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Appeals Nos. 489 & 490 of 1961. Appeals by special leave from the award dated March 16, 1959, of the Second Industrial Tribunal, Delhi in Reference I. D. No. 20 of 1958. G.S. Pathak, section T. Desai, M. L. Sethi, B. Dutta and Anand Prakash, for the appellant (in C. A. No. 489/61) and the respondent (in C. A. No. 490/61). M. C. Setalvad, Attorney General for India M.K. Ramamurthi, D. P. Singh, R. K. Garg and S.C. Agarwal, for the respondents (in C.A. No. 489/61) and the appellants (in C. A. No. 490/61). December 14. The judgment of the Court was delivered by DAs GUPTA,. ' J. These two appeals by special leave, one by the employer and the other by the workmen, arise out of an industrial dispute that was referred for adjudication to the Industrial Tribunal Delhi, by an order made on January 23, 1958 by the Chief Commissioner, Delhi. The Tribunal made its award on March 16, 1959. Out of the numerous 237 matters that were included in the terms of reference, we are concerned in these appeals only with a few. The employer challenges the award as regards : (1) Scales of pay, (2) Dearness allowance, (3) Adjustments, (4) Leave Rules, (5) Gratuity and (6) Retrospective effect of the award. The workmen also attacked the award as regards the scales of pay and dearness allowance. In addition, they have attacked the award as regards the working hours, leave rules, night shift allowance, retirement age and procedure for taking disciplinary action. At the time of the hearing before us however the learned Attorney General, appearing for the workmen, did not press their claim for modification of the award as regards, night shift allowance, leave rules and procedure for taking disciplinary action and working hours. It appears that when the dispute was before the Conciliation Officer, Delhi, for settlement an interim agreement was arrived at between the parties on December 20, 1957 by which the management agreed to give certain interim reliefs, ranging between Rs. 6/ to Rs. 10/ per month from the month of November 1957. One of the terms of the agreement was that this payment "will be adjusted against the final outcome of the demands by constitutional means". The Tribunal has in its award given a direction that this interim relief shall remain unaffected. Taking this to be a direction that the adjustment as agreed upon of payments under the interim arrangement shall not be made, the employer has in its appeal challenged the correctness of this direction also. The most important of the matters in dispute are the questions of the wage scale, the dearness allowance and the adjustment of existing employees into the new scales. It appears that from 1946 onwards the Company 's workmen have had a consolidated wage scale, no distinction being made between 238 the basic wage and the dearness allowance. This wage scale has remained practically unaltered except for some special increments given in the year 1948. By the award the Tribunal has introduced new wage scale for certain existing categories of workmen and in some cases has introduced new scales, after amalgamating more than one category. Thus certain railway despatchers, advertisers, Box No. sorters, filing clerks and bank clerks who were formerly in the scale of Rs. 50 4 90 EB 4 115 and Junior Clerks etc., who had a scale of Rs. 60 100EB 4 115 have all been put on a new scale of Rs. 70 5 100 EB 5 150. There has been a similar amalgamation or clerks, assistants, cashiers, record keepers and others some of whom were on Rs. 80 175 and some on Rs. 80 203 scale, all of them being now put on a new scale of Rs. 90 200. In both cases the starting salary has been raised; the maximum has been raised for the first category. Supervisors and others who were formerly on three different scales, some on Rs. 125 350, some on Rs. 125 300, and some on Rs. 100 250, have all been amalgamated and have been put on a new scale of Rs. 100 350. Obviously, this would mean a lower starting salary for some and maximum for some. ,job I)Daftries some of whom were on Rs. 70 115 scale and others on Rs. 100 155 have all been put on a new scale of Rs. 80 to Rs. 11,15, resulting thus in a lowering of starting salary for some and a rise of a higher maximum for all. A similar lowering in the starting salary has also occurred in cases of some of the jobmachinemen. They were formerly on two scales, one of Rs.125 175 and the other of Rs. 75 175. The Assistant Foremen in the job Department formerly on Rs. 125 175 are put on a scale of Rs. 125 202. Where there has been no amalgamation the new scale has resulted in a slight increase in some cases both in the starting salary and the maximum. In some catagories, no change has been made at all, 239 It is unnecessary to give more details of the difference between the old scale and the new scale as what has been mentioned above is sufficient to indicate that there has been some change in favour of the workmen, though this change is not much. The employer 's contention before us is that there was no case for any revision whatsoever and the Tribunal acted wrongly in making any change in the old wage scale. The workmen 's contention on the contrary is that the changes do not go far enough. The fixation of wage structure is among the most difficult tasks that industrial adjudication has to tackle. On the one hand not only the demands of social justice but also the claims of national economy require that attempts should be made to secure to workmen a fair share of the national income which they help to produce, on the other hand, care has to be taken that the attempt at a fair distribution does not tend to dry up the source of the national income itself On the one hand, better living conditions for workmen that can only be possible by giving them a "living wage" will tend to increase the nation 's wealth and income on the other hand, unreasonable inroads on the profits of the capitalists might have a tendency to drive capital away from fruitful employment and even to affect prejudicially capital formation itself. The rise in prices that often results from the rise of the workmen 's wages may in its turn affect other members of the community and may even affect prejudicially the living conditions of the workmen themselves. The effect of such a rise in price on the Country 's international trade cannot also be always ignored. Thus numerous complex factors, some of which are economic and some spring from social philosophy give rise to conflicting considerations that have to be borne in mind. Nor does the process of valuation of the numorous factors remain static. While international movements in the cause of labour have for many years influenced thinking and 240 some times even judicial thinking in such matters, in this country, the emergence of an independent demo cratic India has influenced the matter even more profoundly. Gajendragadkar, J. speaking for the Court in Standard vacuum Refining Co., of India vs Its Workmen (1), has observed : "In constructing a wage structure in a given case industrial adjudication does take into account to some extent considerations of right and wrong, propriety and impropriety, fairness and unfairness. As the social conscience of the general community becomes more alive and active, as the welfare policy of the State takes a more dynamic form, as the national economy progresses from stage to stage, and as under the growing strength of the trade union movement, collective bargaining enters the field, wage structure ceases to be a purely arithmetical problem. Considerations of the financial position of the employer and the state of national economy have their say, and the requirements of a workman living in a civilised and progressive society also come to be recognised. " In trying to keep true to the two points of social philosophy and economic necessities which vie for consideration, industrial adjudication has set for itself certain standards in the matter of wage fixation. At the bottom of the ladder, there is the minimum basic wage which the employer of any industrial labour must pay in order to be allowed to continue an industry. Above this is the fair wage, which may roughly be said to approximate to the need based minimum, in the sense of a wage which is "adequate to cover the normal needs of the average employee regarded as a human being in a civilised society. " Above the fair wage is the "living wage" a wage "which will maintain the workman in the highest state of industrial efficiency, which will enable him to (1) , 543. 241 provide his family with all the material things which are needed for their health and physical well being, enough to enable him to qualify to discharge his duties as a citizen." (Cited with approval by Mr. justice Gajendragadkar in Standard Vacuum Company 's Case (1) from "The living Wage" by Philip Snowden). While industrial adjudication will be happy to fix a wage structure which would give the workmen generally a living wage economic considerations make that only a dream for the future. That is why the industrial tribunals in this country generally confine their horizon to the target of fixing a fair wage. But there again, the economic factors have to be carefully considered. For these reasons, this court has repeatedly emphasised the need of considering the problem on an industry cum region basis, and of giving careful consideration to the ability of the industry to pay. (Vide Crown Aluminium 's Case (2); the Express Newspapers Ltd., Case (8) and the Lipton 's Case (4). On an examination of the Tribunal 's award as regards the wage scale, we are satisfied that all the considerations mentioned above were present in the mind of the adjudicator and we are of opinion that there is nothing that would justify us in modifying the award either in favour of the employer or in favour of the workmen. It is stated in the award that before the Tribunal the Company 's representative desired that a fair wage level within its paying capacity should be evolved though at the time he argued that existing wage structure is quite fair ""looking to the Company 's financial position as well as the comparative rates prevailing in the other concern. " The Tribunal has not accepted the Company 's contention that the existing wage structure is fair, though at the same time it has held that the wage system needs no such radical change as alleged by the Union. (1) , 543. (3) (2) ; (4) [1959] Supp. 2 S.C.R. 150. 242 Mr. Pathak, who appeared before us for the Company, did not seriously suggest that the present wage structure gives the employees "a fair wage." He argued generally that no case was made out for any revision of the wage structure. Such an extreme proposition has only to be mentioned to deserve rejection. At the time the Tribunal was dealing with this question the wage scale of the workmen in this concern had remained practically unaltered for almost 12 years 12 years of momentous change through which social ideas have moved forward in favour of workmen getting a better share of the national income; 12 years during which the new India was born and a Constitution was framed for this new democracy "to secure to all its citizens, justice, social and economic and political" and enshrining in its 43rd Article the principle that ,the State shall endeavour to secure by suitable legislation or economic Organisation or in any other way to all workers agricultural, industrial or otherwise" among other things tea living wage and conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities. . . . ". The mere passage of time and these revolutionary changes would be sufficient to convince any right thinking man of the need for revision of wage scales which, on the face of it, were far below the "living wage" and mostly also below the " 'fair wage", provided the industry could bear the additional burden. The case for revision becomes irresistible when one takes into consideration the further fact that the cost of living rose steeply during this period. On the basis of 1939 cost as 100, the index for 1946 was 282. By 1958 it had risen to 389. It may be mentioned that since then there has been a further rise. Nor can it be seriously suggested that this concern cannot bear the burden of an increased wage scale. The Tribunal was, in our opinion, right in its conclusion that the material on record shows that the Company has been prospering and has financial 243 stability. We have for ourselves examined the balance sheets and the other materials on the record and have no hesitation in agreeing with that conclusion. Mr. Pathak 's uphill task in the face of these balance sheets already on the record to show that the Company would not be able to bear the burden of an increased wage scale has been made more difficult by the discovery that even after the imple mentation of the award the Company has made large profits during the years 1959 60, 1960 61 and 1961 62. It appears that when the Company was given special leave to appeal to this Court the operation of the Tribunal 's award was stayed only in so far as it directed the management to pay arrears of the wages determined thereby but the operation of the award in so far as it related to the payment of wages from the date of the award was not stayed; and the management was directed to pay to the workmen from that date wages in accordance with the wage scale fixed by the Tribunal by its award under appeal. The result of this has been that the Tribunal 's award as regards the wage scales has been implemented with effect from the date of the award and it is possible for this Court to know how such additional payment has affected the financial position of the Company. It appears that after meeting the additional charges and also after payment of bonus and appropriation to reserves the net profits for the year 1959 60 rose to Rs. 8,04,508/ . For the year 1960 61 these profits were Rs. 8,44,627/ . For the year 1961 62 the profits are shown in the balance sheet as Rs. 59,955/ . That the Company has been prospering is clear. It has its own aeroplanes and possesses immovable properties of considerable value. It has built up good reserves and inspite of that it has been making good profits. It is reasonable to think that with the progress of education in the country and the increasing news mindedness of the people the future prospects of the Company are no less bright. On a consideration 244 of all this,, we are clearly of opinion that Mr. Pathak 's contention that the wage scale fixed by the Tribunal is too heavy for the Company to bear, must be rejected. Equally unacceptable is Mr. Pathak 's next contention that the wage scale fixed by the Tribunal operates unfavourably on this Company vis a vis two other concerns in Delhi region, viz., the Times of India, Delhi and the Statesman, Delhi. We have compared the wage scales in these two concerns viz., the Times of India, Delhi and the Statesman, Delhi, with the wage scale under the award and have for the purpose of comparison taken into consideration the dearness allowance as fixed by the Tribunal. The comparison shows that while in some cases the Company (the Hindustan Times) will have to pay more to its workmen than what is being paid to workmen of the same category by the Times of India, Delhi and the Statesman, Delhi, in several cases it will be less. It has also to be borne in mind that the Times of India, Delhi and the Statesman, Delhi, are much smaller units of the newspaper industry than the Hindustan Times. These Companies are mere adjuncts to the Times of India, Bombay and the Statesman, Calcutta, respectively. Therefore, even if for some categories the wage scale under the award is higher than that in the Times of India, Delhi and the Statesman, Delhi, that would be no ground for modifying the award in favour of the Company. We have therefore come to the conclusion that there is no ground whatsoever for modifying the wage scale fixed by the award in favour of the Company. On behalf of the workmen it was strenuously contended that the increase given by the award over the previous wage scale falls far short of justice. It is pointed out that even the Times of India, Delhi and the Statesman, Delhi, which are much smaller 245 concerns and of lesser financial stability and strength, pay to some categories of its workmen higher wages than what has been fixed by the award. Thus our attention has been drawn to the fact that for Assistants, the Times of India, Delhi, rate is Rs. 241 402, and in the Statesman, Delhi, it is Rs. 190 297 for some and Rs. 264 463 for others while under the award the scale is Rs. 125 375. There are several other cases also where the wage scale under the award appears to be lower than what is being paid by the Times of India, Delhi and the Statesman, Delhi. It has been urged by the learned Attorney General that in view of the fact that the wage scale of the Company has remained practically stationary for the last 12 years and that it is indisputably well below the fair wage and the further fact that even smaller concerns in this region, like the Times of India, Delhi and the Statesman, Delhi, have been paying more to some categories of its workmen, the wage scale as fixed by the Tribunal should be raised at least for some of the categories. There is undoubtedly some force in the contention and it maybe said that the Tribunal has been rather cautious in the matter of revision of wage scales. Even so, it has to be remembered that where, as in the present case, the proper principles have been applied by the Tribunal, it is not the practice of this Court to interfere, ordinarily, with details of this nature when exercising its special jurisdiction under article 136 of the Constitution. It also appears to us that the very fact that the Tribunal has been cautious in the matter of raising the wage scales has influenced it in the directions it has given on the question of adjustment of the present employees into the wage scale. In this way some relief has been given to the present employees which might otherwise have been given by raising the wage scale. On a consideration of all these facts we have reached the conclusion that it will not be 246 proper for us to modify the wage scales fixed by the Tribunal in favour of the workmen also. On the question of dearness allowance it is not disputed before us that in the circumstances of the resent case the Tribunal acted rightly in awarding dearness allowance at a flat rate for all categories of workmen. On behalf of the Company it was however urged that the Tribunal has made an obvious mistake in fixing the amount of dearness allowance at Rs. 25/ . For fixing the rate at Rs. 25/ the Tribunal has said : "In view of the revised scales as now laid down, I think the same should further be supplemented in the circumstances stated above by a flat rate of dearness allowance in all cases, viz., Rs. 25/ with retrospective effect from the date of reference so that the lowest paid worker will start not less than Rs. 75/ . 1 direct accordingly. " Mr. Pathak points out that the lowest paid worker for whom wage scales have been fixed will be getting under the award a minimum of Rs. 6l0/ so that with the dearness allowance of Rs. 25/ "the lowest paid worker" will start at Rs. 85/ and not Rs. 75/ . Mr. Pathak suggests that the Tribunal has made a mistake in its calculations and that having decided that the lowest paid worker will start at not less than Rs. 75/ , it should have fixed Rs. 15/ and not Rs. 25/as the dearness allowance. This argument however overlooks the fact that the reference as regards the dearness allowance was in respect of all categories of workmen, though the reference as regards scales of pay did not cover some categories, viz., mazdoors and canteen boys. They therefore continue to remain on their old scale of Rs. 50 3 85. When the Tribunal in considering the question of dearness allowance was thinking of the starting pay of the lowest paid worker 247 it had obviously these categories in mind. Having concluded that the lowest paid worker should start at Rs. 75/ as the total amount of basic pay and dearness allowance the necessary conclusion reached by the Tribunal was that Rs. 25/ should be fixed as the dearness allowance. It is, in our opinion, proper and desirable that the dearness allowance should not remain fixed at this figure but should be on a sliding scale. As was pointed out in Workmen of Hindusthan Motors vs Hindusthan Motors (1), the whole purpose of dearness allowance being to neutralise a portion of the increase in the cost of living, it should ordinarily be on a sliding scale and provide for an increase on rise in the cost of living and a decrease on a fall in the cost of living. On a consideration of all the circumstances of this case, we direct that a sliding scale be attached to the dearness allowance of Rs. 25/ per month as awarded by the Tribunal on the lines that it will be liable to be increased or decreased on the basis of Re. 1/ for every ten points in case of rise and fall in the cost of living from the base of 400, the 1939 index being taken to be 100 the sliding scale to take effect from April 1, 1959. This brings us to the question of adjustment of the existing employees into the new scale. The Tribunal has dealt with this matter thus : " '. the adjustment in the new scales shall be made with retrospective effect from the date of the reference, viz., 23rd January, 1958. In making adjustment in the new scales no one shall be adversely affected and it shall be on the line laid down by the Industrial Tribunal in the case of Caltex India Ltd., at p. 659 read with para. 23 of the decision of the Labour Appellate Tribunal, reported in at page 188. " It appears that in the case of Caltex India Ltd. ,(Supra) the Industrial Tribunal, West Bengal, gave (1) 248 the following directions for adjustment of employees into the wage scale fixed by it. All employees for whom the scale has been stated above should be stepped up in the stage next above which the present pay is drawn. A special increment at the rate of one increment in the new scale for every three completed years of service should be given. The employees whose salaries are less than the minimum prescribed will be pulled up to the minimum of the prescribed scale. If the existing salary of an employee is higher than the salary he will be entitled to under the prescribed scale, there will be no cut and he will be stepped up to the nearest increase with the increments given above. After the salaries are adjusted, no employee should be staggered and he will continue to get future increments. If an employee be already drawing a salary which is higher than the maximum prescribed by the award, he will be subjected to no cut in his salary. " This was followed by a direction as regards the date by which the adjustment was to be made. The Labour Appellate Tribunal modified these directions by introducing two provisions : (1) that the maximum of the grade should not be exceeded and (2) that the basic wage that was being paid to an employee at the date of the award of the Tribunal is not to be affected to the employees 'prejudice. The employer 's objection is to the provision that a special increment at the rate of one increment in the new scale for every 249 three completed years of service should be given. It is argued that such a provision may well be appropriate in a case where wage scale is being fixed for the first time or where even if there was already a wage scale in force the rate of increment in the new scale is much higher than that in the old wage scale, but not where, as in the present case, the increments under the new scale and the old scale are practically the same. We are not impressed by this argument. As was pointed out by this Court in a recent judgment in French Motor Car Co., Ltd. vs Its Workmen (1), what adjustment should be given is to be decided when fixing wage scales whether for the first time or in place of an old existing scale has to be decided by industrial adjudication after consideration of all the circumstances of the case. It may well be true that in the absence of any special circumstances and adjustment of the nature as allowed in this case by allowing special increment in the new scale on the basis of service already rendered may not be appropriate. Clearly, however, in the present case the Tribunal took into consideration in deciding this question of adjustment the fact that it had been extremely cautious as regards increasing the old wage scales. Apparently, it thought that it would be fair to give some relief to the existing employees by means of such increase by way of adjustment while at the same time not burdening the employer with higher rates of wages for new incumbents. In these circumstances, we do not see ally Justification for interfering with the directions given by the Tribunal in the matter of adjustment. It will be convenient to consider at this stage the objection raised in the Company 's appeal to the Tribunal 's direction in connection with the interim agreement. As has been stated earlier, this agreement was arrived at between the parties when the dispute was before the Conciliation Officer. The (1)(1962) 250 relevant portion of the agreement is in these words : "It is hereby agreed between the parties that: 1. The Management agrees to make interim relief on the following terms to every employee, excluding working journalists, drawing salary up to Rs. 400 p.m. (i)Advance payment ranging between Rs. 6/ to Rs. 10/ per month beginning from the month of November, 1957 in the following manner : (a) Those with annual increment of Rs. 3/ , Rs. 4/ , and Rs. 5/ Rs. 6/ (b) Those with annual increment of Rs. 6/ Rs. 7/ (c) Thosewith annual increment of Rs. 7/ Rs. 8/ (d) Thosewith annual increment of Rs. 10/ Rs. 10/ Note. (i) In case any employee has already reached the ceiling of his grade, even then he would he entitled for the above benefit. (ii) This payment will be adjusted against the final out come of the present demands by constitutional means." "The final out come of the present demands by constitutional means 's is the Tribunal 's award. Under the agreement therefore what has been received by 251 the workmen as advance payment at Rs. 6/ or Rs. 71or Rs. 8/ or Rs. 10/ per month as interim relief has to be adjusted against what is due to be paid to them under the award. In other words, the Company is entitled under the agreement to deduct the payments made as interim relief from what is payable to these very employees under the award. The Tribunal 's direction that the interim relief shall remain unaffected is in effect an order that term (ii) of the agreement need not be complied with. We can find no justification for such an order. While it is true that industrial adjudication can and often has to modifiy existing contracts between an employer and its workmen, there can be no justification for modification of an agreement of this nature pending final settlement of a dispute. Such a direction that the solemn words of the workmen 's representatives that interim relief which may be given will be adjusted against the relief finally given need not be complied with, is not only unfair to the employer but is also not calculated to serve the best interests of the workmen themselves. For one thing, an order of this nature in one case by a Tribunal that such an undertaking need not be carried out is likely to hamper interim settlements generally; it is also not desirable that workmen should be encouraged to treat their undertakings as of no value. Industrial adjudication must be careful not to encourage bad faith on the part of the workmen or the employer. A direction as given by the Tribunal in this case that the term in the agreement that payments made will be adjusted against the final outcome need not be complied with, is unfortunately to have such effect on workmen. We therefore set aside the Tribunal 's direction that interim relief will remain unaffected and direct that adjustments should be made in terms of the said interim arrangement. This brings us to the question of Leave Rules. The Company objects to the award as regards this matter in so far as it directs the Company to allow 15 252 day 's sick leave with full pay and allowances with accumulation up to six months on production of medical certificate given by a registered medical practitioner. It also objects to the direction that the present practice as to insistence on previous application for the purpose of casual leave should not be relaxed in cases where it cannot possibly be so done in emergent and unforeseen circumstances and the direction that up to 3 days no medical certificate should be asked for. It appears that at present the Management grants 10 days ' casual leave to the business staff and 7 days ' casual leave to all the other categories and there is no sick leave facility available. Mr. Pathak has tried to convince us that in view of the provisions of the , no provision need be made about sickness leave at all. , That this Act has been applied to the Company and that the workmen of the Company get the benefit of this Act is not disputed. It is difficult to see however how the benefit that the workmen will get under this Act can affect the question of sickness leave being provided for the workmen. This Act it has to be noticed does not provide for any leave to the workmen on the ground of sickness. It provides in section 46 (1) (a) for periodical treatment of any insured person in case of his sickness if certified by a duly appointed medical practitioner. It is unnecessary to mention here the several provisions in the Act; viz., Sections, 47, 48 and 49 which deal with the eligibility of workmen for sickness benefit and the extent of the benefit that may be granted. Section 56 of the Act provides for medical benefits to the insured workman or in certain cases to the members of his family. It appears to us clear however that in providing for periodical payments to an insured worker in case of sickness (sickness benefit) or for medical treatment or, attendance to him or the members of his family, the legislature did not intend 253 to substitute any of these benefits for the workmen 's right to get leave on full pay on the ground of sickness. It is next contended that the Tribunal 's direction as regards sickness leave offend the provisions of Delhi Shops and Establishments Act, 1954. Admittedly, a large number of workmen covered by the reference are governed by the provisions as regards leave under the Delhi Shops and Establishments Act, 1954. Section 22 of that Act fixes the maximum for sickness or casual leave with wages to a period of 12 days and further provides that such leave shall riot be accumulated. It is thus clear that as regards those workmen to whom the Delhi Shops and Establishments Act, 1954 applies the Tribunal has acted illegally in fixing the period of sick leave at 15 days and permitting accumulation. We therefore set aside this direction in the award and direct instead that the Company shall allow to the workmen to whom the Delhi Shops and Establishments Act, 1954 applies, sickness or casual leave of a total of 12 days with full pay and allowances and that such leave shall not be accumulated. We are also of opinion that it will not be right to have two separate leave rules for the two classes of workmen, one to whom the Delhi Shops and Establishments Act, 1954 applies and the other two whom it does not apply. For that is likely to be a source of much discord and heartburning. Therefore, in respect also of those workmen to whom the Delhi Shops and Establishments Act, 1954 does not apply, we think that the same period of 12 days in a year with full pay and allowances should be fixed for sickness or causal leave, and there should be no accumultation of such leave; and we direct accordingly. We cannot find any justification for the direction of the Tribunal that the practice of insistence on 254 previous application for the purpose of casual leave should be relaxed in cases where it cannot possibly be so done in emergent and unforeseen circumstances and that upto 3 days no medical certificate should be asked for. The leave rules of the Company as they now stand provide that ordinarily previous permission of the head of the department and the Establishment Manager shall be obtained before casual leave is taken but that when this is not possible due to sudden illness, the head of the Department or the Manager as soon as may be practicable should be informed in writing of the absence from work and of the probable duration of such absence. In our opinion, this provision is reasonable and is calculated to meet the needs of workmen for taking leave without previous permission, in case of emergency. In these circumstances, the further directions as regards this that have been given by the Tribunal appear to us to be unnecessary and are hereby set aside. On the question of gratuity, the only argument seriously pressed by Mr. Pathak was that the scheme as framed by the Tribunal would put undue strain on the Company 's sources. We have already expressed our agreement with the Tribunal 's conclusion that the Company 's financial resources are strong and stable and that not only has the Company been prospering in recent years but that its future prospects are also bright. Therefore, we do not think that the scheme of gratuity as framed by the Tribunal is unduly favourable to the workmen or that it places any undue strain on the Company 's financial resources. One provision in the gratuity scheme which ought to be mentioned is that under it an employee who is dismissed for misconduct shall not be entitled to any gratuity. It has been pointed out by this Court in more than one case that having regard to the nature of gratuity it will not be proper to deprive 255 an employee of the gratuity earned by him because of his dismissal for misconduct and the proper provision to make in this connection is that where an employee is dismissed for misconduct which has resulted in financial loss to the employer the amount lost should be deducted from the amount of gratuity due. As however in the present case, the workmen have not appealed against the award as regards the gratuity scheme framed by the Tribunal, it will not be proper for us to make the modification as indicated above. Coming now to the question of retirement age on which the workmen have appealed, we find there is some controversy as regards the existing position. The workmen stated in their written statement before the Tribunal that " 'at present there are no set rules in the Company in this matter. " Their claim was that the retirement age should be fixed at 60 for all the employees of the Company. According to the Management 's written statement "the existing superannuation system is that the age of retirement is fixed at 55." The Magagement further stated that the age of retirement " 'as fixed, that is, 55 years" is appropriate and should not be raised. In respect of this controversy as regards the existing position there appears to be little material on the record. From the appointment letters of some of the employees that we find on the record it appears that for some appointments made in 1955 the age of retirement was mentioned as 55. In the several letters of appointments made prior to that year no age of retirement has been mentioned. It is not clear, therefore, how on the question of retirement age the Tribunal proceeded on the basis that the "existing retirement" age is 55. Proceeding on this basis the Tribunal directed "that the existing retirement age at 55 years should continue but the workers may be allowed to remain in employment and work up to 60 years if found fit. The question of the further extension 256 should rest with the discretion of the Management. " On behalf of the workmen the learned Attorney General has contended that the assumption that the existing retirement age is 55 is wrong in respect of most of the workmen and that except for a few persons appointed after 1955 no retirement age is fixed either in the letters of appointment or in the standing orders of the Company. For all these employees for whom no retirement age has been fixed already, the learned Attorney General argued on the basis of the decision of this Court in Guest Keen, Williams Private Ltd., vs P. J. Sterling., (1) that it would not be fair to fix any age of superannuation. It was held in that case that it was unfair to fix the age of superannuation of previous employees by a subsequent standing order. The Labour Appellate Tribunal had held that it would be unreasonable and unfair to introduce a condition of retirement at the age of 55 in regard to the prior employees having regard to the fact that when they entered service there was no such limitation. This Court felt that it would not be justified in reversing this decision of the Labour Appellate Tribunal. Dealing next with the question whether it followed that there should be no rule of superannuation in regard to these previous employees the Court said : "In our opinion it is necessary to fix the age of superannuation even with regard to the prior employees, and we feel no difficulty in holding that it would not be unfair or unreasonable to direct that these employees should retire on attaining the age of 60. An option to continue in service even thereafter which the respondent claimed is wholly unreasonable and is entirely inconsistent with the notion of fixing the age of superannuation itself. Once the age of superannuation is fixed it may be open to the employer for special reasons to continue in its employment a workman who has passed that (1) ; 257 age : but it is inconceivable that when the age of superannuation is fixed it should be in the option of the employee to continue in service thereafter. We would accordingly hold that in the circumstances of this case the rule of retirement for the previous employees in the concern should be 60 instead of 55 and that the rule of 55 should apply to all employees who enter the service of the appellant after the relevant standing orders came into force." Assuming therefore that for the majority of the employees there is no existing retirement age it would on the authority of the above case, be open to the Tribunal to fix the age of superannuation even with respect to them. As however the Tribunal 's decision that this age should be 55 is vitiated by the incorrect assumption that there is an existing retirement age of 55 it has been necessary for us to consider the question for ourselves. It appears that before the Tribunal the Union 's representative himself desired that the retirement age should be fixed at 58 years which may be extended up to 60 years in fit cases. Before us the Counsel for the Company did not seriously contest that in consideration of the present day circumstances in the country it would be fair to fix the retirement age at 58. Accordingly, we set aside the Tribunals award on this question of retirement age and fix the age at 58 years, subject to the proviso that it will be open to the Company to continue in its employment a workman who has passed that age. This rule should apply to all the employees of the Company. There remains for consideration the question of retrospective operation of the award. Under section 17A of the , an award shall come into operation with effect from such date as may be specified therein but where no date is so specified it shall come into 258 operation on the date when the award becomes enforceable. Even without a specific reference being made on this question it is open to an industrial tribunal to fix in its discretion a date from which it shall come into operation. The reference, in the present case, included as a matter in dispute the question of retrospective effect in these words : "Whether all the above demands should be made applicable retrospectively with effect from April 1, 1956 and what directions are necessary in this respect ?" The Tribunal rejected the workmen 's claim for giving effect to its award from April 1956. Wherever however the Tribunal has given relief the Tribunal has directed that the award should come into effect from the date of reference, i. e., January 23, 1958. On behalf of the Company Mr. Pathak contends that there is no reason why the award should be given effect to from any date prior to the date of its pronouncement. We are not impressed by this argument . No general formula can be laid down as to the date from which a Tribunal should make its award effective. That question has to be decided by the Tribunal on a consideration of circumstances of each case. There have been cases where this Court has made an award effective from the date when the demand was first made. There are other cases where the orders of the Tribunal directing the award to be made effective from the date of the award has not been interfered with. It is true that in some cases this Court has modified the Tribunal 's award in such a case. But it does not appear however that any general principles have been laid down. Indeed, it is difficult and not even desirable that this Court should try to lay down general principles on such matters that require careful consideration of the 259 peculiar circumstances of each case for the exercise of discretion. It is sufficient to say that we find no reason to interfere with the Tribunal 's direction in this case that the reliefs given by it would become effective from the date of the reference. We therefore allow both the appeals in part by modifying the Tribunal 's award as regards dearness allowance, leave rules and retirement age and also as regards the adjustment of the interim relief as mentioned above. In all other matters in appeal before us the award is confirmed. The modifications made as regards dearness allowance will, as already stated, take effect from April 1, 1959. The modifications as regards leave rules and as regards retirement age will take effect from this date. In both the appeals the parties will bear their own costs. Appeals allowed in part.

The Chief Commissioner, Delhi, referred an industrial dispute for adjudication to the Industrial Tribunal, Delhi, which gave its award on March 16, 1959. Both the appellant and the respondents were dissatisfied with the award and they came to this Court by special leave. The award was challenged by the appellant with regard to scales of pay, dearness allowance, adjustments, leave rules, gratuity and retrospective effect of the award. The respondents attacked the award as regards the working hours, leave rules and retirement age. Held, that while social justice demands that workmen should get a fair share of the national income which they help to produce, it has also to be seen that that does not result in the drying up of the source of national income itself. Inroads 235 on the profits of the capitalists should not be such as have a tendency to drive capital away from fruitful employment and thereby affect prejudicially capital formation itself The Tribunal had applied the correct principles and the award should not be disturbed, Held, also, that the Tribunal had erred in awarding a fixed dearness allowance of Rs. 25 / . The object of dearness allowance being to neutralise part of the rise or fall in the cost of living, it should ordinarily be on a sliding scale. Held, that the contention of the appellant that in view of the provisions of the , no provision need be made about sickness leave at all, was rejected. It was pointed out that in providing for periodical payments to an insured worker in case of sickness or for medical treatment or attendance to him or the members of his family under the Act of 1948, the Legislature did not intend to substitute any of these benefits for the workmen 's right to get leave on full 'Pay on the ground of sickness. Held, that as regards those workmen to whom the Delhi Shops and Establishments Act, 1954, applied,. the Tribunal had acted illegally in fixing the period of sick leave at 15 days and permitting accumulation. The appellant shall allow to the workmen to whom the Delhi Shops and Establishments Act applied, sickness or casual leave for a total period of 12 days with full pay and allowances, and such leave shall not accumulate. As it was not desirable to have two separate leave rules for two classes of workmen, one to whom the Act of 1954 applied and tile other to whom the Act did not apply, it was held that the same rule should apply to other workers also. Held, also, that tile scheme of gratuity as framed by the tribunal was not unduly favourable to workmen and it also did not place any undue strain on the financial resources of tile Company. As regards the provision in the gratuity scheme that an employee who is dismissed for misconduct shall not be entitled to any gratuity; it was held that the proper provision should be that where an employee is dismissed for misconduct which has resulted in financial loss to the employer, the amount of loss should be deducted from the amount of gratuity due. The award of the Tribunal on tile question of retirement age was set aside and the retirement age was fixed at 58, subject to the proviso that it would be open to the company to continue in its employment a workmen who had passed that age, The rule was to apply to all tile employees of the Company. 236 No general formula could be laid down as to the date from which a Tribunal should make its award effective. That question has to be decided by the Tribunal on consideration of the circumstances of each case. There was no justification for interfering with the direction of the Tribunal that in this case the reliefs given by it should become effective from the date of the reference. Standard Vacuum Refining Co., of India vs Its workmen, , M/s. Crown Aluminium Works vs Its workmen; , , Express Newspapers Ltd. vs Union of India, , M/S. Lipton Ltd. vs Their Workmen [1959] Supp. 2 section C. R. 150, Workmen Hindustan Motors vs Hidustan Motors, 52, French Motor Car Co. vs Their Workmen, and Guest Keen, Williams (P) Ltd. vs P. J. Sterling [1961] 1 section C. R. 348, referred to.

civil Appeal No. 353 of 1955. On appeal by special leave from the judgment and order dated the 22nd August 1955 of the Labour Appellate Tribunal of India at Lucknow in Misc. Case No. 111 C 650 of 1954. Veda Vyas, (section K. Kapur and N. H. Hingorani, with him) for the appellant. J. N. Bannerji, (P. C. Agarwalla, with him) for the respondent. 561 1956. May 8. The Judgment of the Court was delivered by VENKATARAMA AYYAR J. The appellant is a company registered under the Indian Companies Act, and owns a factory called Modi Oil Mills in the district of Meerut. The respondents are workmen employed in the Mills. The business of the Mills consists in the manufacture of oils and paints. On 12 7 1954 the management put up the following notice: "Notice is hereby given that due to non availability of groundnut seed and neem seed at the parity with the ruling prices of the groundnut oil and neem oil, the Management is reluctantly compelled to close the Groundnut Crushing Section and Neem Section till the next groundnut season and thus the workers in the attached list are surplus and their services are laid off with effect from 14th July, 1954. Workers, thus affected, shall be paid compensation according to Industrial Disputes (Amendment) Act, 1953, subject to conditions laid therein. It is further notified that the time of the attendance as provided in Section 25(D) and (E) shall be 10 a.m. for all the laid off workers". Pursuant to this notice, 142 workmen mentioned therein, being the respondents in this appeal, were laid off from the 14th July 1954. On 26 7 1954 the workmen acting through their Union sent a notice to the management demanding full wages for the period of lay off on the ground that it was unjustified and illegal. The management denied these alle gations, and. refused the demand. This being an industrial dispute as defined in section 2(k) of the Industrial Disputes Act XIV of 1947, in the ordinary course, proceedings would have been taken with reference thereto under the provisions of that Act. But there was at that time another industrial dispute between the parties pending final adjudication. That dispute had been referred under section 10 of the Industrial Disputes Act for adjudication to the Regional Conciliation Officer, Meerut. He had pro nounced his award, and against that, both the parties 562 had preferred appeals to the Labour Appellate Tribunal, and they were pending at the date of the, notice. The Industrial Disputes (Appellate Tribunal) Act XLVIII of 1950, hereinafter referred to as the Act, contains special provisions with reference to certain disputes which might arise between parties, when there is already pending adjudication between them another industrial dispute. They are sections 22 and 23, which are as follows: "22. During the period of thirty days allowed for the filing of an appeal under section 10 or during the pendency of any appeal under this Act no employer shall (a)alter, to the prejudice of the workmen concerned in such appeal, the conditions of service applicable to them immediately before the filing of such appeal, or (b)discharge or punish, whether by dismissal or otherwise, any workmen concerned in such appeal, save with the express permission ' in writing of the Appellate Tribunal. Where an employer contravenes the provisions of section 22 during the pendency of proceedings before the Appellate Tribunal, any employee aggrieved by such contravention, may make a complaint in writing, in the prescribed manner to such Appellate Tribunal and on receipt of such complaint, the Appellate Tribunal shall decide the complaint as if it were an appeal pending before it, in accordance with the provisions of this Act and shall pronounce its decision thereon and the provisions of this Act shall apply accordingly" '. On 24 8 1954 the respondents filed an application before the Labour Appellate Tribunal under section 23 of the Act. Therein, they alleged that the lay off was not bona fide, because the ground given therefor, namely, non availability of groundnut and neem seeds at parity with ruling prices was not true; that further in view of the pendency before the Labour Appellate Tribunal of an industrial dispute between the parties, the lay .off was in contravention of section 22(a) of the Act, and they accordingly prayed 563 that they might be awarded by way of compensation full wages for the entire period of the lay off. The appellant contested the claim. It contended that the non availability of groundnut and neem seeds as ,mentioned in the notice was true, and that the lay off was bonafide. It also claimed that section 22(a ) of the Act had no application to the dispute, as the notice distinctly stated that the workmen would be paid compensation as provided in section 25 C of the Industrial Disputes Act as amended by Act XLIII of 1953. It also contended that under that section compensation was payable only for the first 45 days at the rate mentioned in the body of the section and not for any period subsequent thereto. The Tribunal held that the lay off was justified. It further held on a construction of section 25 C that the workmen were entitled to half the basic wages and dearness allowance not merely for the first 45 days but for the entire period, and that as the appellant did "not observe them provisions 'of that section", there was an alteration of the conditions of service within section 22(a) of the Act. It accordingly awarded compensation for the whole of the period at 50 per cent. of the basic wages and dearness allowance. Against this decision, the management has preferred this appeal by special leave. On behal of the appellant, Sri Veda Vyas contended firstly, that on its finding that the lay off was justified, the only order which the Tribunal could have passed was one of dismissal of the petition filed by the respondents and that the award of compeneation was in consequence, without jurisdiction; and secondly, that on a true construction of section 25 C of the industrial Disputes Act, the workmen were entitled to compensation only for a period of 45 days as provided in proviso (a) to section 25 C. We are of opinion that both these contentions are well founded. On the first question, the jurisdiction of the Tribunal to grant relief under section 23 of the Act arises only if it is made out that there was contravention of section 22 by the management. The respondents ,understood this position quite correctly, and with 564 view to bring themselves within section 23, they alleged that the lay off was not bona. ' fide, inasmuch as, in fact, groundnut and neem seeds were available. This contention rests on the supposition that the conditions under which workmen could be laid off are conditions as to their service, 'and that when the employer lays off workmen without proper grounds therefor, it is a violation of the conditions of service within section 22(a) of the Act. There was some argument before ' us whether lay off, whether justifiable or otherwise, could be brought within section 22(a) of the 'Act as amounting to breach of the conditions of service. On the one hand, the argument was that the expression "conditions of service" would include only such conditions as would operate when the workmen were actually in service ,such as the quantum of wages, hours of work, provision for leave and so forth, and that when there was a lay off, these conditions could by their very nature have no application, and that if the lay off 'was unjustified, that would give the workmen a right to take proceedings under the 'provisions of the Industrial Disputes Act, but that they could make no claim under section 23 as for a breach of the provisions of section 22(a). The contention on the other side, was that the workmen and the management ,should be deemed to have agreed that there would be lay off only for good and proper reasons and under conditions permitted by law, and that if those conditions were not satisfied, the lay off would be an alteration of the conditions of service within section 22(a). The question is one of some importance, but it is unnecessary to express any opinion on it, as counsel for the appellant conceded after some argu ment that conditions under which the workmen could be laid off would be conditions of service. On this footing, he contended that as the lay off *as, in fact, justified, there Was no breach of those conditions, and that, in consequence, section 22(a) of the Act had no application. On behalf of the respondents, it is argued that the lay off must, by its very nature, be temporary and of short duration, and that if it is for 565 a long or indefinite period as in the present case, it could not be said to be a proper lay off such as could be deemed to have been agreed to by the workmen, and that section 22(a) of the Act would, therefore, be applicable. It is common ground that there are no statutory rules prescribing the conditions under which there could be a lay off. If there had been, they would operate as conditions of service between the parties, and then the question would simply have been whether there had been a compliance with them. Under the provisions of the Industrial Employment (Standing Orders) Act XX of 1946, certain Standing Orders had been framed with reference to this matter. Counsel on both sides state that after the enactment of the Industrial Disputes (Amendment) Act XLIII of 1953, they are no longer in force, and that there are no statutory provisions applicable to the present dispute. We must, therefore, decide the question on the footing that the only condition which the parties might be taken to have agreed to is that the lay off should be for adequate grounds and for a reasonable period. On this question, there is a clear finding in favour of the appellant. The Tribunal has found that groundnut and neem seeds were not available at parity prices, and that for that reason, the work had to be stopped. It is not likely that businessmen would cut their profits to spite the workmen. The period of the lay off was expressed to be until the next groundnut season and we have been told that the season for groundnut begins sometime in November December. In fact, all the respondents have been reemployed in relays from September onwards, and by the first week of December all of them had been absorbed. On the finding of the Tribunal that the lay off was justified, it follows that the application of the respondents under section 23 of the Act was liable to be dismissed on the ground that there had been no contravention of section 22(a). But., notwithstanding this finding, the Tribunal went on to hold that the application under section 23 of the Act was maintainable. To appreciate the 566 reasoning 'behind this decision, it is necessary to refer to section 25 C of the Industrial Disputes Act, which runs as follows: "Right of workmen laid off for compensation: Whenever a workman (other than a badli workman or a casual workman) whose name is borne on the muster rolls of an industrial establishment and who has completed not less than one year of continuous service under an employer is laid off, he shall be paid by the employer for all days during which he is so laid off, except for such weekly holidays as may intervene, compensation which shall be equal to fifty per cent. of the total of the basic wages and dearness allowance that would have been payable to him bad he not been so laid off: Provided that (a)the compensation payable to a workman during any period of twelve months shall not be for more than forty five days except in the case specified in clause (b); (b)if during any period of twelve months, a workman has been paid compensation for forty five days and during the same period of twelve months he is again laid off for further continuous periods of more than one week at a time, he shall, unless there is any agreement to the contrary between him and the employer, be paid for all the days ' during such subsequent periods of lay off compensation at the rate specified in this section". The appellant does not dispute the right of the respondents to compensation, and, in fact, they were informed by the very notice dated 12 7 1954 under which they were laid off, that compensation would be paid to them in accordance with section 25 C. It is as regards the quantum of compensation payable under that section that the parties are disagreed. It will be remembered that the lay off commenced on 14 7 1954 and was to continue until the next groundnut season, and that the workers were actually absorbed in batches from September, and that by the first week of December, they had all of them been employed. There was thus one continuous lay off 567 for periods varying from 57 to 121 days. The contention of the appellant is that, on these facts, the workmen were entitled to compensation only in accordance with proviso (a) to section 25 C, and that they would therefore be entitled to 50 per cent. of the basic wages and dearness allowance for the first 45 days and for the rest of the period, no compensation was payable. The respondents agree that proviso (a) to section 25 C applies to the first period of 45 days; but they contend that for the remaining period of the lay off, the governing provision is proviso (b) to sec tion 25 C, and that under that proviso, they would ,be entitled to compensation as provided in the body of the section, i.e. 50 per cent. of the basic wages and dearness allowance, for the remaining period also. This contention was accepted by the Tribunal, and holding that the compensation awarded by the appellant was not in accordance with section 25 C, it decided, as already mentioned, that there was an alteration of the conditions of service, and accordingly awarded compensation under section 23 of the Act. It is contended for the appellant that the construction which the Tribunal has put on section 25 C is erroneous, and that the amount of compensation offered by the appellant was the correct amount payable under that section. As already stated, there is no dispute that the compensation payable for the first 45 days has to be determined in accordance with proviso (a) to section 25 C. The dispute is only as to whether for the rest of the period of lay off the workmen are entitled to compensation under proviso (b) to section 25 C. That proviso would apply only if the workmen had been paid compensation for 45 days, and were again laid off for further periods of more than one week at a time. On the wording of the section, it is clear that the lay off which falls within proviso (b) to section 25 C must be distinct from that for which compensation had been paid in accordance with proviso (a) to section 25 C and subsequent thereto in point of time. And as, in the present case, there was one continuous lay off for the entire period, proviso (b) could have no application. 568 Counsel for the respondents contends that though there was only one lay off, it should notionally be split up into two, the first period being the 45 days covered by proviso (a) to the section and the rest of the period, by proviso (b) It is arguable that there could be a second and distinct lay off following the first without a break, as for example, when the management first notifies lay off for a period of 45 days and pays compensation therefor, and again issues a fresh notification at the end of the period declaring a further lay off for a period exceeding 7 days in continuation of the notified lay off, and that that would fall within proviso (b). But, in the present case, there was only one notification. , and the period specified therein was up to the next season. By no straining of the language. of proviso (b) to section 25 C can such a lay off be brought within its purview. The respondents rely in support of their contention on the decision in Automobile Products of India Ltd. vs Their Workmen(1). But that decision gives no effect whatever to the words "again laid off", and moreover, if the construction adopted therein is correct, there would be no need for the provisos (a) and (b), as what would be payable under them, according to the respondents, would become payable under the body of the section itself. If, as observed in the above decision, this conclusion leads to an anomalous position, it is for the legislature, if it thinks fit, to amend the section and not for the Tribunal to construe it otherwise than what it plainly means. We are accordingly of opinion that the respondents are entitled to compensation only for the 45 days as provided in proviso (a), and that as the appellant had offered to pay the same by its notice dated 12 7 1954, there was no aIteration of the conditions of service within section 22 of the Act, and that, in consequence, the petition of the respondents was liable to be rejected. We accordingly allow the appeal, set aside the order of the Tribunal, and dismiss the petition of the respondents. The parties will bear their own costs. (1) [19551 1 Labour Law Journal 67.

