura one, we find it difficult to hold that the incurring of expenditure by a bridegroom satisfies the test of consideration for the bride. In 'Kailasanatha Mudaliar vs Parasakthi Vadivanni ', (3) Varadachar J., speaking for the (1) (2) (3) Mad. 267 Court lays down the test of the Asura marriage in the following manner : "The distinctive feature of the Asura form of marriage is the giving of money or money 's worth to the bride 's father for his benefit or as consideration for his giving the girl in marriage. " The learned judge distinguishes the case of "Samu Asari vs Anachi Ammal ' (1) on the ground that there money was held to have been paid for the father 's benefit though utilized by him to meet the expense of the marriage which he must have defrayed out of his own fund and points out also the distinction between payment to the father for his own benefit and payments to the bride received by kinsmen not for their own use. In that case a jewel was presented by the bride 's father and placed on the bride 's neck at the time of the betrothal ceremony as ' parisam ' and the value of the jewel was not even the subject of a bargain but merely left to the pleasure of the bridegroom 's father. The learned judge observed that such a gift could in no sense be called bride 's price. In 'Sivangalingam Pillai vs K. V. Ambalavana Pillai, (2) the bride 's father gave a large amount and also jewels to the bride and plaintiff 's brother in law on behalf of the bridegroom gave the bride 's father a present of Rs. 1,000/ and a cloth worth Rs. 65/ . It was also agreed that all the expenses of the marriage should be borne by the bridegroom. It was contended that the said presents and the incurring of expenditure on the marriage was a consideration for the bride and therefore the marriage was in an Asura form. The Divisional Bench rejected the contention. Pandrang Row J. observed at page 481: "It is a well known fact that, whatever the custom is, the bridegroom and his people also spend a considerable sum of money in respect of the marriage whenever they can afford it. Such expenditure obviously does not convert the marriage which is otherwise in the Brahma form into one which is in (1) (2) A.I.R. 1938. 479. 268 the Asura form. " The learned judge proceeded to state at page 480 thus : "So far as our Presidency is concerned, all marriages among Hindus are presumed to be in the Brahma form unless it is proved that they were in the Asura form; in other words, it is incumbent on the party who alleges that a particular marriage was in the Asura form to prove that bride price was paid in respect of the marriage by the bridegroom or his people to the bride 's father" and the present given to the bride 's father the learned judge remarked that this customary present would not necessarily amount to payment of bride 's price. Abdur Rahman J., added that 'if a party wishes to assert that the marriage was Asuric in form, he must establish that some price was paid for the bride in pursuance of either of an express or implied contract to the bride 's father or on his account. " This judgment we may say so with respect puts the principle on a correct legal basis and brings out in bold relief the distinction between bird 's price on the one hand and the presents and the expenditure incurred in respect of the marriage by one or the other of the parties on the other hand Patanjali Sastri J., in 'V.S. Velavutha Pandaram vs section Suryamurthi Pillai ' (1) approached the case if we may say so from a correct perspective. There a sum of Rs.500/ was paid by the bridegroom to the bride 's father for the specific purpose of making jewels for the bride in pursuance of a stipulation for such gift as a condition of giving the girl in marriage. The learned, judge held that the said payment was not bride 's price and did not make the marriage an Asura marriage. The learned judge in passing referred to the case of 'Samu Asari vs Anachi Ammal ' (2), and observed as follows : " 'As the father was benefitted by such contribution in that he was relieved to that extent from defraying such expenses (1) (2) 269 himself, the marriage was one in the Asura form. This view has been criticised in the latest edition of Mayne 's Hindu Law as not really warranted by the Hindu Law texts, and the point may have to be reconsidered when it arises. " Patanjali Sastri, J., again considered this point in Second Appeal No. 2272 of 1945. There on the occasion of the marriage one sovereign was given along with the other presents to the bride 's father as Memmekkanoni. The question was whether the mere adoption of this customary form per se brought the marriage within the category of an Asura or unapproved marriage. The learned judge expressed the view that the payment of memekanom no longer signifies in substance and in truth consideration for the transfer of the girl but has survived as a token ceremonial payment forming part of the marriage ritual. The said judgment was confirmed by a Divisional Bench of the said High Court in 'Vedakummpprath Pillai Muthu appellant vs Kulathinkai Kuppan '. (1) Balakrishna Ayyar, J., speaking for the Bench neatly summarised the law on the subject at page 804 thus : "One essential feature of an Asura marriage, the feature which makes the form objectionable, is that the father of the bride receives a gratuity or fee for giving the girl in marriage. Ordinarily, it would be expected of every decent and respectable father when he selects a husband for his daughter to make his selection uninfluenced by any considerations other than the welfare of the girl. But when he receives a payment for his personal benefit, a very objectionable factor would influence his selection and it is clearly this which the ancient lawgivers took objection to and therefore relegated the form to the category we call 'disapproved '. When the father accepts money and allows his greed or avarice to sway his judgment, he thereby converts what is intended to be a sacrament into a commercial transaction. " With respect we are in full agreement with the observations of the learned judge. Commenting upon the (1) 270 argument built upon the payment of one sovereign to the bride 's father the learned judge observed : "In most, though not necessarily in all cases, the payment has lost all its original significance and survives only as a ritualistic form '; it has become a ceremonial symbol devoid of any content or meaning or purpose. x x x x Now when a father gives such a large amount as stridhanam and receives one sovereign in compliance with traditional form it would be very wrong to say that he had been selling or mortgaging the girl and that he received the sovereign from greed or love of gain. " The foregoing discussion leads to the following results . Under Hindu Law marriage is a sacrament and it is the religious duty of the father to give his daughter in marriage to a suitable person but if he receives a payment in cash or in kind as a consideration for giving his daughter in marriage he would be converting a sacrament into a commercial transaction. Brahma marriage satisfies the said test laid down by Hindu Law. But from Vedic times seven other forms of marriage were recognized based on custom and convenience. Asura form is one of the eight forms of marriage. The essence of the said marriage is the sale of a bride for a price and it is one of the unapproved forms of marriage prohibited by Manu for all the four castes of Hindu society. The vice of the said marriage lies in the receipt of the price by the bride 's father or other persons entitled to give away the bride as a consideration for the bride. If the amount paid or the ornaments given is not the consideration for taking the bride but only given to the bride or even to the bride 's father out of affection or in token of respect to them or to comply with a traditional or ritualistic form, such payment does not make the marriage an A 'sura marriage. There is also nothing in the texts to indicate that the bearing 271 of the expenditure wholly or in part by the, bridegroom or his parents is a condition or a criterion of such a marriage, for in such a case the bride 's father or others entitled to give her in marriage do not take any consideration for the marriage, or any way benefit thereunder. The fact that the 'bridegroom 's party bears the expenditure may be due to varied circumstances. Prestige, vanity, social custom, the poverty or the disinclination of the bride 's father or some of them may be the reasons for the incurring of expenditure by bridegroom 's father on the marriage but the money so spent is not the price or consideration for the bride. Even in a case where the bride 's father though rich is disinclined to spend a large amount on the marriage functions and allows the bridegroom to incur the whole or part of it, it cannot be said that he has received any consideration or price for the bride. Though in such a case if the bridegroom 's father had not incurred the said expenditure in whole or in part, the bride 's father might have to spend some money, on that account such as indirect result could not be described as price or consideration for giving the bride. Shortly stated Asura marriage is a marriage where the bride 's father or any other person entitled to give away the bride takes Sulka or price for giving the bride in marriage. The test is two fold: There shall not only be a benefit to the father, but that benefit shall form a consideration for the sale of the bride. When this element of consideration is absent, such a marriage cannot be described as Asura marriage. As the Asura marriage does not comply with the strict standards of Hindu Law it is not only termed as an unapproved marriage, but it has been consistently held that whenever a question arises whether a marriage is a Brahmu or Asura, the presumption is that the marriage is in Brahma form and the burden is upon the person who asserts the con trary to prove that the marriage was either an Asura or any other form. 272 With this background let us look at the facts of the case. Though in both the plaints it is stated that Bangaru Ammal had been married in Asura form, no particulars are given but in the evidence the plaintiff 's witnesses in one voice depose that the custom in the Rakambala caste to which Bangaru Ammal and her husband belonged, is to give money in the shape of 'parisam ' to the bride 's father at the time of the betrothal. The witnesses who depose to Bangaru Ammal 's marrage say that at the time of her betrothal a sum of 1,000/ was paid as ' parisam '. Both the Courts did not accept this evidence and they held that it had not been established that a sum of Rs. 1,000/ was paid as 'parisam ' at the time of the betrothal of Bangaru Ammal. This finding is not attacked before us. It is argued that the evidence discloses that there is a practice in the said caste to give Kambu as IT parisam ' to the bride 's father as a bride 's price and the said practice supports the evidence that in the case of the marriage of Bangaru Ammal also such a 'parisam ' was paid as consideration for the marriage. On the question of the said alleged practice the evidence does not support it. P. W. I to P. W. 10 depose. that "parisam ' is paid in cash for marriages in their community varying from Rs. 150/ to Rs. 1,000/ . This evidence has been rightly ' disbelieved by both the courts. The evidence does not bear out the case of giving of 'parisam ' in Kambu. Some of the witnesses also depose to the payment of Rs. 1000/ as 'parisam ' at Bangaru Ammal 's marriage but that was not accepted by the courts. The evidence destroys the case that 'parisam ' was paid at her marriage in Kambu. No witness examined in the two cases says that Kambu is paid at the marriages of the members of the community or was paid at the time of Bangaru Ammal 's marriage as a consideration for the marriage but it is said that the witnesses who had been 273 examined in the earlier suit whose evidence has been marked by consent in the present case deposes to that fact. Errammal, the mother of Bangaru Ammal, whose evidence is marked as P. 11 (R) deposes that when Thevaram Zamindar married her the 'parisam ' was only Rs. 1,000/ and that when her daughter was married, the 'parisam ' was also Rs. 1000/ . In cross examination she says that according to the custom of the community, it is the practice to bring a mapelli for the nischithartham (betrothal function) and it is customary also to bring cumbu and flour at the time of the marriage and sprinkle it in the marriage hall. This evidence indicates that the 'parisam ' is only given in cash but Kambu is brought at the time of the marriage and sprinkled in the marriage hall presumably for the purpose of purification. This evidence does not show that Kambu is given as "parisam ' for taking the bride. Sermalai Naicker who gave evidence in an earlier suit which is marked as P. 11 (a) belongs to Rajakambala caste. In his chief examination he says that he paid Rs. 200/ as 'parisam ' at the time of the marriage and paid Rs. 300/ as "parisam ' for the marriage of his son and received Rs. 200/ as 'parisam ' for the marriage of his daughter. In cross examination he says that on the betrothal day only one kalam of cumbu and cash are given to the bride 's party and that the Kambu is used by the bride 's people and that at the time of the marriage 3 or 4 marakkals of cumbu are again brought which is thrown over the bride and the bridegroom byway of blessing. He adds that throwing of the kambu is a ritual in marriage ceremonies and that Kambu and cash are called "Parisam '. This evidence brings out the distinction between cash paid as the 'Parisam ' and Kambu brought to conform with the traditional ritual. 274 R.W. 3 in the earlier suit whose evidence is marked as D. 317 says that he was a guru of the Rajakambala caste and that he performed the marriage of Moolipatti zamindar. He further says that Kambu is taken by the bridegroom 's party to the bride 's house when the betrothal takes place and that seven pieces of jaggery, a cloth etc. are also taken and that no money is given in the caste. We do not see how this evidence supports the practice of paying kambu as 'parisam '. indeed his evidence shows that Kambu is taken only as a part of the ritual and he is definite that no 'parisam ' is paid in the caste. Ramasami Naicker Zamindar of Ammaianaickoor. was examined in the previous suit and his evidence is marked as D 416. He is definite in the chief examination that no 'parisam ' is paid in his community. He says that it is rather undignified to receive 'Parisam ' and that he has not seen any parisam paid in his caste. Whether this witness is speaking truth or not, his evidence does not support the plaintiff. From the aforesaid evidence it is not possible to hold that either there is a practice in the Rajakambala family to give Kambu as 'parisam ' for the bride or kambu was paid as 'parisam ' at the time of the betrothal ceremony in connection with Bangaru Ammal 's marriage. Reliance is placed upon Nelson 's Manual of the Madhura Country published in 1.865. At page 82 of Part II in that /Manual the following passage appears : "After this, the price of the bride, which consists usually of 7 kalams of kambu grain, is solemnly carried under a canopy of white cloth towards the house of the bride 's father 275 its approach being heralded by music and dancing. The procession is met by the friends of the bride who receive the price, and allege together to the bride 's house. " Similarly, in Thurston 's Castes and Tribes of Southern India published in 1902 in Volume VII under the heading 'Thotti Naickers ' at page 192, the following passage is given "The bride price is 7 kalams of Kambu and the couple may cat only this grain and horsegram until the wedding is over. " The evidence adduced in this case does not support the said statement. Even if those formalities are observed, they are only the relics of the past. That practice represents only a symbolic ritual which. has no bearing upon the reality of the situation. Indeed the witnesses in the present case realizing the ritualistic character of the said observances seek to base the case of the Plaintiffs on a more solid foundation but have miserably failed in their attempt. These passage s therefore do not help the plaintiffs. The next question is whether the expenditure for the marriage was incurred by the bridegroom 's party i. e. by the Mannarcottai Zamindar. The learned Subordinate judge held on the evidence that Thevaram Zamindar spent a large amount of money for the marriage but the Mannarcottai Zamindar also spent a sum of Rs. 300/ or Rs. 575/ for the marriage expenses. He expressed the view that if the matter was res integra, he would have held that the incurring of such an expenditure by the bridegroom 's party would not have made the marriage. an Asura marriage but felt bound by some of the decisions 276 of the Madras High Court to come to the opposite conclusion. The learned judges of the High Court came to the conclusion that the marriage expenses in their entirety were borne by the Mannarcottai Zamindar and it must have been either in pursuance of the custom or arrangement among the community. The evidence as regards the custom of the bride groom 's party incurring the expenses of the marriage is unconvinc ing. Indeed the learned counsel for the respondent does not rely upon custom but he prefers to base his case on the finding of the High Court that the entire marriage expenditure was incurred by the Mannarcottai zamindar. Let us now consider the evidence in this regard in some detail. P.W. 1 says in his evidence that Bangaru Ammal was the only child of the Thevaram Zamindar, that he was very affectionate to her and that he spent heavily for the marriage though he was not able to say how much he spent. P. W. 4 also says that Thevaram Zamindar gave her lot of jewels and finally gave her his entire estate. The evidence that Thevaram Zamindar spent large amounts on the marriage and gave lot of jewels to Bangaru Ammal must be true, for even in 1895 when the marriage of Bangaru Ammal took place it is inconceivable that the marriage would have been celebrated with a few hundred rupees that was given by the Mannarcottai zamindar. He must have spent much larger amount than that consistent with his status and position in life and particularly when he was celebrating the marriage of his only daughter. Now coming to the documentary evidence in support of the contention that Mannarcottai Zamindar met the entire expenditure, the respondents relied upon P. , P. and P. is a letter dated August 8, 1885, written by persons representing the Mannarcottai zamindar to the 277 Thevaram Zamindar office. Therein he stated :"You should soon get ready there all the materials and samans for the shed and 'Panthal ' in connection with muhurtham. We will start and come without fail". This letter does not show that Mannarcottai Zamindar gave the money for the materials and samans for the said 'Panthal '. It was only an intima tion that everything should be made ready for the marriage as Mannarcottai people would be coming there without fail. Exhibit P. 23 is the account of expenditure incurred on Bangammal 's marriage from 1.9.1895 to 5.9.1895. It is said that it represents the amount spent on behalf of Mannarcottai zamindar and the amount recouped from him. The document is not very clear. The account does not appear to represent the entire expenditure incurred at the time of marriage because the entry about charges for pounding 50 kalams of paddy shows that 50 kalams of paddy must have been supplied from Thevaram stores and there is nothing on the account to show that 50 kalams were purchased on Mannarcottai account. Be that as it may this account only shows that Mannarcottai zamindar paid about Rs. 300/ but the learned counsel for the respondents argued relying upon exhibit P. 27 that even the balance of Rs. 295/14/in exhibit P. 23 shown as the excess amount spent by Thevaram Estate was paid off by the Mannarcottai zamindar to the Thevaram Zamindar. Exhibit P. 27 is an entry dated September 30, 1885 in the account book of Thevaram Zamindar. It show that the Maha raja meaning Thevaram Zamindar gave to Thevaram office Rs. 290. It does not establish the respondent 's version. The only merit of the contention is that the two figures approximate each other. If that figure represents the amount paid by Mannarcottai Zamindar to Thevaram in full discharge of the amount due from the former to the latter, the entry would have run to the effect that the balance of the amount due from Mannarcottai under Ex.p.23 was paid and it would have been credited in Mannarcottai 278 account. It may have been that the sum of Rs. 290/was the balance out of the amount that Thevaram Zamindar took with him when he went to Mannarcottai for meeting his expenditure. The other accounts P. 25 and P. 26 filed in the case are neither full nor clear and no definite conclusion could be arrived at on the basis of the said account. We therefore hold on the evidence and probabilities that Thevaram Zamindar had spent large amounts in connection with the marriage and Mannarcottai zamindar spent only about Rs. 300/ in connection with the said marriage. Such a finding does not bring the marriage within the definition of Asura marriage as explained by us. earlier. The expenditure incurred by the bridgegroom 's party was not and could not have been the consideration for the Thevaram Zamindar giving his daughter in marriage. It is contended that the High Court found that there was no 'Kanyadhan ' at the time of the Bangaru Ammal 's marriage and as 'Kanyadhan ' was necessary ingredient of Brahmu marriage, Bangaru Ammal could not have been married in that form. The High Court relying upon the evidence of Veluchami Naicker who is stated to be the Guru of the caste held that 'Kanyadhan ' had not been observed in Bangaru Ammal 's marriage. The learned counsel for the appellant contests the correctness of the finding and he relies upon some invitations in support of his contention that 'Kanyadhan ' was observed in Bangaru Ammal 's marriage but the documents are not clear on the, point. The Guru only narrates some of the ceremonies held in marriages in the community but he does not expressly state that the ceremony of 'Kanyadhan ' was not observed at Bangaru Ammal 's marriage. In this state of evidence the presumption in. Hindu Law that the marriage was performed in Brahmu form must be invoked. As we have pointed out under the Hindu Law whether a marriage was in Brahmu form or Asura form the Court will presume 279 even where the parties are Shudras that it was in the Brahmu form. Further where it is proved that the marriage was performed in fact the Court will also presume that the necessary ceremonies have been performed. See 'Mauji Lal vs Chandrabati Kumari '(1). This presumption has not been rebutted in this case. That apart the argument of the learned counsel for the respondents mixes up an essential ingredient of the Brahmu marriage, namely the gift of the girl to the bridegroom with a particular form of ritual adopted for making such a gift. In both forms of marriages a girl is given by father or in his absence by any other person entitled to give away the girl to the bridegroom. In the case of Brahmu marriage it takes the form of a gift while in the case of Asura marriage as price is paid by the bridegroom, ,it takes the form of a sale. As we have held that in Bangaru Ammal 's marriage no consideration passed from the bridegroom to the bride 's father, the father must be held to have made a gift of the girl to the bridegroom. To put in other words there was 'Kanyadhan ' in Bangaru Ammal 's marriage. We therefore reject this contention. Lastly reliance is placed on the conduct of the appellant in not questioning the correctness of the finding given by the learned Subordinate judge in his application for delivery that the marriage was in Asura form. The learned counsel for the appellant sought to explain his conduct but in our opinion nothing turns upon it. If the marriage was not in Asura form as we held it was not, the conduct of the appellant could not possibly make it an Asura marriage. In this view it is not necessary to give opinion on the other questions raised in the appeals. In the result the decrees of the High Court are set aside and both the suits are dismissed with costs throughout. One hearing fee. Appeals allowed (1) (1911) L.R. 38 I.A.122.