During the pendency of an appeal before the Labour Appellate Tribunal in respect of a prior industrial dispute between the same parties the management laid off certain workmen and offered to pay compensation equal to half the basic wages and dearness allowance for the first 45 days in accordance with the provisions of proviso (a) to section 25 C, Industrial Disputes Act. The workmen made an application to the Tribunal under section 23 of the Industrial Disputes (Appellate Tribunal) Act, 1950 alleging that there was a breach of section 22(a) of the same Act, and that the lay off was not bona fide and claimed full wages for the entire period of the lay off as compensation. The Tribunal held that the lay off was justified but that the workmen were entitled to half the basic wages and dearness allowance not merely for the first 45 days but for the entire period under proviso (b) to section 25 C. Held, that on the finding of the Tribunal that the lay off wag justified the application under section 23 was liable to be dismissed. Proviso (b) to section 25 C, Industrial Disputes Act, is only applicable in case of a second and distinct lay off and does not apply to a period subsequent to the first 45 days of one continuous lay off.

iminal Appeal No. 72 of 1961. Appeal by special leave from the judgment and order dated December 20, 1960, of the Bombay High Court in Criminal Apeal No. 1207 of 1960. Jai Gopal Sethi, C.L. Sareen and R.L. Kohli, for the appellant, G. C. Mathur and P. D. Menon, for the respondent. July 24. The Judgment of the Court was delivered by SHAH, J. On May 1, 1962, we ordered after arguments were concluded that the appeal be allowed and the conviction of the appellant be set aside. We now proceed to record our reasons in support of the order. 398 The appellant, Ramesh Amin, and seven others were tried in the Court of Session, Aurangabad, for offences punishable under sections 366, 366A. Indian Penal Code, and abetment thereof. The appellant was the third accused at the trial. The Sessions Judge convicted accused Nos. 1 to 4 and 7 of the offences charged against them and sentenced them to suffer rigorous imprisonment for two years for each offence, and acquitted the rest. The High Court of Bombay entertained appeal of accused Nos. 1 to 4 (but not of accused No. 7) and set aside the order of conviction and sentence against them for the offences punishable under section 366 read with section 34 and section 366A of the Indian Penal Code. The High Court, however, convicted the appellant of abetting the seventh accused in inducing a minor girl, Anusaya, to go with other persons from her residence at Kabadipura to Gulzar Theatre, and then to a house known as Bohori Kathada with intent that she may or knowing that she was likely to be seduced to illicit intercourse. With special leave the appellant has appealed to this Court. The seventh accused, Patilba, is a resident of Aurangabad, and the eighth accused is his wife. Anusaya is the daughter of Shakuntala by her husband Kashinath. After the death of Kashinath, Shakuntala brought her infant daughter Anusaya to the house of Patilba and started living with him as his mistress. Sometime later Shakuntala left the house of Patilba and took up residence at Nasik but Anusaya 'continued to live with Patilba and was brought up by him. Marriage was arranged by Patilba between Anusaya and one Ramlal, but Anusaya declined to live with her husband. Pat ilba introduced Anumaya to some "customers" and she started indulging in promiscuous intercourse, for money. It was the prosecution case that on January 13, 1960, the appellant went to the residence of Patilba and asked him to bring Anusaya and 399 one Chandrakala (a woman following the profession of a prostitute) to the Gulzar Theatre, and accordingly, Patilba, the eighth accused, Chandrakala and Anusaya went to the Theatre. At the instance of the appellant, Anusaya and Chandrakala were taken by one Devidas (who has given evidence as an approver) to Bohori Kathada. Sub Inspector Pagare of the Police Station City Police Chowk, Aurangabad, had received information that some persons were consuming illicit liquor in a room at Bohori Kathada and he arranged to raid that house. Pagare found accused Nos. 1 to 5 and Devidas in a room consuming liquor. He also found Chandra kala and Anusaya in an inner apartment, Persons found in the room were arrested and sent for medical examination to the local Civil Hospital, and it was found that Anusaya had not attained the age of 18 years. Pagare then laid an information before the Judicial Magistrate, Aurangabad, for offence punishable under the Bombay Prohibition Act, 1949 (we are informed at the Bar that in respect of those offences the accused were acquitted and we are not concerned in this case with those offence) and also for offences punishable under sections 366 and 366A of the Indian Penal Code against nine persons including the appellant, Patilba and Devidas. In the course of proceedings for commitment to the Court of Session, Devidas was tendered pardon on condition of his making a full disclosure of the circumstances within his knowledge. The case was then committed to the Court of Session, Aurangabad for trial. The Court of Session held that accused Nos. 1 to 4 had in furtherance of their com mon intention kidnapped Anusaya a girl below the age of 18 years in order that she may be forced or seduced to illicit intercourse or knowing it to be likely that she would he forced or seduced to illicit intercourse, and the seventh accused Patilba had abetted the commission of that offence, and that accused Nos. 1 to 4 and 7 had induced Anusaya to 400 go from her residence to the Gulzar Theatre and from the theatre to Bohori Kathada with intent that she may be or knowing that it was likely that she would be forced or seduced to illicit intercourse. He accordingly convicted accused Nos. 1 to 4 of the offence under section 366 read with section 34 of the Indian Penal Code and also of the offence under a. 366A of the Indian Penal Code. The High Court of Bombay in appeal acquitted accused Nos. 1 to 4 of the offence of kidnapping because, in their view, accused Nos. 1 to 4 had "nothing whatever to do with the original kidnapping by Patilba (the 7th accused) and since he was not the lawful guardian of this girl, her being bro ught to this room cannot be regarded as kidnapping". The learned Judges also acquitted accused Nos, 1 to 4 of the offence under section 366A observing that ,,there is no evidence of any direct talk between any of the accused and the girl, nor even of any inducement offered through Patilba (accused No. 7). Even so far as accused No, 3 is concerned, there is no direct talk between Anusaya and accused No, 3 which can be regarded as an inducement to her to move either from the house of Patilba or from the theatre to the room in question. " But in their view the case against tile appellant "did not end with this" : They observed. "The evidence. . . . clearly indicates that accused No. 3 instigated Pat ilba and Devidas to bring the girl to the theatre and thereafter to the room in question. Patilba, as we have stated, being in custody of this girl and the girl being minor and helpless, induced or forced her to go to the cinema and thereafter to this room and actually left her there. So far Patilba was concerned, he intended that she should be forced or seduced to illicit intercourse by one or the other of 401 the accused. Accused No. 3 by asking Patilba to bring the girl to the theatre and asking Devidas and Patilba to bring the girl to the room clearly instigated Patilba in the comm ission of this offence. He must, therefore, be held clearly guilty of the offence of abet ment of this offence by Patilba. " The High Court accordingly convicted the appellant of the offence under section 366A read with section 109 of the Indian Penal Code, because, in their view, he had abetted the commission of an offence punishable under section 366A by Patilba by instigating the latter to bring Anusaya to the theatre and by by further instigating Patilba and Devidas to bring Anusaya from the theatre to Bohori Kathada. In our view, the appellant cannot in law be held guilty of abetting the commission of an offence punishable under section 366A, Indian Penal Code, by Patilba. The facts proved by the evidence are these: Anusaya at the material time had not attained the age of 18 years. She was brought up by Patilba and even though she had married Ram Lal she was at the material time and for many months before living under the guardianship of Patilba. For a long time before the date of the offence Anusaya was accustomed to indulge in promiscuous intercourse with customers" for money. She used to entertain, as she herself admitted, "one or two customers every day" and bad before the date of the offence been habituated to the life of a prostitute. On the day in question she and her companion Chandrakala went to the Gulzar Theatre accompanied by Patilba. In the theatre Anusaya and Chandrakala were seeking customers: they repaired during the break in the show to the entrance of the theatre for that purpose, but she had to return disappointed because they found a police van parked near the 402 entrance. Anusaya and the 6th accused went to Bohori Kathada for carrying on their profession as prostitutes. There is no evidence that she was not willing to go to Gulzar Theatre on the night in question nor is there any evidence that she was unwilling to go to Bohori Kathada to which she and her companion were invited for the purpose of prostitution. Do these facts make out a case against the appellant of abetment of the offence of procuration of a minor girl punishable under section 366A of the Indian Penal Code? Section 366A was enacted by Act XX of 1923 to give effect to certain Articles of the International Convention for the Suppression of Traffic in Women and Children signed by various nations at Paris on May 4, 1910. There are three principal ingredients of the offence: (a) that a minor girl below the age of 18 years is induceed by the accused, (b) that she is induced to go from any place or to do any act, and (c) that she is so induced with intent that she may be or knowing that it is likely that she will be forced or seduced to illicit intercourse with another person, The evidence clearly establishes that Anusaya had not at the material time attained the age of 18 years. But there is no evidence on the record that Patilba induced Anusaya to go to the theratre or from the theatre to Bohori Kathada. It must be assumed that when Patilba accompanied Anusaya to the theatre and from the theatre to the Bohori Kathada at the suggestion of the appellant he knew that she was going for plying her profession as a prostitute. But in our judgment a person who merely accompanies a woman going out to ply her profession of a prostitute, even if she has not attained the age of eighteen years, does not thereby commit an offence under section 366A of the Indian Penal Code. It cannot be said that thereby he induces her to go from any place or to do any act with the intent or knowledge contemplated by the section. We agree that seduction to illicit intercourse contemplated by the section does not mean merely straying from the path of virtue by a female for the first time. The verb "seduce ' is used in two senses. It is used in its ordinary and narrow, sense as inducing, a woman to stray from the path of virtue for the first time: it is also used in the wider sense of educing a woman to submit to illicit intercourse at any time or on any occasion. It is in the latter sense that the expression has been used in as. 366 and 366A of the Indian Penal Code which sections partially overlap. This view has been taken in a large number of cases by the Superior Courts in India, e. g. Prafula kumar Basu vs The Emperor (1), Emperor vs Laxman Bala (1), Krishna Maharana vs The King Emperor (3), In re Khalandar Saheb (4) Suppiah vs Emperor (5), Pessumal vs Emperor (6), King Emperor vs Nga Ni Ta (7) and Kartara vs The State (8). The view expressed to the contrary in Emperor vs Baijnath (9), Saheb Ali vs Emperor (11) Aswini Kumar Roy vs The State (10) and Nara vs Emperor (12) that the phrase used in section 366 of the Indian Penal Code is "Properly applicable to the first act of illicit intercourse, unless there be proof of a return to chastity on the part of the girl since the first act" is having regard to the object of the Legislature unduly restrictive of the content of the expression "seduce" used in the Code. But this is not a case in which a girl who had strayed from the path of virtue when she (1) Cal. 1074 (2) Bom. (3) Pat. (4) A. I. R. (5) A. I. R. 1930 Mad. (6) (7) (8) I. L. R. [1957] Punjab 2003. (9) All. (10) Col. 1457 (11) A. I. R. A. I. R. 404 was in the custody of her guardian and had with a view to carry on her affair accompanied her seducer or another person. Such a case may certainly fall within the terms of s.366 or s.366A whichever applies. But where a woman follows the profession of a prostitute, that is, she is accustomed to offer herself promiscuously for money to "customers", and in following that profession she is encouraged or assisted by someone, no offence under section 366A is committed by such person, for it cannot be said that the person who assists a girl accustomed to indulge in promiscuous intercourse for money in carrying on her profession acts with intent or knowledge that she will be forced or seduced to illicit intercourse. Intention on the part of Patilba or knowledge that Anusaya will be forced to subject herself to illicit intercourse is ruled out by the evidence: such a case was not even suggested. Seduction implies surrender of her body by a woman who is otherwise reluctant or unwilling to submit herself to illicit intercourse in consequence of persuasion, flattery, blandishment or importunity, whether such surrender is for the first time or is preceded by similar surrender on earlier occasions. But where a woman offers herself for intercourse for money not casually but in the course of her profession as a prostitute there are no scruples nor reluctance to be overcome, and surrender by her is not seduction within the Code. It would then be impossible to hold that a person who instigates another to assist a woman following the profession of a prostitute abets him to do an act with intent that she may or with knowledge that she will be seduced to illicit intercourse. Appeal allowed.

The appellant was convicted of the offence under section 366A read with section 109 of the Indian Penal Code. The case against him was that A who was a minor below the age of 18 years was brought up by P and had before the date of the offence been habituated to the life of a prostitute. On the day in question the appellant went to the residence of P and asked him to bring A to a theatre, P accompanied A to the 397 theatre where the latter sought some customers. They were taken by another person to a place called Bohori Kathada at which place A was invited for the purpose of prostitution. When P accompanied A to the theatre and from there to Bohori Kathada he knew that she was going for plying her profession as a prostitute. Held, that the appellant could not in law be held guilty of abetting the commission of an offence under section 366A of the Indian Penal Code by P. A person who merely accompanies a woman going out to ply her profession of a prostitute, even if she has not attained the age of 18 years, could not be said thereby to induce her to go from any place or to do any act with the intent or knowledge that she will be forced or seduced to illicit intercourse within the meaning of section 366 A. Seduction implies surrender of her body by a woman who is otherwise reluctant or unwilling to submit herself to illicit intercourse whether such surrender is for the first time or is preceded by similar surrender on earlier occasions ; but where a person in the course of her profession as a prostitute offers herself for profession as a prostitute offers herself for intercourse, there are no sucruples nor reluctance to be overcome, and surrender by her is not seduction within the Code.

Civil Appeal No. 1933 of 1979. Appeal by Special Leave from the Judgment and Order dated the 20th July, 1979 of the Delhi High Court in F.A.O. (OS) No. 86 of 1979. A. K. Sen, P. P. Rao, N. D. Garg, R. Venkataramani and section K. Bisaria for the Appellant. K. K. Venugopal, H. K. Puri and section C. Dhanda for the Respondent. The following Judgments were delivered TULZAPURKAR, J. This appeal at the instance of the appellant company (original plaintiff) is directed against an interlocutory order passed by the High Court in F.A.O. (O.S.) 86 of 1979 refusing to grant temporary injunction in a suit which is still pending. Principally it raises two substantial questions: (a) whether a post service restrictive covenant in restraint of trade as contained in cl. (10) of the service agreement between the parties is void under section 27 of the Indian Contract Act ? and (b) whether the said restrictive covenant, assuming it to be valid, is on its terms enforceable at the instance of the appellant company against the respondent ? On March 21, 1980 we dismissed the appeal at the conclusion of the hearing and it was stated that our reasons will follow. We now proceed to give our reasons for the dismissal. Briefly stated the facts are these. The appellant company carries on business as valuers and surveyors, undertaking inspection of quality, weighment, analysis, sampling of merchandise and commodities, cargoes, industrial products, machinery, textiles, etc. It has estabilshed a reputation and goodwill in its business by developing its own techniques for quality testing and control and possesses trade secrets in the form of these techniques and clientele. It has its head office at Calcutta and a branch at New Delhi and employs various persons as managers and in other capacities in Calcutta, New Delhi and other places. On March 27, 1971 the respondent was employed by the appellant company as the Branch Manager of its New Delhi office on terms and conditions contained in the letter of appointment issued to him on the same date. Clause (10) of the terms and conditions of employment placed the respondent under a post service restraint that he shall not serve any other competitive firm nor carry on business on his own in similar line as that of the appellant company for two years at the place of his last posting. Since it is vital we set out the said clause which ran thus: "10. That you will not be permitted to join any firm of our competitors or run a business of your own in similar 1283 lines directly and/or indirectly, for a period of two years at the place of your last posting after you leave the company. " On November 24, 1978 the appellant company terminated the respondent 's services with effect from December 27, 1978. Thereafter the respondent started his own business under the name and style of "Superintendence and Surveillance Inspectorate of India" at B 22, South Extension, New Delhi on lines identical with or substantially similar to that of the appellant company. On April 19, 1979 the appellant company brought a suit in the Delhi High Court on its Original Side claiming Rs. 55,000/ as damages on account of the breach of the aforesaid negative covenant contained in cl. (10) and for permanent injunction restraining the respondent by himself, his servants, agents or otherwise, from carrying on the said business or any other business on lines similar to that of the appellant company or associating or representing any competitors of the appellant company before the expiry of two years from December 27, 1978. After filing the suit the appellant company sought an interim injunction by way of enforcing the aforesaid negative covenant and a Single Judge of the Delhi High Court initially granted an ad interim injunction on April 29, 1979 which was confirmed by him on May 25, 1979 after hearing the respondent. The learned Single Judge took the view that the negative covenant, being in partial restraint of trade, was reasonable inasmuch as it was limited both in point of time (two years) as well as the area of operation (New Delhi which was his last posting) and, therefore, was not hit by section 27 of the Contract Act. He also took the view that the negative covenant was enforceable as the expression "leave" in cl. (10) was not confined to voluntarily leaving of the service by the respondent but was wide enough to include termination of his services by the appellant company. On appeal by the respondent, a Division Bench of the High Court reversed the order of the learned Single Judge on both the points and that is how the two questions indicated at the commencement of this judgment arise for our determination in this appeal. Since in our view the appeal is capable of being disposed of on the second point we think it unnecessary to decide or express our opinion on the first question which was hotly and ably debated at the bar by counsel on either side but we will indicate briefly the rival lines on which the arguments proceeded. On the one hand counsel for the respondent tried to support the view of the Division Bench by pointing out that in India the law on the subject was codified by statute which was exhaustive and on the topic of agreements in restraint of trade and exceptions in that behalf the Indian Courts cannot invoke or derive 1284 assistance from the English Common Law and the exceptions developed thereto by English decisions from time to time, that section 27 of the Indian Contract Act was absolute in terms in that it did not make any distinction between partial or general restraints and that unless a case was covered by the Exception provided thereunder every restraint of trade, whether partial or general would be void under that section. In this behalf reliance was placed on a number of decisions of various High Courts commencing from the celebrated decision of Sir Richard Couch, C.J. in Madhub Chunder vs Rajcoomar Doss(1) where section 27 was interpreted in the aforesaid manner. Counsel urged that a distinction between a negative covenant operative during the period of employment and one that is operative during post service period has been well recognised and that all post service restrictive covenants were prima facie void, that the only exceptions were those given in the statute and that the exceptions developed by the English case law could not be invoked here. According to him the test of reasonableness had been wrongly adopted by the learned Single Judge. He pointed out that accepting the interpretation placed on section 27 by High Courts even the Law Commission has recommended a change in that by suitable legislation. He further pointed out that the Division Bench has gone a step further and after considering whether the instant case would fall within those exceptions developed by English case Law has come to a negative conclusion against the appellant company. On the other hand counsel for the appellant company contended that the interpretation of section 27 as given by various High Courts including Sir Richard Couch 's decision in Madhub Chunder 's case (supra) has not been so far considered by this Court and it requires to be examined and considered by this Court especially in view of certain observations made by this Court in Niranjan Shankar Golikari 's (2) case which warrant such reconsideration. Though it was a case dealing with negative covenant that was operative during the employment period counsel pointed out that entire case law Indian as well as English was discussed and this Court at page 389 of the report observed thus: "The result of the above discussion is that considerations against restrictive covenants are different in cases where the restriction is to apply during the period after the termination of the contract than those in cases where it is to operate during the period of the contract." 1285 Tulzapurkar, J.) According to counsel the very fact that this Court has observed that considerations qua post service restrictions are different from those that are to be considered in cases of restrictions during the employment suggests that perhaps a rigorous test of reasonableness may have to be adopted in the former cases but there would be cases where post service restrictions, if reasonable, even after applying the rigorous tests may be valid as not falling under section 27 of the Act, it was, therefore, not correct to say that all post service restrictions were void. His precise contention was that even a post service restrictive covenant, if it was reasonable, qualified or limited in operation both in point of time and area, as was the case here, does not amount to any restraint of trade at all within the meaning of section 27 and such restrictive covenant could be justified as being necessary and essential to protect the employer 's interests, his trade secrets and his trade connections and, therefore, valid. As regards the argument based on codified exception, counsel pointed out, that even the case of a restrictive covenant operative during the period of employment between master and servant had not been provided for as an exception below section 27 but even so such restrictive covenant was never regarded as amounting to restraint of trade under section 27 mainly because it was always regarded as reasonable and necessary to protect the employer 's interests, which shows that the statutory exceptions were not exhaustive. Lastly, counsel urged that the Law Commission 's recommendation on which reliance was placed by respondent 's counsel would be inconsequential because it proceeds on the acceptance of the interpretation placed on section 27 by various High Courts and he is seeking to get that interpretation examined and considered by this Court. However, as we have said above, we do not propose to discuss or decide the aforesaid question inasmuch as this appeal can be disposed of by deciding the second question that has been raised before us and for that purpose we shall proceed on the assumption that the negative covenant contained in cl. (10) of the service agreement is valid and not hit by section 27 of the Contract Act. The question is whether the said restrictive covenant is on its terms enforceable against the respondent at the instance of the appellant company. We have already quoted the restrictive covenant contained in cl. In terms the clause provides that the restriction contained therein will come into operation "after you (respondent) leave the company". Admittedly in the instant case the respondent had not on his own left the company but his services were terminated by the appellant company by a notice dated November 24, 1978 with effect from December 27, 1978. The question is whether the phrase "after you 1286 leave the company" means the leaving of service by the respondent voluntarily or would include even the case of termination of his services by the appellant company. The Division Bench of the High Court has taken the view that the word "leave" does not include termination of service by the employer. Counsel for the appellant company contended that the word "leave" occurring in the phrase "after you leave the company" would be wide enough to include all cases of cessation of service whether brought about by voluntary quitting on the part of the employee or termination of his services by the employer and in that behalf reliance was placed upon an English decision in Murray vs Clese where it was held that an agreement restricting competition with an employer "after leaving his service" would be operative on the termination, however accomplished, of the service, e.g. by a dismissal without notice. (vide: Stroud 's Judicial Dictionary, 4th Edn., Vol. 3, page 1508, Item 13, under the word 'leaving '). In our view, the word "leave" has various shades of meaning depending upon the context or intent with which it is used. According to the plain grammatical meaning that word in relation to an employee would normally be construed as meaning voluntary leaving of the service by him and would not include a case where he is discharged or dismissed or his services are terminated by his employer. Ordinarily the word "leave" appears to connote voluntary action. In Words & Phrases Permanent Edition Vol. 24 at page 499 the following statement of law based on an American decision occurs: "An application for the employment of a street car conductor provided that in the event of his leaving the services for any reasons whatever within six months, the money paid to him for work under instruction while on trial should be deducted from such moneys as should be due from the company on the date of his "leaving". Held, that the word "leaving" meant to quit or depart, implying volition on the part of the person leaving, and limited the forfeiture of the instruction wages to a case where plaintiff left defendant 's employ of his own volition, nor was such instruction effected by the words, "for any reason whatsoever." Muesling vs International Ry. Co., , 178, 85 Misc. In our view having regard to the context in which the expression "leave" occurs in cl. (10) of the service agreement and reading it alongwith all the other terms of employment it seems to us clear that in the instant case the word "leave" was intended by the parties to refer only to a case where the employee has voluntarily left the services 1287 of the appellant company of his own, and since here the respondent 's services were terminated by the appellant company the restrictive covenant contained in cl. (10) would be inapplicable and, therefore, not enforceable against the respondent at the instance of the appellant company. Counsel for the appellant company urged that our construction would lead to putting a premium upon an dishonest employee who by his own misdemeanour and misbehaviour may invite termination of his services. All that we can say is that the appellant company should have taken care to use appropriate language while incorporating such restrictive covenant so as to include every case of cessation of employment arising from any reason whatsoever and not used the expression "leave," which normally is synonymous to the expression "quit" and indicates voluntary act on the part of the employee. In the result the appeal is dismissed with no order as to costs. SEN, J. I regret that my learned brethren propose to express no opinion on the question on which, in my view, the appeal turns. The question is whether a negative covenant which restricts the right of the employee, after the conclusion of the term of service, or the termination of the employment for other reasons, to engage in any business similar to or competitive with that of the employer, is in restraint of trade and, therefore, void under section 27 of the Contract Act, 1972. I have no doubt in my mind that the appeal cannot be decided without deciding this question. This appeal on certificate from a judgment of the Delhi High court, relates to a covenant in restraint of trade contained in an agreement between the appellant company and the respondent in circumstances which we will explain. The appellant company carries on the business of valuer, surveyor, inspection of quality, weighment, analysis, sampling of merchandise and commodities, cargoes, industrial products, machinery, textiles, etc. It has its head office at Calcutta with a branch at New Delhi. On or about March 27,1971, the respondent who is a surveyor and valuer was employed by the appellant as the Branch Manager of its New Delhi office. One of the terms and conditions of the employment was that the respondent would not serve elsewhere or enter into any business for a period of 2 years after leaving the service. The term is contained in clause 10 of the agreement which reads: 10. That you will not be permitted to join any firm of our competitors or run a business of your own in similarity as directly and/or indirectly, for a period of two years at the 1288 place of your last posting after you leave the Company. The appellant terminated the services of the respondent by its letter dated December 27, 1978. Thereafter the respondent started a business of his own under the name and style of "Superintendence and Surveillance Inspectorate of India" at E 22, South Extension, New Delhi on lines identical with and substantially similar to that of the appellant. On April 19, 1979, the appellant commenced a suit in the Delhi High Court in its original side claiming Rs. 55,000/ as damages on account of breach of the covenant and for permanent injunction to restrain the respondent by himself, his servants or agents or otherwise from carrying on the said business or any other business on lines similar to that of the appellant or associating or representing any Competitors of the appellant before the expiry of two years from December 27, 1978. A Single Judge of the Delhi High Court adopting the test of reasonableness, held that under section 27 of the Contract Act to determine whether the agreement is void, one has to see whether the restraint is reasonable; and if so the negative covenant can be enforced as enjoined by illustrations (c) and (d) to section 57 of the specific Relief Act, 1963. He held that Clause 10 of the agreement is not unreasonable, because the area of restraint is restricted to New Delhi, the place of last posting of the respondent and is not unlimited, being limited to a period of two years from the date he left the service. He went on to say that negative covenant in a contract of employment has always been enforced, if it is in the protection of the employer, and referred to Niranjan Shankar Golikari vs Century Spinning and Mfg. Co. Ltd. [1967] 2 S.C.R. p. 378. He further held that the negative covenant was operative as the word "leave" in clause 10 was wide enough to include termination of service. He, accordingly, by his order dated May 25, 1979, made the earlier ex parte ad interim injunction granted by him on April 24, 1979 absolute but restricted its operation to New Delhi and for the period ending 27th December, 1980 or till the decision of suit, whichever is earlier. On appeal by the respondent, a Division Bench of the High Court reversed the order of the learned Single Judge holding that negative covenant operating beyond the period of employment was in restraint of trade and, therefore, void under section 27 of the Contract Act. 1289 Four questions arise in this appeal: 1. Whether Clause 10 of the agreement was in restraint of trade; and if so, being partial was valid and enforceable being reasonable?; 2. Whether according to the test of reasonableness laid down by Lord Macnaghten in Nordenfelt vs Hakim Nordenfelt Guns & Ammunition Co. Ltd.,(1) an injunction to enforce the negative covenent can be granted under illustrations (c) and (d) to section 57 of the , despite section 27 of the Contract Act, 1872 ? 3. Whether, and to what extent, the provisions of Section 27 of the Contract Act are subject to the common law doctrine of restraint of trade ? 4. Whether the word "leave" in Clause 10 of the agreement between the parties makes the negative covenant operative only when a servant voluntarily leaves his employment, or, applies even in a case of termination of his services by an order of dismissal or termination of his services? Agreements of service, containing a negative covenant preventing the employee from working elsewhere during the term covered by the agreement, are not void under section 27 of the Contract Act, on the ground that they are in restraint of trade. Such agreements are enforceable. The reason is obvious. The doctrine of restraint of trade never applies during the continuance of a contract of employment; it applies only when the contract comes to an end. While during the period of employment, the Courts undoubtedly would not grant any specific performance of a contract of personal service, nevertheless; Section 57 of the clearly provides for the grant of an injunction to restrain the breach of such a covenant as it is not in restraint of, but in furtherance of trade. In Niranjan Shankar Golikari 's case, supra, this Court drew a distinction between a restriction in a contract of employment which is operative during the period of employment and one which is to operate after the termination of employment. After referring to certain English cases where such distinction had been drawn, the Court observed: "A similar distinction has also been drawn by the Courts in India and a restraint by which a person binds himself during the term of his agreement directly or indirectly not to take service with any other employer or be engaged by a third party has been held not to be void and not against section 27 of the Contract Act." 1290 It referred to with approval the decision in The Brahmaputra Tea Co. Ltd. vs Scarth, I.L.R. , where the condition under which the covenantee was partially restrained from competing after the term of his engagement with his former employer, was held to be bad but the condition by which he bound himself during the term of his agreement, not, directly or indirectly, to compete with his employer was held good, and observed: "At page 550 of the report the Court observed that an agreement of service by which a person binds himself during the term of the agreement not to take service with any one else, or directly, or indirectly take part in, promote or did any business in direct competition with that of his employer was not hit by section 27." The Court further observed: "An agreement to serve a person exclusively for a definite term is a lawful agreement, and it is difficult to see how that can be unlawful which is essential to its fulfillment, and to the due protection of the interests of the employer, while the agreement is in force." The Court also approved of the several Indian decisions where an agreement of service contained both a positive covenant viz. that the employee shall devote his whole time attention to the service of the employers and also a negative covenant preventing the employee from working elsewhere during the term of the agreement, and the High Courts have enforced such a negative covenant during the term of employment having regard to illustrations (c) and (d) to section 57 of the which, in terms, recognised such contracts and the existence of negative covenants therein, and stated that the contention that the existence of such a negative covenant in a service agreement made the agreement void on the ground that it was in restraint of trade and contrary to section 27 of the Contract Act had no validity. In conclusion, the Court observed: "The result of the above discussion is that considerations against restrictive covenants are different in cases where the restriction is to apply during the period after the termination of the contract than those in cases where it is to operate during the period of the contract. Negative 1291 covenants operative during the period of the contract of employment when the employee is bound to serve his employer exclusively are generally not regarded as restraint of trade and therefore do not fall under section 27 of the Contract Act. A negative covenant that the employee would not engage himself in a trade or business or would not get himself employed by any other master for whom he would perform similar or substantially similar duties is not therefore a restraint of trade unless the contract as aforesaid is unconscionable or excessively harsh or unreasonable or one sided." (Emphasis supplied) The decision in Niranjan Shankar Golikari 's case supra is therefore of little assistance to the appellant. It is not seeking to enforce the negative covenant during the term of employment of the respondent but after the termination of his services. The restriction contained in Clause 10 of the agreement is obviously in restraint of trade and, therefore, illegal and unenforceable under section 27 of the Contract Act. In support of the appeal, learned counsel for the appellant has, in substance, advanced a two fold contention. It is submitted, firstly, upon the common law doctrine of restraint of trade that though the covenant is in restraint of trade, it satisfies the 'test of reasonableness ', as laid down by Lord Macnaghten in Nordenfelt vs Maxim Nordenfelt Guns & Ammunition Co. Ltd., supra, and is, therefore, enforceable despite section 27 of the Contract Act, 1872, and, secondly, that the word "leave" in Clause 10 of the agreement is wide enough to make the covenant operative even on the termination of employment i.e. it includes the case of dismissal. I am afraid, the contentions are wholly devoid of substance. While the Contract Act, 1872, does not profess to be a complete code dealing with the law relating to contracts, we emphasise that to the extent the Act deals with a particular subject, it is exhaustive upon the same and it is not permissible to import the principles of English Law de hors the statutory provision, unless the statute is such that it cannot be understood without the aid of the English Law. The provisions of Section 27 of the Act were lifted from Hom. David D. Field 's Draft Code for New York based upon the old English doctrine of restraint of trade, as prevailing in ancient times. When a rule of English law receives statutory recognition by the Indian Legislature, it is the language of the Act which determines the scope, uninfluenced by the manner in which the anologous provision comes to be construed narrowly, or, otherwise modified, in order to bring the construction 1292 within the scope and limitations of the rule governing the English doctrine of restraint of trade. It has often been pointed out by the Privy Council and this Court that where there is positive enactment of Indian Legislature the proper course is to examine the language of the statute and to ascertain its proper meaning uninfluenced by any consideration derived from the previous state of the law or the English law upon which it may be founded. In Satyavrata Ghosh vs Kurmee Ram Bangor, ; , Mukherjee J. while dealing with the doctrine of frustration of contract observed that the Courts in India are to be strictly governed by the provisions of Section 56 of the Contract Act and not to be influenced by the prevailing concepts of the English Law, as it has passed through various stages of development since the enactment of the Contract Act and the principles enunciated in the various decided cases are not easy to reconcile. What he says of the doctrine of frustration under section 56 of the Contract Act is equally true of the doctrine of restraint of trade under section 27 of the Act. Now, so far as the present case is concerned, the law is to be found in section 27 of the Contract Act 1872, which reads: "27. Agreement in restraint of trade void Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind is to that extent void. Exception: One who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business, within specified local limits, so long as the buyer or any other person deriving title to the goodwill from him, carries on a like business therein, provided that such limits appear to the Court reasonable, regard being had to the nature of the business. " The section is general in terms, and declares all agreements in restraint void pro tanto, except in the case specified in the exception. The question whether an agreement is void under section 27 must be decided upon the wording of that section. There is nothing in the wording of section 27 to suggest that the principle stated therein does not apply when the restraint is for a limited period only or is confined to a particular area. Such matters of partial restriction have effect only when the fact fall within the exception to the section. A contract, which has for its object a restraint of trade, is prima facie, void. Section 27 of the Contract Act is general in terms and 1293 unless a particular contract can be distinctly brought within Exception 1 there is no escape from the prohibition. We have nothing to do with the policy of such a law. All we have to do is to take the words of the Contract Act and put upon the meaning which they appear plainly to bear. This view of the section was expressed by Sir Richard Couch C.J. in celebrated judgment in Madhub Chunder vs Rajcoomar Doss at pp. 85 86 laying down that whether the restraint was general or partial, unqualified or qualified, if it was in the nature of a restraint of trade, it was void. The observations of Sir Richard Couch, C.J., in Madhub Chunder vs Rajcoomar Doss, supra, which have become the locus classicus were these: "The words 'restraint from exercising a lawful profession, trade or business ' do not mean an absolute restriction, and are intended to apply to a partial restriction, a restriction limited to some particular place, otherwise the first exception would have been unnecessary. " Moreover, "in the following section (section 28) the legislative authority when it intends to speak of an absolute restraint and not a partial one, has introduced the word 'absolutely '. The use of this word in section 28 supports the view that in section 27 it was intended to prevent not merely a total restraint from carrying on trade or business but a partial one. We have nothing to do with the policy of such a law. All we have to do is to take the words of the Contract Act, and put upon them the meaning which they appear plainly to bear. " The test laid down by Sir Richard Couch, C.J. in Madhub Chunder vs Rajcoomar Doss, supra, has stood the test of time and has invariably been followed by all the High Courts in India. The agreement in question is not a 'goodwill of business ' type of contract and, therefore, does not fall within the exception. If the agreement on the part of the respondent puts a restraint even though partial, it was void, and, therefore, the contract must be treated as one which cannot be enforced. It is, however, argued that the test of the validity of a restraint, whether general or partial, is dependent on its reasonableness. It is pointed out that the distinction drawn by Lord Macclesfield in Mitchel vs Reynolds (1711) 1 PMas 161 between general and partial restraint, was removed by the House of Lords in Nordenfelt vs Maxim Nordenfelt Guns and Ammunition Co. (supra). According to the judgment of 1294 Lord Macnaghten in Nordenfelt 's case, the validity in either case was reasonableness with reference to particular circumstances. It is urged that all covenants in restraint of trade partial as well as general are prima facie void and they cannot be enforced, according to the test laid down by Lord Macnaghten in Nordenfelt 's case and accepted by the House of Lords in Mason vs Provident Clothing and Supply Co. Ltd., , unless the test of reasonableness is testified. It is also urged that while an employer is not entitled to protect himself against competition per se on the part of an employee after the employment has ceased, he is entitled to protection of his proprietory interest viz. his trade secrets, if any, and a business connection. The test of reasonableness which now governs the common law doctrine of restraint of trade has been stated in Chitty on Contracts, 23rd Edn., Vol. I. p. 867: "While all restraint of trade to which the doctrine applied are prima facie unenforceable, all, whether partial or total, are enforceable, if reasonable." A contract in restraint of trade is one by which a party restricts his future liberty to carry on his trade, business or profession in such manner and with such persons as he chooses. A contract of this class is prima facie void, but is becomes binding upon proof that the restriction is justifiable in the circumstances as being reasonable from the point of view of the parties themselves and also of the community. In Elizabethan days, all agreements in restraint of trade, whether general or restrictive to a particular area, were held to be bad; but a distinction came to be taken between covenant in general restraint of trade, and those where the restraints were only partial. According to the test laid down by Parker, C.J. (later Earl of Macclesfield) in Mitchel vs Reynolds, supra, the general restraint was one which covered an indefinite area, and was, as a rule held bad while a partial restraint was valid if reasonable, the onus being upon the covenanter to show it to be unreasonable. There is no higher authority upon this subject than Tindal, C.J., who had to do much with moulding of the law on this subject and bringing it into harmony with the needs of the changing times. In Mornen vs Graves ; , Tindal, C.J. said: "The law upon this subject (i.e. restraint of trade) has been laid down with so much authority and precision by Parker, C.J., in giving the judgment of the Court of B.R. (King 's Bench) in the case of Mitchel vs Reynolds which has been the leading case on the subject from that time to 1295 the present, that little more remains than to apply the principle of that case to the present. Now the rule laid down by the court in that case is 'that voluntary restraints, by agreement between the parties, if they amount to a general restraint of trading by either party, are void, whether with or without consideration, but particular restraints of trading, if made upon a good and adequate consideration, so as to be a proper and useful contract, that is, so as it is a reasonable restraint only, are good. " Later on he goes on to observe: "Parker, C.J., says,: a restraint to carry on a trade throughout the kingdom must be void; a restraint to carry it on within a particular place is good, which are rather instances and examples than limits of the application of the rule, which can only be at least what is a reasonable restraint with reference to the particular cases. " By decrees, the common law doctrine of restraint of trade, has been progressively expanded and the legal principles applied and developed so as to suit the exigencies of the times, with the growth of trade and commerce, rapid industrialisation and improved means of communication. In Nordenfelt vs Maxim Nordenfelt Guns & Ammunition Co. Ltd., (supra), Lord Macnaghton held that the only true test in all cases, whether of partial or general restraint, was the test proposed by Tindal, C.J.: What is a reasonable restraint with reference to a particular case ? Thereby he denied that general and partial restraints fall into distinct categories. A partial restraint in his opinion was not prima facie valid. It was on the same footing as a general restraint i.e. prima facie void, but valid, if reasonable. In Mason vs Provident Clothing and Supply Co. Ltd., supra, the House of Lords held that Lord Macnaghton 's proposition was a correct statement of the modern law. The House of Lords in this case developed the law in two respects: First, it held that all covenants in restraint of trade, partial as well as general, prima facie void and that they cannot be enforced unless the test of reasonableness as propounded by Lord Macnaghton is satisfied. Secondly, it made a sharp distinction, stressed as long ago as 1869 by James, L.J., in Leather Cloth Co. vs Lorsont ; , between contracts of service and contracts for the sale of a business. In Herbert Morris Ltd. vs Saxelby, supra, the House of Lords held that a master cannot protect himself from competition by an ex servant 1296 or his new employer. He cannot stipulate freedom from competition. But he can protect his trade secrets or his confidential information. The 'test of reasonableness ' evolved in common law after the decision of Lord Macnaghton, in Nordenfelt 's case, supra, and re affirmed by the two decisions in Mason vs Provident Clothing & Supply Co. Ltd. and Herbert Morris Ltd. vs Sexelby, supra, is that such covenants are prima facie, void and the onus rests upon the covenante to prove that the restraint is reasonable. In Nordenfelt 's case, Lord Macnaghton also adverted to the distinction between covenant entered by the seller of the business on the one hand and the covenant by the employee on the other. Framers of section 833 of Field 's Draft Code for New York designed some hundred and twenty five years ago, expressed the intention to replace the common law stating that "contracts in restraint of trade have been allowed by modern decisions to a very dangerous extent", and they proceeded to draft the provision with the deliberate intention of narrowing the law. The provision was never applied to New York, but found its way into the Contract Act, 1872 as section 27. Several sections of the Field 's Code were enacted in the Act. The Code was anathema to Sir Frederick Pollock who in his preface to Pollock and Mulla 's Indian Contract Act, p. 5, described the Code as the evil genius of the Act, the worst principles of codification ever produced, and advocated that 'whenever the Act was revised every thing taken from the Code should be struck out '. It must be remembered that the test of reasonableness comes from the judgment of Lord Macnaghten in Nordenfelt 's case in the House of Lords in 1894. In 1862, however, when the Field provision was drafted, it was not easy to foresee that the common law would shortly discard the distinction drawn by Lord Macclesfield in Mitchel vs Reynolds in 1711, between general and partial restraints. A general restraint was one which covered an indefinite area, and was, as a rule, held bad, while a partial restraint was valid, if reasonable. the onus being upon the covenantor to show it to be unreasonable. This was a mere rule of thumb, but was stubbornly adhered to by as great a common lawyer as Bowen, L.J., as late as 1893, when the Nordenfelt 's case was in the Court of Appeals: Be that as it may, in Field 's draft, as early as 1862, are clearly expressed two principles that govern the modern common law today, but were unknown to it at that stage, and were not unequivocally stated until 1916, first that restrictive covenants are prima facie invalid, and secondly between master and servant covenants on the one hand and vendor and purchaser covenants on the other, there is a great gulf 1297 fixed. The onus of proving reasonableness under Exception 1, was placed on the covenantee, while the common law at the time placed it upon the covenanter to show unreasonableness. Sir Frederick Pollock 's criticism of the substantive part of section 27 was that it laid down too rigid a rule of invalidity, not merely for general but also for partial restraints, and of the exceptions that they were too narrow, being based upon an idea of the common law, now outmoded, that a restraint must be confined within local limits. His views on the main body of the section may be illustrated by two quotations: "The law of India. is tied down by the language of the section to the principle, now exploded in England, of a hard and fast rule qualified by strictly limited exceptions. " "To escape the prohibition, it is not enough to show that the restraint created by an agreement is partial, and general." Two passages from his comments on Exception 1 may also be cited: "The extension of modern commerce and means of communication has displaced the old doctrine that the operation of agreements of this kind must be confined within a definite neighbourhood. But the Anglo Indian law has stereotyped that doctrine in a narrower form than even the old authorities would justify." "Meanwhile the common law has, on the contrary, been widening the old fixed rules as to limits of space have been broken down, and the court has only to consider in every case of a restrictive agreement whether the restriction is 'reasonable in reference to the interests of the parties concerned reasonable in reference to the interests of the public." Reverting to the judgment of Sir Richard Couch in Madhub Chunder vs Rajcoomar Doss, supra, we find that that eminent Judge held that section 27 of the Contract Act does away with the distinction observed in English cases following upon Mitchel vs Reynolds, supra, between partial and total restraints of trade, and makes all contracts falling within the terms of section void, unless they fall within the exceptions. As already stated, that decision has always been followed. In Shaikh Kalu vs Ram Saran Bhagat, [1908] 13 C.W.N. 388 Mukherjee and Carnduff, JJ, referred to the history of the legislation 1298 on the subject and observed that the framers of the Act deliberately reproduced Section 833 of Field 's Code with the full knowledge that the effect would be to lay down a rule much narrower than what was recognised at the time by the common law, while the rules of the common law, on the other hand, had since been considerably widened and developed, on entirely new lines. They held that the wider construction put upon section 27 by Sir Richard Couch in Madhub Chundur vs Raj Coomar Doss, supra, is plainly justified by the language used, and that the selection had abolished the distinction between partial and total restraints of trade and said: "The result is that the rule as embodied in sec. 27 of the Indian Contract Act presents an almost startling dissimilarity to the most modern phase of the English rule on the subject. They went on to observe: "As observed, however, by Sir Richard Couch in the case to which we have referred, we have nothing to do with the policy of the law, specially as the Legislature has deliberately left the provision in sec. 27, in its original form, though other provisions of the Contract Act have from time to time been amended. The interference would be almost irresistible under these circumstances, that the Courts have rightly ascertained the intention of the legislature. The silence of the Legislature in a case of this description is almost as emphatic as an express recognition of the construction which has been judicially put upon the statute during many years past. In this view of the matter, if we adopt the construction of sec. 27 of the Indian Contract Act as first suggested by Sir Richard Couch and subsequently affirmed in the cases to which we have referred, a construction which is consistent with the plain language of the section, the agreement in this case must be pronounced to be void." (Emphasis supplied) The Law Commission, in its Thirteenth Report, has recommended that Section 27 of the Act should be suitably amended to allow such restrictions and all contracts in restraint of trade, general or partial, as were reasonable, in the interest of the parties as well as of the public. That, however involves a question of policy and that is a matter for Parliament to decide. The duty of the Court is to interpret the section according to its plain language. The question for consideration is whether, assuming that the wider construction placed by Sir Richard Couch in Madhub Chundur vs 1299 Raj Coomar Doss, supra, to have been the law, at the time of enactment, it has since become obsolete. A law does not cease to be operative because it is an anachronism or because it is antiquated or because the reason why it originally became the law, would be no reason for the introduction of such a law at the present time. Neither the test of reasonableness nor the principle of that the restraint being partial was reasonable are applicable to a case governed by Section 27 of the Contract Act, unless it falls within Exception 1. We, therefore, feel that no useful purpose will be served in discussing the several English Decisions cited at the Bar. Under Section 27 of the Contract Act, a service covenant extended beyond the termination of the service is void. Not a single Indian Decision has been brought to our notice where an injunction has been granted against an employee after the termination of his employment. There remains the question whether the word 'leave ' in clause 10 of the agreement is wide enough to make the negative covenant operative on the termination of employment. We may for convenience of reference, reproduce that covenant below: "10. that you shall not be permitted to join any firm of our competitors or run business of your own in similarity as directly and/or indirectly for a period of 2 years at the place of your last posting after you leave the Company. " On a true construction of clause 10 of the agreement, the negative covenant not to serve elsewhere or enter into a competitive business does not, in my view, arise when the employee does not leave the services but is dismissed from service. Wrongful dismissal is repudiation of contract of service which relieved the employee of the restrictive covenant General Billposting vs Atkinson L.R. [1909] A.C. 116. It is, however, urged that the word 'leave ' must, in the context in which it appears, be construed to mean as operative on the termination of employment. Our attention is drawn to Stroud 's Judicial Dictionary, 4th Edn., Vol. II, Pr. 13 p. 1503. There is reference to Mars vs Close, An agreement restricting competition with an employer "after leaving his service" was held to be operative on the termination, however, accomplished, of the service, e.g. by a dismissal without notice. The word 'leave ' has various shades of meaning depending upon the context or intent with which it is used. According to the plain meaning, the word 'leave ' in relation to an employee, should be 1300 construed to mean where he "voluntarily" leaves i.e. of his own volition and does not include a case of dismissal. The word 'leave ' appears to connect voluntary action, and is synonymous with the word 'quit '. It does not refer to the expulsion of an employee by the act of his employer without his consent and against his remonstrance. That is a meaning in consonance with justice and fair play. It is also the ordinary plain meaning of the word 'leave '. In shorter Oxford English Dictionary, 3rd Ed. X, page 1192, the following meaning is given "to depart from; quit; relinquish, to quit the service of a person. " The drafting of a negative covenant in a contract of employment is often a matter of great difficulty. In the employment cases so far discussed, the issue has been as to the validity of the covenant operating after the end of the period of service. Restrictions on competition during that period are normally valid, and indeed may be implied by law by virtue of the servant 's duty of fidelity. In such cases the restriction is generally reasonable, having regard to the interest of the employer, and does not cause any undue hardship to the employee, who will receive a wage or salary for the period in question. But if the covenant is to operate after the termination of services, or is too widely worded, the Court may refuse to enforce it. It is well settled that employees covenants should be carefully scrutinised because there is inequality of bargaining power between the parties; indeed no bargaining power may occur because the employee is presented with a standard form of contract to accept or reject. At the time of the agreement, the employee may have given little thought to the restriction because of his eagerness for a job; such contracts "tempt improvident persons, for the sake of present gain, to deprive themselves of the power to make future acquisitions, and expose them to imposition and oppression. " There exists a difference in the nature of the interest sought to be protected in the case of an employee and of a purchaser and, therefore, as a positive rule of law, the extent of restraint permissible in the two types of case is different. The essential line of distinction is that the purchaser is entitled to protect himself against competition on the part of his vendor, while the employer is not entitled to protection against mere competition on the part of his servant. In addition thereto, a restrictive covenant ancillary to a contract of employment is likely to affect the employee 's means or procuring a livelihood for himself and his family to a greater degree than that of a seller, who usually receive ample consideration for the sale of the goodwill of his business. 1301 The distinction rests upon a substantial basis, since, in the former class of contracts we deal with the sale of commodities, and in the latter class with the performance of personal service altogether different in substance; and the social and economic implications are vastly different. The Courts, therefore, view with disfavour a restrictive covenant by an employee not to engage in a business similar to or competitive with that of the employer after the termination of his contract of employment. The true rule of construction is that when a covenant or agreement is impeached on the ground that it is in restraint of trade, the duty of the Court is, first to interpret the covenant or agreement itself, and to ascertain according to the ordinary rules of construction what is the fair meaning of the parties. If there is an ambiguity it must receive a narrower construction than the wider. In Mills vs Dunham, , Kay, LJ. observed: "If there is any ambiguity in a stipulation between employer and employee imposing a restriction on the latter, it ought to receive the narrower construction rather than the wider the employed ought to have the benefit of the doubt. It would not be following out that principle correctly to give the stipulation a wide construction so as to make it illegal and thus set the employed free from all restraint. It is also a settled canon of construction that where a clause is ambiguous a construction which will make it valid is to be preferred to one which will make it void. " The restraint may not be greater than necessary to protect the employer, nor unduly harsh and oppressive to the employee. I would, therefore, for my part, even if the word 'leave ' contained in clause 10 of the agreement is susceptible of another construction as being operative on termination, however, accomplished of the service e.g. by dismissal without notice, would, having regard to the provisions of Section 27 of the Contract Act, 1872, try to preserve the covenant in clause 10 by giving to it a restrictive meaning, as implying volition i.e. where the employee resigns or voluntarily leaves the services. The restriction being too wide, and violative of section 27 of the Contract Act, must be subjected to a narrower construction. In the result, the appeal must fail and is dismissed but there shall be no order as to costs. S.R. Appeal dismissed.

The appellant company carries on business as valuers and surveyors undertaking inspection of quality, weighment analysis, sampling of merchandise and commodities, cargoes, industrial products, machinery, textiles etc. It has established a reputation and goodwill in its business by developing its own techniques for quality testing and control and possess trade secrets in the form of these techniques and clientele. It has its head office at Calcutta and a branch at New Delhi and employs various persons as managers and in other capacities in Calcutta; New Delhi and other places. On March 27, 1971, the respondent was employed by the appellant company as the Branch Manager of its New Delhi office on terms and conditions contained in the letter of appointment issued to him on the same date. Clause (10) of the terms and conditions of employment placed the respondent under a post service restraint that he shall not serve any other competitive firm nor carry on business on his own in similar line as that of the appellant company for two years at the place of his last posting. On November 24, 1978, the appellant company terminated the respondent 's services with effect from December 27, 1978. Thereafter, respondent started his own business under the name and style of "Superintendence and Surveillance Inspectorate of India" at E 22 South Extension New Delhi on lines identical with or substantially similar to that of the appellant company. On April 19, 1979 the appellant company brought a suit in the Delhi High Court on its original side, claiming Rs. 55,000/ as damages on account of the breach of negative covenant contained in clause (10); and for permanent injunction restraining the respondent by himself, his servants, agents or otherwise, from carrying on the said business or any other business on lines similar to that of the appellant company or associating or representing any competitors of the appellant company before the expiry of two years from December 27, 1978. After filing the suit the appellant company sought an ad interim injunction by way of enforcing the aforesaid negative covenant and a Single Judge of the Delhi High Court initially granted an ad interim injunction on April 29, 1979 which was confirmed by him on May 25, 1979 after hearing the respondent. On appeal by the respondent, the Division Bench of the High Court reversed the interim order and hence the appeal by certificate. Dismissing the appeal, the Court 1279 ^ HELD: (Per Tulzapurkar J., on behalf of Untwalia, J. and himself). Assuming that the negative covenant contained in clause (10) of the service agreement is valid and not hit by section 27 of the Indian Contract Act, it is not enforceable against the respondent at the instance of the appellant company. The appellant company should have taken care to use appropriate language, while incorporating such restrictive covenant so as to include every case of cessation of employment arising from any reason whatsoever and not used the expression "leave", which normally is synonymous to the expression "quit" and indicates voluntary act on the part of the employee. A, B C] (2) The word "leave" has various shades of meaning depending upon the context or intent with which it is used. According to the plain grammatical meaning that word in relation to an employee would normally be construed as meaning voluntary leaving of the service by him and would not include a case where he is discharged or dismissed or his services are terminated by his employer. Ordinarily, the word connotes voluntary action. [1286 D] (3) In the instant case, having regard to the context in which the expression leave occurs in clause (10) of the service agreement and reading it alongwith all the other terms of agreement, it is clear that the word "leave" was intended by the parties to refer to a case where the employee voluntarily left the services of his own. [1286 G H, 1287 A] Murray vs Close, 32 Law Times Old series p. 89; held inapplicable to Indian Law. Muesling vs International Rly. Co., , 178 ; quoted with approval. Per Sen J.: 1. Agreements of service, containing a negative covenant preventing the employee from working elsewhere are not void under section 27 of the Contract Act, on the ground that they are in restraint of trade. Such agreements are enforceable, the reason being that the doctrine of restraint of trade never applies during the continuance of a contract of employment and applies only when the contract comes to an end. While during the period of employment the Courts undoubtedly would not grant any specific performance of a contract of personal service, nevertheless Section 57 of the clearly provides for the grant of an injunction to restrain the breach of such a covenant, as it is not in restraint of, but in furtherance of trade. [1289 C E] 2. There is a clear distinction between a restriction in a contract of employment which is operative during the period of employment and one which is to operate after the termination of employment. Mere existence of negative covenant in a service agreement does not make it void on the ground that it was in restraint of trade and contrary to the Contract Act. The restriction contained in clause 10 of the agreement in this case is clearly in restraint of trade and therefore illegal under section 27 of the Contract Act. It is not seeking to enforce the negative covenant during the term of employment of the respondent but after the termination of his services. [1289 F G, 1290 F G, 1291 C D] 1280 Niranjan Shankar Golikari vs Century Spinning and Manufacturing Co., Ltd., ; , distinguished. When a rule of English law receives statutory recognition by the Indian Legislature, it is the language of the Act which determines the scope, uninfluenced by the manner in which the anologous provision comes to be construed narrowly or otherwise modified in order to bring the construction within the scope and limitations of the rule governing the English doctrine of trade. [1291 H, 1292 A] Satyavrata Ghosh vs Kurmee Ram Bangor, ; , followed. A contract which has for its object a restraint of trade is, prima facie void. The question whether an agreement is void under section 27 must be decided upon the wording of that section. There is nothing in the wording of section 27 to suggest that the principle stated therein does not apply when the restraint is for a limited period only or is confined to a particular area. Such matters of partial restriction have effect only when the fact fall within the exception to the section. Section 27 of the Contracts Act is general in terms, and declares all agreements in restraint void pro tanto, except in the case specified in the application and unless a particular contract can be distinctly brought within Exception I there is no escape from the prohibition. Here the agreement in question is not a "good will of business", type of contract, and, therefore does not fall within the exception. If the agreement on the part of the respondent puts a restraint even though partial, it was void, and, therefore, the contract must be treated as one which cannot be enforced. [1292 E H, 1293 A, F G] Madhub Chander vs Raj Coomar Dass, @ 85 86; approved. A contract in restraint of trade is one by which a party restricts his future liberty to carry on his trade, business or profession in such manner and with such persons as he chooses. A contract of this class is prima facie void, but it becomes binding upon proof that the restriction is justifiable in the circumstances as being reasonable from the point of view of the parties themselves and also of the community. Under Section 27 of the Contract Act the onus is upon the covenanter. [1292 H, 1293 A, & 1294 D E] 6. A law does not cease to be operative because it is an anachronism or because it is antiquated or because the reason why it originally became the law could be no reason for the introduction of such a law at the present times. Neither the test of reasonableness nor the principle of that the restraint being partial was reasonable are applicable to a case governed by Section 27 of the Contract Act, unless it falls within Exception I. Under Section 27 of the Contract Act, a service covenant extended beyond the termination of the service is void. [1299 A C] Nordenfelt vs Maxim. Nordenfelt Guns and Ammunition Co. Ltd. ; Mason vs Provident Clothing and Supply Co. Ltd., ; Herbert Morris Ltd. vs Saxelby; discussed. On a true construction of clause 10 of the agreement the negative convenant not serve elsewhere or enter into a competitive business does not, arise 1281 when the employee does not leave the services but is dismissed from service. Wrongful dismissal is a repudiation of contract of service which relieves the employee of the restrictive covenant. [1299 E F] General Billposting Co. vs Atkinson, L. R. ; referred to. The word 'leave ' has various shades of meaning depending upon the context of intent with which it is used. According to the plain meaning, the word 'leave ' in relation to an employee, should be construed to mean where he "voluntarily" leaves i.e. of his own volition and does not include a case of dismissal. The word 'leave ' appears to connote voluntary action, and is synonymous with the word 'quit '. It does not refer to the expulsion of an employee by the act of his employer without his consent and against his remonstrance. That is a meaning in consonance with justice and fair play. [1299 H, 1300 A B] 9. Restrictions on competitions during the period of service are normally valid and indeed may be implied by law by virtue of the servant 's duty of fidelity. In such cases the restriction is generally reasonable, having regard to the interest of the employer and does not cause any undue hardship to the employee, who will receive a wage or salary for the period in question. But if the covenant is to operate after the termination of services, or is too widely worded, the Court may refuse to enforce it. [1300 C D] 10. It is well established that employee 's covenants should be carefully scrutinised because there is inequality of bargaining power between the parties; indeed no bargaining power may occur because the employee is presented with a standard form of contract to accept or reject. At the time of the agreement, the employee may have given little thought to the restriction because of his eagerness for a job; such contracts "tempt improvident persons, for the sake of present gain, to deprive themselves of the power to make future acquisitions and expose them to imposition and oppression". [1300 E F] 11. The Courts view with disfavour a restrictive covenant by an employee not to engage in a business similar to or competitive with that of the employer after the termination of his contract of employment since a restrictive covenant ancillary to a contract of employment is likely to affect the employee 's means or procuring a livelihood for himself and his family. [1301 B C] 12. The true rule of construction is that when a covenant or agreement is impeached on the ground that it is in restraint of trade, the duty of the Court is, first to interpret the covenant or agreement itself, and to ascertain according to the ordinary rules of construction what is the fair meaning of the parties. If there is an ambiguity it must receive a narrower construction than the wider. The restraint may not be greater than necessary to protect the employer, nor unduly harsh and oppressive to the employee. Even if the word 'leave ' contained in clause 10 of the agreement is susceptible of another construction as being operative on termination, however, accomplished of the service e.g. by dismissal without notice, would having regard to the provisions of section 27 of the Contract Act, 1972, try to preserve the Government in clause 10 by giving to it a restrictive meaning, as implying volition i.e. where the employee resigns or voluntarily leaves the services. The restriction being too wide; and violative of section 27 of the Contract Act, must be subjected to a narrower construction. [1301 C G] 1282

Appeal No. 311 of 1959. Appeal from the judgment and order dated October 31, 1955, of the Travancore Cochin High Court, Ernakulam, in Original Petition No. 75 of 1955. A. N. Kripal and D. Gupta, for the appellant. Sardar Bahadur, for the respondent. December 13. The Judgment of the Court was delivered by 238 KAPUR, J. This is an appeal pursuant to a certificate of the High Court of Kerala against the judgment and order of that court and the question for decision is the applicability of section 35 of the Indian Income tax Act (hereinafter termed the 'Act '). The facts which have given rise to the appeal are these: The respondent is a limited company which owns a spinning mills at Alwaye. It commenced business in January, 1951, and its first accounting year ended on December 31, 1951, and the relevant assessment year is 1952 53. It filed its return showing an income Rs. 3,21,284 without taking into account the amount allowable under section 15C of the Act. On February 2, 1953, the net assessable income of the respondent was determined at Rs. 1,47,083 after deducting Rs. 1,79,081 under section 15C. The respondent however declared a dividend of Rs. 4,72,415 which attracted the application of section 2 of the Finance Act, 1952, read with Part B, proviso (ii) of First Schedule and thus it became liable to the payment of additional income tax and this fact was overlooked by the Income tax Officer. After giving notice under section 35 of the Act, the Income tax Officer by an order dated January 25, 1954, rectified this error and imposed an additional tax at the rate of one anna in the rupee. He later discovered that this was also erroneous and the rate should have been 5 annas in a rupee. By an order dated August 12, 1954, he rectified the error. Under section 18A, advance income tax had to be paid and the respondent company had deposited only Rs. 5,000 and therefore became liable to penal interest under section 18A(8) of the Act. By the same order this omission to impose penal interest was ' corrected and this error was thus rectified. Against this order the respondent company went in revision under section 33A(2) to the Commissioner of Income tax but the revision was dismissed. Thereupon the respondent company filed a petition in the High Court of Kerala under article 226 of the Constitution on the ground that section 35 of the Act did not apply and that on the merits additional tax could not be imposed. The High Court by its judgment dated October 31, 239 1955 held that the orders made were without jurisdiction and therefore granted a writ of certiorari quashing the orders and the Income tax Officer has brought this appeal pursuant to a certificate of that High Court. According to the High Court, section 35 of the Act was a provision for rectification of "mistakes apparent on the record" and in the opinion of the High Court it was a mistake analogous to O. 47, r. 1 of the Code of Civil Procedure for grant of review on the ground of mistake or error apparent on the face of the record and it construed it in the following words: "i.e. an evident error which does not require any extraneous matter to show its incorrectness. The error may be one of fact but is not limited to matters of fact and include also errors of law. But the law must be definite and capable of ascertainment. An erroneous view of law on a debatable point or a wrong exposition of the law or a wrong application of the law or a failure to apply the appropriate law cannot be considered a mistake or error apparent on the face of the record. See Chitaley 's C.P.C. Col. III pp. 3549 50, 5th edition. " On the ground that the applicability of proviso (ii) of Part B of the First Schedule of the Finance Act was a complex question which could not be said to be "apparent on the face of the record", the High Court held that the necessary foundation for the exercise of the powers under section 35 had not been laid and therefore the Income tax Officer had no jurisdiction to make the order that he did. The High Court also held that the levy of penal interest under section 18A(8) of the Act for failure to make advance deposit under section 18A(3) was also without jurisdiction. The learned Judges of the High Court seem to have fallen into an error in equating the language and scope of section 35 of the Act with that of O. 47, r. 1, Civil Procedure Code. The language of the two is different because according to section 35 of the Act which provides for rectification of mistakes the power is given to the various income tax authorities within four years from the date of any assessment passed by them to rectify 240 any mistake "apparent from the record" and in the Civil Procedure Code the words are "an error apparent on the face of the record" and the two provisions do not mean the same thing. This court in Maharana Mills (Private) Ltd. vs Income tax Officer, Porbandar (1) has laid down the scope of section 35 at p. 358 in the following words: "The power under section 35 is no doubt limited to rectification of mistakes which are apparent from the record. A mistake contemplated by this section is not one which is to be discovered as a result of an argument but it is open to the Income tax Officer to examine the record including the evidence and if he discovers any mistake he is entitled to rectify the error provided that if the result is enhancement of assessment or reducing the refund then notice has to be given to the assessee and he should be allowed a reasonable opportunity of being heard. " In that case the error arose because of an initial mistake in determining the written down value which was subsequently rectified. In an earlier case M. K. Venkatachalam vs Bombay Dyeing & Manufacturing Co. Ltd. (2) where as a consequence of a subsequent amendment of the law having retrospective effect, the Income tax Officer reduced the amount of interest under section 18A(5) of the Act and the assessee obtained from the High Court a writ of prohibition against the Income tax Officer on the ground that the mistake contemplated had to be apparent on the face of the order and not a mistake resulting from an amendment of the law even though it was retrospective in its effect, it was held that it was a case of error apparent from the record. Gajendragadkar, J. in his judgment said: "At the time when the Income tax Officer applied his mind to the question of rectifying the alleged mistake, there can be no doubt that he had to read the principal Act as containing the inserted proviso as from April 1, 1952. " Thus this court has held that discovery of an error on (1) (2) ; 241 the basis of assessment due to an initial mistake in determining the written down value is a mistake from the record and so is a misapplication of the law even though the law came into operation retrospectively. The Income tax Officer, can, under section 35 of the Act, examine the record and if he discovers that he has made a mistake he can rectify the error and the error which can be corrected may be an error of fact or of law. The restrictive operation of the power of review under 0. 47 R. 1, Civil Procedure Code is not applicable in the case of section 35 of the Act and in our opinion it cannot be said that the order of the Income tax Officer in regard to assessment in dispute was without jurisdiction. In regard to section 18A (8) also the learned Judges have misdirected themselves because that section is mandatory. It provides: section 18A(8) "Where, on making the regular assessment, the Income tax Officer finds that no payment of tax has been made in accordance with the foregoing provisions of this section, interest calculated in the manner laid down in sub section (6) shall be added to the tax as determined on the basis of the regular assessment. " Therefore the Income tax Officer was required to calculate the interest in the manner provided under the provisions of that sub section and had to add it to the assessment. Counsel for the respondent sought to raise the question as to the applicability of proviso (ii) of Part B of First Schedule of the Finance Act 1952 and relied upon the judgments of this Court in Commissioner of Income tax vs Elphinstone Spinning & Weaving Mills Co. Ltd. (1) and similar cases reported as Commissioner of Income tax, Bombay City vs Jalgaon Electric Supply Co. Ltd.(1) and Commissioner of Income tax, Bombay City vs Khatau Makanji Spinning and Weaving Co. Ltd. (3); but the facts of those cases were different. In the first case there was no total income and the (1) (2) (3) [1960] 40 I.T.A. 189. 31 242 Finance Act was not applicable in that case. In the second there was no profit in any preceding year and therefore the fiction failed because it postulates that there should be undistributed profits of one or more years immediately preceding the previous year. In the third case also the Finance Act was inapplicable because the additional tax was not properly laid upon the total income and what was actually taxed was never a part of the total income of the previous year. In our opinion the order of the High Court was erroneous. We therefore allow this appeal and set aside the judgment and order of the High Court with costs in this court and in the High Court. Appeal allowed.

After the respondents net assessable income for the years ,952 53 was determined, it declared dividends which attracted provisions of the Finance Act, 1952, and became liable to the 237 payment of additional income tax, which fact was overlooked by the Income tax Officer, who, after giving notice under section 35 of the Income tax Act, rectified the error and imposed an additional tax at the rate of one anna in the rupee. He later discovered that this was also erroneous and the rate should have been five anmas in a rupee and rectified the error; by the same order the omission to impose penal interest under section 18A(8) was rectified and penal interest was imposed. The respondent 's case before the High Court was that section 35.of the Act did not apply and that on the merits the additional tax could not be imposed. The High Court held that the necessary foundation for the exercise of the powers under section 35 bad not been laid and therefore the Income tax Officer had no jurisdiction to make the order; and also that the penal interest under section 18A(8) of the Act for failure to make advance deposit was also without jurisdiction. Held, that the language and scope of section 35 of the Indian Income tax Act, 1922, could not be equated with that of O. 47, r. 1 of the Code of Civil Procedure. The Income tax Officer could under section 35 of the Act examine the record and if he discovered that a mistake had been made, could rectify the error both of law and fact. The restrictive operation of the powers of review under 0. 47, r. of the Code of Civil Procedure was not applicable in the case of section 35 of the Income tax Act. Held, further, that the section 18A(8) was a mandatory one and the Income tax Officer was required to calculate the interest in the manner provided under the provisions of that sub section and had to add it to the assessment. Maharana Mills (P.) Ltd. vs Income tax Officer, and M. K. Venkatachalam vs Bombay Dyeing & Manu facturing Co. Ltd.; , , discussed. Commissioner of Income tax vs Elphinstone Spinning & Weaving Mills Co. Ltd. , Commissioner of Income tax, Bombay City vs Jalgaon Electric Supply Co. Ltd., and Commissioner of Income tax, Bombay City vs Khatau Makanji Spng. & Weavg to. Ltd., not applicable.

ivil Appeal Nos. 850 of 1973 etc. From the Judgment and Order dated 3.9. 1970 of the Allahabad High Court in Civil Miscellaneous (ITR) No. 461 of 1961. With CIVIL APPEAL No. 941 of 1975. From the Judgment and Order dated 5.5. 1972 of the Allahabad High Court in I.T. Reference No. 236 of 1969. Raja Ram Agarwal and Mrs. Rani Chhabra for the Appellants. B.B. Ahuja and Ms. A Subhashini for the Respondents. The Judgment of the Court was delivered by RANGANATH MISRA, J. CA. No. 850 of 1973 This appeal is by certificate and is directed against the judgment of the High Court of Allahabad. Assessee and five of his brothers constituted a Hindu Joint Family. The relevant assessment year is 1953 54 corresponding to the accounting period ending on 30th June, 1952. The Joint Family which owned inter alia a sugar factory at Bijnore. In 1930 there was partition in the family and the members of the erstwhile Joint Family constituted themselves into a partnership firm which took over the sugar factory and operated the same. In the year ,1944, Sheo Prasad, one of the brothers who was a partner of the firm instituted a suit in the Lahore High Court for dissolution of the firm. Partition of the country followed and after the parties shifted over to India a fresh suit was instituted at Bijnore for purposes of partition. The properties were put in charge of a receiver appointed by the Court. So far as the sugar factory is concerned, the arrangement was that at five yearly rest an auction was to be held confined to the partners and the highest bidder would be given lease to operate the factory for that period under the receiver. On 16th July, 1948, Sheo Prasad trans ferred his 1/6th share to Banarsi Dass at a stated valuation of Rs.4,50,000. On 3rd May, 1950, another brother, Devi Chand, leased out his 1/6th share to Banarsi Dass on an annual payment of Rs.50,000. On 13th July, 1950, yet another brother, Kanshi Ram, similarly leased out his 1/6th share to Banarsi Dass for a similar sum. In 1951, Kanshi Ram sued for cancellation of the lease. On 6th April, 1954, the dispute was compromised and the lease was 104 terminated. Kanshi Ram undertook to pay to Banarsi Dass at the rate of Rs. 16,000 for the first three years and at the rate of Rs. 10,000 for the subsequent two years. Devi Chand 's 1/6th share was also returned on mutual arrangement and he agreed to pay a sum of Rs.39,000 and odd annually to Banarsi Dass for the lease period. During the assessment proceedings, the nature of these receipts came to be debat ed the assessee maintained that these were in the nature of capital receipt lieu of the lease hold interest and the Income tax Officer maintained that those were revenue re ceipts. In due course, the Tribunal ultimately upheld the view of the Revenue. One more question that arose was the admissibility of a claim of expenditure being payment of interest on a loan taken for purchase of shares in the sugar factory. The Income tax Officer had allowed the claim of Rs.75,211. The Appellate Assistant Commissioner gave notice to the assessee and disallowed the same. The Appellate Tribunal reversed the finding of the Appellate Assistant Commissioner in regard to the admissibility of the claim. Thus the assessee as also the Revenue applied to the Tribunal to refer the case to the High Court. As far as relevant, the following questions were referred for the opinion of the High Court under section 66(1) of the Act at the instance of the assessee. Whether on the facts and in the circum stances of the case, the sums of Rs. 16,000 and Rs.39,262 received from Kanshi Ram and Devi Chand respectively were assessable as income of the assessee? 2. Whether on the facts and in the circum stances of the case, depreciation is allowable on the 1/6th share in S.B. Sugar Mills, Bij nore which the assessee had acquired from Seth Sheo Prasad? So far as the first question is concerned, the High Court referred to the arrangement entered into by the parties as also the terms of compromise and referred to certain deci sions and came to the conclusion that the sum of Rs. 16,000 received as a part of the total sum of Rs.68,000 constituted an assessable receipt. On the same reasoning, the High Court held that the amount of Rs.39,262 received from Devi Chand was also liable to tax. So far as the other question is concerned, the High Court held: "The question, however, remains whether the assessee is 105 entitled to claim depreciation on the ground that it has acquired 1/6th share in the S.B. Sugar Mills. It is to be noted that the asses see does not claim to be full owner of the property. All that the assessee claims is 1/6th share in S.B. Sugar Mills." "The assessee claims allowance under clause (vi) of subsection (2) of section 10 of the Indian Income tax Act of 1922. Clause (vi) is: 'In respect of depreciation of such buildings, machinery, plant or furniture being the property of the assessee . . " "In order to qualify for an allowance under clause (vi), the assessee has to make out that the building, machinery, plant or furniture is the property of the assessee. Mr. Shanti Bhushan appearing for the assessee urged that clause (vi) is attracted even where an asses see owns a fractional share in the machinery. On the other hand, Mr. Brij Lal Gupta appear ing for the Department urged that ownership of a fractional share in machinery does not attract clause (vi). The point is not free from difficulty. " The High Court ultimately came to hold: "In order to qualify for an allowance under clause (vi), the claimant must make out that the machinery is the property of the assessee. That test is not satisfied by the present assessee. The assessee does not claim to be the full owner of the machinery in question. All that is claimed for the assessee is 1/6th share in the machinery. Such a fractional share will not suffice for granting an allow ance for depreciation under section 10(2)(vi) of the Act. " We have heard learned counsel for the assessee appellant at length. He has referred to several authorities in support of the assessee 's stand of admissibility of the claim ' on both scores. According to him, the proper test to be adopted should have been to find out whether the arrangement consti tuted an apparatus to earn profit. whether the arrangement was one in course of business activity, and whether what was received constituted a part of the circulating capital or was a part of the fixed asset. We have considered the sub missions of 106 the learned counsel for the appellant but are not in a position to accept the same. There is hardly scope to doubt that the benefit of section 10(2)(vi) of the Act would be admissible only where the assessee is the owner of the property. It too is not admissible in respect of a fraction al claim. Similarly, we are of the view, in agreement with the High Court. that the amounts which the assessee received under the compromise or by amicable arrangement was in the nature of profits to be received by the assessee for the interest held in the business and, therefore, constituted taxable income. No other point was canvassed before us. This appeal has to fail and is hereby dismissed. Parties are directed to bear their own costs throughout. A. No. 233 of 1976 This appeal between the parties is also by certificate granted by the Allahabad High Court and relates to the assessment year 1955 56 for the accounting period ending on 30th June, 1954. Leave has been confined to two questions as would appear from the order granting the certificate, namely, as to whether one of the instalments received by the assessee out of the said amount of Rs.68,000, as referred to above, in respect of an earlier assessment year constituted a taxable receipt. The second question relates to acquisition of the 1,6th share under a deed of exchange from Devi Chand under the exchange deed dated 16th July, 1948, which indicated that the valuation of that interest was shown to be Rs.4,50,000 and depreciation was claimed in regard to it. Both the questions raised here are covered by our aforesaid judgment. The appeal of the assessee has therefore to fail. The appeal is accordingly dismissed. Parties are directed to bear their own costs. C.A. No. 1101 of 1975. The relevant assessment year in this case is 1954 55 corresponding to the accounting period ending June 30, 1953. Three questions survive for consideration: One relating to the receipt of Rs. 16,000 and Rs.42,957 in the same manner as already indicated, and the other depreciation in regard to the 1/6th share, said to have been valued at Rs.4,50,000. Both the questions have to be answered against the assessee for the reasons already indicated. In this case, there is a third question which is relevant, namely, whether in the facts and circumstances of the case. the unabsorbed carried forward loss of Rs.78,084 was liable to be set off against the share of the rent received by the assessee from the Receiver. Dealing with this question, the High Court ob served:. 107 "During the previous year relevant to the assessment year 1953 54, the assessee had suffered a loss in sugar business. After setting off the loss against other heads of income there remained an unabsorbed loss of Rs.78,084. In the assessment year in dispute the assessee claimed that the unabsorbed loss of the preceding year should be brought for ward and set off against its share in lease money received from the Receiver in respect of S.B. Sugar Mills. This claim of the assessee has been disallowed and the question arises as to whether the assessee was entitled to carry forward and set off the loss as claimed by it. " The High Court referred to section 24 of the Income tax Act of 1922 and indicated that two conditions had to be ful filled before the claim of set off of carried forward loss could be admitted, firstly, the income against which the loss has to be set off should be income from business and secondly, the business should be same in which the loss was suffered. The High Court referred to certain decisions including the one of this Court in and ultimately negatived the claim of the assessee by saying that the question would not arise because the letting out of the sugar mill was not the business of the assessee. In fact the receiver was appointed for dissolution of the firm and the main reason. as found by the High Court. for allowing the sugar factory to work was to dispose it of as a running mill so that proper price would be fetched. Having heard learned counsel for the parties, we are satisfied that there is no merit in the assessee 's stand and the same has got to be dismissed. The appeal is accordingly dismissed. Parties are directed to bear their own costs throughout. C.A. No. 941 of 1975 This appeal is by certificate from the judgment of the Allahabad High Court. The assessee is the sugar mill which during the relevant assessment year 1960 61 corresponding to the accounting period ending 30th June, 1959, was in the hands of a Court Receiver. The sugar mill was being assessed as an Association of Persons. Banarsi Dass. a partner, had 1/6th share therein. He had acquired under a deed of ex change dated 16th July, 1948 1/6th share of Sheo Prasad in exchange of shares held by Banarsi Dass in Lord Krishna Sugar Mills valued at Rs.4,50.000. In this assessment year, the receiver claimed that for the purposes of computing the depreciation allowance, the written down value of the busi ness assets be enhanced so as to reflect the sum of Rs.4,50,000 in place of 1/6th share representing the share of 108 Sheo Prasad. Similar claim had been raised by Banarsi Dass in his own assessment. The Income tax Officer rejected the claim and such rejection has been upheld throughout. We have already turned down the claim of Banarsi Dass. This claim has, therefore, to be rejected. We may additionally point out that under the scheme of the Act, it is the assessee who alone is entitled to maintain such claim of depreciation and it would indeed be difficult, within the framework of the scheme contained in the statute, to maintain a separate value of the part of the asset to work out depreciation. The book value as shown must be applicable to the entire assets of the firm including the 1/6th share which Sheo Prasad had given to Banarsi Dass. The claim has rightly been rejected in the forums below including the High Court. The appeal has no merit and is dismissed. Parties will bear their own costs. P.S.S. Appeals dis missed.

'A ', a partner in a firm running a sugar factory, insti tuted a suit for its dissolution in 1948 and a Receiver was appointed by the Court. The arrangement arrived at for the factory was that it would be leased out for a term of five years to the highest bidder from amongst the six partners. In July, 1948, 'A ' transferred his 1/6th share to the appel lant for Rs.4,50,000. The appellant had taken a loan against shares of that value held by him in another sugar mill for purchase of the share. In May, 1950, another partner 'B ' leased out his 1/6th share to the appellant on an annual payment of Rs.50,000. In July, 1950 yet another partner 'C ' leased out his 1/6th share to the appellant for a similar sum. In 1951 'C ' sued for cancellation of the lease. In April, 1954 the dispute was compromised and the lease termi nated. 'C ' undertook to pay the appellant at the rate of Rs. 16,000 for the first three years and at the rate of Rs. I0,000 for the subsequent two years. 'B 's 1/6th share was also returned on mutual arrangement and he agreed to pay the appellant a sum of Rs.39,000 and odd annually. During the assessment proceedings for the year 1953 54 the nature of these receipts came to be considered. The assessee appellant maintained that these were in the nature of capital receipts in lieu of the lease hold interest. The assessee also claimed depreciation on the 1/6th share in the sugar mill that he had acquired from 'A '. Similar questions also arose for the assessment years 1954 55 and 1955 56. The assessee had suffered a loss in the sugar business in the assessment year 1953 54, a part of which remained unab sorbed, and claimed set off of that unabsorbed loss against the share of the rent received by him from the Receiver in the assessment year 1954 55. Since the sugar mill was being assessed as an association of persons, for the assessment year 1960 61 102 the Receiver claimed that for the purpose of computing depreciation allowance, the written down value of the busi ness assets be enhanced so as to reflect the sum of Rs.4,50,000 in place of 16th share representing the share of 'A '. The Revenue negatived the assessee 's contentions, which view was upheld by the High Court. Dismissing the appeals by certificate, the Court, HELD: 1. The amounts the assessee received under the compromise or by amicable arrangement from other partners were in the nature of profits to be received by the assessee for the interest held in the business and, therefore, con stituted taxable income. [106B] 2. The benefit of section 10(2)(vi) of the Income tax Act, 1922 would be admissible only where the assessee is the owner of the property. It too is not admissible in respect of a fractional claim. [106A] In the instant case, all that is claimed for the asses see is 1/6th share in the machinery. Such a fractional share does not suffice for granting an allowance for depreciation under section 10(2)(vi) of the Act. [105F] 3. Two conditions had to be fulfilled under section 24 of the Incometax Act, 1922 before the claim for set off of carried forward loss could be admitted, firstly, the income against which the loss has to be set off should be income from business and secondly, the business should be same in which the loss was suffered. [107C] In the instant case, the letting out of the sugar mill was not the business of the assessee. The Receiver was appointed for dissolution of the firm and the main reason for allowing the sugar factory to work was to dispose it of as a running mill so that proper price could be fetched. [107DE] 4. Under the scheme of 1922 Act, it is the assessee who alone is entitled to maintain claim of depreciation. Within the framework of that scheme it is difficult to maintain separate value of a part of the asset to work out deprecia tion. The book value, as shown must in the instant case, therefore, be applicable to the entire assets of the firm including the 1/6th share which 'A ' had given to the appel lant. The claim of the Receiver for depreciation cannot, therefore, be sustained. [108B] 103

l Appeals Nos. 1449 to 1454 of 1967. Appeals by special leave from the judgments and orders dated December 15, 1966 of the Madhya Pradesh High Court in Misc. Petitions Nos. 303 of 1966 etc. I. N. Shroff, for the appellants (in all the appeals). M. N. Phadke, K. L. Hathi and P. C. Kapur, for the respondents (in C.As. 1449, 1450 and 1452 of 1967). V.S. Desai, K. L. Hathi and P. C. Kapur, for the respondents (in C.As. 1453 and 1454 of 1967). The Judgment of the Court was delivered by Grover, J. All these appeals arise out of writ petitions that were filed in the High Court of Madhya Pradesh challenging the notices of demand issued by the Deputy Transport Commissioner for payment of the amount of passenger tax said to be due under the Madhya Pradesh Motor Vehicles (Taxation of Passengers) Act, 1959, hereinafter referred to as the 'Act '. By a common judgment dated November 8, 1966 the High Court allowed the petitions and quashed the demand notices. The appeals may be divided into two categories. In C. As. 1449 and 1453 of 1967 returns had been duly filed as contemplated by section 5 of the Act but no tax had been deposited as required by section 6. Demand 9 85 notices were issued in respect of the tax payable pursuant to the returns some years later. Proceedings were also taken as no payment was made for recovery of the tax as arrears of land revenue. In the other four appeals the returns were never filed but it appears the authorities did take certain proceedings under section 7 of the Act and in some cases accounts of the respondents were checked and their liability determined. When demand notices were sent and recoveries sought to be made the writ petitions were filed. The High Court did not go in these matters fully ,and treated all the petitions as if the facts were similar. Section 3 of the Act which is the charging section provides that there shall be levied and paid to the State Government a tax on all passengers carried by stage carriages at a rate equivalent to 15 % of the fare inclusive of the tax payable to the operator of a stage carriage. The tax has to be collected by the operator of a stage carriage and paid to the State Government in accordance with the provisions of the Act. Under section 5 the operator must deliver to the tax officer or to such prescribed officer as may be specified a return in the prescribed form and manner either daily or at such intervals as may be prescribed. Section 6 lays down that the tax payable during any month in accordance with the return submitted under section 5 shall be paid into a Government treasury by the operator and the receipt evidencing such payment has to be forwarded to the Tax Officer. Sections 8, 9 and 10 are in the following terms "(8) Fares escaping assessment. If, for any reason, the whole or any portion of the tax leviable under this Act, for any month has escaped assessment, the Tax Officer may, at any time within, but not beyond, one year from the expiry of that month, assess the tax which has escaped assessment, after issuing a notice to the operator and making such inquiry as the officer may ,consider necessary. (9)Penalty for non payment of tax. Where the whole orany portion of the tax payable to the State Government in respect of any stage carriage for any month or portion thereof in pursuance of sections 6, 7 and 8 has not been paid to it in time the Tax Officer may, in his discretion, levy in addition to the tax so payable, a penalty not exceeding 25 per cent of the maximum tax which would have been payable to the State Government if the stage carriage had carried its full complement of passengers during such month or portion thereof. (10)Recovery of tax, etc, (1 ) In the cases referred, to in sections 7, 8 and 9 the, Tax Officer shall serve on the operator a notice of demand for the sums payable 9 86 to the State Government and the sums specified in such notice may be recovered from the operator as arrears of land revenue. (2)The tax shall be a first charge on the stage carriage in respect of which it is due as also on its accessories and such stage and the accessories thereof may be attached and sold for the recovery of the tax under the appropriate law relating to the recovery of arrears of land revenue. " Section 12 provides for an appeal against a notice of demand ' served under section 10. The scheme of the above provisions apparently is that the operator of a stage carriage has to submit a return in accordance with section 5 and pay tax into the Government treasury every month as provided by section 6. No question can arise of any assessment order being made under section 7 by the Tax Officer where the returns are found to be correct and complete. It is only where either no returns have been submitted or where the return submitted appear to the Tax Officer to be incorrect or incomplete that the Tax Officer has to follow the procedure laid down in section 7 and determine the tax payable by the operator. The High Court was of the view that even where returns had been filed and accepted as correct the Tax Officer has to pass a proper assessment order holding the operator liable for payment of tax in accordance with the return submitted by him. In other words no notice of demand can be issued until the Tax Officer makes such an order quantifying the amount of tax. We are unable to accede to the contention which prevailed ' with the High Court that even where returns had been submit ted but the tax has not been paid the Tax Officer is bound to, make an order before serving a notice of demand even though the demand is strictly in accordance with the returns which have been submitted. Section 7 rules out any such course to be followed by the Tax Officer. It is only when the returns have not been submitted or when return submitted are found to be incorrect and incomplete that the Tax Officer has to make an inquiry, and determine the sum payable by the operator by way of tax. Similarly if there has been escapement of tax proceedings have, to be taken under section 8 and an order has to be made after an enquiry. The position would be same if penalty is sought to be levied, under section 9. But where returns have been accepted as correct nothing more need be done except to recover the tax due which has not been paid and no asessment order need be passed in view of the express language of section 7. 987 We are satisfied that in the two appeals, i.e., C. As. 1449 and 1453/67 in which returns had been filed the Tax Officer was not bound to make any order quantifying the amount of tax before issuing the notice of demand. The amount sought to be realized was quantified in the returns themselves vide Form IV read with Rule 4(2)(c) of the M. P. Motor Vehicles (Taxation of Passengers) Rules. It has not been shown that any penalty was sought to be imposed in those two cases. The order of the High Court, therefore, in these appeals cannot be sustained and is hereby set aside and the writ petitions are ordered to be dismissed. As regards C. As. 1450, 1451, 1452 and 1454/67, it appears, as has been stated earlier, that some proceedings were held of the nature contemplated by section 7 and the notices of demand were issued after orders had been duly made by the Tax Officer. But this is a matter which was not examined in each case by the High Court and we would like to express no opinion with regard to it. These appeals are also allowed and the orders of the High Court are set aside. The High Court will rehear and redecide the same in accordance with law. There will be no order as to costs in all. the appeals. K. B. N, Appeals allowed.

Under the Madhya Pradesh Motor Vehicles (Taxation of Passengers) Act, 1939, where returns have been accepted as correct nothing more need be done except to recover the tax due which has not been paid and no assessment order need be passed in view of the express language of section 7. It is only when the returns have not been submitted or when returns submitted are found to be incorrect and incomplete that the tax officer has to make an enquiry and determine the sum payable by the operator by way of tax. Simmilarly if there has been escapement of tax, proceedings have to be taken under section 8 and an order has to be made after an enquiry. The position would be the same if penalty is sought to be levied under section 9. [986F H; 987A]

CIVIL APPEALS Nos. 118 to 121 of 1952. (Appeals under article 133 (1) (c) of the Constitution of India from the Judgment and Order dated the 10th August, 1950, of the High Court of Judicature, Punjab at Simla (Khosla and Kapur JJ.) in Civil Miscellaneous Nos. 256, 260, 261 and 262 of 1950). Dr. Balkshi Tek Chand (T. N. Sethi, with him) for the appellants. M.C. Setalvad, Attorney General for India (Porus A. Mehta, with him) for the respondents. January, 22. The Judgment of the Court was delivered by MUKHERJEA J. These four consolidated appeals, which have come before us, on a certificate granted by the High Court of Punjab under article 133 (1)(c)of the Constitution, are directed against one common judgment of a Division Bench of that court dated the 10th August, 1950, by which the learned Judges dismissed four analogous petitions, presented on behalf of the different appellants, claiming reliefs under articles 226 and 227 of the Constitution, in respect of certain income tax investigation proceedings commenced against them under Act XXX of 1947. It appears that a partnership firm carrying on business under the name and style of K.S. Rashid & Son was started on the 5th of May, 1934, the partners being three in number to wit K.S. Rashid Ahmed, Saeed Ahmed, his son, and Mrs. Zafar Muhammed, his mother Mrs. Zafar Muhammed died on the 7th of January, 1946, and as a result of her death the partnership stood dissolved. Immediately on the day following, 740 that is to say on the 8th of January, 1946, a new firm was started bearing the same name, with the two surviving partners of the original firm and one Saeeda Begum, a daughter of K.S. Rashid, as the third partner. On the 31st of December, 71947, the Central Government referred the cases of this firm, as well as of the individuals constituting it, to the Income taxInvestigation Commission for enquiry and report under section 5of Act XXX of 1947, presumably on the ground that there had been substantial evasion of payment of income tax in these cases. The authorised official appointed under section 5 (4)(3) of the Act, who figures as respondent No. 2 in all these appeals, in due course started investigation in these cases and the appellants ' complaint is, that contrary to the provisions of the Act, he extended his investigations to a period subsequent to the 31st March, 1943, up to which date the income tax assessment in all these cases was completed. A petition embodying this complaint was made to the authorised official on the 8th of April, 1949, but no order was passed on the petition, as the Commission was expecting an early change of law in this respect. The law was amended by an Ordinance dated the 5th of July, 1949, but the appellants still contended that the amendment was neither retrospective in its operation, nor did it enable the authorised official to carry on his investigation beyond the 31st March, 1943. The account books, however, were shown to the official under protest. On the 17th September, 1949, three applications were filed before the Commission, one with regard to the affairs of Mrs. Zafar Muhammed stating that no investigation could take place in regard to her as she was already dead;the second with regard to the affairs of Saeeda Begum on the ground that she being a new partner and not having been assessed before, was not subject to 'the jurisdiction of the Commission; while the third application was to the effect that the new firm, which came into existence on the 8th of January, 1946, could not have its affairs enquired into at all under the provisions of the Act. After that, in June, 1950, four miscellaneous petitions were filed, (being C.M. Gases Nos. 259 to 262 741 of 1950) on behalf of the appellants, before the High Court of Punjab, and the prayers made therein were of a three fold character. It was prayed in the first place that a writ of prohibition might be issued to the Commission and the authorised official directing them not to proceed with the investigation of cases referred to the Commission under section 5 of Act XXX of 1947. The second prayer was for a writ in the nature of certiorari for quashing the proceedings already commenced. The third and the alternative claim was that the proceedings before the Commission might be revised under article 277 of the Constitution and suitable orders passed as the justice of the case would require. Upon these petitions, rules were issued on the 25th of July, 1950, after a report from the Investigation Commission had been called for. On behalf of the respondents, who resisted these petitions, certain preliminary points were raised in bar of the petitioners" claim. It was contended in the first place that the petitioners being assessees belonging to U.P., their assessments were to be made by the Income tax Commissioner of that State and the mere fact that the location of the Investigation Commission was in Delhi would not confer jurisdiction upon the Punjab High Court to issue writs under article 226 of the Constitution. The second objection was that the Act itself being of a special nature which created new rights and liabilities, the remedies provided for in the Act itself for any breach or violation thereof were the only remedies which could be pursued by the aggrieved parties and article 226 or 227 of the Constitution would not be available to the petitioners. The third ground taken was that the court could not give relief to the petitioners because of sections 5(3) and 9 of Act XXX of 1947. These contentions found favour with the learned Judges who heard the petitions, and although they did not express any final opinion on the third point raised they dismissed the applications of the petitioners on the first two grounds mentioned above. It is against these orders of dismissal that the present appeals have been taken to this court and Dr. Tek Chand, who appeared on behalf of the appellants, has assailed the 742 propriety of the decision of the High Court both the points. So far as the first, point is concerned, which relates to the question of jurisdiction of the Punjab High Court to issue writs of certiorari or prohibition in these cases, the learned Judges based their decision entirely upon the pronouncement of the Judicial Committee in the well known case of Ryots of Garabandho vs ' Zamindar of Parlakitnedi(1). The question for consideration in that case was, whether the High Court of Madras had jurisdiction to issue a writ of certiorari in respect of an order passed by the Collective Board of Revenue, as an appellate authority, in certain proceedings for settlement of rent between the Zamindar of Parlakimedi and the Ryots of certain villages within his estate situated in the district of Ganjam which was wholly outside the limits of the Presidency town of Madras. The question was answered in the negative. The Judicial Committee laid down that the three Chartered High Courts of Calcutta, Madras and Bombay had powers to issue, what were known as the high prerogative writs, as successors to the Supreme Courts which previously exercised jurisdiction over these Presidency Towns; but the exercise of the powers under the Charter was limited to persons within the ordinary original civil jurisdiction of the three High Courts, and outside that jurisdiction it extended only to 'British subjects ' as defined in the Charter itself. It was held that the Supreme Court of Madras had no jurisdiction under the Charter which created it to correct or control a country court of the the East India Company deciding a dispute between Indian inhabitants of the Ganjam district about the rent payable for land in that district; and no such power was given by any subsequent legislation to its successor, the High Court . A contention seems to have been raised on behalf of the appellants that the jurisdiction to issue writs could be rounded on the fact that the office of the Board of Revenue, which was the appellate authority in the matter of settlement of rents, was located within the town of Madras (1) 70 I.A. 129. 743 and the order complained of was made in that town and reliance was placed in this connection upon the case of Nundo Lal Bose vs The Calcutta Corporation (1), where a certiorari was issued by the Calcutta High Court to quash an assessment made by the Commissioners of the town of Calcutta on a certain dwelling house. This contention was repelled by the Judicial 'Committee with the following observations: "The question is whether the principle of that case can be applied in the present case to the settlement of rent for land in Ganjam, merely on the basis of the location of the Board of Revenue, as a body which is ordinarily resident or located within the town of Madras, or on the basis that the order complained of was made within the town. If so, it would seem to follow that the jurisdiction of the High Court would be avoided by the removal of the Board of Revenue beyond the outskirts of the town, and that it would never attach but for the circumstance that an appeal is brought to, or proceedings in revision taken by, the Board of Revenue. Their Lordships think that the question of jurisdiction must be regarded as one of substance, and that it would not have been within the competence of the Supreme Court to claim jurisdiction over such a matter as the present by issuing certiorari to the Board of Revenue on the strength of its location in the town. Such a view would give jurisdiction to the Supreme Court, in the matter of the settlement of rents for ryoti holdings in Ganjam between parties not otherwise subject to its jurisdiction, which it would not have had over the Revenue Officer who dealt with the matter at first instance. " It is on the basis of these observations of the Judicial Committee that the learned Judges have held that the mere location of the Investigation Commission in Delhi is not sufficient to confer jurisdiction upon the Punjab High Court to issue a writ in the present case. It is said that the petitioners are assessees within the U. P State and their original assessments were made by the Income tax Officers of that State. (1)I.L.R. II Cal. 275 744 The subsequent proceedings, which had to be taken in pursuance of the report of the Investigation Commission, would have to b.e taken by the Income tax authorities in the U.P., and if a case had to be stated, it would be stated to the High Court at Allahabad. Taking, therefore, as the Privy Council had said, that, the question of jurisdiction is one of substance, it was held that no jurisdiction in the present case could be vested in the Punjab High Court, for that jurisdiction could be avoided simply by removal of the Commission from Delhi to another place. This line of reasoning does not appear to us to be proper and we do not think that the decision in the Parlakimedi 's case(1) is really of assistance in determining the question of jurisdiction of the High Courts in the matter of issuing writs under article 226 of the Constitution. The whole law on this subject has been discussed and elucidated by this court in its recent pronouncement in Election Commission vs Venkata Rao(2 ) where the observations of the Judicial Committee in Parlakimedi 's case, upon which reliance has been placed by the Punjab High Court, have been fully explained. It is to be noted first of all, that prior to the commencement of the Constitution the powers of issuing prerogative writs could be exercised in India only by the High Courts of Calcutta,, Madras and Bombay and that also within very rigid and defined limits. The writs could be issued only to the extent that the power in that respect was not taken away 'by the Codes of Civil and Criminal Procedure(3) and they could be directed only to persons and authorities within the original civil jurisdiction of these High Courts. The Constitution introduced a fundamental change of law in this respect. As has been explained by this Court in the case referred to above, while article 225 of the Constitution preserves to the existing High Courts the powers and jurisdictions which they had previously, article 226 confers, on all the High Courts, new and very wide powers (1) 70 I.A. 139. (1) ; (3) Vide in this connection Besant vs Tire Advocate General of Madras. 46 I.A. 176. 745 in the matter of issuing writs which they never possessed before. "The makers of the Constitution" thus observed Patanjali Sastri C.J. in delivering the judgment of the court, "having decided to provide for certain basic safeguards for the people in the new set up, which they called fundamental rights, evidently thought it necessary to provide also a quick and inexpensive remedy for the enforcement of such rights, and, finding that the prerogative writs, which the courts in England had developed and used whenever urgent necessity demanded immediate and decisive interposition, were peculiarly suited for the purpose, they conferred, in the State 's sphere, new and wide powers on the High Courts of issuing directions, orders, or writs primarily for the enforcement of fundamental rights, the power to issue such directions, etc. 'for any other purpose ' being also included with a view apparently to place all the High Courts in this country in somewhat the same position as the Court of King 's Bench in England. " There are only two limitations placed upon the exercise of these powers by a High Court under article 226 of the Constitution; one is that the power is to be exercised "throughout the territories in relation to which it exercises jurisdiction", that is to say, the writs issued ' by the court cannot run beyond the territories subject to its jurisdiction. The other limitation is that the person or authority to whom the High COurt is empowered to issue writs "must be within those territories" and this implies that they must be amenable to its jurisdiction either by residence or location within those territories. It is with reference to these two conditions thus mentioned that the jurisdiction of the High Courts to issue writs under article 226 of the Constitution is to be determined. The observations of the Judicial Committee in Parlakimedi 's case(1) have strictly speaking no direct bearing on the point. It is true as the Privy Council said in that case that the question of jurisdiction must be regarded as one of substance, but the meaning and implication of this observation could be ascertained only with reference to the context of (1) 701. A. 129. 11 95 S.C. 1./59 746 the facts and circumstances of that case. As was pointed out by this court in the case referred to above(1): "Their Lordships considered, in the peculiar situation they were dealing with, that the mere location of the appellate authority alone in the town of Madras was not a sufficient basis for the exercise of jurisdiction whereas both the subject matter, viz., the settlement of rent for lands in Ganjam, and the Revenue Officer authorised to make the settlement at first instance were outside the local limits of the jurisdiction of the High Court. If the Court in Madras were recognised as having jurisdiction to issue the writ of certiorari to the appellate authority in Madras, it would practically be recognising the court 's jurisdiction over the Revenue Officer in Ganjam and the settlement of rents for lands there, which their Lordships held it never had. That was the 'substance ' of the matter they were looking at. " In our opinion, therefore, the first contention raised by Dr. Tek Chand must be accepted as sound and the view taken by the Punjab High Court on the question of jurisdiction cannot be sustained. So far as the second point is concerned, the High Court relies upon the ordinary rule of construction that where the legislature has passed a new statute giving a new remedy, that remedy is the only one which .could be pursued. It is said that the Taxation on Income (Investigation Commission) Act, 1947, itself provides a remedy against any wrong or ' illegal order of the Investigating Commission and under section 8 (5) of the Act, the aggrieved party can apply to the appropriate Commissioner of Income tax to refer to the High Court any question of law arising out of such .order and thereupon the provisions of sections 66 and and 66 A of the Indian Income tax Act shall apply with this modification that the reference shall be heard by a Bench of not less than three Judges of the High Court. We think that it is not necessary for us to express any final opinion in this case as to whether section 8 (5) of the Act is to be regarded as providing the only remedy available to the aggrieved party and that it excludes altogether the remedy provided for (1) A.I.R. z953 S.C. 310, 214; ; 747 under article 226 of the Constitution. For purposes of this case it is enough to state that the remedy provided for in article 226 of the Constitution is a discretionary remedy and the High Court has always the discretion to refuse to grant any writ if it is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere. So far as the present case is concerned, it has been brought to our notice that the appellants before us have already availed themselves of the remedy provided for in section 8(5) of the Investigation Commission Act and that a reference has been made to the High Court of Allahabad in terms of that provision which is awaiting decision. In these circumstances, we think that it would not be proper to allow the appellants to invoke the discretionary jurisdiction under article 226 of the Constitution at the present stage, and on this ground alone, we would refuse to interfere with the orders made by the High Court. Dr. Tek Chand argues that the Income tax authorities have not referred all the matters to the High Court which the appellants wanted them to do. But for this there is a remedy provided in the Act itself and in case a proceeding occasions a gross miscarriage of justice, there is always the jurisdiction in this court to interfere by way of special leave. In the result, we dismiss the appeals but in the circumstances of the case make no order as to costs. ' Appeals dismissed.

The Punjab High Court has jurisdiction to issue a writ under article 226 of the Constitution to the Income tax Investigation Commission located in Delhi and investigating the case of the petitioner under 5 of the Taxation on Income (Investigation Commission) Act, 1947, although the petitioners were assessees within the U.P. State and their original assessments were made by the Income tax authorities of that State. Article 226 of the Constitution confers on all the High Courts new and very wide powers in the matter of issuing writs which they never possessed before. There are only two limitations placed upon the exercise of such powers by a High Court; one is that the power is to be exercised "throughout the territories in relation to which it exercises jurisdiction", that is to say, the writs issued by the court cannot run beyond the territories subject to its jurisdiction. The other is that the person or authority to whom 739 the High Court is empowered to issue writs "must be within those territories" and this ,implies that they must be amenable to its jurisdiction either by residence or location within those territories. The remedy provided in article 226 of the Constitution is a discretionary one and the High Court has always the discretion to refuse to grant any writ if it is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere. Ryots of Garabandho vs Zamindar of Parlakimedi (70 I.A. 129) and Election Commission v; Saka Venkata Subba Rao ; referred to.