The main question involved in both the appeals was whether the marriage of Bangaru Ammal was in Asura form or in Brahma form. The contention of the appellant was that it was not in Asura form. Except a bare allegation in the plaint that the said marriage was held in Asura form, the plaintiffs did not give any particulars or set up any custom in the community to which the parties to the marriage belonged. They had given evidence that 'a sum of Rs. 1000 was paid as 'Parisam ' to the father of bride but that evidence had been rejected by both the courts. Respondents pointed out to the giving of Kambu by bridegroom 's party to the bride 's party at the time of betrothal and expenditure of Rs. 300/ by bridegroom 's party in connection with the marriage of Bangaru Ammal and maintained that it was Asura marriage. Held, that the marriage of Bangaru Ammal was not in Asura form but in Brahma form. There was nothing to show that there was a practice in the family to give Kambu as 'Parisam for the bride or Kambu was paid as 'parisam ' at the time of the betrothal ceremony in connection with the marriage of Bangaru Ammal. The father of the bride had spent large amounts and the bridegroom 's party had spent only about Rs. 300/ in connection with the said marriage. The expenditure incurred by the bridegroom 's party was not and could not have been the consideration for the father giving his daughter in marriage. There is a presumption in Hindu Law that every Hindu marriage is in Brahma form and that pre sumption has not been rebutted in this case. The court was entitled to presume that the necessary ceremony of Kanyadan must have been performed. As no consideration passed from the bridegroom to the father of the bride, the father must be held to have made a gift of the girl to the bridegroom. 245 The essence of the Asura marriage is the sale of a bride for a price and it is one of the unapproved forms of marriage prohibited by Manu for all the four castes of Hindu society. The vice of the said marriage lies in the receipt of the price by the bride 's father or other persons entitled to give away the bride as a consideration for the bride. If the amount paid or the ornament given is not the consideration for taking the bride but only given to the bride or even to the bride 's father out of affection or in token of respect to them or to comply with a traditional or ritualistic form, such payment does not make the marriage an Asura marriage. There is also nothing in the texts to indicate that the bearing of the expenditure wholly or in part by the bridegroom or his parents is a condition or a criterion of such a marriage, for in such a case the bride 's father or others entitled to give her in marriage do not take any consideration for the marriage, or in any way benefit thereunder. The fact that the bridgeroom 's party bears the expenditure may be due to varied circumstances. Prestige, vanity, social custom, the poverty or the disinclination of the bride 's father or some of them may be the reasons for the incurring of expenditure by bridegroom 's father on the marriage but the money so spent is not the price or consideration for the bride. Even in a case where the bride 's father, though rich, is disinclined to spend a large amount on the marriage functions and allows the bridegroom to incur the whole or part of it, it cannot be said that he has received any consideration or price for the bride. Though in such a case if the bridegroom 's father had not incurred the said expenditure in whole or in part, the bride 's father might have to spend some money on that account, such an indirect result could not be described as price or consideration for giving the bride. Asura marriage is a marriage where the bride 's father or any other person entitled to give away the bride takes Sulka or price for giving the bride in marriage. The test is two fold. There shall not only be a benefit to the father, but that benefit shall form a consideration for the sale of the bride. When this element of consideration is absent, such a marriage cannot be described as Asura marriage. Jaikisondas Gopaldas vs Harikisandas Hulleshandas Born. 9, Vijarangam vs Lakshman, (1871) 8 Born. H. C. Report. 244, Muthu Aiyar vs Chidambara Aiyar, , Chunilal vs Surajram, (1909) I. L.R. 33 Born. 433, section Authikesayulu Chetty vs section Ramanvjan Chetty" (1909) 1. L. R. , Gabrielnathaswami vs Valliammai Ammal, A. 1. R. , Ratnathanni vs Somasundara 246 Mudaliar, , Samu Asari vs Anachi Ammal, ; Kailasanath Mudaliar vs Parasakthti Vadivanni, Mad. 488, Sivangalingam Pillai vs K. V. Ambalayana Pillai, A. 1. R. ; V. section Velavutha Pandaram vs section Suryamurthi Pillai (1941) 2 M. L. J. 770 and Vedakummapprath Pillai vs Kulathinkai Kuppan, , referred to.

Civil Appeal No. 1148 1979. From the Judgment and Order dated 4.4.1979 of the Delhi High Court in S.A.O. No. 103 of 1979. P.H. Parekh and A.K. Gupta for the Appellant. 940 Dr. U.R. Lalit, C.M. Oberai and D.N. Misra for the Respondent. The Judgment of the Court was delivered by NATARAJAN, J. This appeal by special leave is directed against a judgment of the Delhi High Court dismissing the second appeal preferred by the appellant herein to impugn the order passed against him in execution proceedings taken under Section 21 of the Delhi Rent Control Act 1958 by the Rent Controller and confirmed by the Rent Control Tribunal. The respondent, a Government official who has since retired from service is the owner of a house bearing number A/15, Naraina Vihar, New Delhi. During the year 1976, the respondent was residing in Government Quarters situated in Kidwai Nagar, New Delhi. On June 1, 1976 the respondent and the appellant appeared before the Rent Controller and sought for permission of the Rent Controller for the rear portion of the ground floor being leased out for a period of 18 months to the appellant under Section 21 of the Delhi Rent Control Act (hereinafter referred to as the Act). Besides filing the application, the parties gave their declarations before the Rent Controller. The respondent declared that he was the owner of the premises No. A 15, Naraina Residential Scheme, Delhi, that he did not require the rear portion of the ground floor as shown in the plan Exhibit A 1 for his own use. that as such he wanted to let out the same to the appellant for residential purpose at a monthly rent of Rs.500 exclusive of water and electricity charges for a period of 18 months with effect from June 1, 1976 as per proposed lease deed Exhibit A 2. The appellant for his part declared that he had heard the statement of the respondent and he accepted the same as correct, that he wanted to take on lease the rear portion of the ground floor of the re spondent 's house as marked in plan Exhibit A I for his residence on a monthly rent of Rs.500 exclusive of water and electricity charges for a period of 18 months with effect from June 1, 1976 as per the terms contained in the draft lease deed Exhibit A 2 and further declared that he "shall vacate the premises on the expiry of the aforesaid period of 18 months. " Thereupon the Rent Controller passed an order as under: "Having regard to the averments made in the petition and the statements of the parties recorded above, permission under Section 21 of the Delhi Rent Control Act, 1958 is granted to the petitioner for letting out the aforesaid por 941 tion of the aforesaid house as detailed in the statement of the petitioner to the respondent for residential purpose for a period of 18 months with effect from today, the 1st of June, 1976. File be consigned to the record room. " It was the case of the respondent in the execution application filed by him that pursuant to the above said permission granted by the Rent Controller, the appellant was inducted into possession of the leased portion on June 2, 1976, that the period of lease came to an end on November 30, 1976 and that as the appellant failed to deliver posses sion on December 1, 1977 as undertaken by him, he had to file the application under Section 21 for recovering posses sion of the leased portion. The said execution application was filed on December 12, 1977. The appellant contested the application and raised a three fold defence as under: (1) He had been inducted into possession as a tenant on May 28, 1976 itself, i.e. before the Rent Controller gave permission to the lease transaction by his order dated June 1. 1976 and that as such the tenancy was not governed by the order passed under section 21 of the Act by the Rent Con troller. (2) Though the leased portion was taken on rent for being used as a residence, the parties by mutual arrangement had agreed soon after the lease to make the proprietary concern of the appellant viz. M/s. Refaire Projects Corpora tion the tenant of the premises and as such the firm was the tenant and not the appellant and hence the execution appli cation against the appellant was not maintainable. After the period of tenancy was over, a fresh tenancy was entered into governing not only the leased portion of the ground floor on a higher rent of Rs.550 P.M. but also covering a garage and servants quarters on a monthly rent of Rs. 150 and by reason of the new tenancy the respondent was disentitled to file an execution application. The Rent Controller and the Rent Control Tribunal, after a due consideration of the materials placed before the court by the parties, rendered concurrent findings to the effect that the tenancy came into effect only by reason of the permission granted by the Rent Controller under Section 21, that the several pleas of the tenant viz. a tenancy 942 coming into existence even prior to the order of the Rent Controller, a subsequent modification of the tenancy so as to make the firm the tenant and a fresh tenancy being creat ed so as to cover an additional area and on revised rental terms were all untenable and baseless contentions. Both the authorities therefore allowed the execution application and directed the appellant to deliver possession of the leased premises. Before the High Court, in the second appeal preferred by the appellant, the question of a fresh tenancy on revised terms of lease was again sought to be canvassed but the High Court very rightly declined to examine the matter as the exercise would call for appraisal of evidence on factual matters which is in the domain of the Trial Court and the first Appellate Court and would also necessitate sitting in judgment over concurrent findings of facts rendered by the courts below. It was then urged before the High Court that there was no agreement in writing as required under Section 21 of the Act and hence the permission granted by the Rent Controller was not a valid one on the strength of which an execution application can be filed. The High Court rejected this contention stating that inasmuch as the parties had made statements before the Rent Controller and duly signed them, there was sufficient compliance with the terms of Section 21 and it was not necessary that there should be a separate agreement in writing over and above the draft agreement and the statements rendered before the Rent Con troller. The High Court also briefly went into the question whether the proprietary concern of the appellant had become the tenant and whether thereby the use of the premises had been changed from residential to non residential purpose and found the contentions of the appellant to be wholly devoid of merit. The High Court therefore dismissed the second appeal and hence the present appeal by special leave by the tenant. Mr. Parekh, learned counsel for the appellant, realising the futility of canvassing once over again the unsuccessful defences raised before the courts below and the High Court, sought to assail the judgment of the High Court and the order in the Execution Application on two grounds alone viz. (1) the permission obtained by the respondent from the Rent Controller under Section 21 was in fraud of the statute and (2) an important condition prescribed by Section 21 was not fulfilled. It has to be mentioned even here that these contentions had not been raised before the Rent Controller and the Appellate Tribunal or even before the High Court. 943 In so far as the first contention is concerned, the appellant has alleged in the special leave petition that the respondent had been obtaining permission from the Rent Controller under Section 21 on several occasions for leasing out different portions in the ground floor as well as the first floor of the house to different tenants for short periods in order to deprive the tenants of their rights conferred by the Act and also to get higher rent from each successive tenant. The respondent has controverted these averments in his counter affidavit. Mr. Parekh submitted that the appellant was not setting up a new case because he had given the details of the names of the previous tenants and the portions occupied by them and the periods for which short term leases were granted to them after obtaining permission from the Rent Controller under Section 21 of the Act and as such there were enough materials before the Court to show that the respondent had been abusing the provisions of Section 21 and playing a fraud upon the statute and obtaining permission for leasing out portions of the house to several tenants for limited durations and as such the permission granted by the Rent Controller in this case is vitiated by the fraud committed by the respondent and hence the execution application filed by the respondent was not at all maintainable. It is true we find that in the objections filed by the appellant to the execution application, he has given some particulars regarding the names of some tenants to whom the other portions of the building had been let out by the respondent after obtaining permission from the Rent Controller under Section 21. But significantly enough, the appellant had not pursued the matter and substantiated the charge of fraud levelled by him. He has not cross examined the respondent with reference to the leases granted earlier by him to other tenants nor has he adduced independent evidence to prove the factum of those leases and such leases being granted by abuse of the provisions of Section 21. In the absence of factual materials to show the abuse or misuse of the provisions of Section 21, it is not possible for us to sustain the contention of the appellant 's counsel that the respondent had practised fraud on the Rent Controller and obtained permission under Section 21 to lease out a portion of the house to the appellant because a plea per taining to fraudulent practice is a mixed question of fact and law. Without the requisite foundation on facts to prove a wilful contravention or abuse of a provision of law a finding cannot be rendered as to whether a party has commit ted a fraud by abusing any legal provision. Besides, it has to be borne in mind that even if the respondent had let out the ground floor portions and the first floor of the build ing to other tenants on earlier occasions by having recourse to Section 21 of the Act, the respondent may have done so on the basis of bona .fide grounds and 944 genuine calculations and his calculations may have gone wrong due to factors or events beyond his control. Learned counsel invited our attention to the decisions rendered in S.P. Noronah vs Prem Kumari Khanna, 1 and V.S. Rahi vs Ram Chambeli, ; and argued that the respondent had suppressed material facts from the Rent Controller when he asked for permission under Section 21 of the Act to lease out the premises in question to the appellant for eighteen months, and furthermore the Rent Controller had passed his order granting permission under Section 21 without the application of mind. Similar contentions were raised before us in the case of Inder Mohan Lal vs Ramesh Khanna (C.A. No. 468 of 1977) in which judg ment has been rendered by us on 4.8. 1987. The whole gamut of Section 21, the object underlying the provision, the field of its operation and the correct ratio to be applied in dealing with cases pertaining to Section 21 have been elaborately considered by us in the light of the earlier decisions of this Court and some of the decisions rendered by the Delhi High Court. We have pointed out therein that in order to attract Section 21 four conditions have to be satisfied viz. (1) the landlord does not require the whole or part of any premises for a particular period, (2) the landlord must obtain the permission of the Controller in the prescribed manner, (3) the letting of the whole or part of the premises must be for residential purposes only; and (4) such letting out must be for such period as may be agreed to in writing. After analysing the decision in Noronah 's case the resultant position emerging under law has been summa rised as follows: "An analysis of this judgment which has been applied in the various cases would indicate that Section 21 only gives sanction if the landlord makes a statement to the satisfaction of the court and the tenant accepts that the landlord does not require the premises for a limited period, this statement of a landlord must be bona fide. The purpose must be for residence. There must not be any fraud or collusion. There is a presumption of regulari ty. But it is open in particular facts and circumstances of the case to prove to the satisfaction of the executing court that there was collusion or conspiracy between the land lord and the tenant and the landlord did not mean what he said or that it was a fraud or that the tenant agreed because the tenant was wholly unequal to the landlord. " 945 Viewed in this light it may be seen that the respondent herein has satisfied all the tests prescribed in Noronah 's case. The respondent was a Government servant and was living in Government quarters allotted to him. He had an apprehen sion that the allotment of the Government quarters may be cancelled because of his owning a house and so he had to provide for any contingency resulting from the cancellation of the allotment of Government quarters to him, and hence he felt he would be able to spare the leased premises only for a limited period. There was no material before the Rent Controller to establish or even to arouse suspicion that the respondent was playing a fraud on the statute. In such circumstances the order passed by the Rent Controller cannot be said to be vitiated in any manner. It would also be pertinent to point out in this context that if the Rent Controller had reason to suspect the bona fides of the respondent 's application under Section 21, the Rent Control ler could only have declined to grant his permission for the lease transaction and, if he had done so, the lease transac tion would not at all have come to pass through. The Rent Controller could not have compelled or directed the respond ent to give the premises on lease to the appellant for an indefinite period of time so as to enable the appellant to have the benefit of the statutory protection afforded by the Act against eviction except on one or more of the grounds set out in Section 14. In so far as Rahi 's case (supra) is concerned, the facts therein were totally different and they were instrumental for the court declining to sustain the landlady 's application under Section 21 for eviction of the tenant. The evidence in the case established that the land lady had previously let out the identical portion of the house to other tenants but still she had made a false decla ration before the Rent Controller that she had never let out the portion to any one earlier. Furthermore her statement that after the lease period was over her mother would be joining her and the leased portion would be required for her was found to be false because the lady in question was not her mother but an aunt whom the landlady claimed to be her foster mother. It was therefore a case where the permission under Section 21 had been obtained on the basis of false declarations and statements. In the present case no such false declaration had been made by the respondent when he sought the permission of the Rent Controller under Section 21. On the other hand we are inclined to agree with the argument of the respondent 's counsel that the facts of the case call for the court taking the view which it had taken in the case of Dhanwanti vs D.D. Gupta, (AIR In that case it was observed that there may be certain cases where the owner, after obtaining permission under Section 21 of the Act had let out the premises for a limited period and after the expiry of the said 946 period he may have again found it necessary to obtain per mission to let out the premises for another limited period due to genuine causes and therefore, the mere fact of let ting out of the premises once again by having resort to Section 21 of the Act for a limited period should not neces sarily lead to the inference that from the very beginning the premises were available for letting out indefinitely. In the instant case there is no evidence except the averment of the appellant that the respondent had let out the leased portion on earlier occasions also for limited periods by having resort to Section 21. However even if that statement is true there cannot be an automatic inference that the permission granted by the Rent Controller pertaining to the lease of the premises to the appellant had been obtained by fraudulent means by the respondent. Apart from these things there is also another factor which weakens the objections raised by the appellant and denudes them of force and content. He has waited for the full term of the lease to raise objections about the re spondent playing a fraud on the statute. He has failed to put forth these objections within a reasonable time after the permission was granted by the Rent Controller to impugn the order on the ground of the alleged fraud perpetrated by the respondent. It was observed by this Court in J.R. Vohra vs India Export House, ; at 911 912 that the remedy available to a tenant in a case where there was only a ritualistic observance of the procedure while granting permission for the creation of a limited tenancy or where such permission was procured by fraud practised by the landlord or was a result of collusion between the strong and the