Civil Appeal No.86 of 1958. Appeal by special leave from the Award dated November 15, 1956, of the Industrial Tribunal, Assam, at Dhubri. M. C. Setalvad, Attorney General for India, section N. Mukherjee and B. N. Ghose, for the appellants. Niharendu Dutt Mazumdar and Dipak Dutta Choudhri, for the respondents. October 14. The Judgment of the Court was delivered by SINHA C. J. This is an appeal by special leave from the Award dated November 15, 1956, made by the Industrial Tribunal, Assam. The dispute arose between the employers, the Indian General Navigation 3 & Railway Company Limited, carrying on business at No. 4, Fairlie Place, Calcutta, and the Rivers Steam Navigation Company Limited, carrying on business at No. 2, Fairlie Place, Calcutta, which will be referred to, in the course of this judgment, as the appellants ', and their workmen at Dhubri Ghat, represented by the Dhubri Transshipment Labour Union and Dhubri Local Ghat Transhipment Labour Union, Dhubri, which will be referred to hereinafter as the respondents '. The Award aforesaid was published in the Assam Gazette on December 19, 1956. It is necessary to state the following, facts in order to appreciate the points arising for decision in this case: The appellants carry on business of inland water transport in North East India and in Pakistan, in association with each other, and are commonly known as the Joint Steamer Companies. The appellants jointly maintain a large number of wharves, jetties, godowns, etc., at different river stations in India and in Pakistan, for the purposes of their business. One such station is at Dhubri in Assam. At that station, a large number of workmen are employed for the purpose of loading and unloading the appellant 's vessels and for transshipping goods from railway wagons to the appellants ' vessels and vice versa. Before May, 1954, such workmen were employed by a contractor called the Assam Labour Supply Syndicate which will hereinafter be referred to as 'the Syndicate '. Those workmen were organized under two labour unions, called (1) the Dhubri Transhipment Labour Union which was affiliated to the Indian National Trade Union Congress which is, a Federation of Trade Unions, and (2) the Dhubri Local Ghat Transhipment Labour Union. There were differences between the Syndicate and its employees who made certain demands, and has threatened to go on strike to enforce their demands. Conciliation proceedings under the industrial Disputes Act, 1947 (which will hereinafter be referred to as the Act), took place, in the course of which certain agreements to be referred to in greater detail hereinafter, were reached between the Syndicate and the respondents on 4 February 23, 1953, and March 30, 1953. On May 3, 1954, by virtue of a Memorandum of that date, an agreement was arrived 'at between the appellants and the respondents, whereby the appellants agreed that instead of employing a contractor to handle the work of loading and unloading and transhipment of goods, the appellants would employ supervisors and agents to handle the work " pending the proposed Tripartite Conference to decide the issue of permanent direct employment of employees for the future ". The appellants also agreed to maintain continuity of service of the workmen and the existing terms and conditions of their service. The Tripartite Conference contemplated by the Agreement, was to consist of the represent. natives of the appellants, the workmen and the Government of Assam. As a result of the Tripartite Con ference held on July 9 & 10, 1954, an agreement was reached between the appellants and the Indian National Trade Union Congress, which was incorporated in the form of a letter dated July 16, 1954, from the General Secretary of the Congress, Assam Branch, Dhubri Ghat, to the several Unions at different stations, including Dhubri. As a result of this agreement, the appellants agreed, inter alia, to introduce permanent direct employment at all the transhipment ghats of Assam, progressively, without prejudicing the agreement of May 3, 1954. It will be necessary hereinafter to consider some of the terms of this agreement in detail, when dealing with the several points in controversy between the parties. After the agreement aforesaid, there arose certain differences amongst the workmen represented by the two Unions aforesaid, in respect of the election of their office bearers. As a result of those internal dissensions amongst the employees, two rival groups, each claiming to represent a section of the workmen, came into existence. The appellants, thereupon, notified the Indian National Trade Unions ' Congress, that recognition to the Dhubri Transhipment Labour Union, was being withdrawn pending satisfactory settlement of the internal differences. Thus, came into existence, a new Trade Union known as the 5 Dhubri Transhipment Workers ' Union, in or about July, 1955. Meanwhile, between May 2, 1955, and July 31, 1955, the appellant 's, on five different occasions and on different charges, dismissed eight of their employees, after making such inquiries as they thought necessary against those workmen, and after giving them each an opportunity of explaining their conduct. On July 21, 1955, one B. Chakravarty, Secretary, Dhubri Transhipment Labour Union, served a notice on the appellants under sub section (i) of section 22 of the Act, that " I propose to call a strike on the 11th August, 1955, from zero hours, if the following demands be not fulfilled within fourteen days on receipt of this notice". Then followed an annexure containing ten demands which need not be set out here. A similar notice was also served by the Secretary Dhubri Local Ghat Transhipment Labour Union on the same date ' the annexure in this case containing eleven demands. On July 26, 1955, the Conciliation Officer of the Government of Assam, received the notice of the strike. He held conciliation proceedings on August 6, 1955, but those proceedings ended abruptly without arriving at any settlement. On August 8, 1955, the said Conciliation Officer, who was the Labour Officer of Gauhati, by his letter bearing the same date, informed the Labour Commissioner, Assam, about the failure of the conciliation proceedings, and forwarded copies of that letter to the appellants and the workmen 's Union at Dhubri. Without waiting for the statutory period of seven days from the date of failure of the conciliation proceedings, a large number of workmen concerned went on strike with effect from the mid night of August 10, 1953, in pursuance of the notices of strike aforesaid. They were alleged by the appellants not only to have gone on strike, but also to have forcibly entered the appellants ' jetties and other working places and prevented the loyal workmen, who were willing to carry on the transhipment work, from carrying on their normal work. The strike is, therefore, alleged to have been illegal. On August 11, 1955, the District Magistrate, Goal para, promulgated an 'order under 6 section 144 of the Code of Criminal Procedure, prohibiting the "holding of any meetings, demonstrations, pro cessions, or causing threat, obstructions, annoyance or injury directed against the persons lawfully employed in the following areas in the Dhabri Town and its suburbs". Then followed a specification of the ghats to which the prohibition applied This order was to remain in force till September 10, 1955, In consequence of the aforesaid strike which was treated by the appellants as illegal, they declared a lock out on August 11, 1955, in respect of 91 workmen named in the notice issued to them. Another lock out notice was issued on August 13, 1955, in respect of a much larger number of workmen in different groups described as belonging to a particular Sardar 's gang. The legality of these lock out notices, was seriously challenged by the respondents. The Workers ' Union called off the strike with effect from August 19, and the appellants lifted the lock out with effect from August 27. The appellants took proceedings against those employees who had taken part in the strike. They suspended those workmen who were alleged to have not only taken part in the strike, but also had obstructed those workmen who were willing to work. But those workmen who were alleged to have only participated in the strike, were not suspended during the inquiry. On September 8, 1955, 37 of the employees were convicted under section 188 of the Indian Penal Code, for violation of the aforesaid order under section 144 of the Criminal Procedure, Code, with the result that on September 9, they were Dismissed by the appellants. Another batch of 52 employees were convicted under a 143/188 of the Indian Penal Code, on February 17,1956. Meanwhile, on September 13, 1955, the Government of Assam bad constituted a Board of Conciliation, consisting of three persons, namely, (1) Labour Commissioner of Assam, as the Chairman, (2) D. N. Sarma of Gauhati, as representing the interest of the employees, and (3) P. J. Rayfield, as representing the interest of the employers, with a view to promoting settlement of the dispute between the appellants and their workmen 7 at Dhubri. The appellants alleged that they had dismissed their workmen as a result of the inquiry held by their nominee into the conduct of the persons who had participated in the alleged illegal strike and/ or had caused obstruction, before they became aware of the constitution of the Board of Conciliation, as aforesaid. On coming to know of the constitution of the said Board of Conciliation, the appellants subsequently passed orders, holding the order of dismissal of the two hundred and twenty three employees in abeyance, pending the disposal of their application to the Board for permission to dismiss the said two hundred and twenty three employees. The Board of Conciliation, by majority, P. J. Rayfield dissenting, came to the conclusion that as regard the dismissal of the thirty seven workmen, the Management had violated section 33 of the Act, because, in their opinion, the proceedings of the Board of Conciliation had commenced from August 26, and not from September 13. As regards the permission sought by the Management to dismiss the suspended two hundred and twenty three workmen, by a similar majority, it was held that although the strike prima facie was illegal, it was not unjustified. The dissenting member, P. J. Rayfield, recorded his note of dissent to the effect that the conciliation proceedings commenced on September 13, 1955, and not earlier, as decided by the majority, and consequently, the dismissal of the,thirty seven workmen ( 'discharge ' of 37 workmen, as stated in the note of dissent), was not in contravention of section 33 of the Act, and that the permission to dismiss the two hundred and twenty three workmen on the ground that they had been found guilty, by a departmental inquiry, of participating in an illegal strike and forcibly preventing others from attending work, should have been granted. This conclusion was sought to be based on the alleged legal position that the Board had no power to withhold the permission applied for, and had not the power to decide as to the kind of punishment to be imposed upon the workmen who had admittedly taken part in a strike which had unanimously been held to be illegal. The dissenting note also sought to 8 show that the finding of the majority of the Board that the strike was justified, was not based on a proper appreciation of the facts of the case. The report of the Board of Conciliation was published on Decem ber 5, 1955. As the parties had come to a stalemate, the Government of Assam, by its order dated December 7, 1955,as subsequently amended by its order dated January 23, 1956, referred the dispute to Shri Radhanath Hazarika as an Industrial Tribunal, for the adjudication of the dispute on the following issues: " 1 (a) Are the Management of R.S.N. & I.G.N. Railway Company Limited justified in dismissing the following eight workers: Manzoor Hussain, Sudam Singh, ldrish, Tazmal Hussain (S/o S.K. Gaffur) Jahangir Sardar, Keayamat Hossain, Panchu Shah and Ram Ekbal Singh? (b) If not, what relief, if any, are they entitled to ? (2) (a) Are the Management of R.S.N. & I.G.N. Railway Company Limited justified in dismissing and/or suspending as the case may be 260 workers at Dhubri Ghat on or about the 29th August, 1955? (b) If not, to what relief, if any, are the workers entitled ? " The parties to the dispute filed their written statement before the Tribunal and tendered both oral and documentary evidence before it. The Tribunal made its Award which was published in the Assam Gazette on December 19, 1956, as already stated. The Tribunal held that the strike, though illegal, was justified, but that in the absence of standing orders whereby participation in any illegal strike, could justify a punishment of dismissal, the appellants were not entitled to dismiss those workmen whose case was before the Tribunal. The Tribunal, by its Award, directed reinstatement of 208 out of 260 workmen whom the appellants had dismissed, or had sought permission to dismiss. The remaining 52 workmen were ordered to be refused reinstatement on the ground that they had been convicted under section 143 of the Indian Penal Code, which implied an offence involving 9 use of criminal force. It also directed the appellants to pay full wages and allowances from August 20, 1955, till the date of reinstatement of the workmen who had been directed to be reinstated. The Tribunal also held that the dismissal of the eight workmen who were the subject matter of the issue 1(a) aforesaid of the Reference, was bad, and therefore, those 8 workmen were also ordered to be reinstated with back wages. The present appeal by special leave is directed against the said Award of the Tribunal. Before we deal with the merits of the controversy between the parties, it is convenient at this stage to deal with certain arguments by way of preliminary objections to the maintainability and competence of the appeal, raised on behalf of the respondents. Those objections are of a three fold character, (1) no appeal lies, (2) the appellants did not exhaust their statutory remedies under section 17A of the Act, and (3) the appeal is not competent also for the reason that the Government of Assam has not been impleaded as party respondent to the appeal, In our opinion, there is no substance in any one of these objections. With reference to the first ground, the argument runs as follows: The Tribunal made its Award on November 15, 1956, and, submitted the same to the Assam Government under section 15 of the Act. On December 8 of that year, the Government of Assam directed the said Award to be published in the Assam Gazette, and it was so published on December 19, 1956. According to the order of the State Government, the Award became enforceable under section 17A, on the expiry of 30 days from the date of publication, namely, December 19, 1956. Accordingly, the Award became enforceable on January 18,1957, and acquired the force of law by the operation of the statute. By virtue of section 17(2) of the Act, the Award became " final and shall not be called in question by any court in any manner whatsoever ", subject to the provisions of section 17A. It was, therefore, further contended that in the events which had happened before January 18, 1957, the Award had become enforceable and had 2 10 acquired the force of law by operation of the statute, had, thus, passed beyond the pale of litigation and adjudication by any court of law. This argument has only to be stated to be rejected in view of the provisions of the Constitution. It is manifest that the provisions of the Act are subject to the paramount law as laid down in the Constitution. Article 136 of the Constitution, under which this Court grants special leave to appeal (in this case, from a determination of the Tribunal), cannot be read as subject to the provisions of the Act, as the ' argument on behalf of the respondents would postulate. The provisions of the Act must be read subject to the over riding provisions of the Constitution, in this case, article 136. Therefore, whatever finality may be claimed under the provisions of the Act, in respect of the Award, by virtue of sections 17 and 17A of the Act, it must necessarily be subject to the result of the determination of the appeal by special leave. It was further contended that the Award had merged in the orders of the Government, on publication in the Official Gazette, under section 17 of the Act, but this is the same argument stated in another form, and any argument based on the provisions of the, Act, making the Award final and enforceable, must always be read as being subject to the decision of this Court, in the event of special leave being granted against such determination by the Tribunal and as adopted by the Government. The same argument was advanced in still another form, namely, that the appellants should have moved this Court before the lease of the time contemplated by section 17 and section 17A of the Act, that is to say, before January 18, 1957. Apart from the consideration that this argument tends to curtail the period of limitation, prescribed by this Court by statutory rules, the operation of sections 17 and 17A of the Act, is not automatically stayed by making an application for special leave. It is only by virtue of specific orders made by this Court, staying the operation of the Award or some such order, that the appellant becomes, for the time being, immune from the operation of those provisions of the 11 Act, which impose penalties for the infringement of the terms of the Award. Adverting to the second branch of the preliminary objection, it appears that the provisions of section 17A, particularly, the provisos, have been sought to be pressed in aid of the respondents ' contention, without realizing that the Award in question in this case, does not come within the purview of either of those provisos. The State Government was not a party to the Industrial dispute, nor was it an Award given by a National Tribunal. Hence, there is no substance in the contention that the appellants did not exhaust their statutory remedies under section 17A of the Act. The third branch of the preliminary objection is based on the contention that the Government of Assam was a necessary and proper party, as it had acted under delegated powers of legislation under the Act, in making the Award enforceable and giving it the force of law. It is a little difficult to appreciate how the State Government became a necessary or proper party to this appeal. The State Government does not play any part in the proceedings, except referring the dispute to the Tribunal under section 10 of the Act. The publication of the Award under section 17, is automatic on receipt of the same by the Government. Its coining into operation is also not subject to any action on the part of the State Government, unless the case is brought within the purview of either of the provisos to section 17A. In view of these considerations, it must be held that there is no merit in the preliminary objection. The appeal must, therefore,, be determined on its merits. On the merits of the controversy between the parties, it has been argued by the learned counsel for the appellants that the Tribunal, having held the strike to be illegal, has erred in holding that it was justified; that an illegal strike could never be justified and that the Tribunal was wholly in error in losing sight of the fact that the appellants were carrying on what had been notified as a public utility service. In this connection, it was further argued that in view of 12 the proviso to section 10(1) of the Act, the State Government was bound to make a Reference of the dispute to an Industrial Tribunal when notice of strike under section 22 of the Act had already been given, and that, therefore, the failure of the employer to enter into direct negotiations with the employees, upon receipt of the strike 'notice, could not be used by the Tribunal for coming to the finding that the strike was justified. It was also urged that the Tribunal had clearly erred in holding that the lock out declared by the appellants, was illegal, and that, in coming that conclusion, it had over looked the provisions of section 24(3) of the Act. The Tribunal, it was further argued, had erred in holding that, in the absence of standing orders to the effect that participation in an illegal strike is a gross misconduct, an employer could not dismiss its workmen for mere participation in an illegal strike. Assuming that the last stated argument was not well founded it was argued that the standing orders governing the relations between the Syndicate and the workmen, would also govern the relations between the appellants and the workmen, as a result of the agreement aforesaid whereby the appellants undertook all the liabilities of the Syndicate in relation to the workmen, and guaranteed to them the same conditions of service. In this connection, it was also argued that the Tribunal bad made a serious mistake of record in treating the standing orders of the Syndicate as a mere draft and, therefore, of no binding force as between the employers and the employees; that the Tribunal erred, while considering the case of the eight workmen dismissed before the commencement of the strike, in proceeding upon an unfounded assumption that no charge sheets had been served upon those workmen during the inquiry against them, and that, therefore, the Award, in so far as it related to those 8 workmen, was entirely erroneous. As against the two hundred and eight workmen ordered by the Tribunal to be reinstated, it was argued that the departmental inquiry held by the appellants had resulted in the distinct finding that they bad not only participated in the illegal strike, but had also instigated loyal workmen 13 to join in the illegal strike, and had obstructed tranship ment work by loyal workmen. In this connection, it was also argued that in any view of the matter, the thirty seven persons, who had been convicted by the criminal court under section 188 of the Indian Penal Code, for having transgressed the prohibitions contained in the prohibitory order under section 144 of the Code of Criminal Procedure, were clearly liable to be dismissed on the findings of the criminal court itself, apart from any other considerations bearing on the regularity of the inquiry against them; that the Tribunal was in error in holdidg that the inquiry against the dismissed workmen was not in accordance with the prescribed procedure; and lastly, that this was not a case of reinstatement of the dismissed workmen, and that only compensation should have been awarded to them. On behalf of the respondents, their learned counsel, besides raising the preliminary objection already dealt with, urged that the Tribunal was fully justified in holding that the strike, though illegal, was " perfectly justified " and virtually provoked by the appellants. Though in the statement of the case, the argument had been raised that the strike could not be illegal, because the notification declaring the service at the ghats to be public utility service, was ultra vires, that argument was not persisted in before us, but it was vehemently argued that there were no standing orders either of the Syndicate or of the appellants, which could govern the service conditions of the workmen, and that in any event, mere participation in an illegal strike would not entitle the employers to dismiss those workmen who had joined the strike; that the dismissal orders in all cases, were sheer acts of victimization and unfair labour practice. It was also sought to be argued that the lock out was entirely illegal, and that in any view of the matter, its continuance after the strike had been called of, was wholly unjustified and against the principles of " social justice ". Further, it was urged that the appellants had dismissed and/or suspended 260 workmen without framing any specific charges against them; that the dismissal of the eight workmen 14 in view of the incidents before the commencement of the strike, was also illegal, and in any event, irregular, because, it was urged, no specific charges had been framed against them. It was also sought to be argued that the notice ' inviting the workmen to join their work, being unconditional without any reservations, amounted to a condonation of the strike, and therefore, the dismissal orders against the two hundred and sixty workmen were bad in law. Some other arguments also were advanced on behalf the respondents, but we do not propose to take notice of them, because they were ultimately found to be without any foundation in the record of the case. As a matter of fact, the arguments on behalf of the respondents, were not marked by that strict adherence to the record of the case, or the case made out before the Tribunal, as ought to be the case before courts of justice generally, and certainly, before the highest Court in the land. Now, turning to the merits, it is better to deal with the first issue first, that is to say, whether the dismissal of the eight workmen, named in the Issue as amended, was justified, and if not, to what relief they were entitled. The Tribunal dealt with the individual cases of those workmen, and came to the conclusion that the dismissal of none of them was justified, and that, therefore, all of them were entitled to reinstatement with all their back wages and other benefits accruing to them from the date of their suspension and subsequent dismissal until the date of their reinstatement, minus what had been paid to them. Thus, the first issue in both the parts, was decided entirely in favour of the workmen. We have, therefore, to examine how far the determination of Tribunal on the first issue, is open to question. The cases of Manzoor Hussain, Sudama Singh, Idrish and Tazmal Hussain, have been dealt with together by the Tribunal below. These four workmen had been dismissed by the appellants, upon a report made by Rayfield, the enquiring officer under the appellants, on the allegation that they had assaulted their Labour Supervisor section P. Tevari on May 2, 1955. This charge against those four workmen, was examined by 15 a Magistrate who tried them for the alleged assault on Tewari. The Magistrate found them not guilty and acquitted them by his judgment given in April, 1956. The departmental inquiry by Rayfield was held on May 17, 1955, when a member of witnesses were examined by him on behalf of the appellants. In their joint written statement, these four workmen stated that as the police case was pending against them in regard to these very charges, they were not in a position to make any further statement in their defence. The Tribunal came to the conclusion that, on the material before it had not been made out that Tewari had been actually assaulted, while on duty, and that the dismissal order was passed " possibly with a view to frighten the other workmen and to satisfy the whims of Tewari ". We have examined the record, and we do not find any justification for differing from the conclusions of the Tribunal. With reference to the case against Panchu Shah and Ram Ekbal Singh, it appears that the Tribunal definitely came to the conclusion that their dismissal order was vitiated because it was an act of victimization and was mala fide. In the face of this clear finding,we do not think that we can interfere with the determination of the Tribunal in respect of these two workmen. But the case against Jahangir Sardar and Keayamat Hussain, stands on a different footing. The charge against Jahangir was two fold, namely, (1) wilful insubordination and disobedience, and (2) conduct prejudicial to good order and discipline. To these charges, Jahangir demurred and objected, saying he could not " understand the reasons for the charge sheet ". On this demurrer, a letter dated May 7, 1955, was issued to him, giving him the details of the acts charged against him, with reference to the time, date and place. The charge against Keayamat was similarly, a two fold one, namely, (1) disorderly behaviour and inciting others to disturbance and violence, and (2) conduct prejudicial to good order and discipline. Keayamat also demurred to the charge in the same way that it was vague, and that 16 he was not aware of anything wrong having been done by him. On May 7, Keayamat was also given a similar letter, explaining to him the details of the charge aforesaid, with reference to the time, place and date of the acts which formed the gravamen of the charge against him. A number of witnesses were examined by Raymond who held the inquiry. In both these cases, the Tribunal refused to accept the result of the inquiry, chiefly on the ground that no specific charge had been laid against them, and that the allegations were much too vague. In recording this finding, the Tribunal has fallen into a grievous error of record. It has completely omitted to consider the letter issued to both these workmen on May 7, giving full particulars of the charges against them. If it had considered that letter issued to both these workmen, it would not have fallen into this serious error which has vitiated its award in respect of them. The Tribunal further proceeded to comment on the evidence led before the inquiring officer and remarked that the evidence was meager or insufficient. It also observed that the " degree of proof, even in the departmental enquiry, is the same as required in a Court of Law ". In our opinion, the Tribunal misdirected itself in looking into the sufficiency of proof led before the inquiring officer, as if it was sitting in appeal on the decision of the employers. In the case of these two employees, there is no finding by the Tribunal that the order of dismissal against them, was actuated by any mala fides, or was an act of victimization. In view of these considerations, the dismissal order made by the appellants on a proper inquiry, after giving the workmen concerned sufficient opportunity of explaining their conduct, must be upheld. The appeal in respect of these two workmen, must, therefore, be allowed, and the order of the Tribunal in respect of them, accordingly, set aside. The order of the Tribunal in respect of the other six workmen, is confirmed. Having dealt with the orders of dismissal in respect of the incidents before the strike of August 11, 1955, 17 we now turn to the strike itself The first question that arises in this connection, is whether the strike was illegal as alleged by the appellants and as found by the Tribunal. The learned counsel for the respondents sought to reopen the finding about the illegality of the strike, basing his submissions mainly on the contention that there were no conciliation proceedings pending either in fact or in law on the date of the strike, and that, therefore, the finding of the Tribunal was not correct. It was not disputed on behalf of the respondents that the notices of the strike given by the workmen on July 21, 1955, had been duly received by the Conciliation Officer on July 26, 1955, and that the conciliation proceedings were commenced on August 6, 1955. What was contended on their behalf, was that the proceedings had to be stopped, as it appears from the record of those proceedings, without any settlement of the dispute as the "workers ' representative expressed their inability to take further part in the proceedings, on a question of leave to their other representatives". We shall examine the question later as to which party was to blame for the break down of the conciliation proceedings at the very outset. It is enough to observe that under section 20 of the Act, the conciliation proceedings must be deemed to have commenced on July 26, 1955, when the notice of the strike was received by the Conciliation Officer, and those proceedings shall be deemed to have concluded when the report of the Conciliation Officer is received by the Government. In this case, the report to the Government was made by the Conciliation Officer on August 8, 1955. It is not absolutely clear as to when this report of the Conciliation Officer was actually received by the Government. It is clear, therefore, that the conciliation proceedings certainly lasted between July 26 and August 8, 1955. The strike, having commenced on August 11, was clearly illegal in view of the provisions of section 22 of the Act. We must, therefore, hold in agreement with the Tribunal, that the strike was clearly illegal. The Tribunal, having held that the strike was illegal, proceeded to discuss the question whether it 3 18 was justified, and came to the conclusion that it was "perfectly justified". In the first place, it is a little difficult to understand how a strike in respect of a public utility service, which is clearly, illegal, could at the same time be characterized as "perfectly justified". These two conclusions cannot in law co exist. The law has made a distinction between a strike which is illegal and one which is not, but it has not made any distinction between an illegal strike which may be said to be justifiable and one which is not justifiable. This distinction is not warranted by the Act, and is wholly misconceived, specially in the case of employees in a public utility service. Every one participating in an illegal strike, is liable to be dealt with departmentally, of course, subject to the action of the Department being questioned before an Industrial Tribunal, but it is not permissible to characterize an illegal strike as justifiable. The only question of practical importance which may arise in the case of an illegal strike, would be the kind or quantum of punishment, and that, of course, has to be modulated in accordance with the facts and circumstances of each case. Therefore, the tendency to condone what has been declared to be illegal by statute, must be deprecated, and it must be clearly understood by those who take part in an illegal strike that thereby they make themselves liable to be dealt with by their employers. There may be reasons for distinguishing the case of those who may have acted as mere dumb driven cattle from those who have taken an active part in fomenting the trouble and instigating workmen to join such a strike, or have taken recourse to violence. Apart from the basic error of treating the illegal strike to be perfectly justified, the Tribunal has indulged in language which is not characteristic of a judicial approach. The following observations by the Tribunal, in the course of its inordinately long Award, covering about 42 pages in print, are illustrative of the attitude of the Tribunal towards the appellants : " By this letter the Company 's Joint Agent at Dhubri instead of taking a friendly attitude approached the District Magistrate asking for police help. 19 If the Company 's Agent at Dhubri had the honest intention he could have immediately moved the appropriate authority to come immediately to the spot to stop the proposed strike. But instead of that he has provoked the Union by adopting this back door policy to suppress the demands of the workers. It was really unfair on the part of the Agent. It seems that he bad mala fide intention." For this outburst of the Tribunal, justification is sought in the letter which D. J. Milner, the Joint Agent of the appellants, wrote to the Secretary to the Government of Assam, Transport and Industries Department, Labour Commissioner, Government of Assam, Superintendent of Police, Goalpara District, Labour Officer, Lower Assam, and General Secretary, I.N.T.U.C., Assam Branch, on August 9, 1955, informing them of the threatened strike. The last paragraph of the letter explained the reasons for the long letter addressed by the Joint Agent: " In the interest of maintaining this vital link in Assam 's flood stricken communications and protecting our property,, and that of the Railway, as well as our own staff, Railway Staff and loyal laborers, we have to request that adequate police be available at each of our Ghats from shortly prior to midnight on the 10th instant in order that unlawful damage may not be caused by these illegal strikers who will be acting in defiance of Government regulations, and accepted industrial dispute procedure". We see nothing sinister in this letter, justifying the remarks by the Tribunal, quoted above. It was the usual ,request for the maintenance of public peace and for the prevention of acts of violence by misguided persons. It was also addressed to the I.N.T.U.C., the guardian of Labour. On the same date, that is, August 9,1955, B. Chakravarty, the Secretary of the Dhubri Transhipment Labour Union, addressed a letter to the Superintendent of Police, Goalpara, and Deputy Commissioner, Goalpara, alleging that the Joint Agent of the appellants had instructed the officers in charge of the jetties at the Ghats to raise a " hallah " after the zero hour of August 11, 1955, that the labourers of the 20 Transhipment Department were looting the goods of the ship, when they would go for picketing purposes to strengthen their strike. Those allegations of the Secretary, the Tribunal has taken as proof of those allegations, and has observed: ". it is clear that Mr. Milner hatched a plan to create a trouble and the Secretary of the Union got scent of all the secret arrangements made by the Company to create disturbance at the Ghats just immediately after the strike is declared. " This is the first reason assigned by the Tribunal for coming to the conclusion that the strike was "perfectly justified". The second reason for coming to this conclusion, according to the Tribunal, is to be found in the Conciliation Officer 's report that the appellants did not agree to grant leave to the labour representatives to sit in the conciliation proceedings which were held on August 6, 1955. The Tribunal has observed that it appeared also from the appellant 's attitude in refusing to grant leave to the five representatives of the Union, that the appellants were not inclined to give facilities for the conciliation proceedings. Is this observation justified on the record as it stands ? As already indicated, the Conciliation Officer received a copy of the strike notice on July 26, 1955. He fixed August 6, 1955, 10 a.m., at Dhubri, for the conciliation proceedings. The parties to the dispute were apprised of this meeting of August 6, 1955, on August 1, 1955 (ext. O, p. 119). From the proceedings of the Conciliation Officer, it appears that the Union applied to the appellants for leave to five workmen, officials of the Union, to enable them to represent the workmen in the conciliation proceedings. The attitude of the appellants was that they were agreeable to grant leave even on a verbal request, if the request came from those individual workmen, either direct or through the Union, but the appellants were not prepared to grant leave on a petition from the Union alone. On the other hand, the Union was not agreeable that the petition for leave should be made by the workmen themselves, and the Union insisted that it had the right to apply for leave on behalf of those workmen. Upon this, the Union 21 did not take any further part in the proceedings. It would be a travesty of facts to suggest that the appellants were not prepared to grant leave to those five workmen. In the first instance, leave should have been applied for before the date fixed for the commencement of the conciliation proceedings. Secondly, the application should have been made by the workmen concerned, either direct or through the Union. The Tribunal seems to have been under the impression that this attitude of the appellants amounted to a breach of one of the terms of the agreement as a result of the Tripartite Conference aforesaid. That, again, is an assumption which is not justified by the terms of the Agreement. Secondly, the five workmen selected for representing the workmen in the conciliation proceedings, should have applied in good time to their employers for leave for the purpose, but what we find is that an application (ext. M at p. 118) was made on August 6, 1955, not by those workmen themselves, but by the Secretary of the Union, and a copy of the application was forwarded to the Labour Officer and to the Deputy Commissioner, for information. Apparently, the Union was treating the matter as of sufficient importance, but they did not think it necessary to put in the application in time on behalf of the workmen themselves, even though the application might have been made through the Union. That the appellants were not to blame for the attitude they took in the matter of the procedure for application for leave to particular workmen, becomes clear on a reference to the terms of the Agreement dated February 23, 1953, between the Syndicate and their workmen represented by the Dhubri Transhipment Labour Union, at p. 75, Part 1 of the record. The Demand 5(f) was agreed to in these terms : " All leave applications be submitted by a representative of the Union on Tuesday or Friday in a week before the Management, and the decision be communicated to the Union the next day of submission of the application. " On the other band, in respect of leave, the terms of the Agreement reached between the Syndicate and the 22 Dhubri Local Ghat Transhipment Labour Union, on March 13, 1953, are as follows: " It is agreed that the workers will submit leave applications to the management who will communic ate their decision to the workers direct within three days of receipt of the applications and a copy thereof will he sent to the Union for information". It is clear, therefore,that the conciliation proceedings stopped abruptly not because the Management was to blame for not granting leave to the five chosen representatives of the workmen, but because B. Chakravarty insisted that the leave application would not be made by individual workmen but only by the Union. Even that application was made too late, and in the teeth of the terms of the Agreement, quoted above. If the Secretary had not taken this unreasonable attitude, and if he had been anxious that the conciliation proceedings should continue, the easiest thing for him to have done, was to get those five workmen to make their applications for leave, which the Management was prepared to grant even at that late hour. In our opinion, the conciliation proceedings failed because the Secretary took an unreasonable attitude. The Tribunal, therefore, was in error in throwing the blame for the failure of the conciliation proceedings on the Management. The third ground of attack on the bona fides of the appellants, was said to have been the attempt of the Management to interfere in the internal affairs of the Unions. The following remarks of the Tribunal are another instance of its intemperate language with which the Award bristles: " Curiously enough it appears that the Company 's Joint Agent at Dhubri dabbled in politics and meddled in internal administration of the Unions. He propped up another Union and backed it up to stand as a rival Union. " On an examination of the record of the case, it appears that the Indian National Trade Unions ' Congress, to which the Unions were affiliated, was not in favour of the strike. That would be an indication of the fact that the relation between the employers 23 and the employees had not come to the breaking point, and that the Congress, naturally, expected that conditions of service of the employees, could be improved more effectively by peaceful negotiations than by taking recourse to a strike in respect of a service which had been declared by the Government to be a public utility service . But the Secretary of one of the Unions, B. Chakravarty aforesaid, appears to have brought matters to a head without giving the Conciliation Officer a reasonable chance, as already indicated, of bringing about a reconciliation between the view points of the employers and the employees. The appellants had only recently taken over the workmen under their direct employment, and the Tripartite Conference between them, the representatives of the employees, and the Government, was yet to settle all the outstanding Questions between the parties. Hence, the fact that two rival Unions had come into existence, could not be laid at the door of the appellants as an act of unfair labour practice. The Tribunal was not, therefore, in our opinion, justified in holding that the Management had either meddled in the internal administration of the Unions, or dabbled in politics, and had, thus, been guilty of unfair labour practice. The Tribunal has been rather generous to the workmen without being just to the appellants. This is also shown by the fact that, after having held the strike to be illegal, the Tribunal considered the legality of the lock out declared by the appellants on August 11, 1955, in respect of one Ghat, and on August 13, 1955, in respect of the other Ghat. In this connection, the conclusion of the Tribunal may best be stated in its own words to demonstrate its attitude to the appellants: " In this case the Company used the weapon of lock out just to intimidate and put pressure on the employees to withdraw the demands. The lock out is also prohibited under Section 22(2)(d) of the Act. Therefore, both lock out and strike are illegal. The Company had no justification whatsoever to declare a lock out. " 24 Apparently, the Tribunal ignored the provisions of section 24(3) of the Act. The lock out was clearly not illegal. It is another question whether there was a justification for the appellants to continue the lockout even after the strike had been called off on August 19. The Joint Agent of the appellants, by his letter dated August 17, 1955, to the two Unions, had intimated to them that in view of the illegal strikes, lockout had been declared at the local Ghat on August 11, and at the Transhipment Ghat on August 13, and that the lock out " will remain in force until disciplinary action can be instituted against those of our employees chiefly responsible for leading and continuing the illegal strikes ". The continuance of the lock out after August 19, may be unjustified; but that does not make the lock out itself illegal. It was in pursuance of that order of the Joint, Agent, that proceedings were taken against the socalled leading strikers, leading upto their dismissal. Those orders of dismissal, to be presently discussed, are the main points in controversy between the parties in this Court. But before those orders of dismissal were passed, the Management issued a notice on August 26, 1955, lifting the lock out with effect from the next day. It required the employees to report for duty to the Joint Agent personally, at his office between the hours of 9 and 10 a.m. It also contained the threat that any employee who did not report for duty on August 30, " will in the absence of a letter of explanation and good reason, be treated as having voluntarily terminated his services." R. N. Biswas was then appointed the Inquiry Officer by the appellants, and he held the inquiry in batches, the first batch consisting of 26 workmen, the second, of 114, the third, of 68, the fourth, of 17 and the fifth, of 7. These inquiries related to different incidents in connection with the strikes. Biswas appears from the record as placed before us, to have recorded the statements of Milner, Rayfield, C. R. Das and section P. Tewari officers of the appellants in proof of the allegations against the strikers. We do not think any useful purpose will be served by 25 going into the details of the evidence given by those witnesses, because we have come to the conclusion that those several inquiries suffer from the fundamental defect that there is no satisfactory evidence on the record that charges, giving the details of the acts of violence or obstruction, against the strikers, were served upon the workmen against whom those inquiries had been instituted. As a result of each one of these inquiries, the Inquiry Officer, R. N. Biswas, reported that the charge against each one of the workmen, had been proved to his satisfaction. But before the inquiry was held, the Joint Agent on September 9, 1955, informed the thirty seven workmen who had been convicted as aforesaid, of the criminal charge under section 188 of the Indian Penal Code, that their services were terminated from that date, and that they were to call at his office by the 15th of the month to collect their dues and to vacate the quarters of the appellants. As regards the remaining two hundred and twenty three workmen, orders were passed on September 16, to the effect that as the departmental inquiry made against them, had resulted in the charges against them being proved, they were dismissed from the service of the appellants with effect from August 29, 1955. They were called upon to call at the Labour Office on September 18, to collect their dues, and to vacate the quarters of the appellants. Realising that as the Government had appointed a Board of Conciliation on the 13th instant, to resolve the dispute between the parties, the orders aforesaid of dismissal or termination of services of the thirty seven workmen and of the two hundred and twenty three workmen, as aforesaid, would be illegal, the Joint Agent informed the workmen on September 20, 1955, that those orders would be held in abeyance, pending permission from the Board to dismiss them, and they would be deemed to be under suspension. It may be recalled that the Government had constituted a Board of Conciliation, consisting of three persons, viz., H. P. Duara, the Labour Commissioner of Assam, as the Chairman, and D. N. Sarma and P. J. Rayfield as members, representing the interests of the employees and the employers 4 26 respectively. The Board of Conciliation considered the question of the dismissal or suspension of those thirty seven plus 223 workmen, along with the application, of the Management, asking permission to dismiss 223 workmen for their having taken part in the illegal strike, and forcibly preventing willing workmen from attending work. Two of the three persons constituting the Board, namely, the Chairman and D. N. Sarma, came to the conclusion that as regards the dismissal of the thirty seven workmen the order of dismissal was illegal, as in their opinion, the conciliation proceedings had commenced from August 26, and not from September 13. On the question of suspension of 223 workmen, the Board was of the opinion that suspension without pay, pending the permission of the Board to dismiss the workmen, was no punishment, and therefore, no action was called for. As regards the permission sought by the Management to dismiss the suspended two hundred and twenty three workmen, again by a majority, those two members were of the opinion that although the strike was prima facie illegal, it was not unjustified and therefore, the permission sought, could not be given. Rayfield, the other member of the Board, as already stated, submitted his Minute of dissent. He pointed out that the conciliation proceedings commenced on September 13, and therefore, the discharge of the thirty seven workmen, was not in contravention of section 33 of the Act. He further held that the Board had no power to withhold the permission asked for to dismiss 223 workmen on the ground that they had been found guilty, on a departmental inquiry, of having participated in an illegal strike, and of having forcibly prevented workmen from attending work. He added that the grant of the permission would not debar the Union from raising an industrial dispute in that matter. It may be added that the Board unanimously agreed that dismissal " is an appropriate punishment for participation in an illegal and unjustified strike. " The Tribunal also took the same view of the legal position, when it observed, " If the strike is not justified and at the same time it contravenes the provisions of 27 Section 22 of the Act, ordinarily the workmen participating in it are not entitled to any relief. " As a matter of fact, the Tribunal has closely followed the findings of the majority of the Board of Conciliation. But as we have already pointed out, there can be no question of an illegal strike being justified. We have further held, in agreement with the Tribunal, that the strike was illegal, and that it was not even justified in disagreement with the Tribunal assuming that such a situation could be envisaged, in accordance with the provisions of the Act. We have, therefore, to determine the question what punishment, if any, should be meted out to those workmen who took part in the illegal strike. To determine the question of punishment, a clear distinction has to be made between those workmen who not only joined in such a strike, but also took part in obstructing the loyal workmen from carrying on their work, or took part in violent demonstrations, or acted in defiance of law and order, on the one hand, and those workmen who were more or less silent participators in such a strike, on the other hand. It is not in the interest of the Industry that there should be a wholesale dismissal of all the workmen who merely participated in such a strike. It is certainly not in the interest of the workmen themselves. An Industrial Tribunal, therefore, has to consider the question of punishment, keeping in view the over riding consideration of the full and efficient working of the Industry as a whole. The punishment of dismissal or termination of services, has, therefore, to be imposed on such workmen as had not only participated in the illegal strike, but had fomented it, and had been guilty of violence or doing acts detrimental to the maintenance of law and order in the locality where work had to be carried on. While dealing with this part of the case, we are assuming, without deciding, that it is open to the Management to dismiss a workman who has taken part in an illegal strike. There was a great deal of argument at the Bar on the question whether the Management, in this case, was entitled to dismiss the workmen who had taken part, in the illegal strike. 28 A good deal of argument was devoted to the further question whether there were certified standing orders as between the Syndicate and the workmen, or later, as between the appellants and the workmen, and Whether, even apart from such standing orders, it was open to the employers to deal so drastically with their employees who had taken part in the illegal strike. In our opinion, it is not necessary to decide those general questions, in view of our conclusion, to be presently stated, on the question of the regularity of the inquiry held in different batches, as indicated above, by Biswas, the officer appointed by the appellants to hold the departmental inquiry. In order to find out which of the workmen, who had participated in the illegal strike, belong to one of the two categories of strikers who may, for the sake of convenience, be classified as (1) peaceful strikers, and (2) violent strikers, we have to enquire into the part played by them. That can only be done if a regular inquiry has been held, after furnishing a charge sheet to each one of the workmen sought to be dealt with, for his participation in the strike. Both the types of workmen may have been equally guilty of participation in the illegal strike, but it is manifest that both are not liable to the same kind of punishment. We have,therefore, to look into the nature of the inquiry alleged to have been held by or on behalf of the appellants. On the one hand, the workmen took the extreme position that no inquiry had at all been held, and on the other hand, the employers took up the position that the Inquiring Officer had held a regular inquiry, after furnishing a charge sheet to each one of the workmen against whom the inquiry was held. That there was an inquiry held by Biswas, admits of no doubt. The proceedings before him and the evidence recorded by him, have been placed on record. But the most serious question that we have to determine is whether a charge sheet, giving notice to each workman concerned, as to what the gravamen of the charge against him was, had or had not been furnished to him. On this part of the case, the record is admittedly incomplete. The appellants relied upon the following observations 29 of the Tribunal in support of their case that the inquiry had been entirely regular: " The charges are for fomenting and participating in an illegal strike from the 11th August, 1955 and forcibly preventing other labourers from working on the same day. " On the other hand, reliance was placed on behalf of the workmen on the following passage in the Award of the Tribunal: " In this case the Company has not framed any specific charge against those 260 workers alleging that they indulged in violence or acts subversive of discipline. " The finding of the Tribunal is that no such individual charge sheet was delivered to the workmen. This conclusion of the Tribunal was assailed on behalf of the appellants on the ground that as this point had not been specifically made in the written statement of the workmen, the appellants did not put in those charge sheets in evidence, and had contented themselves with only producing the record of proceedings before the Inquiring Officer. As we, naturally, attached a great deal of importance to this question, we were inclined to give another opportunity to the appellants to remove the lacunas in the evidence bearing upon that question, even at this late stage. More than once, during the course of the arguments by the learned Attorney General, we suggested that he might put in those charge sheets, if they were in existence, as additional evidence in this Court, so that we might be satisfied that there had been a regular inquiry according to the requirements of natural justice. After making the necessary investigation, the learned Attorney General informed us on the last day of the arguments, that no such documents were in existence. It was alleged that the entire bundle of documents, containing those individual charges, had been lost, and that, therefore, there were no means of satisfying this Court by documentary evidence, that there were in fact such individual charge sheets delivered to the workmen concerned. We find, therefore, no good reasons for displacing the finding of the 30 Tribunal that there were no such individual charges,in spite of apparently conflicting observations made by it, as quoted above. The position, therefore, is that the strikes were illegal, that there was no question of those strikes being justified, and that, assuming that the strikers were liable to be punished, the degree and kind of punishment had to be modulated according to the gravity of their guilt. Hence, it is necessary to distinguish between the two categories of strikers. The Tribunal attempted to make such a distinction by directing that the 52 workmen, who had been convicted under section 143, read with section 188 of the Indian Penal Code, were not entitled to reinstatement, and the remaining 208 workmen were so entitled. Dealing with the case of the thirty seven workmen, who had been convicted only under section 188 of the Indian Penal Code, for transgression of the prohibitory orders under section 144 of the Code of Criminal Procedure, the Tribunal put those workmen on the same footing as the rest of the workmen. But, in our opinion, those 37 workmen do not stand on the same footing as the others. Those 37 workmen, who were convicted under section 188 of the Indian Penal Code, had been found to have violated the prohibitory orders passed by the public authorities to keep the public peace. Those convictions were based upon evidence adduced before the Magistrate, showing that the workmen had proceeded to the steamer flat through the jetty, in defiance of the orders promulgated under section 144. We have examined the record and we find that there is sufficient indication that those 37 workmen were among the violent strikers, and could not be placed in the category of peaceful strikers. Hence, it is clear that those workmen not only joined the illegal strike by abstaining from their assigned duty, but also violated regularly promulgated orders for maintaining peace and order. Such persons,apparently,cannot be said to be peaceful strikers, and cannot,therefore, be dealt with as lightly as the Tribunal has done. The Tribunal, in our opinion, is wrong in taking the view that the appellants had nothing to do with the violation of the order under section 144 of the 31 Code of Criminal Procedure, promulgated by the District Magistrate, with a view to maintaining peace and order at the site of work. These 37 workmen, therefore, should not have been ordered to be reinstated. As regards the remaining workmen, the question is whether the Tribunal was entirely correct in ordering their reinstatement with full back wages and allowances on and from August 20, 1955, till reinstatement. This would amount to wholly condoning the illegal act of the strikers. On the findings arrived at before us, the workmen were guilty of having participated in an illegal strike, for which they were liable to 'be dealt with by their employers. It is also clear that the inquiry held by the appellants, was not wholly regular, as individual charge sheets had not been delivered to the workmen proceeded against. When the blame attaches to both the parties, we think that they should divide the loss half and half between them. We, therefore, direct that those workmen whose reinstatement by the Tribunal is upheld by us, should be entitled only to half of their wages during the period between the date of the cessation of the illegal strike (i.e. from August 20, 1955) and the date the Award became enforceable. After that date they will be entitled to their full wages, on reinstatement. In this connection, it has also got to be borne in mind that those workmen, as observed in the judgments of the criminal courts which inflicted nominal fines on them on their conviction, were " day labourers who earned their livelihoods by day to day labour ". It is only natural that during all these years that the workmen have not been employed by the appellants, the workmen should have been earning their living by doing day to day labour. It must, therefore be assumed that they were working for their living, and were not wholly unemployed. Therefore, the burden of the back wages for the long period that has elapsed between the date of the end of the strike and the date of the Award, ordering their reinstatement, should be divided half and half between the parties. The appeal is, therefore, allowed in part, as indicated above, that is to say, (1) the order of reinstatement 32 in respect of Jahangir Sardar and Keayamat Hussain,is set aside, (2) similarly, the order of reinstatement in respect of the thirty seven workmen, who had been convicted under section 188 of the Indian Penal Code, is also Set aside, and (3) the order for payment of full back wages, etc., is modified by reducing those amounts by half, for the period aforesaid. As success between the parties has been divided, they are directed to bear their own costs in this Court. Appeal allowed in part.

It was a contradiction in terms to say that a strike in a public utility service, which was clearly illegal, could also be justified. The law does not contemplate such a position nor is it warranted by any distinction made by the . It should be clearly understood by workmen who participate in such a strike that they cannot escape their liability for such participation and any tendency to condone such a strike must be deprecated. The only question of practical importance, that arises in such a strike is, what should be the kind and quantum of the punishment to be meted out to the participants and that question has to be decided on the charge sheet served on each individual workman and modulated accordingly. In determining the question of punishment, distinction has to be made between those who merely participated in such a strike and those who were guilty of obstructing others or violent demonstrations or defiance of law, for a wholesale dismissal of all the workmen must be detrimental to the industry itself. If the employer, before dismissing a workman, gives him Sufficient opportunity of explaining his conduct, and no question of mala fides or victimisation arises, it is not for the Tribunal, in adjudicating the propriety of such dismissal, to look into the sufficiency or otherwise of the evidence led before the enquiring officer or insist on the same degree of proof as is required in a Court of Law, as if it was sitting in appeal over the decision of the employer. In such a case it is the duty of the Tribunal to uphold the order of dismissal. Consequently, in the present case, where the appellants, who were carrying on business in water transport service, notified as a public utility service, dismissed their workmen for joining an illegal strike, on enquiry but without serving a charge sheet oil 2 each individual workman and the Industrial Tribunal directed their reinstatement, excluding only those who had been convicted under section 143 of the Indian Penal Code but including those convicted under section 188 of the Code, with full back wages and allowances, Held, that the decision of the Tribunal to reinstate those who had been convicted under section 188 of the ' Code must be set aside and the wages and allowances allowed to those reinstated must be reduced by half and the award modified accordingly. Held, further, that the , Must be read as subject to the paramount law of the land, namely, the Constitution, and the finality attaching to an award under sections 17 and 17A of the Act, must, therefore, yield to the overriding powers of this Court under article 136 of the Constitution. As the award in the instant case did not fall within the Provisos to section 17 of the Act, it was not correct to contend that the appellants had any other remedies thereunder to exhaust before they could come up in appeal to this Court. Nor was it correct to contend that the Government of Assam was a necessary party in the appeal inasmuch as it had acted by virtue of delegated powers of legislation under the Act in making the award enforceable as law. A State Government plays no part in such a proceeding except to make the reference under section 10 of the Act, nor has it anything to do with regard to the publication of the award, which is automatic under section 17 of the Act, or its operation, unless the case falls within the provisos to section 17A of the Act. A lock out lawfully declared under section 24(3) of the Act, does not cease to be legal by its continuance beyond the strike, although such continuance may be unjustified.

Criminal Appeal No. 750 of 1989. From the Judgment and Order dated 11.4.1988 of the Gujarat High Court in Spl. Application No. 733 of 1987. Kapil Sibal, Additional Solicitor General, A. Subba Rao and P. Parmeshwaran for the Appellants. Vineet Kumar and M.N. Shroff for the Respondents. The Judgment of the Court was delivered by section RATNAVEL PANDIAN, J. This criminal appeal preferred by the appellants, namely, Union of India and the Additional Secretary to the Government of India is against the judgment of the High Court of Gujarat at Ahmedabad in Special Crimi nal Application No. 733 of 1987 dated 11.4. 1988 quashing the order of detention dated 19.6. 1987 passed by the second appellant in exercise of the powers under subsection (1) of Section 3 of the Conservation of Foreign Exchange and Pre vention of Smuggling Activities Act, 1974 with a view to preventing the first respondent, Vasanbharthi Jivanbharthi from engaging in transporting smuggled goods. It seems that the first respondent (detenu) has challenged the detention on numerous grounds, one of which being that none of the members of his household had been informed of the passing of the impugned order of detention and of the fact that the detenu had been taken into custody and also of the place where the detenu was detained. This ground was only subse quently added by an amendment with the permission of the Court. The High Court holding that the detenu 's relatives were not informed about the detention order or about the place where the detenu was detained in compliance with the observation by this Court in A.K. Roy vs Union of India, ; , concluded that the order has been vitiated by such non compliance. Further, the High Court has rejected the plea of 744 the appellants that the relatives of the detenu knew about the detention order as well the place of detention and stated as follows: "Hence if the relatives of the detenu have not been informed and even if from the record, it is found that the relatives had come to know about it from some source, the order of detention would most certainly be invalidated. " In the result, the order of detention was quashed and the detenu was directed to be set as liberty. Mr. Kapil Sibal, the learned Additional Solicitor Gener al has assailed the finding of the High Court stating that the respondent No. 1 (detenu) was already an undertrial prisoner and his relatives inclusive of his maternal uncle had visited him at the jail within two days and, therefore, that the non communication of a written intimation about the fact of passing of the order of detention and of the place of detention in pursuance of the detention order have no significance, and as such the observation made in A.K. Roy 's case can hardly by availed of by the detenu and the order cannot said to be invalidated on that ground. This plea is taken specifically in paragraph 21 and in Grounds I & II in paragraph 23 of the Special Leave Petition. Besides the above stand taken in the SLP, the appellants have reiterat ed. the same in paragraph 9 of the application for ex parte stay of the Order of the High Court, the relevant portion of which reads thus: "The affidavit in opposition was filed on behalf of the Union of India that the detenu was already under trial prisoner and his relatives in fact knew that and also that the maternal uncle had immediately, within two days, visited him at the jail. Therefore. it was not necessary to inform the relatives of his detention and place of detention, as contemplated in the decision of the Supreme Court reported in ; K. Roy 's case). " No counter is filed by the first respondent (detenu) in opposition to the above plea of the appellants. In the above background, we shall now examine whether the High Court is justified in setting aside the Order for the reasons mentioned supra on the basis of the decision in A.K. Roy 's case The relevant portion of the observation in A.K. Roy 's case reads thus: 745 "In order that the procedure attendent upon detentions should conform to the mandate of Article 21 in the matter of fairness, justness and reasonableness, we consider it imper ative that immediately after a person is taken in custody in pursuance of an order of detention, the members of his household, preferably the parent, the child or the spouse, must be informed in writing of the passing of the order of detention and of the fact that the detenu has been taken in custody. Intimation must also be given as to the place of detention, including the place where the detenu is trans ferred from time to time. The object and purpose of the above observation, in our view, seem to be that the family members of the detenu should not be kept in darkness by withholding the informa tion about the passing of the order of detention and the place of detention thereby preventing them from having any access and from rendering any help or assistance to the detenu and similarly the detenu should not be deprived of the privilege of meeting their relations and getting any help or assistance. Coming to the present case, we are satisfied that the family members had sufficient knowledge about the detention of the detenu by virtue of the mittimus issued as well the place of detention. Therefore, no legitimate grievance can be made that there is contravention to the observation in A.K. Roy 's case. Hence for the reasons mentioned above, we are unable to agree with the view taken by the High Court and accordingly we set aside the impugned Judgment and remit the matter to the High Court of Gujarat for consideration of the other contentions raised by the detenu challenging the order of detention and to dispose of the case on its merit. We hope that the High Court will give priority to this matter and dispose of the same expeditiously. Taking into consideration of the fact that the detenu is now enlarged consequent upon the judgment of the High Court which we have set aside, the detenu shall not be taken into custody to serve the unexpired period of detention till the matter is finally disposed of by the High Court. The Criminal Appeal is disposed of accordingly. P.S.S. Appeal allowed.

The respondent was taken into custody in exercise of the powers under sub section (1) of section 3 of the with a view to preventing him from engaging in trans porting smuggled goods. In the special criminal application preferred by him the High Court held that the detenu 's relatives were not informed about the detention order or about the place where the detenu was detained. Consequently, the order of detention was quashed and the detenu was di rected to be set at liberty. In this appeal by special leave, it was contended for the Union of India that the detenu was already an undertrial prisoner and his relatives had visited him at the jail within two days and, therefore, the non communication of a written intimation about the fact of passing of the order of detention and of the place of detention in pursuance of the detention order had no significance, and as such the order cannot be said to be invalidated on that ground. Allowing the appeal, the Court, HELD: 1. The family members of the detenu should not be kept in darkness by withholding the information about the passing of the order of detention and the place of detention thereby preventing them from having any access and from rendering any help or assistance to the detenu and similarly the detenu should not be deprived of the privilege of meet ing their relations and getting any help or assistance. [745C D] A.K. Roy vs Union of India, ; , followed. In the instant case, however, the family members of the detenu 743 had sufficient knowledge about his detention by virtue of the mittimus issued as well the place of detention. The High Court was, therefore, not justified in setting aside the order. [745D E] 2. The matter is remitted to the High Court for consid eration of the other contentions raised by the detenu. He shall not be taken into custody to serve the unexpired period of detention till the matter is finally disposed of. [745F G]

minal Appeal No. 698/85 with 59/86. From the Judgment and Order dated 30.4.1985 of the Punjab and Haryana High Court in Crl. A. No. 345 DB of 1984. R.L. Kohli and Prem Malhotra for the Appellants in Crl. A. No. 698/85. O. P. Sharma R.C. Gunbrele, K.R. Gupta, Mrs. Nanita Sharma, Vivek Sharma and. Kamaljeet Singh for the Appellant in Crl. A. No. 59/86. K.C. Bajaj and Ms. Indu Malhotra (NP) for the Respondent. J One appeal is on behalf of Hari Singh and the other is on behalf of Satbir and Gulbir. They were put on trial along with 67 Suresh, Vijender and Virender for having committed the murder of Mange Ram on 7th October, 1982. Virender being a minor his trial was separated so that the said may be conducted by Children Court. The remaining five accused were convicted for offences under section 302 read with 149, Section 148 and Section 323 read with 149. Sentence of imprisonment for life was imposed against all the five accused persons under Section 302 read with 149. Whereas under Section 148 each one of them was sentenced to undergo rigorous imprisonment for one year, and rigorous imprisonment for three months under Section 323 read with 149. The Sentences were directed to run concurrently. The High Court dismissed their appeal. Special Leave Petition (Criminal) No.2160 of 1985 was filed on behalf of accused Hari Singh, Suresh and Vijender. On 23rd September, 1985 this Court granted special leave to appeal to appellant Hari Singh, but dismissed the said Special Leave Petition so far Suresh and Vijender were concerned. Leave was granted to appellants Satbir and Gulbir on a separate Special Leave Petition filed on their behalf. The case of the prosecution is that in the night intervening 6th and 7th October, 1982 Mange Ram (hereinafter referred to as "the deceased") and Ram Kishan PWI6, who is the first cousin of the deceased, were returning after witnessing the Ram Leela. At that very time Suresh, Satbir, Vijender, Virinder and Gulbir were also returning after the show. Near the baithak of Jit Ram, the accused persons teased some girls of the village who had also gone to see the Ram Leela. The deceased and PW 16 objected to the behaviour of the accused persons towards the girls of their own village. On this it is said that the accused persons abused them which was followed by exchange of abuses from both the sides. Budhi PW 13 intervened and pacified them, Next day at about 2.30 PM. the deceased and PW 16 went to their flour mill to bring back their bullocks and fodder cart. Suresh and Satbir with Pharsas, Hari Singh with a Ballam, Virinder, Vijender and Gulbir with sticks came there. Suresh abused the deceased and PW16 saying that they would teach them a lesson for abusing them i.e. accused persons on the previous night. Having said so accused Suresh gave a Pharsa blow from the blunt side. on the head of the deceased. Satbir also gave a Pharsa blow from the blunt side, on the head of the deceased. PW 1 6 raised an alarm Virinder, Vijender and Gulbir gave stick blows to the 68 deceased. It is further the case of the prosecution that when PW16 tried to intervene Hari, Singh gave a Ballam blow from the blunt side on his head and Vijender gave a stick blow on the left elbow of PW16. Thereafter an alarm was raised and accused persons fled away from the place of occurrence. The victim was taken to B.K. Hospital, Faridabad on a tractor. From there he was referred to A.I.I.M.S., New Delhi, by Dr. O.P. Sethi PW 1.PW 1 also sent information to the Police Post No. 5, Faridabad, at about 4.15 P.M. the victim reached the A.I.I.M.S. At about 7.25 P.M. where he was examined. Raghbir Singh, A.S.I., PWI7 who had got the information about the occurrence at the Police Station Chhainsa at 5.35 P.M. the same evening from the Police Station, New 'Township, Faridabad, went to the Institute aforesaid and recorded the statement of PWI6 at 8.30 P.M. which was forwarded to the Police Station, Chhainsa, where a case was registered at 11.30 P.M. the same night PW 1 7 took up the investigation and visited the place of occurrence and collected blood stained earth. The victim died in the Institute the next morning at 7.00 A.M. The postmortem examination was held by PW 1 5 on 8th October, 1982 at 4.30 P.M. He found three stitched wounds, one on the right varietal region, second on the middle of the scalp and the third on the left varietal region. One out of three wounds, was an operational (surgical) wound. From internal examination, fracture of right occipital bone and right frontal base was found. He also found contusions on the right thigh, left eye and left fore arm of the victim. According to the opinion of PWI 5 the injuries found on the deceased had been caused "by application of blunt force" and were sufficient in ordinary course of nature to cause death. The Pharsas from which according to the prosecution case the aforesaid injuries had been caused, were shown to PW 1 5, the doctor, and he stated as follows: "I have seen the alleged weapon of offence, Pharsa EX.P. 1 and the ante mortem injuries which are noted on the head cannot be inflicted by this weapon. On the opposite side of Pharsa, there are two projecting devices for holding the Pharsa with Bamboo, having a distance of 15 cm. from each other. Even if Pharsa EX.P. 1 is used from any of its two sides (Between iron blade and the two iron projections referred above) 69 even then head injuries mentioned above are not likely to cause. At this stage another sealed parcel containing a Pharsa EX.P.2 opened at the instance of defence counsel. It was found containing a Pharsa exhibit P.2 1 have been this Pharsa also. The distances between two projections holding iron blade with bamboos is about 11.5 cm. and as such the injuries in question could not be caused by this weapon also, either used iron blunt side or iron any of the two sides, as stated by me with reference to EX. P. 1 It is correct that the injury No. 2. is a operational (Surgical) wound which correspond with internal examination of head and corresponding piece of bone was absent having a size of 12 cm. X 10 cm. " On the person of PWI6 only few superficial injuries were found. On 12th October, 1982 the aforesaid Dr. O.P. Sethi PWI of B.K. Hospital, Faridabad, examined accused Suresh under the orders of Shri Raj Kumar, HCS, Judicial Magistrate, Faridabad, and found the following injuries on the persons of Suresh: "1. A diffused and tender swelling over back of left hand all over the wrist joint and lower half of left fore arm. There were bluish mark of two bruises (abraised, each 1/2" x 1/2" over back fore arm). Xray were advised for left wrist joint including lower half of the fore arm and the hands. It was advised for posterior, interior and lateral views. A partially healed injury 1 " x 1/8" placed at the top of head 5" above the pinna of right ear. X ray advised for skull in superior view. A partially healed injury 3/4" x 1/8" at the left half of head 2" behind the interior hair line. X ray was also advised. A liniar injury having 3/4" x 1/8" at right half of head, 1 1/2" behind interior hair line. X ray skull was advised. A vertical injury mark 2" x 1/2 at the left shin 5" 1/2 above left ankle joint. " The duration of the time in respect of the injuries aforesaid was three to six days. PWI stated in the Court that accused Suresh had been medically examined at the request of the Police and a copy of the medical report was also handed over to the Police. It was urged on behalf of the appellants that on the materials on record the Courts below should have come to the conclusion that prosecution has suppressed the real manner, of occurrence and has disclosed a version of the occurrence which cannot be accepted. It was pointed out that accused Suresh, Vijender and Virinder are the sons of accused Hari Singh who was aged about 60 years, as such, it was highly improbable on the part of Hari Singh to join his sons for commiting the murder of Mange Ram who had protested the behaviour of the sons of Hari Singh, the previous night with the girls of the village. From the evidence of Rang Lal PW7 it appears that the flour mill of the deceased and the fields of the accused persons are across the same road. The tube well of accused Hari Singh is situated adjoining the mill where Hari Singh has also got tile residential unit. It was urged that in view of the admitted position that the residential unit, tube well are by the side of the flour mill of the deceased there was no question of the accused persons going to the flour mill of the deceased to assault the deceased and PWI6. The accused persons and the deceased both having their flour mill and residential unit side by side, most probably clashed as a result of a sudden fight in which injuries were caused to the victim as well as to PW16 on the side of the prosecution and on Suresh on the accused side. It may be mentioned that in the First Information Report, only the name of Suresh, one of the six accused was mentioned in connection with the previous night 's incident saying that he along with four or five boys were coming after seeing the Ram Leela and then they started teasing the girls and thereafter an exchange of abuses took place. In the First Information Report it was also stated by PWI6 that accused Suresh and Satbir gave Pharsa blows on the 71 head of the deceased. In the First Information Report PWI6, the informant, did not state that the injuries on the head on the head of the victim were caused by the back side of the Pharsa. On behalf of the appellants, it was pointed out that this change was introduced after it was found during the postmortem examination that injuries had been caused by application of blunt force ' which was inconsistent with the case of assault on the head of the deceased by Pharsa. But merely on the ground that PWI6, the informant. did not mention the name of any other accused in connection with the previous _night incident except Suresh or in the First Information Report having said that Suresh and Satbir gave Pharsas blows on the head of the deceased. Modified the same in court by saying that they gave one Pharsa blow each by the back side of the Pharsa, his evidence cannot be rejected outright. But at the same time the case of the prosecution that Hari Singh along with Five accused including a child. went to the flour mill of the deceased, with an intention to cause the death of the victim, because of the previous night abuses and altercations, also does not appear to be the real version of the occurrence. If the intention of the accused persons was to commit the murder, then they would not have given blows by the back side of the Pharsa on the head of the deceased. In all probabilities because of the previous night 's incident, at about 2.30 P.M. a sudden fight took place, in which accused Suresh and Satbir are alleged to have given blows from the back side of the Pharsa on the head of the deceased. PW 15, the doctor, who held the postmortem examination, has stated that those injuries had been caused "by application of blunt force" and has emphatically repudiated that injuries on the head of the deceased could have been caused by two Pharsas Ex, P. 1 and P2 which had been seized and shown to him during the course of his examination. The injuries from the back side of the Pharsa can be said to have been caused by "blunt force". It has been rightly submitted that on basis of the evidence adduced including the evidence of PW 16, the informant, it cannot be said be said that accused persons had an intention to cause such injuries on the victim which may result in his death. When they caused those injuries by the blunt side of the Pharsa it will be presumed that they had knowledge that those injuries can cause the death, but there was no intention on their part to cause death. As such the Trial Court and the 72 High Court should not have convicted the appellants under Section 302 read with Section 149. On behalf of the State an objection was taken that in view of the dismissal of the Special Leave Petition filed on behalf of two accused Suresh and vijender against whom similar allegations had been made, it is not open to this Court now to entertain any plea on behalf of the three appellants because it will be deemed that while dismissing the Special Leave Petition filed on behalf of Suresh and Vijender this Court has affirmed the findings recorded by the Trial court and the High Court in respect of manner of occurrence and participation of the accused persons including the three appellants. It was also pointed out that if any of the appellant is acquitted or the convictions and sentences imposed against them are altered in any manner it will lead to inconsistency in the different orders passed by this Court. It is true that system of the justice which is being administered by the Courts, one of the basic principles which has to be kept in view, is that Courts of co ordinate jurisdiction, should have consistent opinions in respect of an identical set of facts or on question of law. If Courts express different opinions on the identical sets of facts or question of law while exercising the same jurisdiction, then instead of achieving harmony in the judicial system, it will lead to judicial anarchy. But before any such principle is appliedit must be held that the earlier order passed by this Court dismissing the Special Leave Petition of the coaccused amounts to a judgment or an affirmness of the findings of the High court, about the manner of the occurrence, participation of the different accused persons and the nature of offence committed by them. Article 136 (1) of the Constitution confers overriding and extensive powers of granting special leave to appeal or rejection thereof in the discretion of this Court. Article 136 does not confer a right to appeal, it confers only a right to apply for special leave toappeal, which taking all facts and circumstances into consideration may be granted or rejected. Even in a case where special leave application is rejected, the Order of the High Court does not merge in the Order of this Court, as is the case while exercising the appellate power. Similarly when Special Leave Petition is entertained against any final or interlocutory 73 order this court does not convert itself in a court of appeals. It was said in the case of Gain chand V. Kunjbeharilal; , Chandrachud, J (as he was then): "With regard to the first submission it may he pointed out that an application for special leave under Article 136 of the Constitution against a judgement or an order cannot be equated with the ordinary remedy of appeal, as of right, under any provisions of law. It is an extraordinary right conferred under the constitution, within the discretion of this Court, and such an application for special heave does not come within the contemplation of appeal pending before the Court under Section 13 A (a). " It is a basic principle of the administration of justice that like cases should be decided alike. It is a very sound rule and practice otherwise on same question of law or same set of facts different persons approaching a Court can get different orders. But can the appeal of an accused. who has been granted special leave to appeal, be dismissed on the ground that the Special Leave Petition filed on behalf of a coaccused with more or less similar charges has already been rejected by this court. althouhgh this Court is satisfied that either such accused whose appeal is being heard is entitled to acquittal or ought to have been convicted for a different offence with a different sentence. The doctrine of precedent is not applicable to an order passed by this Court rejecting a Special Leave Petition. Any such order cannot be held to be stare decisis so that it is a binding on us. If it is held that as the Special Leave Petition filed on behalf of Suresh and Vijender having been rejected, this Court cannot alter the conviction or sentence passed against the three appellants. including the acquittal of any one of them. althogh the Court is satisfied on the materials on record, then what was the purpose, while rejecting the Special Leave Petition of the co accused Suresh and Vijender, to grant leave to appeal so far the present three appellants are concerned? At the same time it need not be impressed that rejection of the Special Leave Petition gives a finality to an order of the High Court, inasmuch as the same accused cannot file more then one Special Leave Petition. 74 But in rare and exceptional cases this Court has exercised power under Article 32 of the Constitution so that there should not he miscarriage of justice and to avoid a direct conflict and confrontation between two orders of this Court. In the case of Harbans Singh vs State of U. P., ; , two accused persons had been sentenced to death by a common judgment. Special Leave Petition filed on behalf of one of the accused persons was dismissed. So far the other accused, who had also been sentenced to death. is concerned his Special Leave Petition was entertained on question of sentence. Ultimately his death sentence was commuted to imprisonment for life. The other accused person whose Special Leave petition had been dismissed filed it petition under Article 32. His death sentence was also commuted by the Supreme Court. In that connection it was said: "Since Kashmira Singh 's death sentence was commuted by this Court. it would be unjust to confirm the death sentence imposed upon the petitioner. That will involve the Court as well as the authorities concerned in the violation of rudimentary norms governing the administration of justice. " In the well known case of A.R. Antulay vs R.S. Nayak. AIR 1988 SC 153 1. it was pointed Out that the Supreme Court is not Powerless to correct its error affairs Court is satisfied that if such power is not exercised it will lead to manifest injustice because no man can suffer for the mistake of the Court. Again in the case of Pyare Singh vs State of Madhya Pradesh [1992] Supp. 3 SCC 45, this Court in exercise of power under Article 136 of the constitution while altering the convictions and reducing the sentences of the four out of six accused persons who had filed Special leave petitions before this Court. extended the same benefit and relief to other two accused persons who had not even filed any Special Leave petition against their convictions and sentences because this court felt that if the same benefit of alteration of conviction and modification in sentence is not given to other two convicted accused persons. it will lead to gross injustice. 75 The mere rejection of the Special Leave Petition of co accused persons cannot seal the fate of the appeals of the appellants which have been entertained after leave having been granted by this Court. The appellants to whom leave has been granted can urge all questions within the frame work of Article 136 of the Constitution for consideration by this Court and a relief to which such appellants may be entitled cannot be denied to them merely on the ground that Special Leave Petition in respect of co accused persons with more or less similar charges, evidence and convictions has already been rejected. On materials on record, the prosecution has not been able to prove and establish (hit appellants had the common object or shared the common intention to cause the murder of the victim. From the evidence of the prosecution itself it appears that the flour mill of the deceased and the residential unit of the accused persons being adjacent to each other, suddenly a fight took place in which the appellant Satbir gave a blow by the back side (wooden part) of the Pharsa, which caused one of the two injuries on the head of the deceased. It cannot be held that appellant Satbir had an intention to cause the death of the victim. In the circumstances of 'the case. It can he said that he had only knowledge that such blow may cause an injury resulting in the death of the victim. Accordingly he should have been convicted under Section 304, Part 11, of the Penal Code. So far appellant Gulbir is concerned, according to the prosecution case, he was carrying a stick and he is alleged to have given a stick blow to the deceased on a non vital part of ' the body. In this background, according, to us, he can he held to have committed the offence on under Section 325 of the Penal code. As already pointed out according to the prosecution case itself, the appellant Hari Singh, who was aged about 60 years at the time of the occurrence is said to have given a stick (lathi) blow to the informant PW 16. tie is not alleged to have given any blow to the deceased. Once it is held that different accused persons neither had any common object nor any common intention which they shared together to commit an offence under Section 302 or alike, the appellant Hari Singh has to he held guilty for an offence only under Section 323 of the Penal Code. In the result the conviction of the appellants under Section 302 read with Section 149 of the Penal Code is set aside. The conviction under Sections 148 and 323 read with 149 is also set aside. The appellant Satbir is convicted for an offence under 76 Section 304 Part 11 and is sentenced to undergo rigorous imprisonment for seven years. The appellant Gulbir is convicted for an offence under Section 325 of the Penal Code and is sentenced to undergo rigorous imprisonment for three years. So far the appellant Hari Singh is Concerned, he is convicted for an offence under Section 323 of the Penal Code and is sentence to the period of imprisonment already under gone. Accordingly the appeals are allowed in part to the extent indicated above. N. V. K. Appeal allowed.

The three appellants In the two appeals along with 3 others, were tried for having committed murder. One of the accused being a minor, his trial was separated so that the same could he conducted by the Children Court. The case of the prosecution was that on the night intervening 6th and 7th October, 1982 the deceased and PW16. who was the first cousin of the deceased, were returning after witnessing Ram Leela. At that time the aforesaid 5 accused were also. returning from the show and it was alleged that they teased some girls of the village who had also gone to see the Ram LeeLa, and that the deceased and PWI6 ' objected to this behaviour of the accused persons. On this the accused persons abused them which was followed by exchange of abuses from both the sides. PW13 intervened and pacified them. Next day at about 2.30p.m.the deceased and Pw16 went to their flour mill to bring back 62 their bullocks and fodder cart. Tub of the accused with Pharsas, one with a Ballam, and three others with sticks came there. One of the accused abused the deceased and Pw16 saying that they would teach them a lesson for abusing them the previous night. Having said so one of the accused gave a pharsa blow from the blunt side on the head of the deceased. The other gave a pharsa blow on the head of the deceased. PW16raIsed an alarm and the remaining accused gave blow to PWI6. PW16 also got a blow of Ballam from the blunt side on his head. Thereafter an alarm was raised and all the accused persons fled away from the place of occurrence. The victim was taken to the local Hospital on a tractor and thereafter he was referred to A.I.I.M.S., New Delhi, where PWI examined him and also sent information to the police post at about 4.15 p.m. The victim reached the A.I.I.M.S. at about 7.25 p.m. where he was examined. A.S.I., PW17 who had got the information about the occurrence went to the Institute and the statement was recorded. PW17 took up the investigation. The victim died in the Institute the next morning at 7.00 a.m. The postmortem examination was held by PW15 on 8th October, 1982 at 4.30 p.m. on 12th October, 1982 PWI examined one of the accused Suresh under the orders of judicial Magistrate and he made a report regarding the injuries he had received the duration of the time in respect of the injuries which he stated was 3 to 6 days. The five accused were put up for trial, and the Session Judge convicted and sentenced all these accused for offences under Section 302 read with 149, Sections 148 and 323 read with Section 149 to imprisonment for life. The High court having dismissed their appeals, the three appellants filed two appeals to this Court. In the appeals to this court it was contended on behalf of the appellants that on the materials on record the Courts below should have come to the conclusion that the prosecution had suppressed the real manner of occurrence and had disclosed a version of the occurrence which cannot be accepted. It was pointed out that the accused Suresh, Vijender and Virender were the sons of accused Hari Sing who was age d about 60 years, and that it was highly improbable on the part of , Hari Singh to join his sons for committing the murder of the deceased 63 Mange Ram who had protested about the behaviour of his sons. It was submitted that in view of the admitted position that the residential unit, and the tube well being by the side of the flour mill of the deceased there was no question of the accused persons going to the flour mill of the deceased to assault the deceased and PWI6. It was further submitted that in the First Information Report the name of accused Suresh was mentioned in connection with the previous night 's incident and that he and Satbir gave pharsa blows on the head of the deceased, that PW 16 modified his version of the FIR in court by saying that the injuries on the head of the victim were caused by the back side of the pharsa and that this improvement was introduced after it was found during the postmortem examination that injuries had been caused by application of blunt force which was inconsistent with the case of assault on the head of the deceased by pharsa. The State raised an objection that in view of the dismissal of the Special Leave Petition of the two accused namely Suresh and Vijender against whom similar allegations had been made, it was not open to this Court to entertain any plea on behalf of the present 3 appellants because it will be deemed that while dismissing the special leave petition this Court had affirmed the findings recorded by the Trial court and the High Court in respect of the manner of occurrence and participation of the accused persons including the 3 appellants. Allowing the appeals in part, and setting aside the convictions of the appellants under Section 302 read with Section 149 of the Penal Code; under Sections 148 and 323 read with Section 149; this court, HELD: 1. Appellant Satbir convicted under section 304 Part II and sentenced to undergo rigorous imprisonment for seven years. Appellant Gulbir convicted for an offence under Section 325 Penal code and sentenced to undergo rigorous imprisonment for three years. Appellant Hari Singh convicted for an offence under Section 323 of the penal code and sentenced to the period of imprisonment already undergone. (75 H, 76 A B) 2 (a). In the system of the justice which is being administered by the Courts. One of the basic principles which has to be kept in view, is that Courts of coordinate jurisdiction, should have consistent 64 opinions in respect of an identical set of facts or on question of law. If Courts express different opinions on the identical sets of facts or question of law while exercising the same jurisdiction, then instead of achieving harmony in the judicial system, it will lead to judicial anarchy. (72 D E) (b) Before any such principle is applied It must be held that the earlier order passed by this Court dismissing the Special Leave Petition of the co accused amounts to a judgement or an affirmance of the findings of the High Court, about the manner of the occurrence, participation of the different accused persons and the nature of offence committed by them. (72 F) 3. Article 136 (1) of the constitution confers overriding and extensive powers of granting special leave to appeal or rejection thereof in the discretion of this Court. Article 136 does not confer a right to appeal, it confers only a right to apply for special leave to appeal, which taking all facts and circumstances into consideration may he granted or rejected. Even in a case where the special leave application is rejected, the order of the High Court does not merge In the Order of this Court, as is the case while exercising the appellate power. Similarly, when Special Leave Petition is entertained against any final or interlocutory order this Court does not convert itself to a Court of appeal. (72 D H) Gian Chand vs Kunjbehanlal ; , referred to. (76 E) 4. It is a basic principle of the administration of justice that like cases should be decided alike. It is a very sound rule and practice otherwise on same question of law or same set of facts different persons approaching a Court can get different orders. (73 D) 5. The doctrine of precedent is not applicable to an order passed by this Court rejecting a Special Leave Petition. Any such order cannot be held to be stare decisis so that it is a binding on the Court. (73 F) 6. Rejection of the Special Leave Petition gives a finality to an 65 order of the High Court, Inasmuch as the same accused cannot file more than one Special Leave Petition. But In rare and exceptional cases this Court has exercised power under Article 32 of the Constitution so that there should not he miscarriage of justice and to avoid a direct conflict and confrontation between two orders of this court. (73 H, 74 A) Harbans Singh vs State of U. P., ; ; Pyare Singh vs State of Madhya Pradesh, [1992] SUPP 3 SCC 45 and (77 F) A.R. Antulay vs RS. Nayak. ; , referred to. (78 C) 7. The mare rejection of the Special Leave Petition of co accused persons cannot seal the fate of the appeals of the appellants which have been entertained after leave having been granted by this Court. The appellants to whom leave has been granted can urge all questions within the framework of Article 136 of the Constitution for consideration. by this Court and a relief to which such appellants may be entitled cannot be denied to them merely on the ground that a Special Leave Petition In respect of co accused persons with more or less similar charges, evidence and convictions has already been rejected. (75 F G) 8. On the basis of the evidence of PW16, the informant, it cannot he said that the accused persons had an Intention to cause such injuries son the victim which may result In his death. When they caused the injuries from the blunt side of the Pharsa it will have to be presumed that they had knowledge that those Injuries can cause the death, but there was no intention on their part to cause death. As such the Trial Court and the High Court should not have convicted the appellants under Section 302 read with Section 149. (71 G H) 9. (a) On the materials on record in the Instant case, the prosecution has not been able to prove and establish that the appellants had the common object or shared the common intention to cause the murder of the victim. From the evidence of the prosecution Itself It appears that the flour mill of the deceased and the residential unit of the accused persons being adjacent to each other, suddenly a right took place in which the appellant Satbir gave a blow by the back side (wooden part) of the Pharsa, which caused one of the two injuries on 66 the head of the deceased. It cannot be held that appellant Satbir had an intention to cause the death of the victim. In such circumstances it can be said that he had only knowledge that such blow may cause an injury resulting in the death of the victim. He should have, therefore, been convicted under Section 304, Part II, of the Penal Code. (75 C E) (b) So far as appellant Gulbir is concerned, according to the prosecution case, he was carrying a stick and he is alleged to have given a stick blow to the deceased on a non vital part of the body. In this background, he can be held to have committed the offence only under Section 325 of the Penal Code. (75 F) (c) In regard to the appellant Hari Singh, he was aged about 60 years at the time of the occurrence and the prosecution case itself, is that he is said to have given a stick (lathi) blow to the informant PW 16. He is not alleged to have given any blow to the deceased. He has, therefore,to be held guilty for an offence only under Section 323 of the Penal Code. (75 G)

Appeals Nos. 2380 and 2381 of 1966. Appeals from the judgment and order dated January 7, 1966 of the Calcutta, High Court in Income tax References Nos. 7 and 176 of 1961. section Mitra, section K. Aiyar, R, N. Sachthey and B. D. Sharma, for the appellant (in both the appeals). A. K. Sen, O. P. Khaitan and B. P. Maheshwari, for the respondent (in both the appeals). The Judgment of the Court was delivered by Grover, J. These appeals by certificate arise out of a common judgment of the Calcutta High Court in two Income tax References. The assessee is a private limited company. It carried on the business of banking and financing as also of managing agency. Starch Products Ltd. was one of the various companies which was being managed by the assessee. Starch Products had appointed the U.P. Sales Corporation Ltd. as its selling agent. The assessee claimed to have stood guarantee for a loan of Rs. 6 lakhs which was advanced to the U.P. Sales Corporation Ltd. by the Gwalior Industrial Bank Ltd. The borrower failed to pay the loan which on August 2, 1948 stood at Rs. 5,60,199. This amount was paid by the assessee pursuant to the guarantee. Thereafter the assessee treated the U.P. Sales Corporation Ltd. as its debtor for the aforesaid amount. That company went into liquidation and as the assessee could not recover anything from it a sum of Rs. 5,60,199 was written off in the books of the assessee company. The claim was not entertained either by the Income tax Officer or the Appellate Assistant Commissioner. Before the Income tax Officer the 359 said amount Was claimed as bad debt vide assessee 's letter dated September 12, 1957. The Income tax Officer rejected the explanation furnished by the assessee for advancing such a large amount to a company whose financial position was far from satisfactory. According to him the advance was not a bona fide money lending investment. Subsequently it was sought to be established before the Income tax Officer, that an indemnity had been given to the Gwalior Industrial Bank Ltd. in the matter of the loan account of the U.P. Sales Corporation Ltd. and the payment had been made on its failure to clear the debt of the Bank. According to the In come tax Officer the assessee was asked to produce evidence about the guarantee having been furnished but he was not satisfied that there was any directors ' resolution authorising the furnishing of a guarantee or that the document purporting to be a guarantee had been properly stamped or that there was other sufficient evidence to establish the transaction. Before the Appellate Assistant Commissioner the only substantial ground taken was that the Income tax Officer had wrongly disallowed the claim &or bad debt amounting to Rs. 5,60,199. The Appellate Assistant Commissioner considered the question of the aforesaid amount being an admissible deduction or allowance under section 10(2) (xi) of the Income tax Act 1922. In his opinion the guaranteeing of a loan though made in the interest of the assessee 's business and is a matter of commercial expediency did not represent an advance made in the normal course of the assessee 's business. Such an advance could have been made only if it had been made to the company managed by the assessee under a contractual obligation to guarantee the finances of the managed company. According to him the claim for irrecoverable loan would have been also admissible if the assessee could establish that the loan represented an interest bearing advance made in the course of the assessee 's money lending business but that was not the case of the assessee. And since the loan had been advanced to assist a concern having trade relations with one of the managed companies it could not be allowed as a permissible deduction. The appellate tribunal did not agree with the finding of the Appellate Assistant Commissioner that the loss was not directly incidental to the assessee 's business. This is what the tribunal stated in its order : "The Appellate Assistant Commissioner, in our opinion, failed to appreciate the special nature of the business carried on by the assessee. This is not a case where any money was advanced by the assessee for the purpose of earning interest. All that the assesses did was to stand surety for the money advanced by a Bank to the selling agent of one of its managed companies,. If such a 3 60 guarantee was not given Messrs. Starch Products Ltd., one of the managed companies, would have had to give extended credit to the selling agent and this could be possible if the managed company in its turn was financed either by the managing agents or a third party. It was to obviate the necessity of such borrowing by the managed company that the assessee company stood guarantee for the loan given by Gwalior Industrial Bank Ltd. to U.P. Sales Corporation Ltd. It was only on the failure on the part of the borrower, i.e. U.P. Sales Corporation Ltd., to fulfill its committment that the assessee as a guarantor came into the picture. ' There was, therefore, no question of earning of any interest on any money advanced. It was in the larger interest of the assessee 's business that the guarantee was given. The standing of surety for the sales Organisation of the managed company and the consequent loss arising therefrom was in our opinion germane to the assessee 's 'business. It is now well established that a sum of money extended not of necessity and with a view to give a direct and immediate benefit to the trade but voluntarily and on the ground of commercial expediency and in order to indirectly facilitate the carrying on of the business, may yet be an allowable deduction in computing the profits and gains of the business. " The Tribunal held that the assessee 's claim for the loss of Rs. 5,60,199 was an admissible deduction. At the instance of the Commissioner of Income tax, the Tribunal referred the following question of law to the High Court: "Whether on the facts and in the circumstances of the case, the sum of Rs. 5,60,199 was an admissible deduction in computing the business profits of the assessee ?" Three other questions were referred to the High Court on an application made under section 66(2) of the Act. It is unnecessary to refer to them as the real controversy has centred on the above question alone. The High Court addressed itself to the question whether the amount in dispute fell within section 10(2) (xi) of the Act. The finding of the Appellate Assistant Commissioner that the guarantee had in fact been furnished to the Bank was not disputed. This is what the High Court said after referring to certain decided cases and the relevant portion of the Tribunal 's judgment : "We agree that it was in the larger interest of the assessee 's business that the guarantee was given and we 3 6 1 are of the opinion that the debt was incidental to the business of the assessee within the meaning of section 10(2)(xi) of the Act and such a debt was found to be irrecoverable in the relevant accounting year commencing on the 31st October 1951 and ending on the 18th October 1.952." While computing profits or gains of business under section 10 certain allowances have to be made under sub section The allowance covered by clause (xi) thereof has to be made when the assessee 's accounts in respect of any part of his business, profession or vocation are not kept on the cash basis, of such sum, in respect of bad and doubtful debts, due to the assessee in respect of that part of his business, profession or vocation, ,and in the case of an assessee carrying on a banking or money lending business of such sum in respect of loans made in the ordinary course of such business as the Income tax Officer may estimate to be irrecoverable but not exceeding the amount actually written off as irrecoverable in the books of the assessee. Now a bad debt means a debt which would have gone into the balance sheet as a trading debt in the business or trade. It must arise in the course of and as a result of the assessee 's 'business. The deduction claimed should not be too remote from the business carried on by the assessee. In Madan Gopal Bagla vs Commissioner of Income tax West Bengal(1) the principle which was accepted was that the debt in order to fall within section 10(2) (xi) must be one which can properly be called a trading debt i.e. debt of the trade the profits of which are being computed. It was observed that the assessee in that ease was not a person carrying on business of standing surety for other persons nor was he a money lender. He was simply a timber merchant. There was some evidence that he had from time to time obtained finances for his business by procuring loans on the joint security of himself and some other person. But it was not established that he was in the habit of standing surety for other persons along with them for the purpose of securing loans for their use and benefit. Even if such had been the case any loss suffered by reason of having to pay a debt borrowed for the benefit of another would have been a capital loss to him and not a business loss at all. A businessman may have to stand surety for some one in order to get monies for his own business. There may be a custom of the business by which that may be the only method whereby he could get money for the purpose of his own business. If he is to discharge a surety debt and if any such custom is established it would be a business debt. If the assessee has made a payment not voluntarily but to discharge a legal obligation which arises from his business. he would be entitled to have the amount deducted as a bad debt under section 10(2)(xi); see Commissioner of Income tax Bombay vs (1) 362 Abdullabhai Abdulkadar(1). In Essen Private Ltd. vs Commis sioner of Income tax(2) Madras, the appellant carried on business as a managing agent of several concerns. Pursuant to the agreement with one of the companies managed by it, it advanced large sums of money to the managed company and also guaranteed a loan of Rs. 2 lakhs obtained by that company from a Bank. The managed company failed in its business and upon the Bank pressing for payment the appellant in accordance with its guarantee made certain payments to that Bank. The assessee had ultimately to write off certain sum in its books as bad debts and it claimed that allowance under section 10(1) (xi). The Tribunal found that the advances to the managed company and the agreement guaranteeing the loan to the managed company were in pursuance its objects and were made in the course of its business and the claim was allowed. That decision was finally affirmed by this Court. In this case there was a cause in the memorandum of association by which the assessee was entitled to land monies and to guarantee the performance of contracts. Similarly the managing agency agreement contained a clause about lending and advancing of money to the managed company. It was found by the appellate tribunal that it was a part of the managing agency to provide funds to the managed company. In the present case none of those facts have been found. Neither the memorandum of association nor the managing agency agreement contained any such provision by which it could be said that the guaranteeing of the loan made by the Bank to the selling agents was done in the course of the managing agency business. In our judgment the facts relied upon by the appellate tribunal and the High Court are barely sufficient for bringing the allowance claimed under section 10(2) (xi). It may be mentioned that the case of the assessee was confined to that provision and no reliance was placed on any other provision under which such an allowance could be claimed. There was no privity of contract or any legal relationship between the assessee and the selling agent. Neither under customer nor under any statutory provision or any contractual obligation was the assessee bound to guarantee the loan advanced by the Bank to the selling agent. It is difficult how it was in the interest of the assessee 's business that the guarantee was given. There was even no material to establish that the managed company was under any legal obligation to, finance the selling agent or to guarantee any loans advanced to the selling agent by a third party. It is incomprehensible in what manner the guaranteeing of the loan advanced to the selling agent indirectly facilitated the carrying on of the assessee 's business. It is equally difficult to appreciate the observations of the High Court that it was in the larger interest of (1) (2) 363 the assessee 's business that the guarantee was given. In our opinion the view of the appellate tribunal was based on a complete misapprehension of the true legal position. The High Court also fell into the same error. The allowance which was claimed did not fall within section 10(2) (xi). No attempt was made nor indeed it could be usefully made to claim any allowance under section 10(2:) (xv)of the Act. For the reasons given above the correct answer to the question referred should be in the negative and against the, assessee. The appeals are thus allowed with costs and the judgment of the High Court is set aside. One hearing fee. G.C. Appeals allowed.

The assessee was a Private Limited Company. It carried on the business of banking and financing as also of managing agency. Starch Products Ltd., was one of various companies which was being managed by the assessee. Starch Products had appointed the U.P. Sales Corporation Ltd., as its selling agent. The assessee claimed to have stood guarantee for a loan of Rs. 6 lacs which was advanced to U.P. Sales Corporation Ltd., by the Gwali Industrial Bank. The borrower failed to pay the loan which on August 2, 1948 stood at Rs. 5,60,199. This amount was paid by the assessee pursuant to the guarantee. Thereafter the assessee treated the U.P. Sales Corporation as its debtor for the aforesaid amount. That company went into liquidation and as the assessee could not recover anything from it, a sum of Rs. 5,60,199 was written off in the books of the assessee company. Before the Income tax Officer the said amount was claimed as a bad debt under section 10(2) (xi) of the Income tax Act, 1922. The Income tax Officer rejected the claim. The assessee 's appeal before the Assistant Commissioner failed. The Appellate Tribunal, however, held that the guarantee given by the assessee was of indirect benefit to the assesse 's business because if it had not guaranteed the loan in question the company managed by it would have had to give extended credit to its selling agent which it could not have done without borrowing money either from the assessee or some third party. In reference, the High Court also held that the guarantee was in the larger interest of the assessee 's business. The Commissioner of Income tax appealed to this Court by special leave. HELD : (i) While computing profits or gains of business under section 10 certain allowances have to be made under sub section The allowance covered by cl. (xi) thereof has to be made, when the assessee 's accounts in respect of any part of his business, profession or vocation are not kept on a cash basis, of such sum, in respect of the bad and doubtful debts, due to the assessee in respect of that part of his business profession and vocation and in the case of an assessee carrying an a banking or money lending business of such sum in respect loans made in the ordinary course of such business as the Income tax Officer may estimate to be irrecoverable but not exceeding the amount actually written off as irrecoverable in the books of the assessee. A bad debt means a debt which would have gone into the balance sheet as a trading debt in the business or trade. It must arise in the course of and as a result of the assessee 's business. The deductions claimed should not be too remote from the business carried on by the assessee. [361 B E] 12 Sup. C 1/70 9 358 In the present case, neither the memorandum of association nor the managing agency agreement contained any such provisions by which it could be said that he guarantee of the loan made by the bank to the selling agents was done in the course of the managing agency business. There was no privity of contract or any legal relationship between the assessee and the selling agent. Neither under custom nor under any statutory provision or any contractual obligation was the assessee bound to guarantee the loan advanced by the bank to the selling agent. 'The guarantee could not be said to be indirectly in the interest of the assessee 's business, or as held by the High Court, in its larger interest. The Tribunal and the High Court were, therefore, in error in holding that the sum in question was allowable as a deduction under section 10 (2) (xi). [362 D E, F H] Madan Gopal Bagla vs Commissioner of Income tax, West Bengal, and Commissioner of Income tax, Bombay vs Abdullabhai Abdulkadar, , applied. Essen Private Ltd. vs Commissioner of Income tax, 65 I.T.R. 625, distinguished.

DICTION: Civil Appeal No. 8670 of 1983. From the JudGment and Order dated 3. 9. 1982 of the Punjab and Haryana HiGh Court in ReGular First Appeal No. 1 105 of 198 1. WITH C.A. Nos. 8634 to 86 58/83 and 8660 62/83, 8665 to 8669/83 and 8671 72/ 83 Prem Prasad Juneja and R.S. Sodhi for the Appellants. H.M. Singh for G.K. Bansal for the Respondents. 648 The Judgment of the Court was delivered by K. RAMASWAMY, J. The common questions of law arose for decision in these appeals. Hence they are disposed of together. Notification under section 4 (1) of the Land Acquisition Act 1 of 1984 was published in the Punjab State Gazette on January 27, 1978 acquiring 89 acres 4 canals and 12 marlas of land situated in Dhuri village for public purpose, namely to set up new Mandi Township. The. appellants claimed at the rate of Rs. 30.000 per Bighabut Land Acquisition Officer after classifying the lands into six blocks A to F, awarded market value ranging between Rs. 30,000 to Rs. 6,000 acre. On reference under section 18 of the Act, the District Judge, Sangrur in his judgment dated May 13, 1981 disagreed with the classification and found that all the lands are possessed of the same quality. Relying on sale deeds, exhibit p 3 dated September4,1972, p 5 dated June 14,1976, p 2 dated February 23, 1977 and p 4 dated July 15, 1977, all small extents, he calculated at an average of Rs. 1300 per Biswa and awarded to the lands belonging to Jaswant Kaur Baldev Singh and Gurdev Singh at the rate of Rs. 1,000 per Biswael finding that their lands are abutting Abadi (village) and for the rest awarded at the rate of Rs. 800 per Biswa with statutory solatium at 15% and interest of 6% per annum on enhanced compensation. Dissatisfied therewith the State filed the appeals and against disallowed claims, the claimants in one batch filed appeals and in another batch filed cross objections. The learned Single Judge relied on exhibit p3 and p 5 filed by the claimants and exhibit R 4 and R 6 filed by the State as comparable instances and calculated the average which worked out at Rs. 750 per Biswa. He found that the lands are possessed of potential value for further building purposes. Therefore, he carved out belting at a depth of 100 ft. from the main road to those lands, deducted 1/3rd towards developmental charges and awarded the market value at the rate of Rs. 750 to the land situated abutting to the main road to the depth of 100 ft. and for the balance lands at the rate of Rs.500 per Biswa. The State appeals were allowed and of the claimants and cross objection were dismissed. The Division Bench confirmed the judgment of the learned Single Judge. The claimants filed these appeals by special leave. In the first batch no witness has been examined, but in the second batch witnesses were said to have been examined in proof of these documents but their evidence was not made part of the record. Equally of the sale deeds. It is seen that the documents in the second batch p top 1 include those filed in the first batch. exhibit p 5 is dated Sept. 4, 1972, in which 20 Biswas of land was sold for Ice Factory. It was situated in the town itself. The price fetched therein was Rs. 20,000 Therefore, it worked out at the rate of Rs. 1,000 per Biswa. exhibit p10 is dated August 25, 1975, 7 Biswas of land in Dhaula village was sold for Rs. 649 75,000 which works out at rate of Rs. 1071 per Biswa. exhibit p 7 is dated June 14,. 1976,3 Bighas 16 Biswas of land situated at Dhularoad side was sold for Rs. 4,500 which works out at the rate of Rs. 1285 per Biswa. Ex.p 8 dated June 15, 1977 is for 4 Biswas of land at Dhula road sold for Rs. 4,000 which works out at Rs. 1,000 per Biswa. exhibit p 4 is dated Feb. 23, 1977,3 Biswas of land in the heart of the town Dhuri was sold for Rs. 6,000 which works out to Rs. 2,000 per Biswa. exhibit p 6 is dated may 18,1977, one Bigha7 Biswas were sold for Rs. 1,000, which works out to Rs. 370 per Biswa. This land is away from the town and also from the acquired land. exhibit p 9 is dated July 12, 1977, 15 Biswas of land were sold for Rs. 24,000 working out at the rate of Rs. 1,600 per Biswa. Based thereon it was contended that exhibit p 9 fetches the highest market value and is nearer to the date of notification and would offer comparable price. The High Court ought to have fixed market value at that rate. The High Court committed illegality in relying on two sale deeds of the claimants and two mutation entries on behalf of the state in working out the average. Therefore, fixation of the market value is illegal. The mutations are not admissible as neither sale deeds were filed not any body connected with them are examined. The question, therefore, is whether these sale transactions would reflect the prevailing market value of the land of the total extent of 90 acres. It is seen that in the first batch no one was examined to prove the documents. In the second batch though witnesses were said to have been examined, the evidence is not on record. Neither the reference court nor the High Court discussed the evidence and no finding was given. So we do not have the advantage of any findings in that behalf. The state filed 5 mutation entries which were marked. The sale entries exhibit R 6 is of October 4,1977 and exhibit R 5 of November 13, 1977. The rates of lands in Saledeeds executed between March 7, 1977 to November 13, 1977, i.e. R 2 on 7.3.77, R 3 on 8.6.77, R 4 on 31.8.77 and R 5 on 30.11.77 work out between Rs. 83 to Rs. 450 per Biswa. It is settled law that to determine the market value of the land under section 23(1) of the Act the sales of the land under requisition, if any, or the sales in the neighbourhood lands that possessed of same or similar potentialities or fertility or other advantageous features would furnish basis to determine just and fair market value on the premise of hypothetical willing vendor and willing vendee. The willing vendor who would offer the land and willing vendee who would agree to purchase the land as a prudent man in normal market conditions as on the date of the notification or near about the date of the notification is the acid test. It is also settled law that the sale and purchase of lands at a throw away price at arm 's length or depressed sales or fecal of sales brought into existence in quick succession to inflate the market value would not offer any basis to determine just market value. In order to adjudge whether sales are bonafide sales between willing vendor and 650 willing vendee and whether the consideration mentioned in deed was, in fact and really passed on under transaction '. whether the lands covered by sale deeds and relied on, possessed of same or similar potentialities or fertilities or advantageous features would be brought on record only by examining the vendor or the vendee or if neither of them is available, the attesting witness who has personal knowledge of the bargain and passing of the consideration are mandatory. Vide Periyar & Pareekanni Rubbers Ltd. vs State of Kerala wherein this court surveyed the entire case Law in that respect. Since none has been examined in the first batch the sale transactions referred to either by the state or by the claimants cannot be relied upon. In the second batch since the evidence has not been referred to by the courts below nor discussed by them nor we have the advantage to go through the same, we cannot rely on the same to further enhance the market value. Therefore, we are left with no option. but to reject those sale deeds. Moreover, except exhibit p 9 all other sale deeds are of very small extents. This court consistently has taken the view in Collecior of Lakhimpur vs Bhuban Chandra Dutta AIR 1971 SC 2015 Mirza Naushery voan Khan & Anr. vs Collector (Land Acquisition). Hyderbad ; ; Rain Rattan & Ors. vs State of U. P. Smt. Kaushalya Devi Bogra & Ors.v. Land Acquisition officer, Aurangabad & Anr. ; ; Padma. Uppal vs State of Punjab & Ors. ; , Administrator General of West Bengal vs Collector. Varanasi ; and Special Tehsildar, Land Acquisition vs A. Mangala Glowri [1991]4 SCC 218 that sale deeds of small extents being retail price do not offer comparable basis to fix compensation when large block of land is acquired. To an intending bonafide purchaser if such block of 90 acre is offered for sale, would he agree to purchase at retail price or far less value? Under no circumstance he would agree to purchase at retail prices mentioned above. In view of the settled legal position the saledeeds, sought to be relied upon, do not give us any basis to determine the market value. Every endeavour would be made to fix fair and reasonable market value. If sale transactions relate to the lands under acquisition and if found to be genuine and bonafide transaction between willing vendor and vendee then it may be considered but reasonable margin must be given in fixing whole sale price. Therefore, all the documents except p 9 are rejected. The next contention is that the sale deed exhibit p 9 by which 15 Biswas were sold for Rs. 24,000 which works out at the rate of Rs. 1,600 per Biswa and whether this hiohest price should be given to the appellants. As stated earlier we have no evidence before us as to under what circumstances this document came to be executed and what is the distance between the lands and for what purpose the land was sold and what is the 651 comparable nature of the land, fertility and potentialities of the land, etc. The contention relying on state of Madras v.A.M.Ranjan & Anr. [1976] 3SCR35 that highest value should be fixed cannot be accepted in view of the consistent late. view of this court. In Collector of lakhimppur 's case (supra), this court accepted the principle of average, but however, rejected the small extent of the lands arid enhancement based on the average at Rs. 15,000 per Bigha was reduced to Rs. 10.000 per Bicha. In Smt. Kausalya Devi 's case (supra), this court noted that large extent of land in the developed Aurangabad town was acquired for Medical College, accepted the principle of average worked out by the reference court, varying between Rs. 2.25 to Rs. 5.00 per sq. yard and this court ultimately fixed the market value at the rate of Rs. 1.50 per sq. yard. In Administrator General of West Bengal 's case (supra) this court upheld rejection of the small plots of lands and accepted two sale deeds of large extent working out the average rate at Rs. 500 per Decimal and ultimately reference court fixed the market value at the rate of Rs. 200 per Decimal. It is, therefore, clear that the court in the first instance has to determine as to which of the sale deeds are relevant, proximate in point of time and offer comparable base to determine market value. Thereafter the average price has to be worked out. It would be seen that this court has taken consistent view of working out average and further deductions have been made in fixing just and fair market value when large chunk of the land was acquired. We respectfully agree and adhere to the principle and we find no compelling reason to divert the stream or arrest the consistence. The question then is whether the reduction of the market value by the learned Single Judge is warranted on facts and under law. In his judoment the learned Judge found that the acquired lands are situated between railway line on the one side and link road going from Dhuri to Sarona on the other side. On the third side it is surrounded by the in habited area of Dhuri town. A small portion in Khasra No. 2585 was abutting the Dhola road and the rest of the acquired land is just behind the inhabited area. While acquiring these lands the Govt. have excluded the built up area. He also found that there is tendency of extension of Abadi village towards acquired lands. Therefore, he found that the lands arepossessed of "Potential value for being housed for urban purpose in the near future and, therefore, had to be valued as such" Thus we have the evidence that the lands are possessed of potential value for being used for building purposes. In fact, the acquisition itself is for construction of Mandi Township. The principle of belting is perfectly legal and unexception 652 ble as the lands abutting the main road upto a specified depth, depending on actual material on record, would fetch higher market rate than the lands situated a interior area. However, on facts of this case the belting is not warranted for the reason that as seen on three sides there exist roads and abutting the village. As per the plan as found by the High Court there exists a road cutting across the acquired lands. Therefore, there is not only access on three sides but also to interior lands. Thus in our view belting and fixation of differential rates of value is not justified. The next question is what would be the reasonable and just market value the lands were likely to fetch. In view of the fact that there is no evidence available and since the High Court found that the lands are possessed of potential value the rate of Rs. 1,000 per Biswa as awarded by civil court to the lands abutting abadi and the lands upto a depth of 100 ft is upheld. In view of the preceding finding we hold that the fixation of uniform rate of Rs. 1,000 per Biswa is legal. It is seen that this acquired land of 90 acres is undoubtedly undeveloped area and necessarily requires development by laying the roads, parks, drainage, lighting and other civic amenities. In Brig. Sahib Singh Kalha & Ors. vs Amritsar Improvement Trust & Ors. and Administrator General of West, Bengal 's case (supra) this court deducted 53% of the undeveloped lands towards developmental charges while fixing market value at decimal rate etc. towards amenities. In Special Tehsildar Land Acquisition, Vishakapatnam 's case,(supra) this court made deduction at 1/3rd. The appellant placed reliance on Bhagwathula Swamnana & Ors. vs Special Tahsildar Land Acquisition. Visakhapatnam ; where this court did not deduct any land towards developmental charges. But in that case it was found that the lands acquired are situated in fully developed area. On those circumstances this court did not deduct any land towards developmental charges. It is seen that the consistent view of this court now is that deduction of at least 1/3rd is necessary towards developmental charges. Therefore, we uphold deduction of 1/3rd towards development charges from the market value and determine the market value at Rs. 670 per Biswa. The learned judge while deducting 1/3rd fixed market value at Rs. 759 of frontage lands and Rs. 500 to interior land. Rs. 750 is obvious mistake, but the state did not take any action to have itch corrected not filed appeals. Fixation of Rs. 750 per Biswa of lands from road upto a depth of 100 ft. became final. So we cannot interfere or correct it in claimants appeal. But for the rest of the lands we award Rs. 670 per Biswa. with solatium at 15% and interest at 6% on the enhanced market value from the date of taking possession till date of payment. 653 The appeals are accordingly allowed to the above extent. In the circum stances parties are directed to bear their own costs.