weak, would be for the tenant approaching the Rent Controller during the currency of the limited tenancy itself for adjudication of his pleas as soon as he discovers facts and circumstances that tend to vitiate ab initio the initial grant of permission and not to wait till the landlord makes his application for recovery of the premises after the expiry of the period fixed under Section 21. We are, therefore, unable to sustain the first ground of attack of the appellant 's counsel to assail the judgment of the High Court. In so far as the second ground is concerned, this aspect of the matter also has been considered by us and dealt with in a detailed manner in Inder Mohan Lal 's case. After notic ing the decisions of the Delhi High Court which have held the field all along declaring that Section 21 is a complete Code by itself and that a permission granted under Section 21 would not become invalid either on account of the 947 landlord failing to disclose the reasons for non requirement of the leased premises for a particular period or because of the landlord and the tenant not entering into an agreement in writing subsequent to the grant of permission under Section 21 or on account of the agreement of tenancy in writing not being subsequently registered, this Court af firmed the decisions of the Delhi High Court laying down the above ratio in observance of the settled judicial policy that in the matter of interpretation of a local statute the law settled by the High Court over a continuous period of time should be normally adhered to and should not be dis turbed. The relevant passage in the judgment reads as fol lows: "Learned counsel for the appellant also stressed before us that Section 21 of the Rent Act was a complete Code by itself. The order was under section 21 of the Rent Act. No further question of lease or registered lease arose thereafter. This question has been settled by series of decisions of the Delhi High Court upon which people have acted for long. See the decision in Kasturi Lal vs Shiv Charan Das Mathur, [1976] Rent Control Reporter Vol. 8 703 where at pages 708 709 Misra J. of the Delhi High Court had clearly indicated numer ous cases where it was held that Section 21 was a Code by itself. The order of the permis sion is itself an authority; no lease was necessary and if that is the state of law in Delhi, it is too late in the day to hold otherwise. See the observations of this Court in Raj Narain Pandey and others vs Sant Prasad Tewari & others; , where this Court observed that in the matter of the interpretation of a local statute, the view taken by the High Court over a number of years should normally be adhered to and not to be disturbed. A different view would not only introduce an element of uncertainty and confu sion but it would also have the effect of unsettling transactions which might have been entered into on the faith of those decisions. In Delhi, transactions have been completed on the basis of permission and it was never doubted that there was any requirement of any lease or any agreement subsequent to the order and the same required registration. There is therefore, no merit in the second contention of the appellant 's counsel that since the lease transaction was not reduced to 948 writing in terms of Exhibit A 2 subsequent to the grant of permission by the Rent Controller, the terms of Section 21 are not fulfilled and hence the execution application under Section 21 would not lie. In the light of our conclusions the appeal has to fail and it will accordingly stand dismissed with costs to the respondent. P.S.S Appeal dis missed.

The respondent, a government official, while residing in Government quarters sought permission of the Rent Controller under section 21 of the Delhi Rent Control Act, 1958 for leasing out a portion of his house to the appellant for residential purposes for 18 months as he did not require it for his own use for that period. The appellant declared before the Rent Controller that he accepted the statement of the respondent and that he shall vacate the premises on the expiry of the period of 18 months. The Rent Controller, thereupon, passed an order granting permission in terms of the declaration. When after expiry of the stipulated period the appellant failed to vacate the leased portion, the respondent filed an execution application for recovering possession. The Rent Controller as well as the Appellate Authority rendered concurrent finding to the effect that the tenancy came into effect only by reason of the permission granted by the Rent Controller under section 21 and directed the appellant to deliver possession to the respondent. In second appeal before the High Court it was contended by the appellant that since the lease agreement was not reduced to writing, as required under section 21 of the Act, the permission granted by the Rent Controller was not valid. Dismissing the appeal the High Court held that in as much as the parties had made statements before the Rent Controller and duly signed them, there was sufficient compliance with the terms of section 21 and it was not necessary that there should be a separate agreement in writing over and above the draft agreement and the statements rendered before the Rent Controller. 938 In the appeal by special leave, the contention taken before the High Court was reiterated, and in addition it was contended for the first time that the permission obtained by the respondent from the Rent Controller under section 21 was in fraud of the statute inasmuch as he had been obtaining such permission on several occasions for short periods in order to deprive the tenants of their rights under the Act. Dismissing the appeal, HELD: 1.1 A plea pertaining to fraudulent practice is a mixed question of fact and law. Without the requisite foun dation on facts to prove a wilful contravention or abuse of a provision of law a finding cannot be rendered as to wheth er a party has committed a fraud by abusing any legal provi sion. [943FG] 1.2 In the instant case, the appellant had not cross examined the respondent with reference to the lease granted earlier by the respondent to other tenants nor had he ad duced independent evidence to prove the factum of those leases and such leases being granted by abuse of the provi sions of section 21 of the Delhi Rent Control Act, 1958. In the absence of factual material to show the abuse or misuse of the provisions of section 21, it cannot be said that the respond ent had practised fraud on the Rent Controller in obtaining permission. Besides, even if the respondent had let out different portions of the building to other tenants on earlier occasions by having recourse to section 21 he may have done so on the basis of bona fide grounds and genuine calcu lations and his calculations may have gone wrong due to factors or events beyond his control. The mere fact of letting out of the premises once again by resort to section 21 for a limited period should not necessarily lead to the inference that from the very beginning the premises were available for letting out indefinitely. [943EF, G 944A, 946A] Dhanwanti vs D.D. Gupta, (AIR referred to. 1.3 The respondent was a government servant and was living in Government quarters. He had an apprehension that the said allotment may be cancelled because of his owning a house and so he had to provide for any contingency resulting from such cancellation and hence he felt he would be able to spare the leased premises only for a limited period. There was no material before the Rent Controller to establish or even to arouse suspicion that the respondent was playing a fraud on the statute. In such circumstances the order passed by the Rent Controller cannot be said to be vitiated in any manner. [945AB] 939 S.B. Noronah vs Prem Kumari Khanna, ; , applied. V.S. Rahi vs Ram Chambeli, ; , distinguished. The appellant has waited for the full term of the lease to raise objections about the respondent playing a fraud on the statute. He has failed to put forth these objections within a reasonable time, after the permission was granted by the Rent Controller, to impugn the order on the ground of the alleged fraud perpetrated by the respond ent,. This factor weakens the objections raised by the appellant and denudes them of force and content. [946CD] J.R. Vohra vs India Export House, ; at 911 912, referred to. In the matter of interpretation of a local statute the law settled by the High Court over a continuous period of time should normally be adhered to and should not be disturbed. The Delhi High Court has consistently held that section 21 of the Delhi Rent Control Act, 1958 is a complete Code by itself, and a permission granted thereunder would not become invalid either on account of the landlord failing to disclose the reasons for non requirement of the leased premises for a particular period or because of the landlord and the tenant not entering into an agreement in writing subsequent to the grant of permission under section 21 or on account of the agreement of tenancy in writing not being subsequently registered. A different view would not only introduce an element of uncertainty and confusion but it would also have the effect of unsettling transactions which might have been entered into on the faith of those deci sions. [947B, 946H 947A, FG] Inder Mohan Lal vs Ramesh Khanna (C.A. No. 468 of 1977) decided on 4.8.1987; Raj Narain Pandey & Ors. vs Sant Prasad Tewari & Ors., ; and Kasturi Lal vs Shiv Charan Das Mathur, [1976] Rent Control Reporter, Vol. 8 p. 703, referred to.

Civil Appeal No. 1258 of 1969. From the Judgment and Decree dated 17 2 1969 of the Kerala High Court in Writ Appeal No. 45 of 1968. V. A. Seyid Mohammed and K. M. K. Nair for the Appellant. Ex Parte for the Respondent. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. The perennial, nagging problem of delegated legislation and the so called Henry VIII clause have again come up for decision in this appeal by the State of Kerala. Section 60 of the Madras Cooperative Societies Act 1932 and a notification issued under that provision were struck down by the High Court of Kerala on the ground of unconstitutional delegation of legislative power. Certain consequential directions were issued by the High Court. Those directions have long since worked themselves out and so the party who invoked the jurisdiction of the High Court under Article 226 of the Constitution has no longer any surviving interest. The State of Kerala is, however, interested in sustaining the validity of Section 60 and has filed this appeal. Lawyers and judges have never ceased to be interested in the question of delegated legislation and since the case, we 262 have been blessed(?) by an abundance of authority, the blessing not necessarily unmixed. We do not wish, in this case, to search for the precise principles decided in the case, nor to consider whether N. K. Papiah & Sons vs Excise Commissioner(1) beats the final retreat from the earlier position. For the purposes of this case we are content to accept the "policy" and "guidelines" theory and seek such assistance as we may derive from cases where near identical provisions have been considered. It is trite to say that the function of the State has long since ceased to be confined to the preservation of the public peace, the exaction of taxes and the defence of its frontiers. It is now the function of the State to secure to its citizens 'Social, economic and political justice ', to preserve 'liberty of thought, expression, belief, faith and worship, ' and to ensure 'equity of status and of opportunity ' and 'the dignity of the individual ' and the 'unity of the nation. That is what the Preamble to our Constitution says and that is what is elaborated in the two vital chapters of the Constitution on Fundamental Rights and Directive Principles of State Policy. The desire to attain these objectives has necessarily resulted in intense legislative activity touching every aspect of the life of the citizen and the nation. Executive activity in the field of delegated or subordinate legislation has increased in direct, geometric progression. It has to be and it is as it should be. The Parliament and the State Legislatures are not bodies of experts or specialists. They are skilled in the art of discovering the aspirations, the expectations and the needs, the limits to the patience and the acquiescence and the articulation of the views of the people whom they represent. They function best when they concern themselves with general principles, broad objectives and fundamental issues instead of technical and situational intricacies which are better left to better equipped full time expert executive bodies and specialist public servants. Parliament and the State Legislatures have neither the time nor the expertise to be involved in detail and circumstance. Nor can Parliament and the State Legislatures visualise and provide for new, strange, unforeseen and unpredictable situations arising from the complexity of modern life and the ingenuity of modern man. That is the raison d 'etre for delegated legislation. That is what makes delegated legislation inevitable and indispensable. The Indian Parliament and the State Legislatures are endowed with plenary power to legislate upon any of the subjects entrusted to them by the Constitution, subject to the limitations imposed by the Constitution itself. The power to legislate carries with it the power to delegate. But excessive delegation may amount to abdication. Delegation unlimited may invite 263 despotism uninhibited. So the theory has been evolved that the legislature cannot delegate its essential legislative function. Legislate it must by laying down policy and principle and delegate it may to fill in detail and carry out policy. The legislature may guide the delegate by speaking through the express provision empowering delegation or the other provisions of the statute, the preamble, the scheme or even the very subject matter of the statute. If guidance there is, wherever it may be found, the delegation is valid. A good deal of latitude has been held to be permissible in the case of taxing statutes and on the same principle a generous degree of latitude must be permissible in the case of welfare legislation, particularly those statutes which are designed to further the Directive Principles of State Policy. In Harishankar Bagla and Anr. vs The State of Madhya Pradesh,(1) the question arose whether Section 3 of the Essential Supplies (Temporary Powers) Act, 1946, which empowered the Central Government to make orders providing for the regulation or prohibition of the production, supply and distribution of essential commodities and trade and commerce therein was void for excessive delegation. The Court said it was not and observed: ". the legislature cannot delegate its function of laying down legislative policy in respect of a measure and its formulation as a rule of conduct. The Legislature must declare the policy of the law and the legal principles which are to control any given cases and must provide a standard to guide the officials or the body in power to execute the law. The essential legislative function consists in the determination or choice of the legislative policy and of formally enacting that policy into a binding rule of conduct. In the present case the legislature has laid down such a principle and that principle is the maintenance or increase in supply of essential commodities and of securing equitable distribution and availability at fair prices. The principle is clear and offers sufficient guidance to the Central Government in exercising its powers under section 3". In The Edward Mills Co. Ltd., Beawar vs The State of Ajmer(2), this Court considered the question whether section 27 of the Minimum Wages Act under which power was given to the Government to add to either part of the schedule any employment in respect of which it was in its opinion that minimum wages should be fixed exceeded the 264 limits of permissible delegation and was, therefore, unconstitutional. The Court held that the legislative policy was apparent on the face of the enactment which aimed at the statutory fixation of minimum wages with a view to obviate the chance of exploitation of labour. The intention of the Legislature was not to apply the Act to all industries but only to those industries where by reason of unorganised labour or want of proper arrangements for effective regulation of wages or for other causes the wages of labourers in a particular industry were very low. In enacting section 27 there was, therefore, no delegation of essential legislative power. In Pandit Banarsi Das Bhanot vs The State of Madhya Pradesh(1), this Court held that it was not unconstitutional for the Legislature to leave it to the Executive to determine details relating to the working of taxation laws such as the selection of persons on whom the tax is to be laid, the rates at which it is to be charged in respect of different classes of goods and the selection of goods in respect of which exemption from taxation might be granted etc. In Sardar Inder Singh vs The State of Rajasthan(2), the validity of s.15 of the Rajasthan (Protection of Tenants) Ordinance which authorised the Government to exempt any person or class of persons from the operation of the Act was upheld and the argument that there was impermissible delegation of legislative power was repelled on the ground that the Preamble to the Ordinance set out with sufficient clarity the policy of the Legislature. In Vasantal Maganbhai Sanjanwala vs The State of Bombay(3), section 6 (2) of the Bombay Tenancy & Agricultural Lands Act was challenged as permitting excessive delegation of legislative power as it enabled the Government to fix a lower rate of the maximum rent payable by the tenants of lands situate in any particular area or to fix such rate on any suitable cases as it thought fit. This Court noticed that the Act was undoubtedly a beneficent measure, as shown by the Preamble which stated that the object of the Act was to improve the economic and social conditions of peasants and ensure the full and efficient use of land for agricultural. Bearing in mind the Preamble and the material provisions of the Act, it was held that the power delegated was within permissible limits. 265 In Jyoti Pershad vs The Administrator for the Union Territories of Delhi,(1) Rajagopala Ayyangar, J. made some useful observations which may be extracted here: "In regard to this matter we desire to make two observations. In the context of modern conditions and the variety and complexity of the situations which present themselves for solution, it is not possible for the Legislature to envisage in detail every possibility and make provisions for them. The Legislature therefore is forced to leave the authorities created by it an ample discretion limited, however, by the guidance afforded by the Act. This is the ratio of delegated legislation, and is a process which has come to stay, and which one may be permitted to observe is not without its advantages. So long therefore as the Legislature indicates, in the operative provisions of the statute with certainty, the policy and purpose of the enactment, the mere fact that the legislation is skeletal, or the fact that a discretion is left to those entrusted with administering the law, affords no basis either for the contention that there has been an excessive delegation of legislative power as to amount to an abdication of its functions, or that the discretion vested is uncanalised and unguided as to amount to a carte blanche to discriminate. The second is that if the power or discretion has been conferred in a manner which is legal and constitutional, the fact that Parliament could possibly have made more detailed provisions, could obviously not be a ground for invalidating the law. " In Mohammad Hussain Gulam Mohammad vs The State of Bombay,(2) the question was about the vires of section 29 of the Bombay Agricultural Produce Markets Act. It gave power to the State Government to add to, or amend, or cancel any of the items of agricultural produce specified in the schedule in accordance with prevailing local conditions. The attack was on the ground that legislative power had been delegated to an extent not permissible. The Court while noticing that section 29 itself did not provide for any criterion for determining which item of agricultural produce should be put into the schedule, nevertheless upheld its vires on the ground that guidance was writ large in the various provisions and the scheme of the Act. It was observed that in each case the State Government had to consider whether the 266 volume of trade in the produce was of such a nature as to give rise to wholesale trade so as to merit inclusion in the schedule. Let us now turn to section 60 of the Madras Cooperative Societies Act, 1932 whose vires is in question and which is as follows: "section 60: The State Government may, by general or special order, exempt any registered society from any of the provisions of this Act or may direct that such provisions shall apply to such society with such modifications as may be specified in the order. " The provision is a near Henry VIII clause. But to give it a name is not to hang it. We must examine the preamble, the scheme and other available material to see if there are any discernible guidelines. Sure the Cooperative Societies Act is a welfare legislation. Its preamble proclaims: "Whereas it is expedient further to facilitate the formation and working of co operative societies for the promotion of thrift, self help and mutual aid among agriculturists and other persons with common economic needs so as to bring about better living, better business and better methods of production and for that purpose to consolidate and amend the law relating to co operative societies in the State of Madras." The policy of the Act is there and so are the guidelines. Why the legislation ? "To facilitate the formation and working of Cooperative Societies". Cooperative Societies, for what purpose ? "For the promotion of thrift, self help and mutual aid". Amongst whom ? "Among agriculturists and other persons with common economic needs". To what end ? "To bring about better living, better business and better methods of production". The objectives are clear; the guidelines are there. There are numerous provisions of the Act dealing with registration of societies, rights and liabilities of members, duties of registered societies, privileges of registered societies, property and funds of registered societies, inquiry and inspection, supersession of committees of societies, dissolution of societies, surcharge and attachment, arbitration etc. We refrain from referring to the details of the provisions except to say that they are generally designed to further the objectives set out in the preamble. But, numerous as the provisions are, they are not capable of meeting the extensive demands of the complex situations which may arise in the course of the working of the Act and the formation and the functioning of the societies. In fact, the too rigorous application of some of the provisions of the Act may itself occasionally result 267 in frustrating the very objects of the Act instead of advancing them. It is to provide for such situations that the Government is invested by section 60 with a power to relax the occasional rigour of the provisions of the Act and to advance the objects of the Act. Section 60 empowers the State Government to exempt a registered society from any of the provisions of the Act or to direct that such provision shall apply to such society with specified modifications. The power given to the Government under section 60 of the Act is to be exercised so as to advance the policy and objects of the Act, according to the guidelines as may be gleaned from the preamble and other provisions which we have already pointed out, are clear. We are therefore of the view that section 60 is not void on the ground of excessive delegation of legislative power. We so declare and otherwise dismiss the appeal. N.V.K. Appeal dismissed.

Section 60 of the Madras Cooperative Societies Act, 1932, empowers the State Government to exempt a registered society from any of the provisions of the Act or to direct that such provision shall apply to such society with specified modifications. In the appeal to this Court on the question whether Section 60 of the Act is void on the ground of unconstitutional delegation of legislative power. ^ HELD: 1. Section 60 is not void on the ground of excessive delegation of legislative power. [267 C] 2. The power given to the Government under section 60 of the Act is to be exercised so as to advance the policy and objects of the Act, according to the guidelines enunciated in the preamble and the other provisions of the Act.[267 B] 3. The Act, a welfare legislation, to facilitate the formation and working of cooperative societies consists of numerous provisions, dealing with registration of societies, rights and liabilities of members, duties of registered societies, privileges of registered societies, property and funds of registered societies, inquiry and inspection, supersession of committees of societies, dissolution of societies, surcharge and attachment, arbitration etc. The too rigorous application of some of the provisions of the Act may itself occasionally result in frustrating the very objects of the Act instead of advancing them. To provide for such situations, the Government was invested by section 60 with a power to relax the occasional rigour of the provisions of the Act and to advance the objects of the Act.[266 D, G; H 277 A] 4. (i) Parliament and the State Legislatures are endowed with plenary power to legislate upon any of the subjects entrusted to them by the Constitution, subject to the limitations imposed by the Constitution itself. The power to legislate carries with it the power to delegate. While excessive delegation may amount to abdication, delegation unlimited may invite despotism uninhibited. The theory has therefore been evolved that the legislature cannot delegate its essential function. [262 H 263 A] (ii) The Parliament and the State Legislatures are not bodies of experts or specialists. They are skilled in the art of discovering the aspirations, the expectations and the needs, the limits to the patience and the acquiescence and the articulation of the views of the people whom they represent. They function best when they concern themselves with general principles, broad objectives and 261 fundamental issues instead of technical and situational intricacies which are better left to better equipped full time expert executive bodies and specialist public servants. Parliament and the State Legislatures have neither the time nor the expertise to be involved in detail and circumstance. Nor can Parliament and the State Legislatures visualise and provide for new, strange, unforeseen and unpredictable situations arising from the complexity of modern life and the ingenuity of modern man. That is the raison d 'etre for delegated legislation. [262 E G] (iii) The Legislature may guide the delegate by speaking through the express provision empowering delegation or the other provisions of the statute, the preamble, the scheme or even the very subject matter of the statute. If guidance there is, wherever it may be found the delegation is valid. A generous degree of latitude must be held permissible in the case of welfare legislation, particularly these statutes which are designed to further the Directive Principles of State Policy. [263 B] ; , M. K. Papiah & Sons vs Excise Commissioner ; Harishankar Bagla and Anr. vs The State of Madhya Pradesh [1955] 1 S.C.R., p. 380 @ 388: The Edward Mills Co. Ltd., Beawar vs The State of Ajmer ; Pandit Banarsi Das Bhanot vs The State of Madhya Pradesh ; Sardar Inder Singh vs The State of Rajasthan, Vasantlal Maganbhai Sanjanwala vs The State of Bombay, ; Jyoti Prasad vs The Administrator for the Union Territory of Delhi ; Mohammad Hussain Gulam Mohammad vs The State of Bombay, ; , referred to.

vil Appeal Nos. 1930 33 of 1989. From the Judgment and Order dated 24.9.87 of the Patna High Court in C.W.C. Nos. 489,501,502 and 1173 of 1982 (R). G. Ramaswamy, Additional Solicitor General, Girish Chandra and C.V.S. Rao for the Appellants. M.C. Bhandare, R.S. Meratia, S.S. Johar and A. Mariarpu tham for the Respondents. The Judgment of the Court was delivered by KULDIP SINGH, J. The coal resources in the country have been brought under State ownership and control by The Cook ing Coal Mines (Nationalisation) Act, 1972 (hereinafter called 'the Cooking Act ') and the Coal Mines (Nationalisa tion) Act, 1973 (hereinafter called 'the Coal Act '). These Acts completely divest the ownership rights in the mines from the owners to the Central Government. The Acts provide for payment of specified amount to each of the owners in lieu of 458 take over. Out of the said amount the claims of the credi tors of the owner and other liabilities against him are to be satisfied and the balance, if any, is to be paid to the owner. The Acts further provide for accrual of interest on the payable amount for the procedural period. Section 18(5) of the Coal Act and Section 21(5) of the Cooking Act provide that the interest accruing on the amount shall enure to the benefit of the owners of coal mines. The short question for consideration in these appeals is whether the amount of interest which accrues under the Act is to be paid in its entirety to the owner or the same is also available along with the principal amount for disburse ment to the claimants of the owner. The provisions of the Cooking Act and the Coal Act are identical. Both the Acts were enacted with the same object and purport, one relating to the Cooking Coal mines and the other to the coal mines. The Learned Counsel at the hearing referred to the Coal Act. We may briefly notice the scheme of the said Act. Section 2 gives definitions. Section 3 transfers the rights, title and interest of owners in relation to the coal mines and vests tile same in the Central Government. Section 5 empowers the Central Government to direct vesting of such rights in a Government company. Section 6 makes the vesting of all properties in the Central Government free from mort gage, charge, lien or any other incumbrance. Section 7 provides that the Central Government or Government company shall not be liable for liabilities incurred by the owners prior to the take over. Under Section 8 the owner of every coal mine shall be given by the Central Government in cash and in the manner specified under the Act the amount men tioned in the Schedule to the Act. Section 9(2) provides for payment of simple interest at the rate of 4% from the date on which the Coal Act received the assent of the President upto the date when the amount is paid by the Central Govern ment to the Commissioner. Section 17 provides for appoint ment of Commissioner of payments by the Central Government for the purpose of disbursing the amounts payable to the owner of each coal mine. Section 18(1) lays down that the Central Government shall within 30 days from the specified date pay in cash to the Commissioner for payment to the owner of a coal mine, an amount specified in the Schedule and also other amount payable to the owner under Section 9. Section 18(2) provides further amount due to the owner in lieu of management of the coal mine by the Central Govern ment and simple interest at the rate of 4% on such amount. Under Section 18(3) a deposit account is to be opened by the Central Govern 459 ment in favour of the Commissioner in the Public Account of India and every amount paid under the Act to the Commission er has to be deposited by him to the credit of the said deposit account which is to be operated by the Commissioner. Section 18(4) directs the Commissioner to maintain separate records in respect of each coal mine in relation to which payments have been made to him under the Act. Section 18(5) provides that interest accruing on the amounts standing to the credit of the deposit account shall enure to the benefit of the owners of coal mines and shall also be payable to the Commissioner in addition to the sum referred to in sub section (1). Under Section 20 every person having a claim against the owner of a coal mine has to prefer such claim before the Commissioner within thirty days from the speci fied date. Sections 21 and 22 give first priority to the claims to arrears of wages, provident fund, pension fund, gratuity fund or any other fund established for the welfare of the persons employed by the owner of a coal mine. Next come the secured creditors of the owners. Under Section 23 the Commissioner adjudicates the claims and can accept or reject the same. Section 24A provides that where any amount is payable in respect of a claim admitted under the Act, the interest payable on such amount for any period shall be at such rate not exceeding the rate of interest accruing on any amount deposited by the Commissioner under Section 18. Finally under Section 26 if out of the moneys paid to the Commissioner in relation to a coal mine, there is a balance left after .meeting the liabilities of all the secured and unsecured creditors, he shall disburse such balance to the owner of such coal mine. Relevant provisions of the Coal Act are reproduced hereinaf ter. "Section 3 Acquisition of rights of owners in respect of coal mines (1) On the appointed day, the right, title and interest of the owners in relation to the coal mines specified in the Schedule shall stand transferred to, and shall vest absolutely in, the Central Government free from all incumbrances. " "Section 8 Payment of amount to owners of coal mines(1) The owner of every coal mine or group of coal mines specified in the second column of the Schedule, shall be given by the Central Government, in cash and in the manner specified in Chapter VI, for the vesting in it, under Section 3, of the right, title and interest of the amount specified against it in the corresponding entry in the fifth 460 column of the Schedule." "Section 17 Commissioner of Payments to be appointed (1) For the purpose of disbursing the amount payable to the owner of each coal mine or group of coal mines, the Central Government shall appoint such person as it may think fit to be the Commissioner of Payments." "Section 18 Payment by the Central Government to the Commissioner. (1) The Central Govern ment shall, within thirty days from the speci fied date, pay, in cash, to the Commissioner for payment to the owner of a coal mine, an amount equal to the amount specified against the coal mine in the Schedule and shall also pay to the Commissioner such sums as may be due to the owner of a coal mine under Section 9. (2) In addition to the sum referred to in sub section (1), the Central Government shall pay, in cash, to the Commissioner, such amount as may become due to the owner of a coal mine in relation to the period during which the management of the coal mine remains vested in the Central Government, and simple interest at the rate of four per cent per annum on such amount for the period commencing on the 1st day of July, 1975 and ending on the date of payment of such amount to the Commis sioner. (3) A deposit account shall be opened by the Central Government, in favour of the Commissioner, in the Public Account of India, and every amount paid under this Act to the Commissioner shall be deposited by him to the credit of the said deposit account in the Public Account of India, and thereafter the said deposit account shall be operated by the Commissioner. (4) Separate records shall be main tained by the Commissioner in respect of each coal mine in relation to which payments have been made to him under this Act. Amended (5) Interest accruing on the amounts standing to the credit of the deposit account referred to in sub section (3) shall enure to the benefit of the owners of coal mines and shall also be payable to the Commissioner in addition 461 to the sum referred to in sub section (1). Unamended (5) Interest accruing on the amounts standing to the credit of the deposit account referred to in subsection (3) shall enure to the benefit of the owners of the coal mines. (6) Reference in this section to the owner of a coal mine shall, in relation to a group of coal mines specified in the Schedule, be construed as references to the owner of that group of coal mines. " "Section 24 Disbursement of money by the Commissioner to claimants Where, after meet ing the claims admitted by him, of secured creditors, and unsecured creditors having priority under sub section (2) of Section 22, the total amount of claims of other unsecured creditors admitted by the Commissioner, does not exceed the total amount of the money cred ited to the account of a coal mine, every such admitted claim shall be paid in full and the balance, if any, shall be paid to the owner, but where such amount is insufficient to meet in full the total amount of the admitted claims, all such claims shall abate in equal proportions and be paid accordingly ." "Section 24A Interest on admitted claims Notwithstanding any award, decree or order of any court, tribunal or other authori ty, passed before the appointed day, in rela tion to any coal mine, where any amount is payable in respect of a claim admitted under this Act, the interest payable on such amount for any period after the appointed day shall be at such rate not exceeding the rate of interest accruing on any amount deposited by the Commissioner under Section 18." "Section 26 Disbursement of amounts to the owners of coal mines (1) If out of the moneys paid to him in relation to a coal mine or group of coal mines specified in the second column of the Schedule, there is a balance left after meeting the liabilities of all the secured and unsecured creditors, the Commis sioner shall disburse such balance to the owner of such coal mine or group of coal mines. " 462 The scheme of the Coal Act and the bare reading of its provisions make it clear that the Commissioner has to adju dicate the claims of creditors of the mine owners in accord ance with the priorities. The claims accepted by the Commis sioner, are to be satisfied out of the amount payable to the mine owners and the balance left after meeting the claims of all the secured and unsecured creditors, is to be paid to the owners of the coal mines. The High Court has accepted the contention of the mine owners and has held that the interest accrued under the Coal Act cannot be made available to the Commissioner for meeting the claims of the creditors of the mine owner or to satisfy their other liabilities. According to the High Court whole of the interest amount is to be exclusively given to the mine owners and the claims and liabilities are to be satis fied only out of the principal amount payable to the mine owners under the Coal Act. To support these conclusions the High Court has given three reasons which we may presently examine. The High Court 's conclusions are primarily based on the interpretation of Section 18(5) of the Coal Act. The High Court has quoted the meaning of words "enure" and "benefit" from various dictionaries. No dictionary or any out side assistance is needed to understand the meaning of these simple words in the context and scheme of the Coal Act. The interest has to enure to the benefit of the owners of the coal mines. The claims before the Commissioner under the Coal Act are from the creditors of the owners and the li abilities sought to be discharged are also of the owners of the coal mines. When the debts are paid and the liabilities discharged, it is only the owners of coal mines who are benefited. Taking away the interest amount by the owners without discharging their debts and liabilities would be unreasonable. They have only to adopt delaying tactics to postpone the disbursement of claims and consequently earn more interest. Due to such delay the owner would get huge amount of interest though ultimately he may not get a penny out of principal amount on the final settlement of claims. It would amount to conferring unjust benefit on the owners which can never be the intention of the Parliament. We do not agree with the interpretation given by the High Court and hold that the interest accruing under the Coal Act is the money paid to the Commissioner in relation to the coal mine and the same has to be utilised by the Commissioner in meeting the claims of the creditors and discharging other liabilities in accordance with the provisions of the Coal Act. The High Court noticed that apart from providing priorities for 463 claims the Parliament has also indicated the accounts from which such claims are to be satisfied. According to the High Court since no mention has been made therein with regard to the recovery of any amount of claim out of the interest the same cannot be used for that purpose and has to be exclu sively paid to the owners. We do not agree with the reason ing. Under Section 18(5) of the Coal Act the interest accru ing on the amount standing to the credit of the deposit account shall also be payable to the Commissioner in addi tion to the sum referred to in sub section (1) of Section 18. Section 26 further provides that out of the moneys paid to the Commissioner in relation to the coal mine if there is a balance left after meeting the liabilities of all the secured and unsecured creditors, such balance shall be disbursed to the owner of the coal mine. It cannot be dis puted that the interest paid to the Commissioner under Section 18(5) is money paid to him in relation to a coal mine and as such it has to be utilised in meeting the claims of the creditors of the mine owners and their other liabili ties. Even otherwise interest amount in the present context has no separate entity. As the lamb belongs to the owner of the sheep, the interest goes with the principal. The inter est accrued under the Coal Act is thus, part of the kitty out of which the claims and liabilities are to be met. The High Court has further held that under Section 26 of the Coal Act moneys paid to the Commissioner in relation to a coal mine do not include the money accrued by way of interest. There is no basis for this interpretation. The plain reading of Section 26 read with Section 18(5) of the Coal Act makes it clear that moneys paid to the Commissioner in relation to a coal mine are to be used for satisfying the debts and liabilities. Interest amount accrued under the Coal Act is undoubtedly money in relation to coal mine and as such it squarely comes within the ambit of Section 26 of the Coal Act. The amended Section 18(5) of the Coal Act which escaped the notice of the High Court provides that the amount of interest accruing on the amounts standing to the credit of the deposit account is also payable to the Commissioner. Section 22(3) of the Coal Act makes the assets, in the hands of Commissioner, available for satisfying the debts in order of priorities. The assets of the erstwhile owner lying in the hands of the Commissioner of payment would include the interest which has been paid to the Commissioner under Section 18(5). Similarly Section 24 of the Coal Act says that unsecured creditors will be paid out of the money credited to the account of coal mine. Moneys credited to the account of coal mine also include interest. It is thus clear from the scheme and plain reading of various provisions of the 464 Coal Act that the interest amount has to be made available to the Commissioner to meet the debts and liabilities. We may refer to Section 24A of the Coal Act which fixes the maximum interest payable to the successful claimants. It is provided that interest shall be paid at such rate not exceeding the rate of interest accruing on any amount depos ited by the Commissioner under Section 18. Had the Parlia ment intended to give interest to the owners, there would have no necessity for fixing the maximum limit of interest payable to the claimant with reference to the rate of inter est accruing to the scheduled amount. The two acts being identical whatever we have said about the Coal Act is equally applicable to the Cooking Act. We, therefore, see no legal or equitable grounds to sustain the judgment of the High Court. The appeals are accepted, judgment of the High Court is set aside and the writ petitions of the respondents filed in the High Court are dismissed. There shall be no order as to costs. G.N. Appeals allowed.