Notification under section 4 for acquisition of 89 Acres 4 Kanals and 12 Marlas of land in a village in Punjab, published on January 27, 1978. Appellants claimed compensation Rs. 30,000 per Bigha i.e. Rs. 1500 per Biswa, on the ground that 15 Biswas of land situated near the acquired land had been sold on July 12,1977, for Rs. 24,000 which works out to Rs. 1600 per Biswa. Land Acquisition Collector classified the acquired land In 6 blocks and awarded Market Value ranging between Rs. 30,000 to Rs, 6000 per acre. In reference under Section 18, the District Judge disagreed with classification. The learned Judge, relying on sale deeds dated September 4,1972, June 14, 1976, February 23, 1977 and July 15, 1977, all for small extents, awarded compensation @ Rs. 800 for the rest of land, besides solatium and interest. Appeals filed in the High Court by State of Punjab and by one batch of claimants. Another batch of claimants filed cross objections. The learned Single Judge allowed appeals filed by the State and dismissed appeals and cross objections of the claimants. Market Value was determined, on working out average price on the basis of sale deeds dated September 4,1972 and June 14, 1976 filed by claimants and mutation entries dated August 31, 1977 and October 4,1977 filed by the State. Belting was carved at depth of 100 Ft. from main road and deduction of 1/3rd was made towards development charges. Consequently market value determined @ Rs. 750 per Biswa for land abutting main road and @ Rs. 500 per Biswa for the rest of land. Judgment and order of the learned Single Judge was confirmed by Division Bench. Claimants, by special leave petition filed appeals for higher compensation. This court determined market value at Rs. 1000 per Biswa and allowing the appeals to that extent, HELD It is settled law that to determine market value of the land, the sales of land under requisition if any or the sales in the neighborhood lands, 646 that possessed of same or similar features or fertility or other advantageous features would furnish basis to fix just and fair market value. (649 E) The price for which the willing vender would offer the land and willing vendee would agree to purchase it, as a prudent man in normal market conditions, as on date of notification or near about the date, is acid test to fix market value. Sales and purchases of land at throw away price at arms length or depressed sales or facade of sales made in quick succession to inflate market value do not offer any basis to determine just Market Value. (649 F) In order to adjudge, whether sales are bonafide, whether consideration mentioned in the deed was infect and really passed, whether the lands covered by sale deeds and relied on possessed of same or similar potentialities or fertilities or advantageous features would be brought out on record only by examination of the vendor or the vendee or if neither of them is available, the attesting witness, who has personal knowledge of the bargain and passing of consideration. Hence it is mandatory. (650 A) Periyar & Pareekanni Rubbers Ltd. vs State of Kerala: Sale deeds of small extents being retail price do not offer comparable basis to fix compensation, when large block is acquired. If sale transactions relate to the lands under acquisition and if found to be genuine and bonafide transactions, then it may be considered but reasonable margin must be given in fixing wholesale price. (650 E) Collector of Lakhimpur vs Bhuban Chandra Dutta AIR 1971 SC 2015; Mirza Nausherwoan Khan & Another vs Collector (Land Acquisition) Hyderabad ; ; Ram Rattan & Others vs State of Uttar Pradesh ; Smt. Kaushalya Devi Bogra & Others vs Land Acquisition Officer, Aurangabad Others ; ; Administrator General of West Bengal vs Collector Varanasi ; and Special Tehsildar Land Acquisition vs A Mangal Gowri Court in the first instance has to determine as to which of the sale deeds are relevant, proximate in point of time and offer comparable base to 647 determine market value. The after average price has to be worked out and the contention that highest value should be fixed cannot he accepted. (651 D) State of Madras vs A.M. Ranjan & Another ; ; Collector of Lakhimpur vs Bhuban Chandra Dutta AIR 1971 SC 2015; Sint. Kaushalva Devi Bogra & Others vs Land Acquisition Officer, Aurangabad & Another ; and Administrator General of West Bangal vs Collector, Varanasi ; The Principle of belting is perfectly legal and unexceptionable, as the lands abutting the main road up to a specified depth depending on factual material on record, would fetch higher market value than lands situated in interior area. (652 A) If the acquired land is undeveloped, deduction of at least 1/ 3rd, is necessary towards development charges. (652 F) Brig. Sahib Singh Kalha & Others vs Amritsar Improvement Trust & Others ; Administrator General of West Bengal vs Collector Varanasi ; ; Special Tehsildar, Land Acquisition vs A. Mangal Gowri ; and Bhagwathula Swamnanna & Others vs Special Tehsildar Land Acquisition Visakhapatnam ;

ivil Appeal No. 2041 of 1972. From the Judgment and Decree dated 5.11.1971 of the Gujarat High Court in First Appeal No. 693 of 1964. Harish N. Salve, S.A. Shroff, S.S. Shardul and R. Sasi prabhu for the Appellant. S.T. Desai and M.N. Shroff for the Respondent. The Judgment of the Court was delivered by SEN, J. This appeal on certificate brought from the judgment and order of the High Court of Gujarat dated July 3, 1972 raises a question whether the High Court was justi fied in reversing the decision of the District Judge, Suren dranagar dated March 19, 1964 and restoring the order of the Charity Commissioner, Ahmedabad, State of Gujarat dated February 1, 1962 upholding that of the Deputy Charity Com missioner, Ahmedabad holding that the two temples of Sri Dwarkadhishji and Sri Trikamrayji at Patadi were temples as defined in section 2(17) of the Bombay Public Trusts Act, 1950 and therefore they fell within the purview of the expression 'public trust ' within the meaning of section 2(13) of the Act. The facts giving rise to the appeal may be shortly stated. The appellant is a former ruler of the semi juris dictional State of Patadi, one of the 17 States which en tered into a covenant for the formation of the United State of Kathiawad which on the reorganisation of the States became part of the former State of Bombay and now forms part of the State of Gujarat. The Bombay Public Trusts Act, 1950 was extended to the Saurashtra region including the area that formed part of the erstwhile State of Patadi in the year 1952. In Patadi, which was the seat of the former Ruler, there exist two temples known as Sri Dwarkadhishji Mandir or Haveli which is the main temple and adjacent to it there is the smaller temple known as Sri Trikamrayji Mandir. Both these temples were constructed in the years 1872 and 1875 respectively by the then ruler of Patadi and the cost of construction was met from the Patadi State Treasury. The temples are situated on the main road in Patadi and do not form part of the Darbargadh or the palace wherein the ruler and the members of the royal family used to reside, although there exists a passage leading to the public road presumably meant for the use of the ladies of the royal family. In the Gram Panchayat records Sri Dwarkadhishji Mandir or Haveli stands in the name of the deities and the appellant is merely shown as a Vahivatdar. Similarly, Sri Trikamrayji Mandir is shown as the property of the deities and the appellant as a Vahivatdar. The two temples were exempted from payment of municipal as well as other taxes including the land revenue presumably because they were public tem ples. This is one of the decisive factors in determining whether a temple is a private or a public one. It appears that the management of the temples remained throughout with the successive ruler of Patadi but that circumstance would not afford an indicia of ownership of the temples being vested in the rulers. On the contrary, the evidence shows that the temples were throughout treated as places of public religious worship and the public in general and members of the Vaishnava sect in particular were regu larly worshipping in the temples as a matter of right ever since the installation of the deities and also taking part in the ceremonial festivals like 'Hindola ' and 'Annakut ' and making cash offerings of bhends, gifts of ornaments etc. The evidence also discloses that nobody was required to take permission from the darbar before entering into the temples for darshan and worship, nor was there any obstruction made at any point of time except after the initiation of the proceedings from the appellant or the manager and/or his servants to the use of the temples by the public as of right. The cash offerings or 914 bhents, gifts or ornaments etc. made by the general public and members of the Vaishnava sect were kept in a golak at Sri Dwarkadhishji Mandir under the exclusive control of the Vaishnava sect and remittances were made to Goswami Maharaj, Acharya of the Vaishnava sect at Ahmedabad. Even after the Act was extended to the erstwhile State of Patadi, the public in general and the members of the Vaishnava sect in particular had unrestricted right of worship at the temples. Sometime in the year 1958 the inhab itants of Patadi made a complaint to the Charity Commission er that there were several items of public religious and charitable endowments under the possession and control of the appellant and he was appropriating the income and prof its thereof. Thereupon the Deputy Charity Commissioner suo motu initiated proceedings under section 19 of the Act and issued show cause notice to the appellant. In answer to the show cause notice the appellant filed a reply admitting the existence of some public trusts and agreed to get them registered as such under section 18 of the Act and thereafter made an application. He however pleaded that the two temples in question and the properties appurtenant thereto as well as a public library were private properties of the ruler and the members of the royal family and were not public trusts. During the inquiry, several wit nesses were examined on behalf of the public as well as by the appellant. The appellant however did not enter the witness box but examined his chief darbari NatwarIal Ranch hodlal. The Deputy Charity Commissioner by his order dated January 29, 1960 on the totality of the evidence came to the conclusion that the shrines had been dedicated as places of public religious worship and were therefore temples within the meaning of section 2(17) of the Act and these temples togeth er with the properties appurtenant thereto have constituted public religious trusts within the meaning of section 2(13). The appellant being dissatisfied carried an appeal to the Chari ty Commissioner who by his order dated February 1, 1962 upheld the finding reached by the Deputy Charity Commission er. Aggrieved, the appellant made an application under section 72 of the Act before the District Judge, Surendranagar for setting aside the order of the Charity Commissioner. The learned District Judge disagreed with the finding reached by the Charity Commissioner and held that there was no clear, cogent or satisfactory evidence of the existence of a public endowment. He held that the question as to whether the temples in question were dedicated to the public depends upon inferences which could legitimately be drawn from facts not in 915 dispute and observed that a dedication to the public may be inferred from a long course of conduct of the founders and descendants. However, it was abundantly clear that the temples which undoubtedly have been constructed by the then ruler of Patadi adjacent to the Darbargadh were meant for the worship of the family deities of the founder and his family. The temples were constructed by the then ruler of Patadi, the management of which exclusively remained with the ruler for the time being, and there was nothing to show that they were intended for the use of the public at large for an indeterminate though restricted class of the Hindu community in general. According to the learned District Judge, the mere fact that the public was allowed access to the temples was not conclusive as to the nature of the endowments and that the Department had failed to discharge the burden of showing that they were public endowments. Thereupon, the Deputy Charity Commissioner preferred an appeal under section 72(4) of the Act to the High Court. Disa greeing with the learned District Judge the High Court has come to the conclusion following the decision of this Court in Goswami Shri Mahalaxmi Vahuji vs Rannchhoddas Kalidas & Ors., ; that the two temples were places of public religious worship used as of right by the Vaishnavas and observed: "The circumstance that the public or a section thereof have been regularly worshipping in the temples as a matter of course and they could take part in the festivals and ceremonies conducted in that temple as appears from the record, apparently as a matter of right, is a strong piece of evidence to establish the public character of the temple. " ** ** ** "There is nothing on record to indicate that in the long past in Patadi, any ruler had put any restriction on the use of the temples for Darshan over a fairly long period during which the members of the public have visited the temples as if they were their temples and this establishes their right. Such a consistent and unobstructed user must be taken as of right. It is well known that those who go for 'Dar shan ' and/or 'Puja ' do not and generally have no occasion to assert their right. It is not shown that the right was ever obstructed. " ** ** ** "Although there was a sort of private passage running from 916 the Darbargadh leading to the public road, presumably meant for the use of the 'Pardana shin ' ladies of the royal family, this would not indicate that the temples were attached to the Darbargadh or were reserved for the exclu sive use of the ruler and the members of the royal family. " The High Court on a consideration of the evidence brought out two circumstances, namely, (1) The general public and particularly the members of the Vaishnava sect had unre stricted right of worship at the temples as a matter of course and participated in the festivals of 'Hindola ' and 'Annakut ' functions and sewa at Sri Dwarkadhishji Temple and daily darshan and worship at the other temple which, by itself, was a strong piece of evidence to establish the public character of the temples. And (2) The cash offerings or bhents, gifts of ornaments etc. On consideration of the evidence in the case, particularly the two circumstances adverted to read in conjunction with the evidence as to the way in which the temple endowments had been dealt with and the evidence as to the public user of the temples, the High Court came to the conclusion that they were temples within the meaning of section 2(17) of the Act which clearly fell within the ambit of the expression 'public trust' under section 2(13) It repelled the contention of the appellant that the temples were the pri vate temples of the ruler and members of the royal family, observing: "These two relevant circumstances go to show that the two temples which were places of public religious worship were used as of right by the Vaishnavas.(supra). There is no evidence on record to show that the temples were treated as private property and that the income from the offerings made at the temples was merged with the State funds, much less treated as the private income of respondent No. 1 (ex Ruler). There is also no evidence to show that the temples were at any time closed down on any occasion so as to exclude the public from worship when the members of the Ruler 's family visited the temple or temples on any other family occasion." 917 "The mere management of the temples being with the successive rulers of Patadi would not afford an indicia to show the ownership of temples as having been vested in the Rulers. It is well known that in the princely regimes, a citizen would not ordinarily interfere with the management of such properties being made by the then Ruler. His evidence that the darbar if it thinks fit can obstruct any person from entering into the temples introduced in the examination in chief is not dependable. He has in his cross examination admitted that prior to the enquiry proceed ings, nobody was required to take permission before entering the 'Haveli ' and the Mandir for 'Darshan ' and worship. This would go to show that there was no obstruction made at any point of time by the Darbar and his manager and/or his servants to the use of the temples by the public as of right. " ** ** ** "Even if it be assumed that the temples had originated as private temples, although the case as urged by Mr. Chhaya is that the origin is unknown or lost in antiquity, there is good evidence to show that the temples were being used as public temples. Taking an inte grated view of the circumstances aforesaid, as appear from the relevant evidence on record, in our opinion, it must be held that the Vaishnavas were regularly worshipping in the temples as a matter of course and they took part in the festivals and ceremonies conducted in the temples and outside apparently as a matter of right." ** ** ** "The mere fact that the successive Darbars of the rulers were the managers of the temples would not go to show that the temples were private trust properties. The circumstances aforesaid lead to a reasonable inference that although the origin of the temples was at the instance of 918 then Ruler of the Patadi State, the funds which went for the construction of the temples were the funds of the State and, at least gradually in course of time, there was dedica tion of the temples for the benefit of the Vaishnav community as places of public wor ship. " We thought that on the overwhelming evidence on record both oral and dOcumentary no other conclusion than the one reached by the High Court was possible. The question whether the temples had been dedicated to the public or were the private property of the appellant was essentially a matter of inference to be drawn from the other facts on record and the findings arrived at by the High Court as well as the Charity Commissioner were clearly unassailable. Where in a case like the present, the creation of the trust is not lost in antiquity or shrouded in obscurity, the temples having admittedly been constructed by the appellant 's ancestor must, in the absence of a formal document of endowment, be regarded as the private temples of the founder and the members of the royal family, from the fact that the appel lant and his predecessors have throughout been in management of the same. The findings reached by the High Court and the Charity Commissioner that the temples were places of public religious worship and were temples within the meaning of section 2(17) of the Act and fell within the purview of the expression 'public trust ' as defined in section 2(13), are therefore vitiated due to misplac ing of that burden. (3) The High Court was in error in holding that the temples were constructed by the appellant 's ancestor for the benefit of the community at large and that the general public or a particular section thereof, had an unrestricted right of worship at the temples merely because of the circumstance that there was proof of long user of the temples by the public particularly by the members of the Vaishnava sect without any let or hinderance or the fact that in the revenue records and the register of the gram panchayat the temples were recorded in the names of 919 the deities with the appellant shown as a mere Vahivatdar and that separate accounts were kept in respect of the temples. According to the learned counsel, these circum stances were non sequitur. He relied upon Mulla 's Hindu Law, 15th edn., para 424 at pp. 544 545, Mukherjea 's Hindu Law of Religious & Charitable Trusts, 5th edn., paras 4.36 to 4.40 at pp. 185 190, Nar Hari Sastri & Ors. vs Shri Badrinath Temple Committee, ; ; Goswami Shri Mahalaxmi Vahuji vs Rannchhoddas Kalidas & Ors., ; Bihar State Board Religious Trust, Patna vs Mahant Sri Biseshwar Das, and Radhakanta Deb & Anr. As to the first, there is very strong and clear evidence to establish that there was dedi cation of the temples by the appellant 's ancestor for the use or benefit of the public. "Endowment" is dedication of property for purposes of religion or charity having both the subject and object certain and capable of ascertainment. Hindu piety found expression in gifts to idols and images consecrated and installed in temples, to religious institutions of every kind and for all purposes considered meritorious in the Hindu social and religious system. Under the Hindu law the image of a deity of the Hindu pantheon is, as has been aptly called, a `juristic entity ', vested with the capacity of receiving gifts and holding property. The Hindu law recognises dedica tions for the establishment of the image of a deity and for maintenance and worship thereof. The property so dedicated to a pious purpose is placed extra commercium and is enti tled to special protection at the hands of the Sovereign whose duty it is to intervene to prevent fraud and waste in dealing with religious endowments. Dedication need not always be in writing and can be inferred from the facts and circumstances appearing. It would be a legitimate inference to draw that the founder of the temple had dedicated it to the public if it is found that he had held out the temple to be a public one: Pujari Lakshmana Goundan vs Subramania Ayyar, AIR 1924 PC 44. In view ' of this, the contention that there is no evi dence to establish that there was dedication of the temples by the appellant 's ancestor for the benefit or use of the public or a section thereof, cannot therefore prevail. On the contrary, the evidence discloses that although the temples had been constructed by the appellant 's ancestor, the cost of their construction was met from out of the public 920 exchequer and that the income from the offerings made by the worshippers at the shrine in the form of bhents and gifts of ornaments etc. That evidence clearly establishes that the temples were intended and meant by the founder for the benefit and use of the public. As to the second, undoubtedly the burden was on the Charity Commis sioner to establish the existence of a public endowment and that burden the Charity Commissioner has discharged by unimpeachable evidence of long and uninterrupted user of the temples by the general public and particularly by members of the Vaishnava sect. The finding reached by the High Court and the Charity Commissioner that the temples were places of public religious worship within the meaning of section 2(17) read with section 2(13) of the Act is not vitiated by displacing of that burden but the finding reached by them is based on a proper appreciation of the evidence. As to the third conten tion, we would presently deal with the circumstances brought out in the evidence which lead to no other conclusion than the one arrived at by the Charity Commissioner and the High Court, that the temples constructed 'by the appellant 's ancestor were for the benefit of the community at large and the members of the Vaishnava sect in particular and that they had an unrestricted right of worship. In the absence of a written grant, the question whether an endowment made by a private individual is a public endow ment or a private one is a mixed question of fact and law and the scope of dedication must be determined on the appli cation of legal concepts of a public and private endowment to the facts found in each particular case. Facts and cir cumstances, in order to be accepted as proof of dedication of a temple as a public temple, must be considered in their historical setting viz. the origin of the temple, the manner in which its affairs are managed, the nature and extent of the gifts received, the rights exercised by the devotees in regard to worship therein, etc. In the present case, the temples were constructed at public expenditure by meeting the cost of construction from the public exchequer and the upkeep and maintenance of the temples was met by public subscription and therefore the High Court and the Charity Commissioner rightly inferred existence of a public endow ment. Such an inference was strengthened by the fact of user of the temples by the public or a section thereof, as of right for over a century. The general effect of the evidence is that the appellant as well as his predecessors although in management, had throughout treated the temples as public temples of which they were mere Vahivatdars. 921 The essence of a public endowment consists in its being dedicated to the public; and in the absence of any document creating the endowment, long user is the material factor from which an inference of dedication may arise. The dis tinction between a private and public endowment is that whereas in the former the beneficiaries are specific indi viduals, in the latter they are the general public or a class thereof. The distinction is succinctly brought out in Mula 's Hindu Law in para 424 at pp. 544 545 in these words: "Religious endowments are either public or private. In a public endowment the dedication is for the use or benefit of the public. The essential distinction between a public and a private endowment is that in the former the beneficial interest is vested in an uncertain and a fluctuating body of persons, either the public at large or some considerable portion of it answering a particular description; in a private endowment the beneficiaries are defi nite and ascertained individuals or who within a definite time can be definitely ascertained. The fact that the fluctuating and uncertain body of persons is a section of the public following a particular religious faith or is only a sect of persons of a certain religious persuasion would not make it a private endow ment. The essence of a public endowment con sists in its being dedicated to the public; and in the absence of any document creating the endowment, long user is the material factor from which an inference of dedication may arise. Besides user by the public, conduct of the founder and his descendants is also relevant, and if they in fact held out the temple to be a public one a very strong pre sumption of dedication would arise. " It therefore follows that the principles are well settled. When property is dedicated for the worship of a family idol, it is a private and not a public endowment, as the members who are entitled to worship at the shrine of the deity can only be the members of the family i.e. an ascertained group of individuals. But where the beneficiaries are not the members of a family or specified individuals but the public at large of a specified portion thereof, then the endowment can only be regarded as public intended to benefit the general body of worshippers. We do not think that it would serve any purpose to refer to all the 922 well known decisions except a few. In Pujari Lakshmana Goundan vs Subramania Ayyar (supra), the temple was not an ancient one and there was no deed of endowment. The question was whether the temple was a public temple or a private temple. Although the temple was a private temple, the evi dence disclosed that the Pujari Lakshmana Goundan, the founder of the temple had held out and represented to the Hindu public in general that the temple was a public temple at which all Hindus might worship. Sir John Edge, in deliv ering the judgment of the Privy Council held that on that evidence the Judicial Committee had no hesitation in drawing the inference that the founder had dedicated the temple to the public, as it was found that he had held out the temple as a public temple. Another Privy Council decision to which we need refer is that of Babu Bhagwan Din vs Gir Har Saroop, LR 1939 67 IA 1 where the grant was made to one Daryao Gir and his heirs in perpetuity and the evidence showed that the temple and the properties attached thereto had throughout been treated by the members of the family as their private property appropriating to themselves the rents and profits thereof. Sir George Rankin, delivering the judgment of the Privy Council held that the fact that the grant was made to an individual and his heirs in perpetuity was not reconcila ble with the view that the grantor was in effect making a wakf for a Hindu religious purpose. That very distinguished Judge referred to the earlier decisions in Pujari Lakshar nana Goundan 's case, and observed: "Their Lordships do not consider that the case before them is in general outline the same as the case of the Madras temple, , in which it was held that the founder who had enlarged the house in which the idol had been installed by him, constructed circular roads for processions, built a rest house in the village for worshippers, and so forth, had held out and represented to the Hindu public that it was a public temple." The true test as laid down by this Court speaking through Venkatarama Ayyar, J. in Deoki Nandan vs Murlidhar, ; in determining whether a temple is a private or a public temple, depends on whether the public at large or a section thereof, 'had an unrestricted right of worship ' and observed: "When once it is understood that the true beneficiaries of religious endowments are not the idols but the worshippers, and that the purpose of the endowment is the maintenance of that worship for the benefit of worshippers, the 923 question whether an endowment is private or public presents no difficulty. The cardinal point to be decided is whether it was the intention of the founder that specified indi viduals are to have the right of worship at the shrine, or the general public or any specified portion thereof." The learned Judge distinguished the decision of the Privy Council in Babu Bhagwan Din vs Gir Har Saroop, (supra) on the ground that properties in that case were granted not in favour of an idol or temple but in favour of the founder who was maintaining the temple and to his heirs in perpetuity, and said: "But, in the present case. the endowment was in favour of the idol itself, and the point for decision is whether it was private or public endowment. And in such circumstances, proof of user by the public without interfer ence would be cogent evidence that the dedica tion was in favour of the public. " It was also observed while distinguishing the Privy Council decision in Babu Bhagwan Din 's case that it was unusual for rulers to make grant to a family idol. In Deoki Nandan 's case the Court referred to several factors as an indicia of the temple being a public one viz. the fact that the idol is installed not within the precincts of residential quarters but in a separate building constructed for that purpose on a vacant site, the installation of the idols within the temple precincts, the performance of pooja by an archaka appointed from time to time for the purpose, the construction of the temple by public contribution, user of the temple by the public without interference, etc. The next important decision is that of Tilkayat Shri Govindlalji Maharaj vs State of Rajasthan & Ors., [1964] 1 SCR 561 where a Constitution Bench of this Court had to consider whether the famous Nathdwara Temple which is held in great reverence by the Hindus in general and members of the Vaishnava followers of the Vallabha Sampradaya in par ticular was a public temple. It was held that neither the tenets nor the religious practice at the Vallabha School necessarily postulate that the followers of the denomination must worship in a private temple. The Court observed that the question whether a Hindu temple is private or public must necessarily be considered in the light of the relevant facts relating to it as well as the accepted principles laid down by several judicial decisions, and it was said: 924 "A temple belonging to a family which is a private temple is not unknown to Hindu law. In the case of a private temple it is also not unlikely that the religious reputation of the founder may be of such a high order that the private temple rounded by him may attract devotees in large number and the mere fact that a large number of devotees are allowed to worship in the temple would not necessarily make the private temple a public temple. On the other hand, a public temple can be built by subscriptions raised by the public and a deity installed to enable all the members of the public to offer worship. In such a case, the temple would clearly be a public temple." "Where evidence in regard to the foundation of the temple is not clearly avail able, sometimes, judicial decisions rely on certain other facts which are treated as relevant. Is the temple built in such an imposing manner that it may prima facie appear to be a public temple? The appearance of the temple of course cannot be a decisive factor; at best it may be a relevant factor. Are the members of the public entitled to an entry in the temple? Are they entitled to take part in offering service and taking Darshan in the temple? Are the members of the public entitled to take part in the festivals and ceremonies arranged in the temple? Are their offerings accepted as a matter of right?" It was then laid down that the participation of the members of the public in the Darshan in the temple and in the daily acts of worship or in the celebrations of festival occasions would be a very strong factor in determining the character of the temple. Another significant decision is that of Goswami Shri Mahalaxmi Vahuji vs Rannchhoddas Kalidas & Ors. (supra) where the question arose whether the Haveli of Nadiad where the idol of Sri Gokulnathji was installed which is wor shipped by the Vaishnava devotees of the Vallabha cult is a private or public temple on the ground of dedication, and it was laid down: "In brief the origin of the temple, the manner in which its affairs are managed, the nature and extent of gifts received by it, rights exercised by the devotees in regard to worship therein, the consciousness of the manager and the consciousness of the devotees themselves as to the public 925 character of the temple are factors that go to establish whether a temple is a public temple or a private temple. " See also: Bihar State Board Religious Trust, Patna vs Mahant Sri Biseshwar Das, ; Dhaneshwarbuwa Guru Purshottambuwa owner of Shri Vithal Rukhamai Sansthan vs The Charity Commissioner, State of Bombay, 18 and Radhakanta Deb & Anr. vs Commissioner of Hindu Religious Endowments, Orissa, ; ; Hari Bhanu Maharaj ofBaroda vs Charity Commissioner, Ahmedabad, [1986] 4 SCC .162 and Heir of deceased Maharaj Purshottamlalji Maha raj, Junagad vs Collector of Junagad District & Ors. , ; We have carefully gone through the evidence of the witnesses examined by the Deputy Charity Commissioner as also the finding reached by him as well as by the Charity Commissioner which finding has been upheld by the High Court while reversing the decision of the learned District Judge. We find no substance in the contention advanced. There are overwhelming circumstances brought out in the order of the Charity Commissioner as well as in the judgment of the High Court and no other conclusion is possible than the one reached by them that the temples in question were public religious trusts within the meaning of section 2(17) read with section 2(13) of the Act. The learned District Judge in interfering with the order was largely influenced by the fact that the management of the temples throughout remained with the ruler for the time being and while adverting to the other circumstances held that there was no evidence that the temples were dedicated to the public at large or to a sec tion thereof and that the other circumstances brought out in the evidence viz. public user for the past over 100 years without any let or hinderance, the fact that the members of the Hindu community in general and members of the Vaishnava sect in particular were allowed to visit the temples for worship and make their offerings, or that the temples stand recorded in the names of the deities in the revenue records and the register of the gram panchayat with appellant shown as a Vahivatdar, were not sufficient to draw an inference that the temples were places of public religious worship. In coming to that conclusion he relied upon the decision 926 of the Privy Council in Babu Bhagwan Din 's case (supra) as also of this Court in Goswami Shri Mahalaxmi Vahuji 's case. The underlying fallacy in the judgment of the learned District Judge is that he proceeds on the assumption that there was no dedication of the temples express or implied by the founder for the benefit or use of the pub lic. Several circumstances are brought out by the Charity Commissioner and the High Court showing that the temples were public temples, namely: (1) Although the temples were constructed by the appellant 's ancestor way back in 1872 and 1875, there was positive evidence showing that the entire cost of construction was met from the public exchequer i.e. Patadi State Treasury. (2) The general public and particu larly the members of the Vaishnava sect had an unrestricted right of worship at the temples and participated in the festivals and ceremonies conducted in the temples right from the very inception, as it appears from the record, apparent ly as a matter of right without any let or hinderance on the part of the appellant or his predecessors. (3) The Hindu worshippers at the temples in general and members of the Vaishnava sect in particular made cash offerings of bhents into the golak kept at Sri Dwarkadhishji Mandir or Haveli which was under the exclusive control of the members of the Vaishnava sect and the remittances of it used to be made to Goswami Maharaj, Acharya of Vaishnava sect at Ahmedabad. (4) The public records showed that the temples stand recorded in the names of the deities, the appellant and his predecessors shown as mere Vahivatdars. It was an undisputed fact that separate accounts being maintained in respect of the income and expenditure of the temples i.e. the cash offerings, gifts of ornaments etc.were not intermingled with the monies belonging to the appellant or the members of the royal family and the incomes from the temples were utilised for their upkeep and maintenance and also for acquisition of properties attached to the temples (5) The State used to keep apart a share of vaje i.e. Darbar 's share of the crops grown by the cultivators and also used to impose and collect tola, a cess from the cultivators for the upkeep and mainte nance of the temples. That evidence shows that the public at large and members of the Vaishnava sect had been worshipping at the temples as of right for the last over 100 years and that the temples had all along been primarily maintained by the contributions made by the public particularly by the devotees belonging to the Vaishnava sect. In course of time the tem 927 ples particularly Sri Dwarkadhishji Mandir or HaveIi at tracted a large number of worshippers and they used to participate in the religious festivals and ceremonies per formed there. The evidence of the witnesses also shows that the deities were taken out in a palanquin by members of the Vaishnava sect and it was joined by the general public. The temples though adjacent to the Darbargadh were not in the precincts of the palace but were constructed facing a public road allowing access to the general public. All these cir cumstances clearly support the finding reached by the Chari ty Commissioner and the High Court that the temples were public temples and therefore public religious trusts within the meaning of section 2(17) read with section 2(13) of the Bombay Public Trusts Act, 1950 and the temples with the properties attached thereto were not the private properties of the appellant or the members of his family. The only factor relied upon by the learned District Judge was that the management of the temples remained with the ruler for the time being but then the Court has to come a conclusion not on one single factor alone but on a conspectus of all the relevant factors i.e.1 upon an appreciation of all the facts and circumstances appearing. In the result, the appeal must fail and is dismissed with costs. N.P.V. Appeal dis missed.

At Patadi in the erstwhile State of Patadi in the Sau rashtra region of Gujarat State there were two temples known as Sri Dwarkadhishji Mandir and Sri Trikamrayji Mandir, which were constructed in the years 1872 and 1875 respec tively by the then ruler with funds from the State Treasury. In the Gram Panchayat records the temples stood in the name of the deities, and the appellant, the former ruler of the State, was shown as a Vahivatdar. The temples were exempted from payment of municipal and other taxes including land revenue. The Bombay Public Trusts Act, 1950 was extended to the Saurashtra region of Gujarat State in the year 1952. The Deputy Charity Commissioner, sometime in 1958, suo motu initiated proceedings under section 19 of the above named Act, and issued show cause notice to the appellant, who was Vahivatdar of the temples. The appellant pleaded that the temples and the properties appurtenant thereto were private properties of the ruler and the members of the royal family, and were not public trusts. After examining witnesses, the Deputy Charity Commissioner came to the conclusion that the shrines had been dedicated as places of public religious worship and were, therefore, temples within the meaning of section 2(17) of the Act, and that the temples together with the properties appurtenant thereto constituted public religious trust within the meaning of section 2(13). These findings were upheld by the Charity Commissioner. On an application under section 72 of the Act, the District Judge held 910 that there was no clear, cogent or satisfactory evidence of the existence of a public endowment, that the question whether the temples were dedicated to the public may be inferred from a long course of conduct of the founders and the descendants, and that the mere fact that the public was allowed access to the temples was not conclusive as to the nature of the endowment and that the department had failed to discharge the burden of showing that they were public endowments. The department appealed to the High Court which held that the temples fell within the meaning of section 2(17) of the Act and were, therefore, within the ambit of the expression "public trust" under section 2(13). In the appeal to this Court, it was contended that there was no evidence to establish that there was dedication of the temples by the appellant 's ancestor for the use and benefit of the public, that the findings reached by the High Court and the Charity Commissioner were vitiated due to misplacing of the burden to establish the existence of public endowment, and that the High Court was in error in holding that the temples were constructed by the appellant 's ancestor for the benefit of the community at large and that the general public or a particular section thereof, had an unrestricted right of worship at the temples, merely because there was proof of long user by the members of the Vaishnava sect without any let or hinderance, that in the revenue records and the register of the gram panchayat, the temples were recorded in the names of the deities with the appellant shown as a mere Vahivatdar, and that separate accounts were kept in respect of the temples. Dismissing the appeal, this Court, HELD: 1. The findings arrived at by the High Court as well as the Charity Commissioner that the temples were 'public temples ' and, therefore, 'public religious trusts ' within the meaning of section 2(17) read with section 2(13) of the Bombay Public Trusts Act, 1950, and not the private proper ties of the appellant or the members of his family are unassailable. [927C] 1.2 The question whether the temples had been dedicated or were the private property of the appellant was essential ly a matter of inference to be drawn from the other facts on record. There is clear, consistent, reliable and unimpeacha ble evidence to establish that although the temples in question were constructed by the appellant 's ancestor, he had intended and meant that they were for the use and bene fit of the 911 public, that the public at large and members of the Vaishna va sect had been worshipping at the temples as of right for the last over 100 years and that the temples had all along been primarily maintained by contributions made by the public particularly devotees belonging to the Vaishnava sect. [918C, 926G H] 2.1 The essence of a public endowment consists in its being dedicated to the public; and in the absence of any document creating the endowment, long user is the material factor from which an inference of dedication may arise. The distinction between a private and public endowment is that whereas in the former the beneficiaries are specific indi viduals, in the latter they are the general public or a class thereof. [921A B] 2.2 When property is dedicated for the worship of a family idol, it is a private and not a public endowment, as the members who are entitled to worship at the shrine of the deity can only be members of the family. But where the beneficiaries are not the members of a family or specified individuals but the public at large or a specified portion thereof, then the endowment can only be regarded as public intended to benefit the general body of worshippers. [921G] 2.3 Dedication need not always be in writing and can be inferred from the facts and circumstances appearing. In the absence of a written grant, the question whether an endow ment made by a private individual is a public endowment or a private one is a mixed question of fact and law and the scope of dedication must be determined on the application of legal concepts of public and private endowment. Facts and circumstances, in order to be accepted as proof of dedica tion must be considered in their historical setting viz. the origin of the temple, the manner in which its affairs are managed, the nature and extent of the gifts received, the rights exercised by the devotees in regard to worship there in, etc. [919F, 920E F] In the instant case, the temples were constructed at public expenditure by meeting the cost of construction from the public ex chequer and the upkeep and maintenance of the temples was met by public subscription. The High Court and the Charity Commissioner therefore, rightly inferred exist ence of a public endowment. Such an inference was strength ened by the fact of user by the public as of right for over a century. The appellant as well as his predecessors al though in management, have throughout treated the temples as public temples of which they were mere Vahivatdars. The finding reached by the High Court and the Charity Commis sioner is based on a proper appreciation of the 912 evidence. All the circumstances clearly support the finding. [920G H, C, 927B] Shri Mahalaxmi Vahuji vs Rannchhoddas Kalidas & Ors., ; ; Nar Hari Sastri & Ors. vs Shri Badrinath Temple Committee, ; ; Bihar State Board Religious Trust, Patna vs Mahant Sri Biseshwar Das, ; Radhakanta Deb & Anr. vs Commissioner of Hindu Religious Endowments, Orissa, ; ; Pujari Lakashmana Goundan vs Subramania Ayyar, AIR 1924 PC 44; Babu Bhagwan Din vs Gir Har Saroop, LR 1939 67 IA 1; Deoki Nandan vs Murlidhar, ; ; Tilkayat Shri Govindlalji Maharaj vs State of Rajasthan & Ors., [1964] 1 SCR 561; Bhaneshwarbuwa Guru Purshottambuwa, owner of Shri Vithal Rukhamai Sansthan vs The Charity Commissioner, State of Bombay, ; ; Hari Bhanu Maharaj of Baroda vs Charity Commissioner, Ahmedabad, ; Heir of deceased Maharaj Purshottamlalji Mahara], Junagad vs Collec tor of Junagad District & Ors., ; and Mulla 's Hindu Law, 15th edn., para 424 at pp. 544 545, Mukherjea 's Hindu Law of Religious & Charitable Trusts, 5th edn. paras 4.36 to 4.40 at pp. 185 190, referred to.

: Civil Miscellaneous Petition No. 265 19 of 1988. IN Civil Appeal No. 2632 of 1987. From the Judgment and Order dated 10.6.1985 of the Kerala High Court in W.P. No. 210 of 1985 in O.P. No. 897 of 1984. Mrs. Baby Krishnan for the Appellant. A.K. Srivastava and C.V.S. Rao for the Respondent. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This is an application for making the award dated 17th February, 1988 passed by Mr V. Khalid, a former Judge of this Court, in a dispute referred to him by this Court 's order dated 6th October, 1987, final and to give consequential directions thereupon. 117 On 7th April, 1979 there was a contract for construction of the building in question. The contract consisted of two phases. The date of commencement of both the phases was 10th March, 1979: the date of completion of phase l was 9th June, 1980 and for phase Il 9th November, 1980. The dispute arose about the handing over of the site. According to the appel lant, the site was not handed over to him as agreed upon and therefore, the work could not either be commenced or com pleted as stipulated. He, therefore, accused the respondent of obstructionist tactics also. According to the respondent, however, the claims put forward by the appellant were imagi nary excuses to gain time and that he put forward various demands for extension of time and for payment of compensa tion to which he was not entitled. Clause 70 of the general conditions of the contract provided for settlement of disputes by arbitration. The appellant resorted to this clause and addressed a letter dated 13th September, 1980 to the Chief Engineer, South West Zone, Cochin, informing him that if the said disputes were not settled to his satisfaction within 15 days from the date of receipt of the notice, he would be taking appropriate steps to refer the disputes to arbitration in accordance with the said clause. This request of the appellant was turned down by the Chief Engineer, as according to him, work was in progress and the question of granting reasonable extension of time was under examination. Dissatisfied with this, the appellant took the matter to the Engineer in Chief by his letter dated 14th October, 1980 calling upon him to appoint an Engineer Officer as the sole arbitrator to adju dicate upon the disputes between the parties. This request was not acceded to. The relationship between the parties became strained. The respondent asserted that the appellant had abandoned the work and committed breach of contract. Thereafter, the appellant vide a notice dated 4th October, 1982 called upon the Engineer in Chief to appoint an Engineer Officer as the sole arbitrator. After further correspondence, the Engineer in Chief by his letter dated 9.6.1983 appointed one Mr. K.C.S. Rao, Chief Engineer, Poona Zone, as the arbitra tor in respect of the disputes. Mr Rao, it is asserted, entered into reference. The appellant asserted that Mr Rao was incompetent to function as arbitrator for it was he who had terminated the contract when he was officiating as the Chief Engineer of Sought West Zone. Aggrieved by this appointment, he filed a suit in the Court of Subordinate Judge, Cochin, seeking leave to revoke the authority of the appointed arbitrator under section 5 of the . 118 (hereinafter referred to as 'the Act '), and for appointment of another person as arbitrator under section 12 of the Act. It is not necessary to set out the various stages of litiga tion thereafter. Ultimately, the matter came to this Court and by an order passed by this Court on 25th August, 1987 in Civil Appeal No. 2632/87, it was observed as follows : "Having regard to the facts and circumstances of the case, we are of the opinion that all the disputes mentioned in the Paper Book be arbitrated by a former retired Judge of this Court. We accordingly appoint Mr. Justice vs Khalid (Retd.) a former Judge of this Court, as the Arbitrator. The Arbitrator will decide his remuneration as he thinks fit and the parties will pay the same in equal shares. The parties will also bear the costs and charges of holding the proceedings including the remuneration and other assistance of Stenogra phers etc. Councel for both the parties have no objection to the aforesaid order. The learned Arbitrator will enter into reference within a fortnight from the receipt of the copy of the order and will make the award within four months thereafter. Costs of the parties in the Arbitration proceedings will abide by the decision of the Arbitrator". The arbitrator entered upon the reference, examined the documents, heard the parties and considered the evidence. He made his award after inspecting the sites on 20th December, 1987 and 21st January, 1988. The claims of the appellants contractor were as follows: "1. On account of losses caused due to increase in prices of materials and cost of labour and transport during the extended period of contract from 9.6.80 work for under phase I and from 9.11.80 for work under phase II. 5,47,612.15 2. On Account of work done under the contract including fully executed and partly executed items at the origi nally agreed rates and for the cost of materials lying at site and taken over by the Department as well as for the value of machinery, tools and plants lying over the site and taken over by Department. 7,27,095.01 3. On account of losses caused due to added and infructuous expenditure on overheads, establishments, and 119 supervision during the extended period of contract upto 3.12.81, the date of termination. 1,28,864.00 4. On account of losses caused by way of gains prevented due to unlawful repudiation of the contract by the Depart ment and the consequent termination of the contract by the contractor. 1,04,424.58 5. (a) Release of Bank Guarantee for Rs. 1,25.000 (Bank Guarantee No. G/19/80 dated 28.4.80 issued by the State Bank of India, Willingdon Island, Conchin 3). (b) Refund of the retention amounts recovered by the Department from the Running Account Bills. Amount not indicated 6.Interest on all the amounts due and payable. @18% PA from 9.12.81 till actual date of payment or realisation". The claims on behalf of the respondent, were as under: "1. Excess cost which had to be borne by the Department 19,16,198.82 on account of the defaults of the contractor and subsequent cancellation of the contract after adjusting other amounts due from the contractor under this contract. Cost of reference to Arbitration 7,000.00" The arbitrator by his award asked the respondent to pay the following: "(a) On claim No. I, a sum of Rs.2,00,216.18 with interest at 10% from 9.12.1981 till the date of this Award. (b) On claim No. 11, a sum of Rs.2,47,269.69 with interest at 10% from 9.12.1981 till the date of this Award. (c) Claim No. III Disallowed. (d) Claim No. IV Disallowed. (e) On claim No. V(a), the respondent is directed to 120 refund the Bank Guarantee sum of Rs. 1,25,000 to the Cliamant with interest at 10% from the date of the encashment till the date of this Award. The remuneration of the Arbitrator is Rs.75,000. Rs.50,000 has already been deposit ed. The claimant and the Respondent are di rected to. remit the balance equally (Rs. 12,5000 each) to the Arbitrator to his Madras address by Account payee Draft within two weeks of receipt of the notice under Section 14 of the . 11I. The respondent is directed to pay to the Claimant by way of cost Rs. 17,500 to wards Arbitrator 's remuneration and Rs. 10,000 towards Advocates ' fees and cost. The respondent is directed to suffer their cost. The counter claims preferred by the Re spondent against the Claimant are disallowed. " A petition was filed on behalf of the respondent, where in it was stated as follows: "Regarding petitioner 's claim No. 1, in the absence of any escalation clause, it is not permissible to the Arbitrator to grant any escalation price as sought by the petitioner. On the other hand, if the work is not complet ed within the specified time, he has got right to ask for extension of time. Failure to grant extension of time, the contractor can claim difference of prices. That is not the case here. Extension of time was granted and the Arbitrator after considering the contentions put forth before him has granted 20% of the escalation price which is not in accordance with the terms of the contract. Though the term of the contract envisages that the entire site should be handed over in time for comple tion of the work entrusted to him as referred to above in civil works before starting of the work, the contractor is required to put up some preliminary work like construction of temporary store sheds, temporary office which requires sometime and within that time if the other area or the site is not handed over the contractor has got grievances to complain against the Department. Further, by not hand ing over the site how much damage or loss is sustained has not been 121 apprised off. Therefore, it is submitted that Claim No. 1 of the Contractor should have been considered as outside the scope of the con tract and hence the arbitrator has exceeded his jurisdiction." Mr Ashok Srivastava, counsel appearing for the Union of India, submitted before us that this is a reasoned award and the learned arbitrator had granted a sum of Rs.2 lakhs as escalation charges and costs. Mr Srivastava tried to urge that the right to get escalation charges and costs in the absence of escalation clause was not a matter referred to the arbitrator. In other words, it was urged that the arbi trator had travelled beyond his jurisdiction in awarding the escalation cost and charges. It is difficult to accept this objection for reason more than one. It is well settled that an award can only be set aside under section 30 of the Act, which enjoins that an award of an arbitrator/umpire can be set aside, inter alia, if he has misconducted himself or the proceeding. Adjudicating upon a matter which is not the subject matter of adjudication, is a legal misconduct for the arbitrator. The dispute that was referred to the arbitrator was, as to who is responsible for the delay, what are the repercussions of the delay in com pletion of the building and how to apportion the conse quences of the responsibility. In the objections filed on behalf of the respondent, it has been stated that if the work was not completed within the stipulated time the party has got a right for extention of time. On failure to grant extension of time, it has been asserted, the contractor can claim difference in prices. In the instant case, it is asserted that the extension of time was granted and the arbitrator has granted 20% of the escalation cost. Escalation is a normal incident arising out of gap of time in this inflationary age in performing any contract. The arbitrator has held that there was delay, and he has further referred to this aspect in his award. The arbitrator has noted that Claim I related to the losses caused due to increase in prices of materials and cost of labour and transport during the extended period of contract from 9.5. 1980 for the work under phase I, and from 9.11.80 for the work under phase II. The total amount shown was Rs.5,47,618.50. After discussing the evidence and the sub missions the arbitrator found that it was evident that there was escalation and, therefore, he came to the conclusion that it was reasonable to allow 20% of the compensation under Claim I, he has accordingly allowed the same. This was a matter which was within the jurisdiction of the arbitrator and, hence, the arbitrator had not mis 122 conducted himself in awarding the amount as he has done. It was submitted that if the contract work was not completed within the stipulated time which it appears, was not done then the contractor has got a right to ask for extension of time, and he could claim difference in price. This is precisely what he has done and has obtained a por tion of the claim in the award. It was submitted on behalf of the Union of India that failure to complete the contract was not the case. Hence, there was no substance in the objections raised. Furthermore, in the objections raised, it must be within the time provided for the application under section 30 i.e., 30 days during which the objection was not specifically taken, we are of the opinion that there is no substance in this objection sought to be raised in opposi tion to the award. Once it was found that the arbitrator had jurisdiction to find that there was delay in execution of the contract due to the conduct of the respondent, the respondent was liable for the consequences of the delay, namely, increase in prices. Therefore, the arbitrator had jurisdiction to go into this question. He has gone into that question and has awarded as he did. Claim I is not outside the purview of the contract. It arises as an incident of the contract and the arbitrator had jurisdiction. In that view of the matter the objections raised against the award, cannot be sustained. No other objection was urged before us. The award, therefore, must be made the rule of the Court and there will be a decree in terms of the award, and the respondent is directed to pay Rs. 17,500 as the arbitrator 's remuneration and Rs. 10,000 as advocates ' fees and costs. The Civil Miscellaneous Petition is disposed of accordingly. N.V.K. Petition disposed of.