The (Coke Act) and the (Coal Act) divested the ownership rights in the mines from the owners to the Central Government. The Acts provided for payment in lieu of take over. The payment was to be made to the respective owners after discharging their liabilities. The Acts also provided for accrual of interest on the amount payable, for the procedural period. Some of the owners filed writ petitions before the High Court claiming that the interest accrued exclusively be longed to owners and the same was not available for dis bursement to the claimants of the owners. The High Court allowed the writ petitions, and held that the interest accrued under the Coal Act Cannot be made available to the Commissioner for meeting the claims of the creditors of the mine owners and it is to be exclusively given to the mine owners. The present appeals, by special leave, challenge the said decision of the High Court. Allowing the appeals, HELD: 1. It is clear from the scheme and plain reading of the various provisions of the Coal Act that the interest amount has to be made available to the Commissioner to meet the debts and liabilities. The Commissioner has to adjudi cate the claims of creditors of the mine owners in accord ance with the priorities. The claim, accepted by the Commis sioner, are to be satisfied out of the amount payable to the mine owners and the balance left after meeting the claims of all the 456 secured and unsecured creditors, is to be paid to the owners of the coal mines. [462A, B] 2.1. The High Court 's conclusions are primarily based on the interpretation of Section 18(5) of the Coal Act. The High Court has quoted the meaning of the words "enure" and "benefit" from various dictionaries. No dictionary or any outside assistance is needed to understand the meaning of these simple words in the context and scheme of the Coal Act. The interest has to enure to the benefit of the owners of the coal mines. The claims before the Commissioner under the Coal Act are from the creditors of the owners and the liabilities sought to be discharged are also of the owners of the coal mines. When the debts are paid and the liabili ties discharged, it is only the owners of coal mines who are benefited. Taking away the interest amount by the owners without discharging their debts and liabilities would be unreasonable. They have only to adopt delaying tactics to postpone the disbursement of claims and consequently earn more interest. Due to such delay the owner would get huge amount of interest though ultimately he may not get a penny out of principal amount on the final settlement of claims. It would amount to conferring unjust benefit on the owners which can never be the intention of the Parliament. [462D, E, F] 2.2. Section 24A of the Coal Act provided that interest shall be paid at such rate not exceeding the rate of inter est accruing on any amount deposited by the Commissioner under Section 18. Had the Parliament intended to give inter est to the owners, there would have been no necessity for fixing the maximum limit of interest payable to the claimant with reference to the rate of interest accruing to the scheduled amount. 1464B] 3.1. A plain reading of Section 26 read with Section 18(5) of the Coal Act makes it clear that moneys paid to the Commissioner in relation to a coal mine are to be used for satisfying the debts and liabilities. Interest amount ac crued under the Coal Act is undoubtedly money in relation to coal mine and as such it squarely comes within the ambit of Section 26 of the Coal Act. [463E] 3.2. The amended Section 18(5) of the Coal Act which escaped the notice of the High Court provides that the amount of interest accruing on the amounts standing to the credit of the deposit account is also payable to the Commis sioner. Section 22(3) of the Coal Act makes the assets, in the hands of Commissioner available for satisfying the debts in order of priorities. The assets of the erstwhile owner lying in the 457 hands of the Commissioner of payment would include the interest which has been paid to the Commissioner under Section 18(5).Similarly Section 24 of the Coal ,Act says that unsecured creditors will be paid out of the money credited to the account of coal mine. Moneys credited to the account of coal mine also include interest. [463F, G] 3.3. Under Section 18(5) of the Coal Act the interest accruing on the amount standing .to the credit of the depos it account shall also be payable to the Commissioner in addition to the sum referred to in sub section (1) of Sec tion 18. It cannot be disputed that the interest paid to the Commissioner under Section 18(5) is money paid to him in relation to a coal mine and as such it has to be utilised in meeting the claims of the creditors of the mine owners and their other liabilities. Even otherwise interest amount in the present context has no separate entity. As the lamb belongs to the owner of the sheep, the interest goes with the principal. The interest accrued under the Coal Act, is, thus, part of the kitty out of which the claims and liabili ties are to be met. [463A D] 4. The Coal Act and the Coke Act being identical, this decision in the Coal Act is equally applicable to the Coking Act. [464C]

ivil Appeal Nos. 1249/75 & 2075/79. From the Judgment and Order dated ' 26.9.1974 and 16.10.1978 of Gujarat High Court in I.T.R. Nos. 19 of 1973 and 318 of 1977. Harish N. Salve, P.H. Parekh and Sunil Degra for the Appellant. 915 V. Gauri Shanker, Sr. and section Rajappa for the Respondent. The Judgment of the Court was delivered by RANGANATHAN, J. These appeals raise a question of some complexity on the interpretation of the provisions of the Income Tax Act, 1961, (The 1961 Act '), in regard to which there is a difference of opinion among various High Courts. In the judgment under appeal, reported in , the Gujarat High Court has answered the question raised in favour of the Revenue and against the assessees. Hence these appeals by the assessee, M/s. Garden Silk Weaving Factory, Surat. The two appeals relate to the assessment years 1967 68 and 1968 69 for which the relevant previous years were the Saka years 2022 and 2023 respectively. The question arises in similar circumstances for both the years. We shall set out the facts relevant for the assessment year 1968 69 as the appeals and reference in respect of that year were disposed of earlier than those pertaining to the assessment year 1967 68. The assessee, M/s. Garden Silk Weaving Factory, is a registered firm. For the assessment year in question, it returned a total income of Rs.3,96,483 and a provisional assessment, under section 141 of the Act, was made accepting the income returned. Subsequently, the Income Tax Officer found that, for the assessment year in question, the assessee had made an income of Rs. 11,82,056 but deducted there three figures aggregating to Rs.7,87,573 to arrive at the net income of Rs.3,94,483 which had been returned and accepted. These three figures were figures carried over from the previous year for the assessment year 1967 68. They comprised of: (i) Unabsorbed Rs. 1,59,181 Depreciation (ii) Unabsorbed Rs. 2,79,150 Development Rebate (iii) Unabsorbed Rs. 3,49,242 Business loss Total : Rs. 7,87,573 The Income Tax Officer (I.T.O.) agreed that, out of the above three months, the unabsorbed development rebate pertaining to the assessment year 1967 68 had been rightly carried forward and set off in computing the total income for the assessment year 1968 69. However, 916 for reasons which will become clear later, the Income Tax Officer was of the opinion that the sum of Rs. 1,59,181 (which represented the amount of unabsorbed depreciation relating to the assessment year 1967 68) and the amount of Rs.3,49,242 (which represented the unabsorbed loss pertaining to the assessment year 1967 68) could not be carried forward, as done by the assessee, to the assessment year 1968 69. He, therefore, added back the sum of Rs.5,08,423 (the aggregate of the above two amounts) to the returned income for determining the total income for assessment year 1968 69. This action of the Income Tax Officer was confirmed by the Appellate Assistant Commissioner (A.A.C.). However, on further appeal, the Income tax Appellate Tribunal (A.T.) took a different view. It upheld the Income tax Officer 's stand that the firm could not be allowed to carry forward and set off the business loss carried from the earlier year. But, so far as the unabsorbed depreciation was concerned, it upheld the assesses contention. A reference to the High, Court followed. The following two questions were referred to the High Court of Gujarat for its decision: 1. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee registered firm is entitled to carry forward unabsorbed depreciation from earlier years and that it will be deemed to be an allowance in the nature of depreciation in the previous year, relevant to assessment year 1968 69? 2. Whether the claim of the assessee to carry forward and set off loss of Rs.3,49,242 against its total income for the assessment year 1968 69 has been rightly rejected?" The High Court, in a very detailed judgment, discussed the issues threadbare and answered both the questions against the assessee and in favour of the Revenue. Hence the assesse 's appeal for the assessment year 1968 69 under a certificate of fitness granted by the High Court. For the assessment year 1967 68, a full paper book containing all the orders and statement of facts has not been placed before us. However, the petition of appeal gives a few facts which may be sufficient to dispose of the appeal. The relevant facts are these. For this assessment year, the assessee filed a return on 30/6/67 showing a loss of Rs.7,87,515 but filed a revised return on 22/3/72 showing a loss of Rs.5,46,351. On 14 3 73 the I.T.O. completed the assessment determining a loss of Rs.4,85,250. (It will be noticed that the assessment order for 1968 69 gives a different figure and also shows its composition as partly loss, partly unabsorbed depreciation and partly unab 917 sorbed development rebate but this is not very material for deciding the principle in issue before us). The assessee 's request that this loss should be carried forward to the subsequent assessment year was rejected by the I.T.O. This was confirmed by the A.A.C. on further appeal, the A.T. confirmed the order of the A.A.C., following the High Court 's decision for assessment year 1968 69 which had by then been announced. Thereupon the following question of law was referred to the High Court for its opinion: "Whether, on the facts and circumstances of the case, the Tribunal was justified in rejecting the claim for carry forward of business loss in the hands of the firm in view of the decision reported in " The High Court answered the question in the affirmative following its earlier decision but granted a certificate of fitness for appeal to this Court. This is how the second appeal is before us. It will be seen from the above that, though there are two appeals before us, the question involved in both the appeals is the same. Before discussing the question at issue, it may be useful to briefly summarise the procedure under the statute for determining the total income of an assessee in respect of a previous year. All income accruing or arising to the assessee and includible in his total income, is, to begin with, classified (see section 14) under six different heads: A. Salaries. B. Interest on Securities: (recently omitted) C. Income from Property. D. Profits and gains of business, profession or vocation. (briefly, "business income") E. Capital gains F. Income from other sources. In computing the income of the assessee according to this classification, two aspects have to be borne in mind. One is that, even under the same head, an assessee may have different sources. If so, the 918 income has first to be arrived at in respect of each such source. Thus, if an assessee carries on several businesses, the income of each and every such, business has to be separately computed by allowing against the gross profits and gains of that business only the deductions relevant and appropriate to that business. The second is that, for arriving at the figure of income assessable under a particular head, the individual figures in respect of all the sources have to be aggregated. Thus, to take up the head, "profits and gains of business, profession or vocation", the statute contemplates the computation of the profits and gains of each business, profession or vocation carried on by the assessee separately. The result of such computation may be either a profit or a loss. If all the businesses end in profits, the profits are aggregated to arrive at a resultant figure of profits from "business". On the other hand, if some of the businesses make profit and some of them result in a loss, the profits and the losses have to be added together in order to arrive at the consolidated income under the head "profits and gains of business. " If the total amount of profits exceeds the total amount of losses, there will be a positive income under this head, assessable for that particular assessment year. If on the other hand the losses exceed the profits, they will be "adjusted" against the profits, so as to reduce the assessable income under the head to nil; in addition, the losses of one or more businesses will remain "unabsorbed". There will thus be one resultant figure of profit or loss under each head. This is one aspect of the matter. This is the first stage of computation which we may call "intra head adjustments". This was not specifically provided for in the Indian Income tax Act, 1922 (the 1922 Act) but now finds specific mention in section 70 of the 1961 Act. section 24(1) of the 1922 Act and section 71 of the 1961 Act next contemplate a mutual set off of the losses under one head against the income under some other head subject to some exceptions (like speculation loss, capital loss etc. which, to avoid unnecessary complications and confusion, we shall leave out of account). Thus if, in any particular assessment year, an assessee has incurred a loss under the head "business", this loss can be set off against the income earned by the assessee during that previous year under other heads. Thus, for example, if an assessee has got income by way of salary of Rs.20,000 and income from house property of Rs.25,000 but has sustained a loss of Rs.40,000 in business, the Act envisages the set off of the loss of Rs.40,000 against the income of Rs.45,000 resulting in a total income of Rs.5,000 only. This is the second stage in the process of assessment which we may describe as "inter head adjustment" or "set off". 919 The Acts [section 24(2) of 1922 Act and section 72 of the 1961 Act] next envisage a third stage in the process of assessment which can ' be described as the process of "carry forward and set off". By this process, the assessee is permitted to carry forward a loss he had not been able to adjust or set off in the first and second stages of assessment. This benefit is not available to all kinds of losses but, subject to certain conditions and restrictions on which we need not dilate, it is available to business losses. A business loss of one assessment year which remains "unabsorbed" by the processes of intra and inter head ;adjustments can be carried forward to the succeeding assessment years ,and can be set off against any other business income in those years. A modification to the above scheme had to be enacted in respect of partnership. Partnership firms are treated as separate assesses for the purposes of the Income Tax Acts. Under the Acts, firms are classified into two registered firms and unregistered firms. Unregistered firms are distinct assesses which are liable to pay tax on their total income. The Acts provided that any unabsorbed loss in the case of such a firm could be carried forward only by the firm and not by it 's partners. However, under the 1922 Act, as it stood between 1939 and 1956, registered firms were treated as assesses only to this extent that the total income (or loss) of the firm in any previous year was computed. However, the firm itself was not liable to any income tax. The income of the firm was apportioned among its partners and each partner was assessed on his share of income from the firm. In this scheme, it was obvious that, as soon as the income or loss of a firm was computed, there was nothing further to be done in the case of the firm; the income or loss became that of the partner for all practical purposes. A partner 's share of a business loss of the firm which remained unabsorbed became business loss in the hands of the partner liable to intera head adjustments, inter head adjustments and carry forward as if the loss had been incurred by the partner himself. The Act, therefore, provided that in the case of registered firms the loss which could not be absorbed in the same assessment year by the other income of the firm could be carried forward to the subsequent year not by the firm itself but only by the partners. In other words, each partner carried forward to subsequent years his share of the business loss of the firm and set it off against his business income, whether from the firm or otherwise. There is a third category of unregistered firms assessed as registered the provisions regarding which are not relevant for our present purposes. Leaving them out of account, the Acts outlined a very simple scheme stemmed from the basic fact that a registered firm was not liable to pay tax whereas an unregistered firm had to pay 920 tax. Under this scheme the full advantage of carry forward of the loss incurred by the firm was enjoyed by the partners in the case of a registered firm and in the case of an unregistered firm by the firm itself. The simplicity of the above scheme of assessment of registered and unregistered firms, however, was not allowed to last. In 1956, the legislature decided that registered firms should also be made to pay a tax. This tax, called "firm 's tax" was at rates lower than those applicable to unregistered firms and other assesses. Under the new scheme, which became effective from 1.4.1956, the total income of a registered firm is determined and it is liable to income tax thereon. The income of the firm (less the firm 's tax) is then apportioned among the partners (subject to certain adjustment as before). The share income of each partner is aggregated with the rest of his income to arrive at his total income on which he also pays tax. In this new scheme the question arises: "when the net result of a business carried on by a registered firm in a particular year is a loss, who is to carry forward such loss? Is it the firm (as in the case of unregistered firms) or is it is the partners (as, earlier, in the case of registered firms) or both?" The answer to this question is furnished by the statute which, while broadly continuing the scheme of assessment of registered firms with the modification indicated above, makes a specific provision in regard to carry forward of losses. The provisions of Ss. 75 and 77 in their present form can be usefully extracted here (though they contain references to certain amended provisions which we need not touch upon): 75. Losses of registered firms: (1) Where the assessee is a registered 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) or sub section (3) of section 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 section. 921 76. Losses of unregistered firms assessed as registered firms: In the case of an unregistered firm assessed under the provisions of clause (b) of section 183 in respect of any assessment year, its losses for that assessment year shall be dealt with as if it were a registered firm. Losses of unregistered firms or their partners: 1) Where the assessee is an unregistered firm which has not been assessed as a registered firm under the provisions of clause (b) of section 183, any loss of the firm shall be set off or carried forward and set off only against the income of the firm. (2) Where the assessee is a partner of an unregistered firm which has not been assessed as a registered firm under the provisions of clause (b) of section 183 and his share in the income of the firm is a loss, then, whether the firm has already been assessed or not (a) such loss shall not be set off under the provisions of section 70, section 71, sub section (1) of section 73 or section 74A; (b) nothing contained in sub section (1) of section 72 or sub section (2) of section 73 or sub section (1) or sub section (3) of section 74 or sub section (3) of section 74A shall entitle the assessee to have such loss carried forward and set off against his own income. In view of this specific provision the High Court, following an earlier decision of the same High Court in C. I. T. vs Dhanji Shamji Mana vdar,[ 1974 ] I.T.R. 173 (Guj.) answered the second question referred to it in the reference relating to assessment year 1968 69 and the only referred in regard to the assessment year 1967 68 in favour of the Revenue and against the assessee. The correctness of this answer has not been challenged before us. The first question referred to the High Court in respect of assessment year 1968 69, however, arises in a slightly different way. It arises the context of "depreciation" which is one of the notional 922 allowances by which expression we mean a deduction in respect of an outgoing which is not an item of actual expenditure or is one, which cannot be treated as an outgoing of a revenue nature permitted by the statute to be deducted in the computation of the profits and gains, of a business. In a sense, where the depreciation allowance exceeds the profits, otherwise arrived at, in respect of the business, there will be a resultant "loss" in the business; and, indeed, the Department 's contention is that there is no difference between an unabsorbed loss and unabsorbed depreciation. It would, however, be useful to refer to the treatment meted out by the statute in respect of three items of deductions allowed in the computation of the profits of a business, which may be larger than the profits of the business otherwise computed. One is the development rebate regarding which the statute provides that it has to be set off against the total income of the assessee so as to reduce it to nil and that the balance is, to be carried forward to succeeding assessment years to be accorded a similar treatment. [See Ss. 10(2)(vib) of the 1922 Act and 33(2) of the 1961 Act]. This is an allowance which cannot be a constituent element of a figure of loss to be carried forward to later years and stands on a totally different footing. The second is the allowance for depreciation under S10(2)(vi) of the 1922 Act. In respect of this allowance, section 10(12)(vi) provided that if full effect to the allowance could not be given in the assessment of an assessee for any assessment year, the unabsorbed allowance could be carried forward and set off against business profits in succeeding assessment years indefinitely. This provision, namely clause (b) of the proviso to section 10(2)(vi) of the 1922 Act after an addition in 1953 of the words underlined in the extract below reads thus,: " 10(2)(vi) . . Provided that . . (a) . . . (b) where, in the assessment of the assessee or, if the assessee is a registered firm, in the assessment of its partners, full effect cannot be given to any such allowance in any year not being a year which ended prior to the I April, 1939, owing to there being no profits or gains chargeable for that year, or owing to the profits, or gains chargeable, being less than the allowance, then, subject to the provisions of clause (b) of the proviso to sub section (2) of section 24, the allowance or part of the allowance to which effect has not been given, as the case may be, shall be added to the. amount of the allowance for depreciation for the following year and 923 deemed to be the allowance for that year, and so on for succeeding years. " This provision has, in substance, there are certain verbal differences which are not material for our purposes been re enacted as section 32(2) of the 1961 Act, which now reads thus: B "32(2) Where, in the assessment of the assessee (or, if the assessee is a registered firm or an unregistered firm assessed as a registered firm, in the assessment of its partners) full effect cannot be given to any allowance under clause (ii) of sub section ( 1) in any previous year, owing to there being no profits or gains chargeable for that previous year, or owing to the profits or gains chargeable being less than the allowance, then, subject to the provisions of sub section (2) of section 72 and sub section (3) of section 73, the allowance or part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance for depreciation for the following previous .year and deemed to be part of that allowance, or if there is no such allowance for that previous year, be deemed to be the allowance for that previous year, and so on for the succeeding previous years. " The third type of allowance of this nature, a carry forward of which is contemplated, is an allowance in respect of expenditure on capital assets related to a business. This, by virtue of clause (f) of the proviso to section 10(2)(xiv) of the 1922 Act, re enacted in section 35(4) of the 1961 Act, is treated on the same lines as the depreciation allowance dealt with in section 10(2)(vi) and section 32(2). We shall, however, leave this out of account in our future discussion as it is not material for the purposes of the present case and as, in any event, whatever is decided in regard to unabsorbed depreciation would apply equally in respect of such allowance as well. From the above discussion, it will be seen that unabsorbed losses and unabsorbed depreciation are to be carried forward to future years to be set off against future income. There is, however, one important difference. Unabsorbed losses can be carried forward only for a period of eight years whereas unabsorbed depreciation can be carried forward indefinitely. A rule of priority of set off as between these two therefore becomes necessary and this is provided by section 72(2) of the 1961 Act which deals with carry forward of losses the counterpart of 924 the proviso to section 24(2) of the 1922 Act which reads thus: "Where any allowance or part thereof is, under sub section (2) of section 32 or sub section (4) of section 35, to be carried forward, effect shall first be given to the provisions of this section. " This is the historical context and statutory language on the basis of which the issue before us has to be resolved. The issue is: when there is an unabsorbed depreciation computed in the assessment of a registered firm for any year, how is it to be treated for purposes of carry forward? Three alternatives are possible: (i) It should be retained (without apportionment) and carried forward by the firm only. (ii) It should be apportioned among the partners. Thereafter, it can be dealt with even for carry forward purposes only in the assessments of each of the partners in respect of his aliquot share thereof. (iii) It should be apportioned among the partners each of whom may set off his share thereof against his other income. If, after this, any amount remains unabsorbed, it will revert to the firm. The firm will carry it forward. set it off against its other income in the succeeding year. This operation will be repeated every year indefinitely until the unabsorbed depreciation gets absorbed. The three alternatives will yield widely different results and hence the present controversy. On the above issue there has been a strong cleavage of opinion between the various High Courts. The view that unabsorbed depreciation once allocated to the partners cannot be taken back to the firm 's assessment for being carried forward by the firm and that the partners alone are entitled to carry forward the unabsorbed depreciation for being set off against their income, has been taken in the following cases: (a) K. T. Wire Products vs Union of India, (b) Garden Silk Weaving Factory, and Garden Silk Weaving Factory, (c) CIT vs Ram Swarup Gupta, and Raj Narayan Aggarwala vs CIT, ; (d) Shankaranarayana Construction Co. vs CIT, The view that the unabsorbed depreciation, after being carried forward by the partners and set off against their income, reverts back to the registered firm for being carried forward and set off against its income and that any depreciation still remaining unabsorbed will again go to the partners and that if it still remained unabsorbed would revert back to the firm and so on, has been accepted in: (a) Ballarpur Collieries Co. vs CIT, 219 and CIT vs Nagpur Gas & Domestic Appliances, ; (b) CIT vs Nagapattinam Import and Export Corp., ; CIT vs Madras Wire Products, and CIT vs Madras Wire Products, ; (c) CIT vs Singh Transport Co., ; (d) CIT vs J. Patel & Co., ; (e) CIT vs Shrinivasa Sugar (Co., (f) Pearl Woollen Mills vs CIT, and CIT vs Mahavir Steel Rolling Mills,5, & H); and (g) CIT vs R. J. Trivedi & Sons, Shri Harish Salve, learned counsel for the assessee, canvassed the latter of the above views but with a slight modification. He submitted that, in the present case, the firm as well as the partners had been returning losses all along with the result that no part of the unabsorbed depreciation of the firm had been set off in the partners ' hands. He, therefore, submitted that it was sufficient for him to urge the first of the three alternatives set out earlier and that he need not, for the purposes of this case, seek to support the third alternative, upheld in some of the decisions, which may create an impression in the mind that the assessee was deriving a double benefit by having the unabsorbed depreciation set off in the hands of both the firm and the partners. On the other hand, Dr. Gaurishankar, for the Revenue, strongly advocated the second alternative. According to him, once the assessment is completed, and the total income or loss of the firm ascertained, it has to be apportioned amongst the partners. Thereafter, there remained nothing in the assessment of the firm to be carried forward. Only each of the partners can carry forward his share of the unabsorbed loss (and this, according to him, will include also the unabsorbed depreciation) for set off in his future assessments. The answer to the problem before us has to be discovered in the language of section 32(2) supplemented by that of other sections which deal with the mode of assessment of a firm and its partners. Before turning to these provisions, it will be necessary to clear up one aspect of section 32(2) to which Sri Salve drew attention in the course of his reply. He pointed out that section 32(2) permits the carry forward of the depreciation allowance "where full effect cannot be given to it" owing to there being no profits or gains chargeable for that previous year, or owing to the profits or gains chargeable being less than the allowance. Laying emphasis on the words "profits or gains", he contended that the carry forward of depreciation allowance is at a stage much anterior to that of the determination of the total income of the assessee. On this construction, if an assessee A carries on two businesses, in one of which there is 926 an unabsorbed depreciation of Rs. 15,000 and the profits and gains of the other business is only Rs. 10,000, the net unabsorbed depreciation of Rs.5,000 has to be carried forward irrespective of the other income of the assessee in that year, to the succeeding year. This contention, however, cannot be accepted. Though the section, somewhat infelicitiously, uses the expression "profits and gains" as it occurs in the statute in the fasciculus of sections dealing with the computation of business income, the question of the carry forward of unabsorbed depreciation has always been understood and interpreted as arising only after the intra head and intra head adjustments, referred to earlier, have been carried out. Thus, in the illustration given above, if A has a property income of Rs.6,000 the unabsorbed depreciation of Rs.5,000 will be set off against the property income and there will be no unabsorbed depreciation left for being carried forward to the subsequent assessment year. This is because, where the depreciation allowance attributable to a particular business exceeds the profits otherwise computed for that business, the deduction of the depreciation allowance from such profits can only result in a "loss" from that business this, however, is subject to a limitation that will be discussed later and a business loss has to be set off against income from any other business, by way of intera head adjustment, under section 70 and the income under any other head, by way of inter head adjustment, under section 71. This principle indeed emerges even from the language of section 32(2) in so far as it implicitly recognises that the excessive depreciation of one business can be "given effect to" against the profits and gains of another business in the same year. This, indeed, is a well settled proposition, and it should be sufficient to cite two decisions of this Court which make this clear, In C.I.T. vs Jaipuria China Clay Mines (P) Ltd., [1966]591,T.R.555 this Court observed: "Mr. Shastri, learned counsel for the revenue, urges that depreciation, although a permissible allowance under section 10(2) of the Act, serves to compensate an assessee for the capital loss suffered by him by way of depreciation of his assets. He says that if it had not been expressly allowed as allowance, it would have been treated as capital expenditure and would have been excluded. He further says that depreciation is a charge on the profits of a business. Bearing these two factors in mind, he urges that the expression "loss of profits and gains" in section 24(1 does not include any deficiency resulting from depreciation and, therefore, an assessee is not entitled to ask the department to include the depreciation in the amount which can be set 927 off against income, profits and gains under Other heads such as income from property or dividends. Mr. Rajagopala Shastri for the assessee relies on the history of the legislation and a number of authorities to support the judgment of the High Court. Apart from authority, looking at the Act as it stood on April 1, 1952, it is clear that the underlying idea of the Act is to assess the total income of an assessee. Prima facie, it would be unfair to compute the total income of an assessee carrying on business without pooling the income from business with the income or loss under other heads. The second consideration which is relevant is that the Act draws no express distinction between the various allowances mentioned in section 10(2). They all have to be deducted from the gross profits and gains of a business. According to commercial principles, depreciation would be shown in the accounts and the Profit and Loss account would reflect the depreciation accounted for in the accounts. If the profits are not large enough to wipe off depreciation, the profits and loss account would show a loss. Therefore, apart from proviso (b) to section 10(2)(vi), neither the Act nor commercial principles draw any distinction between the various allowances mentioned in section 10(2); the only distinction is that while the other allowances may be outgoings, depreciation is not an actual outgoing." and expressly disproved the observations of the Madras High Court in C.I.T. vs Nagi Reddy, [19641 that the deduction for depreciation should be limited to the amount of the profits and cannot result in working out a loss. The following observations in the more recent decision in Rajapalayam Mills Ltd. vs C.I.T., , S.C. place the position beyond doubt: It is clear on a plain reading of the language of provision (b) to cl. (vi) that it comes into operation only where full effect cannot be given to the depreciation allowance for the assessment year in question owing to there being no profits or gains chargeable for that year or profits or gains chargeable being less than the depreciation allowance. Now, it is well settled, as a result of the decision of this court in CIT vs Jaipuria China Clay Mines (P) Ltd., , that the words "no profits or gains chargeable for that year" are not confined to profits and gains derived 928 from the business whose income is being computed under section 10, but they refer to the totality of the profits or gains computed under the various heads and chargeable to tax. It is, therefore, clear that effect must be given to depreciation allowance first against the profits or gains of the particular business whose income is being computed under section 10 and if the profits of that business are not sufficient to absorb the depreciation allowance, the allowance to the extent to which it is not absorbed would be set off against the profits of any other business and if a part of the depreciation allowance still remains unabsorbed, it would be liable to be set off against the profits or gains chargeable under any other head and it is only if some part of the depreciation allowance still remains unabsorbed that it can be carried forward to the next assessment year. Obviously, therefore, there would be no scope for the applicability of provision (b) to cl. (vi), if the total income of the assessee chargeable to tax is sufficient to absorb the depreciation allowance, for then there would not be any unabsorbed depreciation allowance to be carried forward to the following assessment year. But where any part of the depreciation allowance remains unabsorbed after being set off against the total income chargeable to tax, it can be carried forward under provision (b) to cl. (vi) to the following year and set off against that year 's income and so on for succeeding years. " The resultant position, therefore, is that initially, the depreciation allowance has to be deducted from the profits and gains of the business to which the assets earning the depreciation relate but, if it remains unabsorbed by such profits, the allowance has to be set off against the other business income of the assessee and, where that is also insufficient, against the other taxable income of the assessee. The carry forward of any depreciation as unabsorbed cannot arise until the stage of final assessment is reached and the total income of the assessee otherwise computed is insufficient to absorb the year 's depreciation allowance. Sri Salve 's argument that the stage of carry forward of depreciation arises at a stage anterior to the completion of the assessment and determination of the total income cannot, therefore, be accepted. Shri Salve, then, contended that there is no statutory provision which enables the apportionment of the firm 's unabsorbed depreciation among the partners and that, therefore, the unabsorbed deprecia 929 tion has to be carried forward by the firm itself and none else. In our opinion, this contention also is not well founded. section 182, to the extent relevant for our present purposes, reads "section 182. (]) Assessment of registered firms Not withstanding anything contained in section 143 and 144 and subject to the provisions of sub section (3), in the case of a registered firm, after assessing the total income of the firm, (i) the income tax payable by the firm shall be determined, and (ii) the share of each partner in the income of the firm shall be included in his total income and assessed to tax accordingly. (2) If such share of any partner is a loss it shall be set off against his other income or carried forward and set off in accordance with the provisions of sections 70 to 75. (3) When any of the partners of a registered firm is a non resident, the