The appellant, a contractor entered into a contract with the respondent for the construction of a building. The contract consisted of two phases. The date of commencement of both the phases was March 10, 1979, the date of comple tion of Phase I was June 9, 1980 and that of Phase II was November 9, 1980. Dispute arose about the handing over of the site. The appellant 's case was that the site was not handed over as stipulated and consequently the work could not either be commenced or completed as stipulated. The respondent asserted that the appellant had abandoned the work and committed a breach of contract. This was negated by the appellant. As the contract provided for settlement of disputes by an arbitrator, the appellant filed a suit for the appoint ment of an arbitrator. The matter came up in appeal to this Court, and one of its former Judges was appointed as an arbitrator. The Arbi trator entered upon the reference, examined the documents, heard the parties, considered the evidence, and made an award after inspecting the sites. The respondent aggrieved by the award filed a petition and contested the same. It was contended that the arbitrator had travelled beyond his jurisdiction in awarding a sum of Rs.2 lakhs as escalation cost and charges in respect of claim I. Disposing of the Civil Miscellaneous Petition the Court, HELD: 1. It is well settled that an award can only be set aside under section 30 of the , if the Arbitrator has misconducted himself or the proceeding. [121C D] 116 2. Adjudicating upon a matter which is not the subject matter of adjudication, is a legal misconduct for the Arbitrator. [121D] 3. Escalation is a normal incident arising out of gap of time in this inflationary age in performing any contract. [121F] In the instant case, the dispute that was referred to the arbitrator was, as to who was responsible for the delay, what are the repercussions of the delay in completion of the building, and how to apportion the consequences of the responsibility. After discussing the evidence and the sub mission of the parties to the contract, the arbitrator, found that it was evident that there was escalation and, therefore, he came to the conclusion that it was reasonable to allow 20% of the compensation under claim I, he accord ingly allowed the same. This was a matter which was within the jurisdiction of the arbitrator, and the arbitrator had not misconducted himself in awarding the amount as he has done. [121D E, G H; 122A] 4. Once It was found that the arbitrator had jurisdic tion to find that there was delay In execution of the con tract due to the conduct of the respondent, the respondent was liable for the consequences of the delay, namely, in crease in prices. [122C D]

l Appeal Nos. 772 773 of 1972. From the Judgment and Order dated 9th/10th July, 1970 of the Calcutta High Court in I.T.R. No. 158 of 1966. N. A. Palkhivala, Dr. D. Pal, U.K. Khaitan, S.R. Agar wal and Parveen Kumar for the Appellant. V.P. Raman, Addl. General, T.A. Ramachandran and R.N. Sachthey for the Respondents. 764 The Judgment of the Court was delivered by GOSWAMI, J. These two appeals by certificate are from the judgment of the Calcutta High Court since reported in Commissioner Income tax, West Bengal I vs Textile Machinery Corporation( '). The two appeals relate respectively to two assessment years 1958 59 (calendar year 1957) and 1959 60 (calendar year 1958). The matter relates to the claim by the assessee for exemption of tax under section 15C of the Indian Income tax Act, 1922 (briefly the Act). The matter came u13 before the High Court 'on a refer ence under section 66(1) of the Act. The two questions referred to were as follows : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the Steel Foundry Division was an industrial undertaking to which section 15C of the. Indian Income tax Act, 1922, applied ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the Jute Mill Division set up by the assessee company was an indus trial undertaking to which section 15C of the Indian Incometax Act, 1922, applied ? The facts may briefly be stated: The assessee (the appellant herein) is a heavy engineer ing concern manufacturing boilers, machinery parts, wagons, etc. For the assessment years 1958 59 and 1959 60 the assessee claimed exemption of tax under section 15C of the Act in respect of the profits and gains derived from its Steel Foundry Division and a similar claim for relief under section 15C in respect of its profits and gains derived from its Jute Mill Division for the year 1959 60. The assessee had previously in the earlier years bought from outside the castings manufactured in the Steel Foundry Division which was started in the assessment year 1958 59 and continued thereafter. Again, similarly in the year '1959 60, in addition to the manufacturing of castings in the Steel Foundry Division the assessee started the Jute Mill Division where the parts made out of the raw material supplied by the Boiler Division by machining and forging them were given to the Boiler Division of the assessee. It was found that out of a total sale of Rs.28,23,127/ of steel castings goods worth Rs.18,39,433/ were used in connection with the various Divisions of the company. In respect of the Jute Mill Division, the Incometax Officer found that out of the total sales of Rs.13,03,509/ sales. to the Boiler Division totalled Rs.11,89,812/ and sales to outside the Jute Mill Division totalled only a sum of Rs.1,13,6971/ . The Income tax Officer and the Appellate Assistant Commissioner, on the above facts, held the under takings as expansion and reconstruction of the business already existing and hence the assessee was not entitled (1) 765 to exemption under section 15C of the Act. The Income tax Appellate Tribunal, however, allowed the appeal of the assessee and accepted the claim for exemption under section 15C. According to the Tribunal both the Steel Foundry and the Jute Mill Division of the assessee were new industrial undertakings. The above conclusion was reached on the basis of several facts found by the Tribunal. These arc that the machinery was new, was housed in a separate building and that industrial licences had to be obtained, for manufactur ing the parts in question. According to the Tribunal the existing business of the assessee consisted of manufacturing boilers, wagons, etc. and for that purpose the assessee was purchasing the spare parts, forgings and castings from outside. The Tribunal came to the conclusion that the business of the new industrial undertakings was to manufac ture those very spare parts. Hence the Tribunal concluded that it could not be said that the undertakings were formed out of the existing 'business to come within the mischief of the exclusion clause in section 15C(2)(i). The Tribunal rightly relying upon the Tara Iron and Steel Co. Ltd. and Others vs State of Bihar(1) also held that even though the manufactured products of the new industrial undertakings were mostly used in the assessee 's other business of manu facturing boilers, wagons, etc. the element of profit was there and the extent of the same could be ascertained as the assessee was maintaining separate books of account. In the reference at the instance of the Department the High Court answered both the questions in the negative and against the assessee. The High Court held as follows : "The goods which the steel foundry division and the jute mill division began producing for the assessee were also previous ly used by the assessee in its business, but they were purchased from outside and this purchase from outside was replaced by produc tion or manufacture from within the asses see 's own business. This change of producing one 's own goods systematically used in the existing business instead of buying them from outside would only be a reconstruction of a business already in existence . In so far as they started producing and manufactur ing themselves, the assessee was doing some thing which was only a reconstruction of the business already in existence . . The newness of the machinery of the steel foundry division and the jute mill division could not by itself make them new industrial undertakings. Separate housing of, and separate accounts for, the steel foundry division and jute mill division may be only parts of reconstruction of the same business and did not necessarily indicate a new indus trial undertaking. The grant of a special licence for the steel foundry division did not make it an industrial undertaking to qualify for exemption from tax under section 15C, because the licence was for expansion of the existing industrial undertaking and the licence did not cover the jute mill division". (1) 766 It is, however, admitted before us that both the units were covered by licences. The controversy in these appeals centres round the true construction of section 15C(2)(i) of the Act and in particu lar with regard to the scope and ambit of the expression therein, namely, the reconstruction of business already in existence. Is the High Court right in holding that the two industrial undertakings, namely, the Steel Foundry and the Jute Mill Division, are formed by reconstruction of the business already in existence differing from the con trary conclusion reached by the Tribunal ? Before we proceed further, we will read section 15C as it stood during the material time: "15C. Exemption from tax of newly estab lished industrial undertakings. (1) Save as otherwise hereinafter provided, the tax shall not be payable by an assessee on so much of the profits or gains derived from any industrial undertaking to which this section applies as do not exceed six per cent per annum on the capital employed in the undertaking computed in accordance with such rules as may be made in this behalf by the Central Board of Revenue. (2) This section applies to any industrial undertaking which (i) is not formed by the splitting up, or the reconstruction of, business already in existence or by the transfer to a new business of building, machinery or plant, previously used in any other business; (ii) has begun or begins to manufacture or produce articles in any part of taxable territories at any time within a period of thirteen years from the 1st day of April 1948, or such further period as the Central Govern ment may, by notification in the Official Gazette, specify with reference to any partic ular industrial undertaking; (iii) employs ten or more workers in a manufacturing process carried on with the aid of power, or employs twenty or more workers in a manufacturing process carried on without the aid of power; Provided that the Central Government may, by notifica tion in the Official Gazette, direct that the exemption conferred by this section shall not apply to any particular industrial undertaking. 767 (3) The profits or gains of an industrial undertaking to which this section applies shall be computed in accordance with the provisions of section 10. (4) The tax Shall not be payable by a shareholder in respect of so much of any dividend paid or deemed to be paid to him by an industrial undertaking as is attributable to that part of the profits or gains on which the tax is not payable under this sec tion. (5) Nothing in this section shall affect the application of section 23A in relation to the profits or gains of an industrial under taking to which this section applies. (6) The provisions of this section shall apply to the assessment for the financial year next following the previous year in which.the assessee begins to manufacture or produce articles and for the four assessments immediately succeeding". We are principally concerned in these appeals with clause (i) of sub section (2) of section 15C and that also only with one part of it, namely, whether the industrial undertakings, Steel Foundry and the Jute Mill Division, are not formed by the reconstruction of the business already in existence. The learned Additional Solicitor General submits that these two undertakings are not entitled to exemption under section 15C(2) as rightly so held by the High Court since they were formed by the reconstruction of the assessee 's business already in existence, namely, the business of heavy engineering. He submits that setting up of a separate unit to do something in the course of pre existing manufacturing process to aid the production of the same article as was being produced by the pre existing industrial undertaking would not amount to starting of a new industrial undertak ing. He further emphasises that production of the articles in the Steel Foundry and in the Jute Mill Division is only ancillary activity to the main business of the assessee and since the articles produced in these two supplemental undertakings help in producing the identical article which has been the end product of the assessee 's main business, section 15C(2) (i) cannot come to the aid of the assessee. According to Mr, Raman these two industrial undertakings cannot be said to be not formed out of the reconstruction of the business already in existence. Section 15C(2)(i) only excludes three categories of industrial undertakings from the benefit of the section without referring to clauses (ii) and (iii) of that sub section and other limiting provisions of the section which are not applicable in the instant case. It is contended by Mr. Palkhivala that acceptance of the Additional Solicitor General 's submission will amount to adding a fourth category of cases in sub section (2)(i), namely, an industrial under 768 taking which is an ancillary undertaking manufacturing certain articles to supplement the principal industrial activity. This, says Mr. Palkhivala, will be adding something to the section. Section 15C is an exemption section. The benefit grant ed under this section is a partial benefit so far as the quantum of the exempted profits of the new industrial under taking as also for a limited period or periods as specified in the section. If the two industrial undertakings, about the existence of which there can be no controversy, as found by the Tribunal, cannot be held to. be formed by the recon struction of the business already in existence, the benefit of section 15C will be available to the assessee. The principal object of section 15C is to encourage setting up of new industrial undertakings by offering tax incentive within a period of 13 years from April 1, 1948. Section 15C provides for a fractional. exemption from tax of profits of a newly established undertaking for five assessment years as speci fied therein. This section was inserted in the Act in 1949 by section 13 of the Taxation Laws (Extensions to Merged States and Amendment) Act, 1949 (Act 67 of 1949) extending the benefit to the actual manufacture or production of arti cles commencing from a prior date, namely, April 1, 1948. After the country had gained independence in 1947 it was most essential to give fillip to trade and industry from all quarters. That seems to be the background for insertion of section 15C. It is also significant that the limit of the number of years for the purpose of claiming exemption has been pro gressively raised from the initial 3 years in 1949 to 6 years in 1953, 7 years in 1954, 13 years in 1956 and 18 years in 1960. The incentive introduced in 1949 has been thus stepped up ever since and the only object is that which we have already mentioned. Under sub section (1) of section 15C the tax shall not be payable by an assessee on profits not exceeding six per cent per annum on the capital employed in the new industrial undertaking from the profits which alone exemption is claimed. Sub section (2) of section 15C has a negative as well as a positive aspect. Negatively, the new industrial undertaking of the assessee should not be formed (1) by the splitting up of the business already in existence, (2) by the reconstruction of business already in existence, or (3) by the transfer to a new business of building, machinery or plant used in a busi ness which was being carried on before April 1, 1948. We agree that it is not possible to exclude any new indus trial undertaking other than the three categories mentioned above. 769 We are concerned in these appeals with the type No. (2) mentioned above. Positively, the new industrial undertaking must produce result, that is to say, it has to manufacture or produce articles at any time within a period of 13 years from April 1, 1948. The further requirement under sub section (2) is with regard to the personnel in the under taking, namely, that ten or more workers have to work in the manufacturing process carried on with the aid of power or twenty or more workers have to carry on work without the aid of power. The above element with regard to the number of workers engaged in the undertaking would go to. show that even small industrial undertakings, newly started, are within the exemption clause, where, for example, twenty workers may complete the industrial process without the aid of power. There is no controversy about the .positive aspects in 'these appeals. Again, the new undertaking must not be substantially the same old existing business. The third excluded category mentioned above significant. Even if a new business is carried on but by piercing the veil of the new business it is found that there is employment of the assets of the old business, the benefit will be not available. From this it clearly follows that substantial investment of new capital is imperative. The words "the capital employed" in the principal clause of section 15C are significant, for fresh capital must be employed in the new undertaking claiming exemption. There must be a new under.taking where substan tial investment of fresh capital must be made in order to enable earning of profits attributable to that new capital. The assessee continues to be the same for the purpose of assessment. It has its existing business already liable to tax. It produced in the two concerned undertakings commodi ties different from those which it has been manufacturing or producing in its existing business. Manufacture of produc tion of articles yielding additional profit attributable to the new outlay of capital in a separate and distinct unit is the heart of the matter, to earn benefit from the exemption of tax liability under section 15C. Sub section (6) of the section also points to the same effect, namely, production of articles. The answer, in every particular case depends upon the peculiar/acts and conditions of the new industrial undertaking on account of which the assessee claims exemp tion under section 15C. No hard and fast rule can be laid down. Trade and industry do not run in earmarked channels and particularly so in view of manifold scientific and technological developments. There is great scope for expan sion of trade and industry. The fact that an assessee by establishment of a new industrial undertaking expands his existing business, which he certainly does, would not, on that score, deprive him of the benefit under section 15C. Every new creation in business is some kind of expan sion and advancement. The true test is no.t whether the new industrial undertaking connotes expansion of the exist ing business of the assessee but whether it is all the same a new and identifiable undertaking separate and distinct from the existing business. No particular decision in one case can lay down an inexorable test to determine whether a given case comes under section 15C or not. In order that the new undertaking can be said to be not formed out of the already existing business, there 770 must be a new emergence of a physically separate industrial unit which may exist on its own as a viable unit. An undertakings is formed out of the existing business if the physical identity with the old unit is preserved. This has not happened here in the case of the two undertakings which are separate and distinct. It is clear that the principal business of the assessee is heavy engineering in the course of which it manufactures boilers, wagons, etc. If an industrial undertaking produce certain machines or parts which are, by themselves, identi fiable units being marketable commodities and the undertak ing can exist even after the cessation of the principal business of the assessee, it cannot be anything but a new and separate industrial undertaking to qualify for appropri ate exemption under section 15C. The principal business of the assessee can be carried on even if the said two addi tional undertakings cease to function. Again, the con verse is also true. The fact that the articles produced by the two undertakings are used by the Boiler Division of the assessee will not weigh against holding that these are new and separate undertakings. On the other hand the fact that a portion of the articles produced in these two new indus trial undertakings had been sold in the open market to others is a circumstance in favour of the assessee that the new industrial units can function on their own. Use of the articles by the assessee is not decisive to deny the benefit of section 15C. Section 15C partially exempts from tax a new industri al unit which is separate physically from the old one, the capital of which and the profits thereon are ascertainable. There is no difficulty to hold that section 15C is applica ble to an absolutely new undertaking for the first time started by an assessee. The cases which give rise to controversy are those where the old business is being car ried on by the assessee and a new activity is launched by him by establishing new plants and machinery by investing substantial funds. The new activity may produce the same commodities of the old business or it may produce some other distinct marketable products, even commodities which may feed the old business. These products may be consumed by the assessee in his old business or may be sold in the open market. One thing is certain that the new undertaking must be an integrated unit by itself wherein articles are pro duced and at least a minimum of ten persons with the aid of power and a minimum of twenty persons without the aid of power have been employed. Such a new industrially recognisa ble unit of an assessee cannot be said to be reconstruction of his old business since there is no transfer of any assets of the old business to the new undertaking which takes place when there is reconstruction of the old busi ness. For the purpose Of section 15C the industrial units set up must be new in the sense that new plants and machin ery are erected for producing either the same commodities or some distinct commodities. In order to deny the benefit of section 15C the new undertaking must be formed by recon struction of the old business. Now in the instant case there is no formation of any industrial undertaking out of the existing business since that can take place only when the assets of the old business are transferred substantially to the new undertaking. There is no such transfer of assets in the two cases with which we are concerned. 771 We will now deal with the question whether the two undertak ings the assessee are formed by reconstruction of the exist ing business. The word 'reconstruction ' is not defined in the Act but has received judicial interpretation. In re South African Supply and Cold Storage Company, Wild vs Same Company(1), Buckley, J. dealing with the meaning of the word 'reconstruction ' in a company matter observed as fol lows : "What does 'reconstruction ' mean ? To my mind it means this. An undertaking of some definite ' kind is being carried on, and the conclusion is arrived at that it is not desirable to kill that undertaking, but that it is desirable to preserve it in some form, and to do so, not by selling it to an outsider who shall carry it on that would be a mere sale but in some altered form to continue the undertaking in Such a manner as that the persons now carrying it on will substantially continue to carry it on. It involves, I think, that substantially the same business shall be carried on and substantially the same persons shall carry it on. But it does not involve that all the assets shall pass to the new company or resuscitated company, or that all the shareholders of the old company shall be shareholders in the new company or resusci tated company. Substantially the business and the persons interested must be the same". This concept of reconstruction was accepted by the Bombay High Court in the Commissioner of Income tax, Bombay City I vs Gaekwar Foam and Rubber Co. Ltd. (1), dealing with section 15C of the Act. While adverting to the passage which we have just quoted the Bombay "Now fully appreciating the distinction which counsel for the Revenue has sought to make between the case of a reconstruction of a company and the case of reconstruction of a business, these observations, as we read them, are equally illuminating in the context of reconstruction of business already in existence in the case of a newly established industrial undertaking". The Delhi High Court also in Commissioner of Income tax vs Gangs Sugar Corpora tion Ltd.(a), accepted the above concept of 'reconstruction ' in the following passage : "We have given the matter our earnest consideration and are of the view that in the reconstruction of business, as in the reconstruction of a company, there is an element of transfer of assets and of some change, however partial or restricted it may be, of ownership of the assets. The transfer, however, need not be of all the assets. It is none the less impera tive that there should be continuity and preservation of the old undertaking though in an altered form. (1) (3) 772 The concept of reconstruction of business would not be attracted when a company which is already running one industrial unit sets up another industrial unit. The new indus trial unit would not lose its separate and independent identity even though it has been set up by a company which is already running an industrial unit before the setting up of the new unit". We endorse the above views with regard to reconstruction of business. Reconstruction of business involves the idea of substan tially the same persons carrying on substantially the same business. It is stated on behalf of the Revenue that the same company in the instant case continues to do the same business of heavy engineering no matter certain spare parts necessary as components to completion of the end product are now manufactured in the business itself. The fact that the assessee is carrying on the general business of heavy engineering will not prevent him from setting up new industrial undertakings and from claiming benefit under section 15C if that section is otherwise applicable. Howev er, in order to be entitled to the benefit under ' section 15C, the following facts have to be established by the assessee. subject always to the time schedule in the section : (1) investment of substantial fresh capi tal in the industrial undertaking set up, (2) employment of requisite labour therein, (3) manufacture or production of articles in the said undertaking, (4) earning of profits clearly attributa ble to the said new undertaking, and (5) above all, a separate and distinct identity of the industrial unit set up. We may add that there is no bar to an assessee carrying on a particular business to set up a new industrial undertaking on account of which exemption of tax under section 15C may be claimed. The legislature has advisedly refrained from inserting a definition of the word 'reconstruction ' in the Act. Indeed, in the infinite variety of instances of restructuring of industry in the course of strides in technology and of other developments, the question has to be left for decision on the peculiar facts of each case. If any undertaking is not formed by reconstruction of the old business that undertaking will not be denied the benefit of section 15C simply because it goes to expand the general business of the assessee on some directions. As in the instant case, once the new industrial undertakings are separate and independent production units ' in the sense that the commodities produced or the results achieved are commercially tangible products and the undertakings can be carried on 773 separately without complete absorption and losing their identity in the old business, they are not to be treated as being formed by reconstruction of the old business. The business of the assessee is of heavy engineering. The two new undertakings are independently producing arti cles which may be of aid to the principal business but yet the undertakings are distinct and not reconstruction out of the existing business of the assessee. Use by the assessee of the articles produced in its existing business or the concept of expansion are not decisive tests in construing section 15C. The High Court is not right in holding the two undertakings as formed by reconstruction of the existing business of the assessee. Several decisions have been cited at the bar before us. We approve of the conclusions in Commissioner of In come tax vs Ganga Sugar Corporation Ltd. (supra); Rajeswari Mills Ltd. vs Commissioner of income tax, Madras(1); Nagar das Bechardas & Brothers P Ltd. vs Commissioner of Income tax Gujarat (2); Commissioner of Income tax, West Bengal I vs Electric Construction and Equipment Company Ltd.(3); Commissioner ofIncome tax vs Hindusthan Motors Limited(4). The decision in Commissioner of Income tax vs Naya Sahitya(5) does not represent the correct legal position and, hence, cannot be approved. We may observe that we are not required to consider in these appeals how profit will be actually calculated in order to determine the quantum of exemption of six per cent of the profit on the capital employed. If difficulties are insurmountable and, therefore, profit cannot be ascer tained, that will be a different question in the course of practical application of the section. That kind of a possi ble difficulty should not weigh in the true construction of section 15C. In the present case the assessee claimed profit and there was no difficulty about ascertainment of the exempted profit as separate books of accounts were kept and the undertakings were at separate places. In view of the foregoing discussion, we are clearly of opinion that the High Court is not right in answering the two questions in the negative and against the assessee. On the other hand. the Tribunal was right in answering the two questions in the affirmative and against the Department. The two questions referred stand answered in the affirma tive. The judgment of the High Court, is, therefore, set aside and the appeals are allowed with costs. P.B.R. Appeals allowed. (1) (2) (3) (4) [1976] Taxation Law Reports.

Section 15C of the Indian Income tax Act 1922, which deals with exemption from tax of newly established industri al undertakings, provides in sub section 2(i) that the section applies, among others, to any industrial undertaking which is not formed by the splitting up, or the reconstruction of business already in existence. The assessee (appellant) was a heavy engineering con cern manufacturing boilers. machinery parts and wagons. In addition, it had started a Steel Foundry Division and a Jute Mill Division. The bulk of the goods produced in both the divisions was used in the various divisions of the assessee company. The assessee 's claim for exemption from tax under section 15C in respect of profits derived from both the companies was rejected by the Income tax Officer and its appeal was rejected by the Appellate Assistant Commissioner on the ground theft the .undertakings were an expansion and recon struction of the existing business. On appeal, the Appellate Tribunal held that although the products manufactured in the two divisions were used in the assessee 's business, the Steel Foundry and the Jute Mill Division were new industrial undertakings, in that the machinery used in them was new, they were housed in separate buildings, were: established under separate licences and that both the new divisions were maintaining separate books of account. On reference, the High Court held that it was a case of reconstruction of the existing business because the goods produced in the two divisions were primarily used in the assessee 's engineering concern. Allowing the appeal. HELD: The Tribunal was right in holding in favour of the assessee. Section 15C is applicable to an absolutely new undertaking for the first time started and in order to deny benefit of the section, the, new undertaking must be formed by reconstruction of the old business. [768 B C] 1. (a) In order to be entitled to the benefit of section 15C, the assessee has to establish: (1) the investment of substantial fresh capital in the industrial undertaking; (2) employment of the requisite labour therein (3) manufacture or production of articles in the under taking; (4) earning of profits 'clearly attributable to the new undertaking; and (5) separate and distinct indentity of the industrial unit set up. (b) Once the new industrial undertakings are separate and independent production units in the sense that the commodities produced or the results achieved are commercial ly tangible products and the undertakings can be carried on separately without complete absorption and losing their identity in the old business, they are not to be treated as being formed by reconstruction of the old business. [772 H, 773 A] 763 (c) The object of the section is to encourage the setting up of new industrial undertakings by offering tax incentives within a certain period. Sub section (2) has a negative as well as a positive aspect. Negatively, a new undertakings should not be formed by splitting up of the business already in existence and by the reconstruction of business already in existence; and positively, a new undertaking must produce results, that is to say, it has to manufacture or produce articles at any time within the stipulated period. The new undertaking must not be substan tially the same as the existing business. The words "the capital .employed" are significant, for, fresh capital must be employed in the undertaking claiming exemption. Manufac ture or production of articles yielding additional profits attributable to the new outlay of capital in a separate and distinct unit is the heart of the matter to earn the benefit from the exemption of tax liability under section 15C. The fact that by establishing a new industrial undertaking the asses see expands its existing business would not deprive it of the benefit under section 15C. If an industrial undertaking produces certain machines or parts which are identifiable units being marketable commodities and the undertaking can exist even after the cessation of the principal business of the assessee, it cannot be anything but a new and separate industrial undertaking to qualify for appropriate exemption under section 15C. [769 E H, 770A] In the instant case, the principal business of the assessee can be carried on even if the two additional undertakings cease to function. The fact that a portion the articles produced in the new undertakings had been sold in the open market to others is a circumstance in favour of the assessee that the new industrial units can function on their own. Use of the articles by the assessee is not decisive 10 deny the benefit of section 15C. There was no 'formation of any indus trial undertaking out of the existing business since that can take place only when the assets of the old business are transferred substantially to the new undertaking. there ,ins no difficulty about ascertainment of the exempted profit as separate books of accounts were kept and the undertakings were at separate places. [770 B D. G H] The High Court was not right in holding that the two undertakings were formed by reconstruction of the existing business of the assessee. [773 B C] 2. Reconstruction involves that substantially the same business shall be carried on and substantially the same persons shall carry it on. But it does not involve that all the assets shall pass to the new company or resus citated company, or that all the shareholders of the old company shall be shareholders in the new company. Substan tially the business and the person interested must be the same. [771 C D] South African Supply and Cold Storage Company Wild vs Same Company, , followed. Commissioner of Income tax Bombay City 1 vs Gackwar Foam and Rubber Co. Ltd. , Commissioner of Income tax vs Ganga Sugar Corporation Ltd. , Rajeswari Mills Ltd. vs Commissioner of Income tax Madras, , Nagardas Bechardas & Brothers P. Ltd. vs Commis sioner Income tax Gujarat, , Commissioner of Income tax. West Bengal I vs Electric Construction and Equipment Company Ltd. and Commissioner of Income tax vs Hindustan Motors Limited, [1976] Taxation Law Reports 821, approved. Commissioner of Income tax vs Naya Sahitya , not approved.

Appeal No. 2 of 1954. Appeal under article 132 (1) of the Constitution of India from the Judgment and Order dated the 10th September, 1953, of the High Court of Judicature at Nagpur in Miscellaneous Petition No. 123 of 1953. M. C. Setalvad, Attorney General for India (P. P. Naik and I. N. Shroff, with him) for the appellant. M. K. Nambiar (Rajinder Narain, with him) for the respondent. B. Sen and P. K. Bose for the Intervener (State of West Bengal). May 13. The circumstances under which the above Resolution came to be adopted may be briefly mentioned. Consequent on the war, there was a phenomenal rise in the price of foodstuffs and of other essential commodities, and among the persons worst hit by it were the Government servants. As a measure of relief to them, the Central and the Provincial Governments sanctioned a grant of grain allowances to them under various Resolutions passed in 1940. The scheme adopted by the Central Government was that its employees stationed in various Provinces received the same benefit as the respective Provincial Government employees. But this scheme was found to be unsuitable for employees of the Central Government, as the allowances granted by the Provincial Governments were not uniform. On 10th May, 1946, the Central Government appointed a Central Pay Commission, hereinafter referred to as the Commission, to enquire into and 601 report on the conditions of service of its employees with particular reference to I 'the structure of their pay scales 'and standards of remuneration with the object of achieving a rationalisation, simplification and uniformity to the fullest degree possible. " The Commission, which was presided over by Sir section Varadachariar, recommended by its report dated 3rd May, 1947, the grant of dearness allowance on a specified scale. On 27th May, 1947, the Government of Central Provinces and Berar appointed a Pay Committee, hereinafter referred to as the Committee, "to examine the recommendations of the Central Pay Commission and to report the extent to which and the modifications subject to which these recommendations should be accepted by the Provincial Government, so far as Government servants under its rule making control are concerned." By its report dated 22nd June, 1948, the Committee recommended the grant of dearness allowance on a scale which, though practically identical with that adopted by the Commission in respect of salaries above Rs. 400 per mensem, was less than it as regards salaries of Rs. 400 per mensem or less. These recommendations were accepted by the Government by its Resolution dated 16th September, 1948. This difference in the result between the two scales not unnaturally caused considerable dissatisfaction among the employees concerned, and after unsuccessful attempts to get redress on the executive side, they filed through their representative, the respondent, the present application under article 226 of the Constitution. In the petition it was alleged that "the State Government should have uniformly adopted the Government of India rates for all its servants and the discrimination in making the two fold slab and accepting the Government of India rates for one slab, i.e., for servants receiving salary over Rs. 400, and not accepting them in respect of the other slab, i.e., of servants drawing below Rs. 400, is highly discri minatory," that "the State Government servant has a right to be treated equally with the Central Government servant similarly situated," and that "every servant has these fundamental and natural rights and 77 602 the petitioner and the members of the Ministerial Services Associations have a right to demand from the respondent the Dearness Allowance at the Government of India rates. " The petitioner then prayed: "That declaring that all ministerial servants are entitled to the Government of India rates of Dearness Allowance or in any case adequate Dearness Allowance, the State Government should be directed by a writ of mandamus or by any other suitable writ or direction to cancel the discriminatory rules of Dearness Allowance and adopt the Government of India rates to all servants without discrimination or in any case, to provide with adequate rates of Dearness Allowance sufficient to provide reasonable subsistence for them." The Government contested the petition on the grounds, firstly, that the claim for dearness allowance was not justiciable, and secondly, that the difference in the scales of dearness allowance adopted by the Commission and by the Committee did not violate article 14. The learned Judges (Sinha C.J. and Bhutt J.) held that under the rules dearness allowance was placed on the same footing as pay, and that the claim relating thereto was therefore justiciable; and that the differentiation made between the employees of the Central Government and of the State Government in the matter of the grant of dearness allowance rested on "no intelligible and reasonable basis," and that the Resolution dated 16th September, 1948, was therefore bad. They accordingly issued a direction to the State Government that they do reconsider the question of dearness allowance payable to the employees concerned. It is against this judgment that the present appeal has been preferred by the State Government on a certificate granted under article 132(1) of the Constitution. It is argued on behalf of the appellant firstly that grant of dearness allowance is a matter ex gratia and not justiciable, and that neither a writ of mandamus nor any direction could be issued with reference thereto, and secondly, that the Resolution dated 16th September, 1948, is not hit by article 14 of the Constitution. In our opinion, both these contention are well founded 603 On the first question, Rule 44 of the Fundamental Rules runs as follow: "Subject to any restrictions which the Secretary of State in Council may by order impose upon the powers of the Governor General in Council or the Governor in Council, as the case may be, and to the general rule that the amount of a compensatory allowance should be so regulated that the allowance is not on the whole a source of profit to the recipient, a Local Government may grant such allowance to any Government servant under its control and may make rules prescribing their amounts and the conditions under which they may be drawn. " Under this provision, it is a matter of discretion with the local Government whether it will grant dearness allowance and if so, how much. That being so, the prayer for mandamus is clearly misconceived, as that could be granted only when there is in the applicant a right to compel the performance of some duty cast on the opponent. Rule 44 of the Fundamental Rules confers no right on the Government servants to the grant of dearness allowance; it imposes no duty on the State to grant it. It merely confers a power on the State to grant compassionate allowance at its own discretion, and no mandamus can issue to compel the exercise of such a power. Nor, indeed, could any other writ or direction be issued in respect of it, as there is no right in the applicant which is capable of being protected or enforced. The learned Judges of the High Court relied on certain rules which put dearness allowance on the, same footing as pay for certain purposes, and held on the authority of the decision in The Punjab Province vs pandit Tara Chand(1) that the present claim was justiciable. But The Punjab Province vs Pandit Tara Chand was an action for recovery of arrears of salary, land it was held that under the law of this country which differed in this respect from that of England, arrears of salary were a debt due by the Government, that they could be attached in execution of a decree under section 60, Civil Procedure Code, as a debt, and that on that basis an action to recover the same was (1) 604 maintainable. This decision was quite recently approved by this Court in State of Bihar vs Abdul Majid(1), wherein it was pointed out that salary was not in the nature of a bounty, and that whatever was recoverable by a Petition of Rights in England could be recovered by action in this country. This question may therefore now be taken to be settled beyond controversy. But we are not concerned in the present proceedings with any debt payable by the Government. The claim is not to recover arrears of dearness allowance which had accrued due under the rules in force relating thereto. The claim now put forward its to compel the Government to grant dearness allowance at a particular rate, and under Rule 44 of the Fundamental Rules, such a claim is a matter of grace and not a matter of right. In England, no petition of right will lie in respect of such a claim. The position is thus stated in Halsbury 's Laws of England, Volume IX, page 688, Note (s) @: " It is erroneous to suppose that a petition of right will lie for matters which are of grace and not of right. [De Bode (Baron) vs R.(2).]" That is also the law in this country where an action is a substitute for a petition of right. In the result, we must hold that the matters raised in the petition are not justiciable. Mr. Nambiar, the learned counsel for the respondent, did not dispute the correctness of this position. But he argued that when once the Government passed 'a Resolution fixing a scale of allowance under Rule 44, that would be law as defined in article 13(3)(a) of the Constitution, and if that law infringed, article 14, it could be declared void. That is a contention which is clearly open to him, and the question therefore that falls to be decided is whether the Resolution dated 26th September, 1948, is bad as infringing article 14. Now, the scheme which has been adopted in the impugned Resolution is firstly that dearness allowance if; to I be paid to the employees on a scale graded according to pay, different rates being adopted for different slabs and there being a progressive reduction (1) ; (2) 13 Q. B 364 exhibit Ch. at P 387 605 of the rate from the lowest to the highest category. No contention is raised that fixing different rates of dearness allowance for different slabs of pay is obnoxious to article 14. Secondly, within any given slab, the scheme places all the employees in the same position, except that in the lowest ranks a slightly higher rate is fixed for residents in the cities of Nagpur and Jubbulpore, which again has not been attacked as discriminatory. These being the features of the scheme, there can be no room for the contention that it has made any discrimination. Mr. Nambiar does, not contend that there is anything in the scheme or in the Resolution adopting it, which bring s it within the prohibition enacted in article 14. His contention is that the Committee whose recommendations were accepted by the Government adopted the rates suggested in the report of the Commission as regards Government servants who drew a monthly salary of. over Rs. 400, but when they came to those employees who drew a monthly salary of Rs. 400 or less, they discarded the rates fixed by the Commission, and, instead, adopted different and lower rates, and that this was discrimination hit by article 14. In other words, the impugned Resolution, though valid in itself as not infringing article 14, becomes void under that provision when it is taken in conjunction with the report of the Commission. We do not find anything in article 14 which supports this somewhat startling contention. Under the Constitution, the Union and the States are distinct entities, each having its own executive and Legislature, with their powers well defined. Article 12 defines "the State" as including the Government and the Legislature of each of the States. Article 13(2) enacts that the State shall not make any laws taking away, or abridging the rights conferred by Part III, and article 14 enacts that, "The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India. " On these provisions, the position is that when a law is impugned under article 13, what the Court has to 606 decide is whether that law contravenes any of the provisions of Part III. If it decides that it does, it has to declare it void; if it decides that it does not, it has to uphold it. The power of the Court to declare a law void under article 13 has to be exercised with reference to the specific legislation which is impugned. It is conceivable that when the same Legislature enacts two different laws but in substance they form one legislation, it might be open to the Court to disregard the form and treat them as one law and strike it down, if in their conjunction they result in discrimination. But such a course is not open where, as here, the two laws sought to be read in conjunction are by different Governments and by different Legislatures. Article 14 does not authorise the striking down of a law of one State on the ground that in contrast with a law of another State on the same subject its provisions are discriminatory. Nor does it contemplate a law of the Centre or of the State dealing with similar subjects being held to be unconstitutional by a process of comparative study of the provisions of the two enactments. The sources of authority for the two statutes being different, article 14 can have no application. The result, therefore, is that the scale of dearness allowance recommended by the Commission and sanctioned by the Central Government can furnish no ground for holding that the scale of dearness allowance recommended by the Committee and adopted by the appellant is repugnant to article 14. It may no doubt ,sound hard that Government servants doing work of a similar kind and working, it may be, even in the same place, should receive different allowances; but the rights of the parties have to be decided on legal considerations, and it is impossible to hold that the Resolution in question is bad under article 14. It was argued on behalf of the appellant that the assumption underlying the argument of the respondent with reference to article 14 that the Committee had adopted the Report of the Commission in part and rejected it in part was itself without foundation. In the view we have taken on the applicability of article 14, this question has no practical importance; but as 607 all the materials have been placed before us, we may briefly express our opinion thereon. In paragraph 80 of the Report the Committee observed that while the Commission based its scale on the cost of living index, they themselves adopted the current level of prices as the basis for fixation of dearness allowance. In paragraph 83 they further observed that in fixing the scale on the basis of the cost of living index the element of pay had also been taken into account, but that as they had revised the scale of basic pay, they were not including it in fixing the dearness allowance. In paragraph 31, they observed that unlike the Commission they were taking into consideration the financial resources of the State in fixing the scale. Thus, the Committee approached the problem from a different angle, and applied different principles in fixing the scale of dearness allowance; and if the two schemes produced the same results at some stages, that was due to coincidence and not to adoption of the report of the Commission by the 'Committee. Mr. Nambiar also referred us to two Resolutions of the appellant dated 4th January, 195 1, and 6th October, 195 1, adopting the scale fixed by the Commission in respect of certain other categories. That has no bearing on the question whether the Committee whose recommendations were approved by the Government had adopted in part the Report of the Commission so as to result in discrimination. The facts stated above show that the Committee went into the matter independently, and viewed the question from a different standpoint; and in formulating the scheme which they did, they did not adopt the Report of the Commission, though they derived considerable assistance from it. In the result, this appeal must be allowed and the petition of the respondent dismissed; but in the circumstances, there will be no order as to costs either here or in the Court below. Appeal allowed.

The Government of Central Provinces and Berar (Now State of Madhya Pradesh) fixed in 1948 a scale of dearness allowance for its servants which though practically identical with the scale of dearness allowance fixed by Central Government in respect of salaries over Rs. 400 per mensem was less than it in respect of salaries for Rs. 400 per mensem or less. The petitioner State government servant challenged the validity of the order of the State Government on the ground that his fundamental right under article 14 of the Constitution had been violated inasmuch as he had a right to be equally treated with the Central Government Servants similarly situated. Held, that under the provisions of Rule 44 of the Fundamental Rules it is a matter of discretion with the local Government whether it will grant dearness allowance to any Government servant and if so how much. It imposes no duty on the State to grant it and therefore no mandamus can issue to compel the State to grant it nor can any other writ or direction be issued in respect of it as there is no right in the Government servant which is capable of being protected or enforced. Article 14 does not authorise the striking down of a law of one State on the ground that in contrast with a law of another State on the same subject its provisions are discriminatory. Nor does it contemplate a law of the Centre or of the State dealing with similar subjects being held to be unconstitutional by a process of comparative study of the provisions of two enactments. The sources of authority for the two statutes being different, Article 14 can have no application. Therefore 'the scale of dearness allowance sanctioned by the Central Government can furnish no ground for holding that the allowance sanctioned by the Government of Central Provinces and Berar is repugnant to Article 14. The State Government was entitled to fix the Government of India rates for one slab and Ali; different rates for another slab, 600 The Punjab Province vs Pandit Tara Chand ([1947] F.C.R. 89), and State of Bihar V. Abdul Majid ([1954] S.C.R. 786) distinguished.

ivil Appeal No. 136 of 1965. Appeal by Special Leave from the Judgment and Order dated the 15th November 1954 of the Election Tribunal, Quilon, Travancore Cochin, in Election Petition No. 18 of 1954. section Mohan Kumara Mangalam, H. J. Umrigar and Rajinder Narain, for the appellant. T. R. Balakrishnan, for respondent No. 1. 1955. September 19. The Judgment of the Court was delivered by VENKATARAMA AYYAR J. This is an appeal by special leave against the order of the Election Tribunal, Quilon declaring the election of the appellant to the Legislative Assembly of the State of Travancore 479 Cochin from the Shencottah Constituency void on the ground that he was disqualified to stand for election under section 7(d) read with section 9(2) of Act No. XLIII of 1951. Under section 7(d), a person is disqualified for being chosen as a member of the Legislative Assembly of a State, if he is interested in any contract for the supply of goods or for the execution of any works for the Government of that State. Section 9(2) declares that if any such contract has been entered into by or on behalf of a Hindu undivided family, every member thereof shall be subject to the disqualification mentioned in section 7(d); but that if the contract has been entered into by a member of an undivided family carrying on a separate business in the course of such business, other members of the family having no share or interest in that business shall not be disqualified under section 7(d). The contract in the present case was for felling trees in a Government forest and transporting them for delivery at the places specified therein. There is now no dispute that this contract is one that falls within section 7(d) of the Act. The point in controversy is simply whether the contract with the Government was entered into on behalf of the joint family, of which the appellant is a member. The agreement stands in the name of one Kuppuswami Karayalar, and the allegations in the petition are that he is a mere name lender for one Krishnaswami Karayalar, who is the manager of a joint family consisting of himself and his sons, the appellant being one of them, and that he entered into the contract in question on behalf of and for the benefit of the joint family. The case of the appellant, on the other hand, is that Kuppuswami whose name appears in the contract was the person solely entitled to the benefits thereof, that he was not a name lender for Krishnaswami Karayalar, and that further neither he nor the joint family had any interest in the contract. Certain other pleas were also put forward by him, but they are not now material. 61 480 The following issues were framed on the above con tentions: " (2) Is the said joint family the owner of the right and benefits of the contract for the felling and removal of timber from Coupe No. 4, Nedumangad Taluq, entered into with the Forest Department, Travancore Cochin State? Has the joint family any interest in the said contract? (3) Is Mr. Kuppuswami Karayalar whose name appears as the contractor only a name lender for the joint Hindu family of which the respondent is a member?" On issue 3, the Tribunal found that Krishnaswami Karayalar was the real contracting party, and that Kuppuswami was a benamidar for him, and on issue 2, that the contract was entered into on behalf of the joint family, of which the appellant was a member. On these findings, it held that the appellant was disqualified under section 7(d) read with section 9(2), and declared his election void. The appellant questions the correctness of this order firstly on the ground that the finding that Kuppuswami is a benamidar for Krishnaswami Karayalar is not warranted by the evidence, and secondly on the ground that the finding that Krishnaswami entered into the contract on behalf of the joint family is based on a mistake of law and is unsustainable. On the first question, Mr. Kumaramangalam for the appellant admitts that there is evidence in support of the conclusion that Kuppuswami was a benamidar for Krishnaswami, but contends that it is meagre and worthless. The question whether a person is a benamidar or not, is purely one of fact, and a finding thereon cannot be interfered with in special appeal, if there is evidence on which it could be based. We must, therefore, accept the finding of the Tribunal that it was Krishnaswami, the father of the appellant, who was the real contracting party to the agreement with the Government. The next question is whether Krishnaswami entered into the contract in his own personal capacity or as manager of the joint family. The Tribunal found 481 as a fact that the business started by Krishnaswami Karayalar was a new venture, and instead of proceeding next to consider on the evidence whether in entering into the contract he acted for himself or for the joint family, it entered into a discussion whether under the Hindu law there was a presumption that a business started by a coparcener was joint family business. After observing that there was no such presumption "in the case of an ordinary manager", it held that "the law is different when the manager happens to be also the father". It then referred to certain decisions in which it had been held that the sons were liable for the debts incurred by the father for a new business started by him, and held "on the above authorities that the joint family of the respondent is the owner of the right and benefit of the present contract". The appellant contends that the statement of law by the Tribunal that there is a presumption that a new business started by the father is joint family business is erroneous, and that its finding that the joint family of which the appellant was a member had an interest in the contract of Krishnaswami could not be supported, as it was based solely on the view which it took of the law. This criticism is, in our opinion, well founded. Under the Hindu law, there is no presumption that a business standing in the name of any member is a joint family one even when that member is the manager of the family, and it makes no difference in this respect that the manager is the father of the coparceners. It is no doubt true that with reference to a trade newly started there is this difference between the position of a father and a manager, that while the debts contracted therefor by the former would be binding on the sons on the theory of pious obligation, those incurred by a manager would not be binding on the members, unless at least there was necessity for the starting of the trade, as to which see Ram Nath vs Chiranji Cal(1), Chotey Lai vs Dulip Narain (2) and Hayat Ali vs Nem Chand(3). But (1) ,All. 605. (2) Patna 386. (3) A.1,R. 1945 Lab. 169, 482 it is one thing to say that the sons are liable for the debts contracted by the father in the trade newly started by him, and quite another thing to treat the trade itself as a joint family concern. We are therefore unable to accept the finding of the Tribunal that the contract of Krishnaswami Karayalar should, as a matter of law, be held to be a joint family business of himself and his sons. This conclusion, however, is not sufficient to dispose of the matter. The case of the respondent that Krishnaswami entered into the contract with the Government of Travancore Cochin on behalf of the joint family rests not merely on a presumption of law but on evidence as to facts and circumstances which, if accepted, would be sufficient to sustain a finding in his favour. In the view it took of the law on the question, the Tribunal did not discuss the evidence bearing on this point or record a finding thereon. It is therefore necessary that there should be a remittal of the case for 'a consideration of this question on the evidence. The appellant contends that there is only the evidence of the respondent in support of the plea that the contract was entered into by Krishnaswami on behalf of the joint family, and that this Court could itself record a finding thereon. But it is argued by the respondent that there are in the judgment of the Tribunal several observations which would support the conclusion that the contract was entered into on behalf of the joint family. Thus ' it is pointed out that in para 5 of the judgment the Tribunal observes that Krishnaswami Karayalar started this new business with a view to discharge the family debts. It further observes in para 6 that the business required an initial investment of about Rs. 25,000 to Rs. 30,000, and that while there is evidence that about Rs. 7,000 had been borrowed by Krishnaswami Karayalar, there is no evidence bow the balance was made up. The contention of the respondent is that this must have proceeded from the joint family funds, and that implicit in the finding of the Tribunal. It is this is also mentioned in the judgment of the Tribunal that 483 Krishnaswami was anxious to support his son, the present appellant, and that many of the witnesses whom the respondent was obliged to examine, were really anxious to help the appellant. (Vide para 12). We do not, however, desire to express any opinion on these contentions, as we propose to leave them to the decision of the Tribunal. We accordingly set aside the order of the Tribunal, and direct that the Election Commission do reconstitute the Tribunal to hear and decide the question whether Krishnaswami Karayalar entered into the contract with the Government of Travancore Cochin on behalf of the joint family or for his own personal benefit, on a consideration of the evidence on record. It is made clear that no further evidence will be allowed. The parties will bear their own costs in this Court. Appeal allowed. Case remitted for hearing.

There is no presumption in Hindu Law that a business standing in the name of a member of the Hindu joint family is joint family business, even when that member is the manager or the father. There is this difference between the position of the father starting a new business and a mere manager doing so that while the debts contracted by the father in such business are binding on the sons on the theory of a son 's pious obligation to pay his father 's debt, those contracted by the latter are not binding on the other 478 members of the family unless, at least, it can be shown that the starting of the business was necessary. Ram Nath vs Chiranii Lal, ([1934] I.L.R. 57 All. 605), Chhotey Lal Chaudhury vs Dalip Narain Singh, ([1938] I.L.R. 17 Patna 386), Hayat Ali Shah vs Nem Chand (A.I.R. , referred to. But this distinctive position of the father does not by itself make the new business started by him a joint business of the undivided family. The question of benami is a question of fact and where there is evidence to support a finding that a person is a benamidar for another, the Supreme Court in a Special appeal will not interfere with it. Consequently, in a case where an election was challenged on the ground that the candidate returned was interested in a contract entered into by his father, benami in the name of another, with the Government for felling trees and transporting timber and as such disqualified to stand for election under section 7(d) read with section 9(2) of the Representation of the People Act and the Tribunal found on evidence that the father was the real contracting party but without considering the evidence on the other point which, if believed, might sustain a finding that the father was meting on behalf of the family, presumed as a matter of law that the ion had interest in the contract and declared the election void, Held, that the Tribunal took an erroneous view of the law and made a wrong presumption, so its decision must be set aside, and as the findings are not sufficient for disposal of the matter the case must be remitted back for rehearing on the evidence on record.