tax on his share in the income of the firm shall be assessed on the firm at the rate or rates which would be applicable if it were assessed on him personally, and the tax so assessed shall be paid by the firm. (4) A registered firm may retain out of share of each partner in the income of the firm a sum not exceeding thirty percent thereof until such time as the tax which may be levied on the partner in respect of that share is paid by him; and where the tax so levied cannot be recovered from the partner, whether wholly or in part, the firm shall be liable to pay the tax, to the extent of the amount retained or could have been so retained. " How this share is to be computed is set out in section 67 which may be set out here: section 67(1) Method of computing a partner 's share in the income of the firm In computing the total income of an assessee who is a partner of a firm, whether the net result of the computation of total income of the firm is a profit or a 930 loss, his share (whether a net profit or a net loss) shall be computed as follows: (a) any interest, salary, commission or other remuneration paid to any partner in respect of the previous year, and, where the firm is a registered firm or an unregistered firm assessed as a registered firm under clause (b) of section [183], the income tax, if any, payable by it in respect of the total income of the previous year, shall be deducted from the total income of the firm and the balance ascertained and apportioned among the partners; (b) where the amount apportioned to the partner under, clause (a) is a profit, any salary, interest, commission or other remuneration paid to the partner by the firm in respect of the previous year shall be added to that amount, and the result shall be treated as the partner 's share in the income of the firm; (c) where the amount apportioned to the partner under clause (a) is a loss, any salary, interest, commission or other remuneration paid to the partner by the firm in respect of the previous year shall be adjusted against that amount, and the result shall be treated as the partner 's share in the income of the firm. (2) The share of a partner in the income or loss of the firm, as computed under sub section (1) shall, for the purposes of assessment, be apportioned under the various heads of income in the same manner in which the income or loss of the firm has been determined under each head of income. (3) Any interest paid by a partner on capital borrowed by him for the purposes of investment in the firm shall, in computing his income chargeable under the head "Profits and gains of business or profession" in respect of his share in the income of the firm, be deducted from the share. (4) If the share of a partner in the income of a registered firm or [an unregistered firm assessed as a registered firm under clause (b) of section 183, as computed under this section, is a loss, such loss may be set off, or carried forward and set off, in accordance with the provisions of this Chapter. 931 Explanation: In this section, "paid" has the same meaning as is assigned to it in clause (2) of section 23. 1. "Sri Salve contends that these provisions talk only of "loss" and that to take this expression as including "unabsorbed depreciation" as well will obliterate the distinction in the treatment meted out to these as separate items by section 32(2) and section 72(2) and (3). We think this argument is misconceived. An unabsorbed depreciation is indeed a part of the "loss". This is so because, in the first place, "depreciation" is a normal outgoing though in a sense notional, which has to be debited in the computation of the profits of a business on commercial principles (quite apart from statute) and it is difficult to see why, when such deduction yields a negative figure of profits, it cannot be a "loss" as generally understood. Jaipuria definitely says so as pointed out earlier. Again, as pointed out earlier, if it is treated as a genus totally different from a "loss", there is"no statutory provision that will permit its adjustment against other business income implicit in section 32( '2) itself and against all other income of the assessee as held by the above decisions. We therefore do not see why "loss" and "unabsorbed depreciation should be treated as antithetical to, or mutually exclusive of, each other. Nor are we persuaded that any mix up or anomaly will result as, suggested by counsel if we treat the expressions as synonymous except to the extent specifically treated differently by the statute. In our view, there is nothing anomalous or absurd in the statute providing for a dissection of the amount of loss for purposes of carry forward and providing for a special or different treatment to unabsorbed depreciation in this regard although it is a component element of the genus described as "loss". To illustrate, suppose an assessee,has a "profit" of Rs.5,000 in one business before deduction of depreciation of, say, Rs. 10,000 and a loss of Rs. 15,000 in another business, it will be quite correct to say that he has a business loss of Rs.20,000 in that assessment year. But for purposes of carry forward this has to be considered under to headings: (a) an unabsorbed depreciation of Rs.5,000 and (b) a business loss of Rs. 15,000. The amount of Rs.20,000 will be carried forward to the subsequent year but the carry forward of Rs.5,000 will be according to the provisions of section 32(2) and the carry forward under section 72 will have, perforce, to be restricted to the other amount of Rs, 15,000. The language of section 72(2) itself contains an indication that, where unabsorbed depreciation is a component of the figure of loss carried forward, the amount of loss proper should be set off first and the unabsorbed depreciation later. But for the special treatment ac 932 corded by section 32(2) and section 72 for purposes of carry forward, there is no difference between an item of "unabsorbed depreciation" and an item of "loss". We are, therefore, of opinion that the unabsorbed depreciation will be allocated among the partners and, like any other loss, will be available to the partner for set off against his business income or other income in the same assessment year. In fact section 32(2), in so far as it talks of depreciation being given effect to in the partners ' assessments recognises that such unabsorbed depreciation should be allocated among the partners. So the first of the three alternatives referred to by us earlier is, in our opinion, out. We now come to the crucial question as to what is to be done when the amount of unabsorbed depreciation does not get absorbed by the other income of the firm and, further, the aliquot shares of the partners therein do not also get absorbed in the partners ' assessments against their other income. There can be two answers to this: (1) that the partners in whose hands the unabsorbed depreciation has been allocated should carry forward the depreciation to succeeding years; or (2) that the amount of depreciation so remaining unabsorbed should be carried forward by the firm for set off in future assessments. We have given our most careful consideration to this matter, particularly in view of the controversy of judicial decisions prevailing thereon, and we have come to the conclusion that the second of these alternatives is what is truly envisaged by the statute. The most formidable obstacle put forward to this course is that, once the unabsorbed depreciation gets divided and allocated to the partners, there is no statutory provision for recalling, to the firm 's "file", the amount remaining unabsorbed. We think this, criticism really proceeds on an unduly narrow construction placed on the provisions of section 32(2). In our opinion, section 32(2) itself contains an inbuilt mechanism for doing this. It is plain, on the language of this sub section, that the benefit of the carry forward is to be given to the assessee. Where the assessee is other than a registered firm or an unregistered firm assessed as a registered firm, this is indeed very plain. In the case of this category of assessee, the difficulty arises because of the words in parenthesis. But a moment 's thought will make it clear that the word "or" in the sub section is really used as a conjunctive. It cannot be an alternative, for there can be no doubt that even in the case of such an assessee the 933 unabsorbed depreciation, for reasons already set out, has to be adjusted against its other income. The assessment of the firm cannot be complete without such a set off. Thus, where a firm assessed as a registered firm, has only unabsorbed depreciation of say, Rs.8,000, in the business carried on by it but a property income of Rs.12,000 its total income for the year has to be Rs.4,000; it cannot be assessed on an income of Rs. 12,000 with the depreciation of Rs.8,000 apportioned to its partners. We have already pointed out that the partner 's share in the unabsorbed depreciation is part of his share in the loss of the firm and, by virtue of section 67(3), will be treated as business loss which is capable of adjustment against his business and other income. This is the position envisaged by section 32(2) when it talks of effect being given to the unabsorbed depreciation in the assessment of the partners. This can refer only to cases where the depreciation cannot be given effect to in the firm 's assessment. It is, therefore, clear that section 32(2) contemplates the situation where the unabsorbed depreciation in the hands of the firm is too large to get absorbed, first, in the hands of the firm and then, after apportionment, in the hands of the partners. What remains thereafter has obviously to be carried forward by the firm which is the assessee referred to in the sub section. Perhaps the meaning of the provision will become clearer if its relevant words are rearranged as follows: "Where full effect cannot be given to any (depreciation) in any previous year in the assessment of the assessee (whatever category it belongs to) and, if the assessee is a registered firm or an unregistered firm assessed as a registered firm, in the assessment of its partners . . . the allowance shall be added . . ". As in the case of all other assesses, the carry forward will be available to the registered firm which is the assessee that is referred to in the sub section. This construction is also strengthened by the last part of the sub section. When it talks of the depreciation allowance carried forward being added to the allowance for depreciation for the following previous year it obviously refers to the depreciation allowance due to the assessee (that is, the firm) in the subsequent previous year. In the normal run of cases, it will thus either get added to the subsequent year 's depreciation in respect of the same assets and get set off against the income from the same business or some other business of the same assessee or, failing that, against other income of such assessee. What 934 the sub section clearly provides for is that the aggregate of the depreciation available to an assessee over the years will be taken into consideration for set off against its income over a period of years. No doubt, the latter portion of section 32(2) does not envisage that the business carried on by the assessee in the subsequent years should be the same or that the assets to the depreciation in respect of which the unabsorbed depreciation is to be added should be the same or, indeed, that any depreciation at all should be allowable to the assessee in the subsequent year. It is no doubt true that the words of the sub section are so widely couched that they can, with a certain amount of difficulty, be rendered capable of application to the situation of each partner carrying forward his share of the unabsorbed depreciation for set off, even where he has no business or business income, against his other income. But we think that it is too strained a construction of the sub section. When, as pointed out by Sri Salve, there is nothing in the sub section or the Act specifically providing even for an apportionment of the depreciation among the partners, it is too contrived a construction to read into the sub section several words intended to provide for a number of partners, each carrying forward his share of the unabsorbed depreciation to successive assessment years. It seems natural and reasonable to construe the section as envisaging the following steps where the assessee is a registered firm: (i) Excessive depreciation should be adjusted in the assessment of the assessee against other business income and against other heads of income; (ii) Depreciation, which remains unabsorbed under (i), will be apportioned to the partners and the share of each will be adjusted against the business and other income of each of the partners pro tanto; (iii) If full effect cannot be given to the depreciation allowance of the assessee by the above processes and some depreciation remains unadjusted, the assessee firm will carry it forward to the succeeding assessment year. The objection to this course is based on a mental imagery of the firm and its partners as altogether different assesses and of the impermissibility of "bringing back" to the firm 's "file" what has gone away to the files of the partners. We think this approach of viewing the two assessments in water tight compartments is not correct. The Act itself contains several provisions [e.g. Ss. 67(2) & (3)] which indicate 935 that this is not so. The observations of this Court in Sankappa vs I. T. O., at pp. 766 7 also bring out the regions of inter dependence of these two assessments. In any event, any such theoretical dichotomy cannot prevail over the provisions of section 32(2). There is also one further reason why this view should find acceptance. As we have pointed out earlier, unabsorbed depreciation is only a species of business loss. But for purposes of carry forward the statute has drawn a distinction between them. In doing so, it specifically out lines the procedure for carry forward and set off of losses in the case of a registered firm but is silent in regard to unabsorbed depreciation. There is no statutory prohibition against the carry forward of unabsorbed depreciation by the registered firm as there is against carry forward of loss. The need felt to enact a specific prohibition in respect of losses and the absence of a like provision in respect of depreciation are significant pointers in support of the above construction. An argument has been put forward by Dr. Gaurishankar on the basis of the amendment to the proviso to section 10(2)(vib) in 1953 to submit that it was intended to negative the claim of carry forward by the firm which was earlier being accepted on the strength of the earlier language resulting in a double advantage. Attention has been drawn to the objects and reasons of the amendment, set out thus at p. 57 in (1952) 21 I.T.R. (Statutes): "The (amendment) is intended to make it clear that where unabsorbed depreciation has been effectively allowed in the assessment of a partner of a registered firm, it would not be carried forward in the case of the firm." (emphasis added) It is true that the clause, before its amendment, permitted all assesses and this included registered firms as well to carry forward their unabsorbed depreciation and that though the registered firm paid no tax, it could, on the language claim a carry forward of the depreciation which had been apportioned among the partners. This resulted in such carry forward being claimed even where the whole or a part of the unabsorbed depreciation of the firm had been set off in the assessment of individual partners. The amendment, vide the words emphasised in the extract above, only seeks to make it clear that such carry forward will not be permitted to the extent it has been given effect to in the partners ' assessments; by necessary implication the carry forward, to the extent it has not been effectively allowed to the partner, continues 936 to be available. The amendment of 1953, therefore, not only does not help the case of the Revenue, it actually lands support to the construction we are inclined to place on the proviso. It is possible that our conclusion may give scope for two grounds of criticism: (i) that the partners derive a double advantage of setting off the unabsorbed depreciation to reduce the taxable income of the firm as well as the partners; and (ii) that this will distort the relief available to various partners depending upon the variations in income as between the several partners as well as over a period of years. We do not think that the first criticism is a valid one. For it is now settled law, that though a firm and its partners are distinct assesses for purposes of income tax, the Act still recognises the principle that a firm is only a compendious name for its partners and that the business carried on by the firm is also a business carried on by each of the partners too vide section 67(2) and (4) and the loss of a registered firm is treated as the losses of its partners too. The procedure envisaged by it will only enable a firm and the partners to set off the aggregate of the unabsorbed depreciation of the firm against the aggregate income of the firm and partners. To the extent effect is given to such unabsorbed depreciation to one or more of the partners the firm cannot again get the benefit and vice versa. There is, therefore, really no double advantage. There is some point in the second criticism. But, then, a certain amount of imbalance among the partners is inherent in the application of any one of the three possible alternatives. If, as suggested by Sri Salve, only the firm and not the partners can carry forward the unabsorbed depreciation, there will be an injustice to the partners who may have other income against which it could be set off. On the other hand, if the unabsorbed depreciation is allocated to the partners and they alone can carry forward and set it off, it will have this consequence that the partners who have other high income will derive the benefit of set off qua their shares but no benefit can be got by partners whose total income is not enough to offset their share of the depreciation and the unabsorbed depreciation will not get absorbed even though the firm may have sufficiently large income in subsequent years. In other words, whichever procedure is adopted, the relief available to the partners will not be uniform. This is a consequence flowing from the variations in the income sources of various partners and cannot be avoided under any scheme of carry forward and set off. We, therefore, do not think that this consideration should weigh against our reaching the conclusion which naturally flows from the language of the sub section. 937 For the reasons discussed above, we are of the opinion that the assessee appellant firm is entitled to a carry forward of the unabsorbed depreciation computed for the assessment year 1967 68 and have it set off in its assessment for the assessment year 1968 69. The unabsorbed loss computed for the assessment year 1967 68, however, cannot be carried forward by the firm to be set off in its assessment for the assessment year 1968 69. So far as the assessment year 1967 68 is concerned, the High Court was right in holding that unabsorbed business loss of one year cannot be carried forward and set off by the firm in a subsequent year; but, if there was any unabsorbed depreciation computed for the assessment year 1966 67, it could have been allowed to be brought forward and set off in the assessment for the assessment year 1967 68 in the manner discussed in the judgment. In the result, appeals for both the assessment years are allowed to the extent indicated and the assessments directed to be modified appropriately. We, however, make no order regarding costs. V. P. R. Appeals allowed.

For the assessment year of 1968 69, the assessee appellant, a registered firm, returned a total income of Rs.3,94,483 and a provisional assessment was made. Subsequently, the Income Tax Officer found that for the said assessment year, the assessee had made an income of Rs. 11,82,056 and deducting therefrom three figures viz., (i) unabsorbed depreciation: Rs.1,59,181; (ii) unabsorbed development rebate: Rs.2,79,150; and (iii) unabsorbed business loss: Rs.3,49,242, aggregating to Rs.7,87,573 and arrived at the net income of Rs.3,94,483, which had been returned and accepted. The three figures were the figures carried over from the previous year for the assessment year 1967 68. The Income Tax Officer allowed the unabsorbed development 910 rebate pertaining to the assessment year of 1967 68 to be carried for ward and set off in computing the total income for the assessment year of 1968 69, but he did not allow the amounts of unabsorbed depreciation and unabsorbed business loss. He, therefore, added back the sum of Rs.5,08,423 (the aggregate of the amounts of unabsorbed depreciation and unabsorbed business loss) to the returned income for determining the total income for the assessment year of 1968 69. The action of the Income Tax Officer was confirmed by the Appellate Assistant Commissioners (A.A.C.). However, on further appeal, the Income tax Appellate Tribunal (A.T.) upheld the income tax Officer 's stand that the firm could not be allowed to carry forward and set off the business loss carried from the earlier year but, so far as the unabsorbed depreciation was concerned, it upheld the assessee 's contention. On these two issues a reference to the High Court was made and the High Court answered them against the assessee. For the assessment year 1967 68, the assessee filed a return on 30.6.67 showing a loss of Rs.7,87,515 but filed a revised return on 22.3.1972 showing a loss of Rs.5,46,351. On 14.3.73 the I.T.O. completed the assessment determining a loss of Rs.4,85,250. The assessee 's request that this loss should be carried forward to the subsequent assessment year was rejected by the I.T.O. This was confirmed by the A.A.C. On further appeal, the A.T. confirmed the order of the A.A.C., following the High Court 's decision for the assessment year 1968 69 which had by then been announced. The High Court answered the (question "Whether, on the facts and circumstances of the case, the Tribunal was justified in rejecting the claim for carry forward of business loss in the hands of the firm in view of the decision reported in 101I.T.R. 658? in the affirmative. Hence the assessee 's the appeals one appeal for the assessment year of 1968 69 and the other for the assessment year of 1967 68 under certificates of fitness granted by the High Court. On behalf of the assessee it was contended that the firm as well as the partners had been returning losses all along with the result that no part of the unabsorbed depreciation of the firm had been set off in the partner 's hands; that when there was an unabsorbed depreciation computed in the assessment of a registered firm for any year, for the 911 purpose of carry forward, it should be retained and carried forward by the firm only. On the other hand, it was submitted for the Revenue that once the assessment was completed and the total income or loss of the firm ascertained, it had to be apportioned amongst the partners. Thereafter there remained nothing in the assessment of the firm to be carried forward. Only each of the partners can carry forward his share of the unabsorbed loss, which also included the unabsorbed depreciation, as there was no difference between unabsorbed loss and unabsorbed depreciation; and that the amendment to the proviso to section 10(2)(vib) in 1953 of depreciation was intended to negative the claim of carry forward, by the firm which was earlier being accepted on the strength of the earlier language resulting in a double advantage. Allowing the appeals, this Court, HELD: 1. "Depreciation" is one of the notional allowances which expression means a deduction in respect an outgoing which is not an item of actual expenditure or is one which cannot be treated as an outgoing of a revenue nature permitted by the statute to be deducted in the computation of the profits and gains of a business. [921H 922B] 2. Initially, the depreciation allowances has to be deducted from the profits and gains of the business to which the assets earning the depreciation relate but, if it remains unabsorbed by such profits, the allowance has to be set off against the other business income of the assessee and, where that is also insufficient, against the other taxable income of the assessee. The carry forward of any depreciation as unabsorbed cannot arise until the stage of final assessment is reached and the total income of the assessee otherwise computed is insufficient to absorb the year 's depreciation allowance. [928E G] 3. An unabsorbed depreciation is a part of the "loss". This is so because, in the first place, "depreciation" is a normal outgoing, though in a sense notional, which has to be debited in the computation of the profits of a business on commercial principles (quite apart from statute) and it is difficult to see why, when such deduction yields a negative figure of profits, it cannot be a "loss" as generally understood. Where the depreciation allowance attributable to a particular business exceeds the profits otherwise computed for that business, the deduction of the depreciation allowance from such profits can only result in a "loss" from that business and a business loss has to be set off against income 912 from any other business, by way of intra head adjustment, under section 70 and the income under any other head, by way of intra head adjustment, under section 71. This is implicit in the provision that the excessive depreciation of one business can be "given effect toll against the profits and gains of another business in the same year and has been recognised by decisions holding that it can be set off against income from other heads. If unabsorbed depreciation is treated as a genus totally different from a "loss", there is no statutory provision that will permit its adjustment against other business income implicit in section 32(2) itself and against all other income of the assessee. "Loss" and "unabsorbed depreciation" should not be treated as antithetical to, or mutually exclusive of, each other. However, there is nothing anomalous or absurd in the statute providing for a dissection of the amount of loss for purposes of carry forward and providing for a special or different treatment to unabsorbed depreciation in this regard although it is a component element of the genus described as "loss" [931B C, 926C E, 93IC F] 4. Unabsorbed losses and unabsorbed depreciation are to be carried forward to future years to be set off against future income. There is, however, one important difference. Unabsorbed losses can be carried forward only for a period of eight years whereas unabsorbed depreciation can be carried forward indefinitely. [923G H] 5. There is also difference between the two in the matter of their carry forward in the case of assessment of a registered firm. In this case, the unabsorbed loss cannot be carried forward by the firm at all. The statute clearly so provides. So far as unabsorbed depreciation is concerned, three alternatives are possible to be urged: (i) It should be retained (without apportionment) and carried forward by the firm only. (ii) It should be apportioned among the partners. Thereafter, it can be dealt with even for carry forward purpose only in the assessment of each of the partners in respect of his aliquot share thereof. (iii) It should be apportioned among the partners each of whom may set off his share thereof against his other income. If, after this, any amount remains unabsorbed, it will revert to the firm. The firm will carry it forward, set it off against its other income in the succeeding year. This operation will be repeated every year indefinitely until the unabsorbed depreciation gets absorbed. [924B E] 6. The third alternative is the correct one: (a) The unabsorbed depreciation should be allocated among the partners and, like any other loss, will be available to the partners to the extent of his share therein for set off against his business income or other income in the same 913 assessment year. In fact section 32(2), in so far as it talks of depreciation being given effect to in the partners ' assessments recognises that such unabsorbed depreciation should be allocated among the partners. The question is what is to be done thereafter. [932A B] (b) When there is nothing in the sub section or the Act specifically providing even for an apportionment of the depreciation among the partners, it is too contrived a construction to read into the sub section several words intended to provide for a number of partners, each carrying forward his share of the unabsorbed depreciation to successive assessment years. It seems natural and reasonable to construe the section as envisaging the following steps where the assessee is a registered firm: (i) Excessive depreciation should be adjusted in the assessment of the assessee against other business income and against other heads of income; (ii) Depreciation, which remains unabsorbed under (i), will be apportioned to the partners and the share of each will be adjusted against the business and other income of each of the partners pro tanto; (iii) If full effect cannot be given to the depreciation allowance of the assessee by the above processes and some depreciation remains unadjusted, the assessee firm will carry it forward to the succeeding assessment year. [934C G] (c) The sub section, before its 1953 amendment, permitted all assesses and this included registered firms as well to carry forward their unabsorbed depreciation so that though the registered firm paid no tax, it could, on the language claim a carry forward of the depreciation which had been apportioned among the partners. This resulted in such carry forward being claimed even where the whole or a part of the unabsorbed depreciation of the firm had been set off in the assessment of individual partners. The amendment only seeks to make it clear that such carry forward will not be permitted to the extent it has been given effect to in the partners ' assessments; by necessary implication, the carry forward, to the extent it has not been effectively allowed to the partner, continues to be available. The amendment of 1953, therefore, does not help the case of the Revenue. [935F 936A] (d) The objection to the above course is also based on a mental imagery of the firm and its partners as altogether different assesses 914 and of the impermissibility of "bringing back" to the firm 's "file" what has gone away to the* files of the partners. This approach of viewing the two assessments in water tight compartments for all purposes is not correct. In any event, any such theoretical dichotomy cannot prevail over the provisions of section 32(2). [934G 935A] (e) The construction suggested does not result in any double advantage to the partners. [936D] (f) It is true that the construction may result in a certain amount of imbalance in the quantum of relief available as among different partners. But similar imbalance is inherent in the application of any of the three possible alternatives. [936E F] 7. The assessee appellant firm is entitled to carry forward the unabsorbed depreciation computed for the assessment year 1967 68 and have it set off in its assessment for the assessment year 1968 69. The unabsorbed loss for the assessment year, 1967 68, however, cannot be carried forward by the firm to be set off in its assessment for the assessment year 1968 69. [937A B] K. T. Wire Products vs Union of India, ; Garden Silk Weaving Factory, ; Garden Silk Weaving Factory, C. I. T. vs Ram Swarup Gupta, ; Raj Narayan Aggarwala vs C.I.T., [1979] 75 ITR I (Del.); Shankaranarayana Construction Co. vs C. I. T., ; Ballarpur Collieries Co. vs C.I.T., ; C. 1. T. vs Nagpur Gas & Domestic Appliances, ; CIT vs Nagapattinam Import and Export Corp., ; CIT vs Madras Wire Products, ; CIT vs Madras Wire Products, ; CIT vs J. Patel & Co., ; CIT vs Shrinivas Sugar Co., ; CIT vs Singh Transport Co., ; Pearl Wollen Mills vs CIT, ; CIT vs Mahavir Steel Rolling Mills, & H) and CIT vs R. J. Trivedi & Sons, , referred to. IT vs Jaipuria China Clay Mines (P.) Ltd., and Rajapalayam Mills Ltd. vs C. I. T., , followed.

Civil Appeal Nos. 750 53 of 1982. Appeal by special leave from the Judgment and order dated the 3rd September, 1981 of the Madhya Pradesh High Court in S.A. Nos. 249, 251 253 of 1980. WlTH Civil Appeal No. 3357 of 1982. Appeal by special leave from the Judgment and order dated the 24th August, 1982 of the Madhya Pradesh High Court in Second Appeal No. 311 of 1982. A.K. Sen, R.P. Singh Suman Kapoor. D.S. Mehra and R.K. Jain, tor the Appellants in C.A section 750 53 of 1982. P.K. Jain, for the Appellants in CA. 3357/82. U.R. Lalit. Mrs. Suneeta Kriplani, Ashok Mahajan and S.K. Gambhir for the Respondent. The Judgment of the court was delivered by VARDARAJAN, J. These appeals by special leave are by the tenants whose eviction has been ordered by all the courts below under section 12 (1) (f) and (h) of the Madhya Pradesh Accommodation Control Act, 1961 on the ground that the respondent landlord requires the premises bonafide for the purpose of having his gold and silver ornaments factory after demolishing the present building and putting up a new building at the place. The tenants were carrying on various kinds of business in the premises. Their defence was that the landlord has other alternative accommodation where he could locate his proposed factory and that his requirement is not bonafide. The courts below have found that the alternative accommodation alleged by the appellants to be available to the landlord is really a farm house which is used for the residential purpose, namely as accommodation for the farm servants of the 947 landlord and it is situated about these miles away from the town and near a burial ground in a lonely place and that it is also not a suitable place where a factory for the manufacture of gold and silver ornaments could be carried on without risk to life and property. As regards the ground of bonafide requirement, the courts below have found that the requirement of the landlord is bonafide and they have ordered eviction of the appellants under section 12 (1) (f) (h) of the Act. Mr. A.K. Sen, learned counsel for the appellants contended before us that alternative accommodation is available and that it is not possible to accept the finding of the courts below that it is not suitable. After going through the judgment of the first Appellate Court which has dealt with this question in depth we agree with the courts below that the alternative accommodation alleged to be available to the landlord is really a farm house where the farm servants of the landlord are accommodated and that it is not suitable for the purpose for which the landlord requires accommodation. Mr. Sen submitted that the eviction ordered is under section 12 (1) (h) of the Act and that section is of the Act is attracted and it is obligatory on the part of the landlord to provide accommodation of equal extent to the tenants in the new building to be constructed by him. The first Appellate Court has observed in its judgment that the order of eviction is sought on the main ground of the bonafide requirement of the landlord. Therefore there is no case for the application of section 18 to the facts of the present case. Though the courts below have passed the order of eviction under section 12 (l) (f) and (h) we are of the opinion that the order of eviction is based really and substantially only under section 12 (1) (f) of the Act. The fact that section 1 2(1) (h) is also mentioned in the orders of the courts below does not make the order of eviction purely one under that section, for the main ground of requirement of the landlord is bonafide personal requirement for locating his proposed factory for the manufacture of gold and silver ornaments. A case more or less similar on facts had come up before this Court in Ramnilal P. Mehta vs Indradaman Amritlal Sheth which arose from proceedings taken under the Bombay Rents, Hotel and Lodging House, Rates Control Act (57 of 1947). There the eviction was sought under section 13(1) (g) and 13 (1) (hh) of that Act. 948 Section 13(1) (g) of that Act corresponds to section 12 (1) (f) of the Madhya Pradesh Accommodation Control Act and Section 13(1) (hh) of that Act corresponds to section 12 (1) (g) namely that the building is required for effecting either repairs or alterations. This Court has observed in that case that once the landlord establishes that he bonafide requires the premises for his occupation, he is entitled to recover possession of it from the tenant under the provisions of sub clause (g) of section (13) (1) irrespective of the fact whether he would occupy the premises without making any alterations or after making the necessary alterations. Though the facts of that case are slightly different in that the requirement was for occupation after making some alterations where as in the present case the requirement is for locating the landlord 's factory after demolishing and re constructing the building, the principle deducible from that decision would apply to the facts of even these case. We agree with Mr. U.R. Lalit, learned counsel for the respondent landlord that the order of eviction is based mainly under section 12(1) (f) of the Act and that from the mere fact that section 12(1)(h) also is added would not make the order of eviction only one under section 12(1)(h) of the Act and section 18 of the Act will not be attracted. This fact was not raised in the courts. below, perhaps due to proper undertaking of this position. For these reasons the appeals fail and are dismissed but under the circumstances of the case without costs. H.S.K. Appeal dismissed.

The respondent landlord sought eviction of the appellants tenants under section 12 (1) of the Madhya Pradesh Accommodation Control Act, 1961 on the main ground that the landlord bonafide required the premises for locating his gold and silver ornaments factory after demolishing and reconstructing the building. The courts below found that the requirement of the landlord was bonafide and ordered eviction of the tenants under section 12 (l) (f) and (h) of the Act. In these appeals the tenants contended that since the eviction ordered was under section 12 (l) (h), section 18 of the Act was attracted and it was obligatory on the part of the landlord to provide accommodation of equal extent to the tenants in the new building to be constructed by him. Dismissing the appeals, ^ HELD: In Ramnilal P. Mehta vs Indradaman Amritlal this Court observed that once the landlord establishes that he bonafide requires the premises for his occupation, he is entitled to recover possession of it from the tenant under the provisions of sub clause (g) of section 13 (1) of the Bombay Rents, Hotel and Lodging House. Rates Control Act, 1947 irrespective of the fact whether he would occupy the premises without making any alterations or after making tho necessary alterations. [948B C] Ramnilal P. Mehta vs Indradaman Amritlal Sheth, ; , referred to. Section 13 (1) (g) of the Bombay Rents, Hotel and Lodging House, Rates Control Act, 1947 corresponds to section 12 (1) (f) of tho Madhya Pradesh Accommodation Control Act. [948A] Applying the above principle to the facts of the instant case, though the Courts below have passed the order of eviction under section 12 (1) (f) and (h) the Court is of the opinion that the order of eviction is based really and substan 946 tially only under section 12 (1) (f) of the Act. The fact that section 12 (1) (h) is also mentioned in the order of the Court below does not make the order of eviction purely one under that section, for the main ground of requirement of the landlord is bonafide personal requirement for locating his proposed factory for the manufacture of gold or silver ornaments. Therefore there is no case for the application of section 18 to the facts of the present case. [947F G]