ivil Appeal Nos. 2567 70 of 1985. From the Judgment and Order dated 3.4.1985 of the Hyderabad High Court in Writ Petition No. 9403 of 1984. Kapil Sibal, Additional Solicitor General, G.L. Sanghi, Anil B. Diwan, G. Ramaswamy, P.A. Choudhary, Kailash Vasudev, Naunit Lal, M.J. Paul, C.S. Vaidyanathan, U.K. Khaitan, Praveen Kumar, section Murlidhar, Vineet Kumar, Vinod Bhagat and Mukul Mudgal for the Appellants. Shanti Bhushan, V.R. Reddy, Rajendra Choudhary, section Thananjayan, K. Ram Kumar for the Respondents. V.B. Sharya for the Intervenor. The Judgement of the Court was delivered by VERMA, J. These appeals by special leave are by several industrial concerns against the Andhra Pradesh State Electricity Board (hereinafter called 'the Board ') challenging the common judgment of the Andhra Pradesh High Court in writ petitions filed by these concerns challenging the revision of the electricity tariffs by the Board by its proceedings contained in B.P. Ms. No. 1014 (Commercial) dated 649 13.12.1983 which came in to force on 15.1.1984. Prior to this revision, the tariffs were governed by B.P. Ms. No. 418 (Commercial) dated 12.1.1981. On 13.12.1983, two separate orders were issued by the Board revising the various tariffs. By one of them, namely, B.P. Ms. No. 1014, the tariffs for various categories of consumers including H.T. categories I and II were revised. By the other order of the same date, namely, Memo No. DE/COML/IV/2250/83/I, the tariffs for highly power intensive industries were also revised upwards. Out of the appellants it was applicable to five units, namely, (1) Nav Bharat Ferro Alloys Ltd., (2) Andhra Sugars Ltd., (3) Ferro Alloys Corporation Ltd., (4) Grindwell Norton Ltd., and (5) A.P. Carbides Ltd. This upward revision of tariffs made by the Board by its two orders dated 13.12.1983 which were made effective from 15.1.1984, was challenged by the appellants in writ petitions filed in the Andhra Pradesh High Court on various grounds. The High court rejected all the grounds and dismissed the writ petitions by its common judgment now reported in A.I.R. 1985 A.P. 299. These appeals by special leave are against the High Court Judgment. The appellants are all H.T. power consumers of one category or other. The tariffs consist of three parts: Part A, Part B and Part C. Part A provides for H.T. tariffs; Part B for L.T. supply; and Part C provides, inter alia, for miscellaneous and general charges. H.T. consumers in Part A are broadly classified into three categories: H. T. Category I (Industrial); H.T. Category II (Non Industrial); and H.T. Category III comprising of power intensive consumers and some others. The Board retained the power to decide in accordance with the guidelines as to which industries were power intensive and which were not. This was the position in the tariffs of 1975. Subsequently, the Board began to deal with the power intensive industries by notifying tariffs for them separately from time to time. In effect, there were four classes of consumers availing H.T. supply; (1) H.T. consumers falling under H.T. Category I (Industrial); (2) H.T. consumers falling under H.T. Category II (Non Industrial); (3) H.T. consumers falling under the category 'power intensive industries '; and (4) H.T. consumers availing supply of electricity for irrigation and agricultural purposes included in Part B. The tariffs for these different categories of H.T. consumers were enhanced from time to time. For H.T. Category I (Industrial), it was 21 paise in 1975, increased to 30 paise in 1979, 33 paise in 1980, 40 paise in 1981 and 48 paise in 1984. Likewise, there was corresponding increase in the energy rates for H.T. Category II (Non Industrial), being 28 paise, 37 paise, 40 paise, 47 paise and 56 paise. The tariffs for power intensive industries were, however, 650 increased by separate notifications issued by the Board from time to time. It was 11 paise prior to 1975, raised to 12.2 paise in 1977, 16 paise in 1978, 18.5 paise in September 1979, 21 paise in November 1979, 25 paise in 1980, 32 paise in 1981 and 45 paise in 1984. The H.T. consumers grouped in Part B were required to pay 15 paise under the 1975 tariffs and 16 paise thereafter. Besides the energy charges as stated above, the H.T. consumers were also required to pay at different rates effective from 1.9.1982 an additional charge levied as 'fuel cost adjustment charges '. The H.T. consumers were also required to pay some amount as 'voltage surcharge ' in accordance with the terms of the agreement entered into by the individual consumers with the Board. The comparison of the aforesaid tariffs shows that the tariffs for power intensive industries to begin with were much less than the tariffs for H.T. Category I (Industrial) and H.T. Category II (Non Industrial). In course of time, the concession in tariffs for the power intensive industries was progressively withdrawn. The concessions were, however, continued in respect of consumers availing H.T. or L.T. supply for purposes of irrigation and agriculture or L.T. supply for domestic, cottage industries, public lighting and small poultry farming units. It is the admitted position that the power generation in the State of Andhra Pradesh is both hydro and thermal, each source contributing almost equally to the total power generation in the State. The H.T. categories have been consuming more than one half of the total power generated in the State against the much larger number of individual L.T. consumers availing the remaining power. The main attacks to the upward revision of the tariffs for H.T. consumers in the writ petitions before the High Court were: (1) The Board, as a public utility undertaking, is expected to function in the most efficient and economical manner; (2) It cannot plan its activities with a view to drive any sizeable profits on its undertaking except in accordance with Section 59 of the (hereinafter referred to as 'the Supply Act '); (3) The Board Could not generate a surplus in excess of that specified under Section 59 of the Supply Act which it had been doing; (4) The Board was preparing its financial statement incorrectly in a manner contray to section 59 of the Supply Act by improperly taking into account expenses chargeable to capital by showing such expenses as charged to revenues; (5) The steep upward revision to tariffs from 1980 made by the Board is invalid, being arbitrary and in contravention of Section 49 and 59 of the Supply Act; and (6) There was no justification for the Board to have revised the tariffs either in 1981 or in 1984 or to have levied any 651 fuel surcharge in terms of Section 49 and 59 of the Supply Act. It was also contended that the tariffs revision was made without prior consultation with the State Electricity Consultative Council as required by Section 16(5) of the Supply Act which also rendered it invalid. Prior to 30.7.1982, it was usual for the Board to take into account various escalation charges such as pay revisions and increases in the cost of fuel and revise its tariffs from time to time. This was done in 1975 and 1981. Thereafter, the Board took the view that to avoid making frequent tariff revisions necessitated by frequent escalations in the cost of fuels like coal and diesel oil, the formula known as "fuel cost adjustment" be evolved. Accordingly, the Board in its proceedings contained in B.P. Ms. No. 589 dated 30.7.1982, set out the formula known as "fuel cost adjustment". This formula was introduced as condition No. 11 in H.T. tariffs Part A. Ever since September 1982, all categories of H.T. consumers in Part A including the power intensive consumers are subject to this condition. Immediately after 30.7.1982, the fuel cost adjustment was fixed as 2.74 paise per unit, which was increased gradually to 2.95 paise, 3.79 paise and 11.68 paise. Thereafter, 3.79 paise was absorbed as part of the tariffs applicable to these H.T. consumers and the remaining increase of 7.89 paise alone was indicated as the fuel cost adjustment charges. The grievance made by all H.T. consumers before the High Court was that: (1) the fuel cost adjustment could not be recovered as part of the tariffs; (2) there is discrimination in recovering the entire fuel cost adjustment from H.T. consumers alone; (3) fairness demands that a reasonable proportion of the burden should be shared also by Part B consumers; and (4) that fuel cost adjustment charge is excessively computed. The High Court rejected all these contentions. It held that this was a matter of policy which could be changed from time to time and it was permissible to gradually withdraw the pre existing concessional tariffs given to the power intensive industries for which the tariffs earlier were much lower as compared to the other consumers and even after the increase , they were not excessive. It was held that electricity was a raw material for power intensive industries and no grievance could be made against the increase of its cost just as such a grievance was untenable against increase in the cost of any other raw material. The challenge on the ground of discrimination was rejected on the ground that H.T. consumers including power intensive industries formed a separate class and the reason which justified grant of concession to them earlier also justified the gradual withdrawal of that 652 concession. It held that prior consultation with the State Electricity Consultative Council according to Section 16(5) of the Supply Act was not obligatory before revising the tariffs. The High Court held that the Board was justified in adjusting its tariffs to ensure progressive minimizing of losses and the failure of the State Government to specify the surplus it could generate in accordance with Section 59 of the Supply Act, did not detract from the Board 's power to adjust its tariffs and generate a surplus on principles of commercial expediency applicable to a public utility undertaking. Fixation of tariffs was held to be a matter of major policy in respect of which the Government can effectively issue directions under Section 78 A of the Act. It was held that the H.T. consumers including power intensive industries were bound to pay according to the revised higher tariffs fixed from time to time under the agreement as contemplated by Section 49 of the Supply Act. The condition of fuel cost adjustment, introduced as condition No. 11 in H.T. tariffs Part A, was held applicable to power intensive consumers also. An additional argument that this added burden became unbearable for the power intensive consumers was rejected on the ground that such inability of the industry to survive is not a compelling consideration for deciding the Board 's power in adjusting it tariffs. Accordingly, the High Court dismissed the writ petitions and upheld the revision of tariffs made by the Board by the impugned B.P. Ms. No. 1014 (Commercial) dated 13.12.1983 w.e.f. 15.1.1984. The High Court having refused to grant a certificate of fitness to appeal to this Court, the appellants have preferred these appeals by special leave. It may be mentioned at this stage that the controversy raised in these appeals was also the controversy in another bunch of civil appeals arising out of a judgment of the Kerala High Court wherein a similar challenge had been upheld and the Kerala State Electricity Board had come in an appeal to this Court. In those matters, the contention of the Kerala State Electricity Board which would be the same as that of the Andhra Pradesh State Electricity Board before us, was accepted and the judgment of the Kerala High Court taking the view contrary to that of the Andhra Pradesh High Court was reversed (Kerala State Electricity Board vs M/s. S.N. Govinda Prabhu and Bros. and Others. , [1986] 4 S.C.C. 198.) All the hearing before us, it was contended by Shri Shanti Bhushan, learned counsel for the Andhra Pradesh State Electricity Board that the Kerala decision concludes these points against the present appellants. On the other hand, Shri G. Ramaswamy and other learned counsel, appearing for the appellants, made an attempt to 653 distinguish the decision in the Kerala case. The question, therefore, is: Whether any ground has been made out by the present appellants to persuade us to take a view different from the one taken by this Court in the Kerala case? Before considering the arguments in these appeals, we would refer to the controversies in the Kerala case and the view taken therein. The decision in Kerala State Electricity Board vs M/s. Govinda Prabhu and Bros. and Others, ; arose out of the decision of the Kerala High Court in a similar situation. The Kerala High Court struck down the upward revision of tariffs made by the Kerala State Electricity Board unlike the Andhra Pradesh High Court which has upheld the upward revision of tariffs in the present appeals. The main question in the Kerala case also related to the extent of authority of the Kerala Board to increase the electricity tariffs under the . The principal ground of challenge which was accepted by the Kerala High Court was that the Kerala State Electricity Board acted outside its statutory authority by formulating a price structure intended to yield substantial revenue to offset not merely the expenditure properly chargeable to the revenue account for the year as contemplated by Section 59 of the Supply Act but also expenditure not so properly chargeable. The Kerala High Court had held that in the absence of a specification by the Government, the Board was not entitled to generate a surplus at all and it acted entirely outside its authority in generating a surplus to be adjusted against items of expenditure not authorised to be met from revenue receipts. this view of the Kerala High Court was based primarily on the construction made of section 59 of the . Accordingly, the Kerala High Court struck down the upward revision of tariffs made by the Kerala State . Accordingly, the Kerala High Court struck down the upward revision of tariffs made by the Kerala State Electricity Board in the years 1980, 1982 and 1984. It may here be mentioned that Section 59 of the Supply Act, as it stood prior to 1978, was amended by Act No. 23 of 1978 and thereafter, by Act No. 16 of 1983, which came into effect from April 1, 1985 only. The Kerala case also was decided on the basis of Section 59 as it stood amended by the 1978 (Amendment) Act, prior to its amendment w.e.f. April 1, 1985 by Act No. 16 of 1983. For our purposes also, Section 59 as it stood amended by the 1978 Act, prior to the 1983 amendment, is relevant. This Court expressly rejected the submission which had found favour with the Kerala High Court that in the absence of a specification by the State Government, the position would be as it was before the 1978 amendment, that is, the Board was to carry on its affairs and 654 adjust the tariffs in such a manner as not to incur a loss and no more. While rejecting the submission, this Court held as under: "We are of the view that the failure of the government to specify the surplus which may be generated by the Board cannot prevent the Board from generating a surplus after meeting the expenses required to be met. Perhaps, the quantum of surplus may not exceed that a prudent public service undertaking may be expected to generate without sacrificing the interests it is expected to serve and without being obsessed by the pure profit motive of the private entrepreneur. The Board may not allow its character as a public utility undertaking to be changed into that of a profit motivated private trading or manufacturing house. Neither the tariffs nor the resulting surplus may reach such heights as to lead to the inevitable conclusion that the Board has shed its public utility character. When that happens the court may strike down the revision of tariffs as plainly arbitrary. But not until then. Not, merely because a surplus has been generated, a surplus which can by no means be said to be extravagant. The court will then refrain from touching the tariffs. After all, as has been said by this Court often enough 'price fixation ' is neither the forte nor the function of the court. " Further, it said: "Turning back to Section 59 and reading it along with Section 49, 67, 67 A etc. We notice that the Electricity Supply Act requires the Electricity Board to follow a particular method of accounting and it is on the basis of that method of accounting that the Board is required to generate a surplus. Broadly, Section 59 requires that a surplus should be left from the total revenues, in any year of account, after meeting all expenses properly chargeable to revenues. It has to be remembered that apart from subventions which may be received from the State Government, which depend entirely on the bounty of the government, the only revenues available to the Board are the charges leviable by it from consumers. Bearing this in mind, we may now consider what expenses are properly chargeable to revenues under the Electricity Supply Act. For this purpose, we may not be justified in having recourse to the principles of corporate 655 accounting or the rules which determine what is revenue expenditure under the Income Tax Act. It appears to us that the Electricity Supply Act prescribes its own special principles of accounting to be followed by the Board. " This Court also held that the prescribing of different tariffs for high and low tension consumers and for different classes of consumers, such as industrial, commercial, agricultural and domestic, appears to be reasonable and far from arbitrary and is based on an intelligent and intelligible differentia. Accordingly, the judgment of the Kerala High Court upholding challenge to the validity of the upward revision of tariffs was set aside. Broadly speaking, the substance of the main arguments advanced before us in these matters was repelled by this Court in the Kerala case. However, learned counsel for the appellants attempted to distinguish the Kerala decision and also tried to advance some additional arguments. We shall refer to those arguments presently. It would be appropriate at this stage to quote the relevant provisions of the , with reference to which the arguments advanced have to be considered. Section 2 of the act relates to interpretation and give the meaning of the expressions defined therein. Section 3 deals with the constitution of the Central Electricity Authority. Section 4 B contains the rule making power of the Central Government. Section 5 provides for the constitution and composition of State Electricity Boards. Section 12 provides for the incorporation of the Board. Section 12 A relates to the capital structure of the Board. Section 78 contains the rule making power of the State Government. Section 79 contains the power of the Board to make regulations. Some of the provisions of the Act which may be quoted in extenso are as under: "4A. Directions by Central Government to the Authority. (1) In the discharge of its functions, the Authority shall be guided by such directions in matter of policy involving public interest as the Central Government may give to it in writing. (2) If any question arises as to whether any such direction relates to a matter of policy involving public interest, the decision of the Central Government thereon shall be final." xxx xxx xxx 656 "16. State Electricity Consultative Council. (1) The State Government shall constitute a State Electricity Consultative Council for the State, and in cases to which Section 6 and 7 apply, the State Government concerned shall constitute such one or more State Electricity Cousultative Council or Councils and for such areas as they may by agreement determine. (2) The State Electricity Consultative Council shall consist of the members of the Board and, if there are any Generating Company or Generating Companies operating in the State, one representative of the Generating Company or each of the Generating Companies, to be nominated by the Generating Company concerned, and such other persons being not less than eight and not more than fifteen as the State Government or the State Governments concerned may appoint after consultation with such representatives or bodies of representative of the following interests as the State Government or the State Governments concerned thinks or think fit, that is to say, local self government, electricity supply industry, commerce, industry, transport, agriculture, labour employed in the electricity supply industry and consumers of electricity, but so that there shall be at least one member representing each such interest in the Council. (3) The Chairman of the Board shall be ex officio Chairman of the State Electricity Consultative Council. (4) The State Electricity Consultative Council shall meet at least once in every three months. (5) The functions of the State Electricity Consultative Council shall be as follows: (i) To advise the Board and the Generating Company or Generating Companies, if any, operating in the State on major questions of policy and major schemes; (ii) to review the progress and the work of the Board and the Generating Company or Generating Companies, if any, operating in the State from time to time; 657 (iii) To consider such other matters as the Board or the Generating Company or Generating Companies, if any, operating in the State may place before it; and (iv) To consider such matters as the State Government may by rules prescribe. (6) The Board shall place before the State Electricity Consultative Council the annual financial statement and supplementary statement, if any, and shall take into consideration any comments made on such statement in the said Council before submitting the same to the State Government under Section 61." xxx xxx xxx "49. Provision for the sale of electricity by the Board to persons other than licensees. (1) Subject to the provisions of this Act and of regulations, if any, made in this behalf, the Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and may for the purposes of such supply frame uniform tariffs. (2)In fixing the uniform tariffs, the Board shall have regard to all or any of the following factors, namely: (a) The nature of the supply and the purposes for which it is required; (b) The co ordinated development of the Supply and distribution of electricity within the State in the most efficient and economical manner, with particular reference to such development in areas not for the time being served or adequately served by the licensee; (c) the simplification and standardisation of methods and rates of charges for such supplies; (d) The extension and cheapening of supplies of electricity to sparsely developed areas. 658 (3) Nothing in the foregoing provisions of this section shall derogate from the power of the Board, if it considers it necessary or expedient to fix different tariffs for the supply of electricity to any person not being a licensee, having regard to the geographical position of any area, the nature of the supply and purpose for which supply is required and any other relevant factors. (4) In fixing the tariff and terms and conditions for the supply of electricity, the Board shall not show undue preference to any person." xxx xxx xxx Section 59 prior to 1978 "General principles for Board 's finance. The Board shall not, as far as practicable and after taking credit for any subventions from the State Government under Section 63, carry on its operations under this Act at a loss, and shall adjust its charges accordingly from time to time: Provided that where necessary any amounts due for meeting the operating, maintenance and management expenses of the Board or for the purposes of clauses (i) and (ii) of Section 67 may, to such extent as may be sanctioned by the State Government, be paid out of capital. " Section 59 as amended by Act No. 23 of 1978 "General principles for Board 's finance. (1) The Board shall, after taking credit for any subvention from the State Government under Section 63, carry on its operations under this Act and adjust its tariffs so as to ensure that the total revenues in any year of account shall, after meeting all expenses properly chargeable to revenues, including operating, maintenance and management expenses, taxes (if any) on income and profits, depreciation and interest payable on all debentures, bonds and loans, leave such surplus, as the State Government may, from time to time, specify. (2) In specifying the surplus under sub section (1), 659 the State Government shall have due regard to the availability of amounts accrued by way of depreciation and the liability for loan amortization and leave. (a) a reasonable sum to contribute towards the cost of capital works; and (b) where in respect of the Board, a notification has been issued under sub section (1) of Section 12 A, a reasonable sum by way of return on the capital provided by the State Government under sub section (3) of that section and the amount of the loans (if any) converted by the State Government into capital under sub section (1) of Section 66A." Section 59 as further amended by Act No. 16 of 1983 "General principles for Board 's finance. (1) The Board shall, after taking credit for any subvention from the State Government under Section 63, carry on its operations under this Act and adjust its tariffs so as to ensure that the total revenues in any year of account shall, after meeting all expenses properly chargeable to revenues, including operating, maintenance and management expenses, taxes (if any) on income and profits, depreciation and interest payable on all debentures, bonds and loans, leave such surplus as is not less than three per cent, or such higher percentage, as the State Government may, by notification in the Official Gazette, specify in this behalf, of the value of the fixed assets of the Board in service at the beginning of such year. Explanation. For the purposes of this sub section, "value of the fixed assets of the Board in service at the beginning of the year" means the original cost of such fixed assets as reduced by the aggregate of the cumulative depreciation in respect of such assets calculated in accordance with the provisions of this Act and consumers ' contribution for service lines. (2) In specifying any higher percentage under sub section (1), the State Government shall have due regard to 660 the availability of amounts accrued by way of depreciation and the liability for loan amortization and leave (a) a reasonable sum to contribute towards the cost of capital works; and (b) where in respect of the Board, a notification has been issued under sub section (1) of Section 12 A, a reasonable sum by way of return on the capital provided by the State Government under sub section (3) of that section and the amount of the loans (if any) converted by the State Government into capital under sub section (1) of Section 66 A." xxx xxx xxx "61. Annual financial statement. (1) In February of each year the Board shall submit to the State Government a statement in the prescribed form of the estimated capital and revenue receipts and expenditure for the ensuing year. (2) The said statement shall include a statement of the salaries of members and officers and other employees of the Board and of such other particulars as may be prescribed. (3) The State Government shall as soon as may be after the receipt of the said statement cause it to be laid on the table of the House, or as the case may be, Houses of the State Legislature; and the said statement shall be open to discussion therein, but shall not be subject to vote. (4) The Board shall take into consideration any comments made on the said statement in the State Legislature. (5) The Board may at any time during the year in respect of which a statement under sub section (1) has been submitted, submit, to the State Government a supplementary statement, and all the provisions of this section shall apply to such statement as they apply to the statement under the said sub section. " xxx xxx xxx 661 "63. Subventions to the Board. The State Government may, with the approval of the State Legislature, from time to time make subventions to the Board for the purposes of this Act on such terms and conditions as the State Government may determine." XXX XXX XXX "65. Power of Board to borrow. (1) The Board may, from time to time, with the previous sanction of the State Government and subject to the provisions of this Act and to such conditions, as may be prescribed in this behalf, borrow any sum required for the purposes of this Act. (2) Rules made by the State Government for the purposes of this section may empower the Board to borrow by the issue of debentures or bonds or otherwise and to make arrangements with bankers, and may apply to the Board with such modifications as may be necessary to be consistent with this Act, the provisions of the (9 of 1914), and the rules made thereunder as if the Board were a local authority. (3) The maximum amount which the Board may at any time have on loan under sub section (1) shall be ten crores of rupees, unless the State Government, with the approval of the State Legislative Assembly, fixes a higher, maximum amount. (4) Debentures or bonds issued by the Board under this section shall be issued, transferred, dealt with and redeemed in such manner as may be prescribed." XXX XX XXX "67. Priority of liabilities of the Board. The Board shall distribute the surplus referred to in sub section (1) of section 59 to the extent available in a particular year in the following order, namely: (i) repayment of principal of any loan raised (including redemption of debentures or bonds issued) under Section 65 which becomes due for payment in the 662 year or which became due for payment in any previous year and has remained unpaid; (ii) repayment of principal of any loan advanced to the Board by the State Government under Section 64 which becomes due for payment in the year or which became due for payment in any previous year and has remained unpaid; (iii) payment for purposes specified in sub section (2) of Section 59 in such manner as the Board may decide. 67 A. Interest on loans advanced by State Government to be paid only after other expenses. Any interest which is payable on loans advanced under Section 64 or deemed to have been advanced under Section 60 to the Board by the State Government and which is charged to revenues in any year may be paid only out of the balance of the revenues, if any, of that year which is left after meeting all the other expenses referred to in sub section (1) of Section 59 and so much of such interest as is not paid in any year by reason of the provisions of this section shall be deemed to be deferred liability and shall be discharged it, accordance with the provisions of this section in the subsequent year or year, as the case may be. Charging of depreciation by Board (1) The Board shall provide each year for depreciation such sum calculated in accordance with such principles as the Central Government may, after consultation with the Authority, by notification in the Official Gazette, lay down from time to time. (2) Omitted (3) The provisions of this section shall apply to the charging of depreciation for the year in which the Electricity (Supply) Amendment Act, 1978, comes into force." XXX XXX XXX "68 A. Directions by the State Government. (1) In 663 the discharge of its functions, the Board shall be guided by such directions on questions of policy as may be given to it by the State Government. (2) If any dispute arises between the Board and the State Government as to whether a question is or is not a question of policy, it shall be referred to the Authority whose decision thereon shall be final. ' ' We shall first consider the common arguments advanced by the learned counsel for the appellants in all these matters before taking up some additional arguments advanced in some of these matters. The first argument is that the requirement of consultation with the State Electricity Consultative Council before the revision of tariffs in accordance with Section 16 of the , not having been made, the upward revision of tariffs is invalid on account of non compliance of Section 16 of the Supply Act. It was urged that revision of tariffs being a major question of policy as envisaged by clause (i) of Sub section (5) of Section 16, it is one of the functions of the Consultative Council to advise the Board on this question and without such advice of the Consultative Council, the revision in tariffs could not be made. It was argued that the consumers ' interest is also represented on the Consultative Council as indicated by Sub section (2) of Section 16 providing for its constitution, and therefore, it was necessary to know the viewpoint of the consumers through their representative in the Consultative Council before deciding upon an upward revision of the tariffs for H.T. consumers. Though the Board may not be bound by the advice of the Consultative Council, yet it was urged, such consultation with the Council was a condition precedent. It was suggested that Section 16 must be read with Section 61 of the Supply Act which requires the Board to submit to the State Government the annual financial statement in February each year. It is unnecessary in the present case to decide whether the revision of tariffs falls within the ambit of `major questions of policy ' occurring in Section 16(5)(i) of the Supply Act since the arguments from both sides proceeded on the basis that revision of tariffs for the purpose of this case may be treated as a `question of policy ' which expression finds place also in Section 78 A of the Supply Act. The question, therefore, reduces itself to this: Whether the failure of the Board to place the matter before and seek the advice of the Consultative Council on this question renders the revision of tariffs made by it 664 invalid? The common premise for the purpose of this case that revision of tariffs by the Board is a question of policy may indicate that it would be open to the Consultative Council to advise the Board also on the question of revision of tariffs, and if such advice is given, then the Board must consider the same before taking the final decision. That, however, does not necessarily mean that where no such advice was taken from the Consultative Council or was rendered on account of the absence of any meeting of the Consultative Council during the relevant period, it would necessarily render invalid the revision of tariffs made by the Board. The consequence of non compliance of Section 16 is not provided and the nature of function of the Consultative Council and the force of its advice being at the best only persuasive. it cannot be said that revision of tariffs without seeking the advice of the Consultative Council renders the revision of tariffs invalid. It is also significant that the annual financial statement containing all particulars relating to revision of tariffs is required to be submitted to the State Government in February each year and the State Government is required after receipt of such statement to cause it to be laid on the table of the House or Houses of the State Legislature and the said statement is open to discussion therein. The Board is bound to take into consideration any comments made on the said statement in the State Legislature. Thus, there is ample provision for discussion on the revised tariffs in the State Legislature with the Board being bound to take into consideration any comments made thereon. Shri Shanti Bhushan sought to make a distinction between the provisions of sub section (5) of section 16 pertaining to the functions of the `Consultative Council ' empowering or enabling the Council to advice the Board on `major questions of policy ' and the provision in sub section (6) as to the obligation of the Board to place certain matters before the `Council ' to emphasise his point that sub section (6) does not envisage any obligation on the part of the `Board ' to place before the Council the proposal for revision of tariffs. He sought to distinguish between the functions of the `Council ' to tender advice and the obligation of the Board to specifically seek and invite such advice. Shri Shanti Bhushan said that the very concept of consultation does imply mandatory obligation or duty attaching the pain of nullity to the transaction. Provisions of the Electricity Act 1947 in England contain certain express statutory stipulations as to the scope of the Consultative Council 's functions which do not, in terms, obtain in the Indian statute. For instance, Section 7 of the English Act which contemplates 665 the establishment of `Consultative Council ' specifically provides in Section 7(4) : ``(4) Each of the said Councils shall be charged with the duties (a) of considering any matter affecting the distribution of electricity in the area, including the variation of tariffs and the provision of new or improved services and facilities within the area, . . . (b) xxx xxx xxx (c) of considering any matter affecting the variation of any tariff regulating the charges for the provision of bulk supplies of electricity by the Generating Board for distribution in the area, being a matter which is either the subject of a representation made to them by consumers or other persons requiring supplies of electricity in the area, or which appears to them to be a matter to which consideration ought to be given apart from any such representation, and, where after consultation with the Area Board action appears to them to be requisite as to any such matter, of notifying their conclusions to the Generating Board; (d) xxx xxx xxx (rest of the Section omitted as unnecessary) Section 37(1) of the English statute again provides: ``37 Fixing and variation tariffs (1) The prices to be charged by the Generating Board for the supply of electricity by them to Area Boards shall be in accordance with such tariffs as may be fixed from time to time by the Generating Board after consultation with the Electricity Council; the different tariffs may be fixed for different Area Boards. ' ' (rest of the Section omitted as unnecessary) The pattern of the provisions in the Indian statute is quite different. 666 The `laying procedure ' before the legislature effectively controls the exercise of the delegated power of the Board. We are of the opinion that though advisable yet failure to seek advice of the Consultative Council before revision of the tariffs does not result in invalidation of the revised tariffs. This consequence appears to us to be the logical and reasonable view to take of the requirement of Section 16 along with other provisions of the Supply Act. One of the arguments addressed at length before us relates to Section 78 A of the Supply Act. It was urged on behalf of the appellant that any direction of the State Government relating to tariffs was on a question of policy within the meaning of Sub section (1), and, therefore, the Board is bound by such direction subject only to the adjudication, if any, in accordance with Sub section (2), if any dispute is raised by the Board in that behalf. It was urged that in the present case the Board was, therefore, bound by the directions of the State Government granting the concession to the power intensive consumers since no dispute was raised by the Board in accordance with Sub section (2), of Section 78 A. Learned counsel for the Board did not for the purpose of this case, dispute this position, but contended that all directions of the State Government were obeyed by the Board and, therefore, the question does not really arise. The Board 's contention is that it has acted according to the directions of the State Government and, therefore, the question of non compliance with any such directions giving rise to the argument based on Section 78 A does not arise. For consideration of the main controversy, it is advisable at this stage to deal with Sections 49 and 59 of the Supply Act. Section 49 makes provision for the sale of electricity by the Board to persons other than licensees. Sub section (1) starts with the words `Subject to the provisions of this Act and of regulations, if any, made in this behalf '. This means that the provision made therein is subject to other provisions of the Supply Act and the regulations. It then proceeds to say that the Board may supply electricity to any person not being a licensee upon `such terms and conditions as the Board thinks fit ' and may for the purposes of such supply supply frame `uniform tariffs '. Sub section (2) then enumerates several factors which the Board is required to `have regard to ' in fixing the uniform tariffs. The meaning of the expression `have regard to ' is well settled. It means that the factors specifically enumerated shall be taken into account while performing the exercise which in this case is the fixation of uniform tariffs. Ordinarily, therefore, uniform tariffs are required to be framed by the Board for making such supply. Sub section (3) then proceeds to 667 say that nothing in the earlier enacted provisions shall derogate from the power of the Board, `if it considers it necessary or expedient to fix different tariffs for the supply of electricity to any person ', having regard to the geographical position of any area, the nature of the supply and purpose for which supply is required and `any other relevant factors '. Sub section (4) then says that in fixing the tariffs and terms and conditions for the supply of electricity, `the Board shall not show undue preference to any person '. In other words, Sub section (4) provides against any unreasonable discrimination in fixing the tariffs and terms and conditions for supply of electricity. The power of fixation of tariffs in the Board is provided in this manner by Section 49 of the Supply Act which requires the fixation of uniform tariffs ordinarily having regard particularly to the specified factors and enables fixation of such tariffs for any person having regard to the factors expressly stated and any other relevant factors, providing further that no unreasonable or undue preference shall be shown to any person by the Board in exercise of its powers of fixing the tariffs. The next important provision is Section 59 of the Supply Act. For appreciating the argument based on Section 59, it is necessary to bear in mind the distinction in Section 59 as it stood prior to 1978, as amended by Act No. 23 of 1978 and finally as amended by Act No. 16 of 1983, quoted earlier. Prior to 1978, Section 59 required the Board, as far as practicable and after taking credit for any subventions from the State Government under Section 63, not to carry on its operations under this ACt at a loss and for this purpose, it was empowered to adjust its charges accordingly from time to time. Under the provision as it then existed, the main thrust was to avoid the Board incurring any loss and for that purpose, it could adjust its charges accordingly from time to time. Section 59 as amended by Act No. 23 of 1978 required the Board, after taking credit for any subventions from the State Government under Section 63, to carry on its operations under this Act and to adjust its tariffs so as to ensure that the total revenues in any year meeting all expenses properly chargeable to revenue including those specified, left such surplus as the State Government specified from time to time. The shift was, therefore, towards having a surplus as the State Government specified from time to time. Sub section (2) then provided guidelines for the State Government in specifying the surplus under Sub section (1) and mentioned the factors to which regard was to be had for this purpose. The effect of the amendment made in Section 59 by Act No. 16 of 1983, which came into effect from 1.4.1985, was to provide for a 668 minimum surplus of three per cent or such higher percentage as the State Government is to specify in this behalf. In other words, prior to 1978 amendment, the requirement from the Board was to avoid incurring any loss, after the 1978 amendment the shift was towards ensuring a surplus as specified by the State Government, and after the 1983 amendment the Board is required to ensure a surplus of at least three per cent unless the State Government specifies a higher surplus. This is the scheme of Section 59 and it is Section 59 as amended by 1978 Act but prior to its amendment by the 1983 Act, with which we are concerned in the present case. It cannot be doubted that Section 59 requiring the Board to adjust its tariffs for the purpose of Board 's finance is to be read along with Section 49 which provides specifically for fixation of tariffs and the manner in which that exercise has to be performed while dealing with any question relating to the revision of tariffs. It was argued on behalf of the appellants that Section 59 as amended by the 1978 Act did not empower the Board to adjust its tariffs to generate any surplus unless the surplus had been specified by the State Government and when specified, the surplus generated could not exceed the specified surplus. In other words, it was argued that when the State Government did not specify any surplus, the Board had no power to adjust its tariffs in a manner which resulted in generating any surplus. We are unable to construe Section 59 in this manner. The general principle for the Board 's finance indicated by Section 59 is that prior to the 1978 amendment, tariffs could be adjusted to avoid any loss, but as a result of the shift made by the 1978 amendment, the power could be exercised to generate a surplus and when the State Government specified the amount of surplus then the Board was bound to adjust the tariffs to ensure generation of the specified surplus. However, generation of a reasonable surplus in any year of account without specification of the surplus amount by the State Government was not contra indicated in the provision inasmuch as the duty to generate a surplus was implicit with the added obligation to ensure generating surplus to the extent specified by the State Government when it was so specified by the State Government. It cannot be accepted as a reasonable view that in the absence of specification of the surplus by the State Government, the Board could not adjust its tariffs to generate even a reasonable surplus in any year of account. The effect of 1983 amendment, which came into force from 1.4.1985, is that the Board is entitled to adjust its tariffs to ensure generating a surplus of not less than three per cent even without such specification 669 by the State Government and when the State Government specifies a higher surplus, then the Board must ensure generating the higher specified surplus. This is, of course, subject to the accepted norm of the Board acting in consonance with its public utility character and not entirely with a profit motive like that of a private trader. The pre 1978 concept of the Board 's functioning to merely avoid any loss is replaced by the shift after 1978 amendment towards the positive approach of requiring a surplus to be generated, the quantum of surplus being specified by the State Government, with a minimum of three per cent surplus in the absence of the specification by the Government of a higher surplus, after the 1983 amendment. This construction made of Section 59, as it stood at different times in Govinda Prabhu 's case (supra) indicated earlier, cannot be faulted in any manner. In Govinda Prabhu 's case (supra) the same argument which is advanced before us was expressly rejected. We are of the same view. It is , therefore, obvious that mere generation of surplus by the Board as a result of adjusting its tariffs when the quantum of surplus has not been specified by the State Government after the 1978 amendment of Section 59 of the Supply Act, cannot invite any criticism unless it is further shown that the surplus generated as a result of the adjustment of tariffs by the Board has resulted in the Board acting as a private trader shedding off its public utility character. In other words, if the profit is made not merely for the sake of profit, but for the purpose of better discharge of its obligations by the Board, it cannot be said that the public enterprise has acted beyond it authority. The Board in the present case has shown that the surplus resulting from upward revision of tariffs applicable to the H.T. consumers made in the present case, was for the purpose of better discharge of its other obligations under the Supply Act and in effect, it has merely resulted in a gradual withdrawal of the concessional tariffs provided earlier to the power intensive consumers which do not in its opinion require continuance of the concessional tariffs any longer. In fact, no material has been placed before us to indicate that this assertion of the Board is incorrect or there is any reasonable basis to hold that the upward revision of tariffs applicable to H.T. consumers is merely with a desire to earn more profits like a private trader and not to generate surplus for utilisation of the funds to discharge other obligations of the Board towards more needy consumers, such as agriculturists or to meet the need of expansion of the supply to deserving areas. The argument with reference to statistics that the upward revision of tariffs for the H.T. consumers results in earning amounts in excess of the cost of generation does not, therefore, merit a more detailed consideration. 670 It was also contended on behalf of the appellants that the generation of electricity by the Andhra Pradesh Electricity Board is both thermal as well as hydro, the quantity from each source being nearly equal and the entire electricity generated is fed into a common grid, from which is supplied to all categories of consumers. On this basis, it was argued that the rise in the fuel cost which led to the fuel cost adjustment applicable only to the H.T. consumers was unreasonable and discriminatory since the burden of rise in fuel cost was placed only on the H.T. consumers. In our opinion, this argument has no merit. The H.T. consumers, including the power intensive consumers, are known power guzzlers and in power intensive industries, electricity is really a raw material. This category of consumers, therefore, forms a distinct class separate from other consumers like L.T. consumers who are much smaller consumers. There is also a rational nexus of this classification with the object sought to be achieved. Moreover, the power intensive consumers have been enjoying the benefit of a concessional tariff for quite some time, which too is a relevant factor to justify this classification. Placing the burden of fuel cost adjustment on these power guzzlers, who had the benefit of concessional tariff for quite some time and have also a better capacity to pay, cannot, therefore, be faulted since the consumption in the power intensive industries accounts for a large quantity. Shri Sibal submitted that the prescription and imposition of disparate tariffs, unrelated to the production cost, on a particular section of consumers would be a case of misplaced philanthrophy on the part of the statutory authority. The Board, Shri Sibal says, cannot use its powers in order to confer "social or economic benefits on particular sections of the community" at the cost of the other sections. Shri Sibal contended that while it may be permissible for the Board to supply electricity to the weaker and under privileged sections of the society at prices which may even be lower than the costs of generation and distribution, however subsidies for such social objectives must come from subventions from Government and should not be made good by unjustifiable higher charges on other sections of electricity consumers. Shri Sibal read to us the following passage in Wade 's Administrative Law (6th Edn.): "Statutory authorities have sometimes made use of their wide general powers in order to confer social or economic benefits on particular sections of the community. In several such cases they have gone beyond the true limits of their powers. The policy of the courts is in general hostile to the 671 use of public funds, such as rates, for new social experiments. Local authorities are subject to a fiduciary duty to use their revenues with due restraint. " (at p. 424) After referring to decided cases on the point, the learned author says: ". The idea that runs through these cases is that public money must be administered with responsibility and without extravagance. This appears to mean it is not available for charity. The generosity of local authorities, in particular, is restrained by the doctrine that they owe a fiduciary duty to their ratepayers analogous to that of trustees. This means that, in deciding upon their expenditure, they must hold a balance fairly between the recipients of the benefit and the ratepayers who have to bear the cost." (at p.426) Shri Sibal contends that in the case of class of consumers respecting which the tariff is enhanced, the enhancement is not justified on the ground of making good the loss on supply to others at cheaper rates. The increase is attributable to higher costs of generation of thermal power. It is not unreasonable to take the view that the thermal power has become costlier on account of the increase in fuel cost and could nationally be allocated to the consumption by H.T. and power intensive consumers, and, therefore, the fuel cost adjustment is made applicable to them alone. In our opinion, the argument on behalf of the Board in this behalf is not unreasonable. It was argued on behalf of the appellants with considerable force that the upward hike of tariff for the H.T. consumers including power intensive was arbitrary and discriminatory inasmuch as it was not related to the cost of generation and was based on irrelevant factors. It was argued that the L.T. tariffs and agricultural tariffs were relieved of this burden and the liabilities of the Board even of a capital nature were taken into account for increasing the tariff applicable to power intensive units. The contention is that these factors are irrelevant and do not permit exercise of the power to increase the tariffs. This arguments was considered at length in Govinda Prabhu 's case before it was 672 negatived. We agree with the reasons given in that decision to repel this contention. In Govinda Prabhu, it was pointed out that the Court would not strike down the revision of tariff as arbitrary unless the resulting surplus reaches such a height as to lead to the inevitable decision that the Board has shed its public utility character and is obsessed by the profit motive of private entrepreneur in order to generate a surplus which is extravagant. The limited power of judicial review in the field of price fixation was also indicated. This limited scope of judicial review in striking down revision of tariffs resulting in generation of surplus applied in Govinda Prabhu cannot be faulted in view of the long line of decisions of this Court on the point and reiteration of the same principle by a Constitution Bench in Shri Sitaram Sugar Company Limited and Another. vs Union of India and Others, ; The surplus generated by the Board as a result of revision of tariffs during the relevant period cannot be called extravagant by any standard to render it arbitrary permitting the striking down of the revision of tariffs on the ground of arbitrariness. We have already indicated that it is not also discriminatory as was the view taken in Govinda Prabhu. It has been pointed out on behalf of the Board that the Board 's action is based on the opinion of Rajadhyaksha Committee 's Report submitted in 1980 and the formula of fuel cost adjustment is on a scientific basis linked to the increase in the fuel cost. This is a possible view to take and, therefore, the revision of tariffs by the Board does not fall within the available scope of judicial review. One of the contentions of Shri G. Ramaswamy, on behalf of the appellant was that the G.Os. issued in respect of the power intensive units amounted to a special tariff for them resulting in their exclusion from the category of H.T. consumers and, therefore, the clause relating to fuel cost adjustment inserted by amendment to the H.T. tariffs did not apply to the power intensive consumers without insertion of a similar clause in the special tariff applicable to them. It was urged that for this reason the power intensive consumers could not be governed by the clause of fuel cost adjustment made applicable to H.T. tariffs. Shri Ramaswamy advanced elaborate arguments to distinguish "terms and conditions of supply" from "terms and conditions of tariff". According to the learned counsel, B.P. Ms. No. 778 dated 18.10.1975 excluded the power intensive units from applicability of the Notification date 17.9.1975 to it. It is unnecessary to repeat the history of the H.T. tariffs by which power intensive tariffs were separated. It would be sufficient in this context to quote the relevant portion of Memo. dated 18.11.1975 which, in our opinion, negatives this argument. It was provided in this Memo. , inter alia as under: 673 "With regard to other charges, such as Miscellaneous charges, terms and conditions of supply, not mentioned specifically herein, those applicable to normal H.T. consumers will apply". The expression "other charges" is wide enough to include within its ambit the fuel cost adjustment admittedly made applicable to all H. T.consumers as a result of the escalation in fuel prices. The method adopted was to prescribe a formula linking it to the increase in fuel cost so that it was not necessary to revise the tariffs each time as a result of increase in fuel prices, the same being taken care of by the relevant factors in the formula for fuel cost adjustment. It was in this context that Shri Ramaswamy contended that the `terms and conditions of supply ' are different from the `terms and conditions of tariff ' and fuel cost adjustment being a term or condition of tariff and not a term or condition of supply, the above provision in the Memo dated 18.11.1975 did not have the effect of applying the term relating to fuel cost adjustment to the power intensive tariff. It is sufficient to state that the Memo dated 18.11.1975 did not merely extend the non specified `terms and conditions of supply ' applicable to normal H.T. consumers to the power intensive consumers but also "other charges" which were merely illustrated by the words following, namely, "such as Misc. charges, terms and conditions of supply not mentioned herein". In other words, this express provision in the Memo, dated 18.11.1975 clearly provided that except for the provisions specifically made for power intensive consumers, in respect of all other provisions the power intensive consumers were to be governed by the provisions, by whatever name called, applicable to the normal H.T. consumers. A further discussion of this distinction sought to be made by Shri G. Ramaswamy of the `terms and conditions of supply ' and `terms and conditions of tariff ' is, therefore, unnecessary. Shri Ramaswamy also urged that there was no communication to the appellant of the applicability of the term relating to fuel cost adjustment during the relevant period which also relieves the power intensive consumers of this liability. On the view we have already taken about the applicability of the term relating to fuel cost adjustment to the power intensive tariffs this point is not material. However, it has also been shown that in the bills issued to the power intensive consumers the same was specifically indicated. If any communication was needed, this indication in the bills issued to the power intensive consumers satisfied that requirement. We are, therefore, unable to accept the contention that the term relating to fuel cost adjustment made applicable to H.T. consumers 674 had no application to the power intensive consumers during the relevant period. Shri Kapil Sibal appearing on behalf of some of the appellants confined the challenge to the mode of exercise of power by the Board. He laid great emphasis on the effect of absence of consultation with the Consultative Committee under Section 16 of the . He also claimed that the quantum of increase could at best be justified only to the extent of one half and no more. Shri Sibal claimed that certain extraneous factors had been taken into account for the purpose of revising the tariffs. The irrelevant considerations, according to Shri Sibal, taken into account are the capital sums owed by the Board and the overall losses incurred by the Board which according to him is impermissible under Section 59 of the . He also argued that the upward revision of H.T. tariffs is intended to subsidise another class of consumers which is not permissible. His arguments are already covered by our earlier discussion. Similarly, the arguments of Shri K.N. Bhat, for the appellant in C.A. No. 5379 of 1985 to the same effect, need to further discussion. The details of the several factors taken into account for the revision in tariffs, to the limited extent they can be gone into within the permissible scope of judicial review in such a matter also do not require any further consideration. Shri Anil Divan, on behalf of the appellant in C.A No. 2569 of 1985, submitted that the increase in tariffs for the power intensive unit in his case was 47 per cent as against 15 per cent for ordinary H.T. consumers. According to him, even ignoring the FCA, the increase is 40 per cent from 32 paise to 45 paise. This is disputed on behalf of the Board. In our opinion, it is unnecessary to go into this question any further for the reasons already given by us. Shri Divan also contended that the Electricity Board 's stand has been conflicting at different stages. In our opinion, any detailed decision on this aspect also is unnecessary on the view taken by us about the Board 's power to revise tariffs, no case for striking down the same as arbitrary and discriminatory having been made out. In view of the earlier decision of this Court in Govinda Prabhu, with the conclusion as well as reasoning of which we respectfully concur and reiteration of the Court 's limited power of judicial review in Shri Sitaram Sugar Company Limited recently decided by a Constitution Bench, we do not find any reason to accept any of the arguments advanced on behalf of the appellants by their learned counsel. In fact, the decision in Govinda Prabhu con 675 cludes the controversy against the appellants and some detailed discussion by us has become necessary only on account of an attempt on behalf of the appellants to distinguish the decision and the emphasis placed on the requirements of Sections 16, 49 and 59 of the . We find no merit in these appeals/special leave petition and the same are dismissed. All interim orders in favour of the appellants/petitioner stand vacated. No costs. R.P. Appeals dismissed.

The appellants are H.T. electricity consumers of various categories in the State of Andhra Pradesh. The respondent State Electricity Board (the Board), by its orders B.P. Ms. No. 1014 dated 13.12.1983 revised upwards the tariffs for various categories of consumers including H.T. categories 1 (Industrial) and II (Non Industrial); and by Memo No. DE/COML/IV/2250/83/I of the same date it revised upwards the electricity tariffs for highly power intensive industries falling under 644 H.T. Category III. Tariffs consisted of three parts. The said three categories of H.T. consumers fell in Part A. H.T. consumers availing supply of electricity for irrigation and agricultural purposes were included in part B. provided for miscellaneous and general charges. Tariffs were not revised for consumers availing H.T. supply for purposes of irrigation and agriculture falling in part B or L.T. supply for domestic cottage industries, public lighting and small poultry farms units. Besides the energy charges, the H.T. consumers included in Part A were also required to pay at different rates effective from 1.9.1982 an additional charge levied as `fuel adjustment charges '; and some amount as `voltage surcharged ' in accordance with the terms of the agreement entered into by the individual consumers with the Board. The writ petitions filed by the appellants challenging the said upward revision of the Electricity Tariffs were dismissed by the High Court upholding the revision of tariffs made by the respondent Board. Aggrieved the appellants preferred appeals by special leave to this Court. It was contended on behalf of the appellants that: (1) the upward revision of tariffs by the State Electricity Board was invalid being made without prior consultation with the State Electricity Consultative Council as envisaged by section 16 of the ; (2) without specification of any surplus by the State Government the Board had no power to adjust its tariffs in a manner which resulted in generating any surplus; (3) there is discrimination in recovery of the entire full cost adjustment from the H.T. consumers alone; (4) the upward hike of the tariffs for the H.T. consumers including power intensive consumers was arbitrary and discriminatory inasmuch as it was not related to the cost of generation and was based on irrelevant factors; and (5) and the Board had acted with profit motive losing its public utility character. Learned counsel representing the power intensive consumers also contended that in the absence of a clause relating to fuel cost adjustment in the G.Os. issued in respect of the power intensive units, they could not be governed by the clause of fuel cost adjustment made applicable to the H.T.tariffs. Dismissing the appeals, this Court, HELD: 1.1 The power of fixation of tariffs in the Board is provided by section 49 of this Supply Act which requires the fixation of uniform 645 tariffs ordinarily having regard particularly to the specified factors and enables fixation of such tariffs for any person having regard to the factors expressly stated and any other relevant factors providing further that no unreasonable or undue preference shall be shown to any person by the Board in exercise of its powers of fixing the tariffs. section 59, requiring the Board to adjust the tariffs for the purpose of its finance is to be read along with section 49. [667B C; 668B C] 1.2. The common premise for the purpose of the instant case that the revision of tariffs by the State Electricity Board is a question of policy may indicate that it would be open to the Consultative Council to advise the Board also on the question of revision of tariffs, and if such advice is given, then the Board must consider the same before taking the final decision. That, however, does not necessarily mean that where no such advice was taken from the Consultative Council or was rendered on account of the absence of any meeting during the relevant period, it would necessarily render invalid the revision of tariffs made by the Board. [664A B] Though it is advisable to seek advice of the Consultative Council before revision of the tariffs yet failure to do so does not result in invalidation of the revised tariffs. This consequence appears to be the logical and reasonable view to take of the requirement of section 16 alongwith other provisions of the Act. [666A B] 1.3 The consequence of non compliance of section 16 is not provided, and the nature of function of the Consultative Council and the force of its advice being at the best only persuasive, it cannot be said that revision of tariffs without seeking the advice of the Consultative Council renders the revisions of tariffs invalid. [664B C] 1.4 It is also significant that the annual financial statement containing all particulars relating to revision of tariffs is required to be submitted to the State Government in February each year and the State Government is required after receipt of such statement to cause it to be laid on the table of the House or Houses of the State Legislature and the said statement is open to discussion therein. The Board is bound to take into consideration any comments made on the said statement in the State Legislature. The 'laying procedure ' before the legislature effectively controls the exercise of the delegated power of the Board. Thus there is ample provision for discussion on the revised tariffs in the State Legislature with the Board being bound to take into consideration any comments made thereon. [664C D; 666A] 646 Kerala State Electricity Board vs M/s. S.N. Govinda Prabhu & Bros. & Ors. , ; , relied on. 2.1 Mere generation of surplus by the Board as a result of adjusting its tariffs when the quantum of surplus has not been specified by the State Government after the 1978 amendment of section 59 of the Act, cannot invite any criticism unless it is further shown that the surplus generated as a result of the adjustment of tariffs by the Board has resulted in the Board acting as a private trader shedding off its public utility character. If the profit is made not merely for the sake of profit, but for the purpose of better discharge of its obligations by the Board, it cannot be said that the public enterprise has acted beyond its authority. [669C E] 2.2 The general principle for the Boards finance indicated by section 59 is that prior to the 1978 amendment, tariffs could be adjusted to avoid any loss, but as a result of the shift made by the 1978 amendment the power could be exercised to generate a surplus and when the State Government specified the amount of surplus then the Board was bound to adjust the tariffs to ensure generation of the specified surplus. However, generation of a reasonable surplus in any year of account without specification of the surplus amount by the State Government was not contra indicated in the provision inasmuch as the duty to generate a surplus was implicit with the added obligation to ensure generating surplus to the extent specified by the State Government when it was so specified by it. It cannot be accepted as a reasonable view that in the absence of specification of the surplus by the State Government, the Board could not adjust its tariffs to generate even a reasonable surplus in any year of account. [668E G] 2.3 In the instant case the Board showed that the surplus resulting from upward revision of tariffs applicable to the H.T. consumers was for the purpose of better discharge of its other obligations under the Supply Act and in effect the same has merely resulted in a gradual withdrawal of the concessional tariffs provided earlier to the power intensive consumers which did not in its opinion require continuance of the concessional tariffs any longer. It was not proved that this assertion of the Board was incorrect or there was any reasonable basis to hold that the upward revision of tariffs applicable to H.T. consumers was merely with a desire to earn more profits like a private trader and not to generate surplus for utiliasation of the funds to discharge other obligations of the Board towards more needy consumers, such as agriculturists, or to meet the needs of expansion of the supply to deserving areas. [669E G] 647 3.1 The H.T. consumers, including the power intensive consumers, are known power guzzlers and in power intensive industries, electricity is really a raw material. This category of consumers, therefore, forms a distinct class separate from other consumers like L.T. consumers who are much smaller consumers. There is also a rational nexus of this classification with the object sought to be achieved. Moreover, the power intensive consumers have been enjoying the benefit of a concessional tariff for quite some time, which too is a relevant factor to justify this classification. Placing the burden of fuel cost adjustment on these power guzzlers, who had the benefit of concessional tariffs, for quite some time and have also a better capacity to pay, cannot, therefore, be faulted since the consumption in the power intensive industries accounts for a large quantity. [670B C] 3.2 It is not unreasonable to take the view that the thermal power has become costlier on account of the increase in fuel cost and could notionally be allocated to the consumption by H.T. and power intensive consumers and, therefore, the fuel cost adjustment is made applicable to them alone. [671E F] 4.1 The Court would not strike down the revision of tariffs as arbitrary unless the resulting surplus reaches such a height as to lead to the inevitable decision that the Board has shed its public utility character and is obsessed by the profit motive of private entrepreneur in order to generate a surplus which is extravagant. [672A B] 4.2 The surplus generated by the Board as a result of revision of tariffs during the relevant period cannot be called extravagant by any standard to render it arbitrary permitting the striking down of the revision of tariffs on the ground of arbitrariness nor is it discriminatory. It was pointed out on behalf of the Board that its action was based on the opinion of Rajadhyaksha Committee 's report submitted in 1980 and the formula of fuel cost adjustment was on a scientific basis linked to the increase in the fuel cost. This is a possible view to take and, therefore, the revision of tariffs by the Board does not fall within the available scope of judicial review. [672C D] Kerala State Electricity Board vs M/s. S.N. Govinda Prabhu and Bros. & Ors., ; , relied on. Shri Sitaram Sugar Company Limited & Anr. vs Union of India & Ors. , ; , followed. 648 5. It cannot be said that the term relating to fuel cost adjustment had no application to the power intensive consumers during the relevant period. The Memo dated 18.11.1975 did not merely extend the non specified 'terms and conditions of supply ' applicable to normal H.T. consumers to the power intensive consumers but also "other charges" which were merely illustrated by the words, "such as Misc. charges, terms and conditions of supply not mention herein". This express provision in the said Memo clearly provided that except for the provision specifically made for power intensive consumers, in respect of all other provisions the power intensive consumers were to be governed by the provisions, by whatever name called, applicable to the normal H.T. consumers. However in the bills issued to the power intensive consumers the terms relating to fuel cost adjustment was specifically indicated. [673D H; 674A] Nav Bharat Ferro Alloys Ltd. vs A.P.S.E. Board Hyderabad, AIR 1985 A.P. 299, approved.

ION: Criminal Appeal No. 31 of 1961. Appeal by special leave from the judgment and order dated October 7, 1958 of the Andhra Pradesh High Court in Criminal Appeal No. 456 of 1957. Ram Reddy for the appellants. Ratna Rao and K R. Choudhri, for respondent No 1. A. Ganganatham Chetty and T.M. Sen. for respondent No.2. October 5. The Judgment of the Court was delivered by HIDAYATULLAH, J. The two appellants who were granted special leave by this Court, appeal against the judgment of the High Court of Andhra Pradesh convicting them, on appeal against acquittal, of an offence under. 380 of the Indian Penal Code and sentencing them to six months ' rigorous imprisonment and a fine Rs. 500/ each, with further rigorous imprisonment for one month in default of payment of fine. The prosecution case which had a chequered career in the High Court and the two Courts below, is as follows: In Dusi, which is a part of Bhaskararaopuram, there was a Press known as Srinivasa Printing Press at Srinivasa Ashram. This Press existed for over 17 years. Pappala Chinna Ramadasu (P.W.4) was admittedly a printer and for some years, the declared keeper of that Press under section 4 of the Press and Registration of Books Act, 1867. The declarations were made in 1944 (Ex.P.4) and 1947 (Ex. On November 21, 1955, 10 Pappala Chinna Ramadasu sold this press by a registered document (Ex.P. 1 ) to one Boddepalli Lakshminarayana for Rs 4,000/ , of which Rs.3,500/ were shown to have been paid in advance and the balance was received by Pappala Chinna Ramadasu on January 10, 1956, (Ex.P.2). Two applications were then made on December 1, 1955, respectively by Chinna Ramadasu and Boddepalli Lakshminarayana before the Collector and District Magistrate for substituting the name of Boddepalli Lakshminarayana in place of that of Pappala Chinna Ramadasu in the declaration. On December 6, 1955, by exhibit P.11 they were informed that they should apply under the Press and Registration of Books Act (25 of 1867). Subsequently, on January 11, 1956, a declaration under section 4 of that Act was made by Boddepalli Lakshminarayana and was accepted (Ex.P.3). The case of the prosecution further is that Boddepalli Lakshminarayana went to Kurnool on March 20, 1956, and in his absence, the two appellants with two others (who were prosecuted but acquitted) removed the Printing Press on the night of March 25, 1956 to Korlakota where the first appellant, Apparao, resides. A report of the offence (Ex. P 13), purporting to be written on March 27, 1956, was handed in at the police station house on the following day at 8 P.m. The police took no action, and a complaint was, therefore, filed on April 4, 1956, by Boddepalli Laksminarayana. The Judicial Second class Magistrate, Srikakulam, convicted the two appellants of an offence under 8. 380 of the Indian Penal Code, and acquitted the two others, with whom we are not concerned, and sentenced each of the appellants to imprisonment till the rising of the Court and a fine of Rs. 250/ , with simple imprisonment for one month in default. On appeal, the Additional District and Sessions Judge, Srikakulam, set aside the conviction and acquitted them. The complainant then obtained special leave of the High Court to file 11 appeal against this acquittal, and the High Court reversed the acquittal, as already indicated above. In support of the prosecution case, the complainant examined four witnesses, including himself. Pappala Chinna Ramadasu was examined as P.W.4 to prove that he had sold the Press to Boddepalli Lakshminarayana, and two other witnesses were examined to prove the removal of the Printing Press by the appellants. The defence of the appellants was as follows: According to them, the Press originally belonged to one Govindachari, and on October 25, 1947 he transferred it to Kuna Appala Naidu by exhibit D 2. In the registered sale deed then executed, Govindachari was joined formally by Pappala Chinna Ramadasu. The sale was for Rs. 6,400/ and on the same day, a promissory note was executed by Kuna Appala Naidu in favour of Govindachari, which was attested by Pappala Chinna Ramadasu. Subsequently, Appala Naidu made payments of certain amounts, and endorsements on tho promissory note showing these payments were signed by Pappala Chinna Ramadasu as a witness. Kuna Appala Naidu was examined as D.W.1, and he stated that, the name of Pappala Chinna Ramadasu was formally included in the transfer deed, since the declaration stood in his name. He also stated that the deed, exhibit D.2, was signed as witness by one Akkala Naidu, who died years before the present controversy started. Kuna Appala Naidu later sold the Press to the second appellant and one Sri K. Sriramda, and the second appellant continued in possession as owner. Pappala Chinna Ramadas continued as the printer, and his declaration as the keeper of the Press also continued. In 1953, Pappala Chinna Ramadasu left the Press for good. The Press was leased out by the second appellant to one Appanna, and this leave continued till 1956. On March 19, 1956, an agreement for leave was executed in favour of the first appellant, and on March 26, 1956, a registered deed was duly 12 executed. According to the appellants, the Press WAS removed during the day on March 27 and the lease amount was paid on the 28th. According to them, the second appellant was the owner, in law and in fact, of the Press and the first appellant was the lessee and had removed the Press in the bona fide exercise of his right as lessee. The appellants examined eight witnesses in support of their case. The case of the prosecution hinged upon the evidence of Pappala Chinna Ramadasu, when confronted with exhibit D 2, he denied his signature, and stated evasively that he could not identify the signatures of Govindachari and Appala Naidu. He admitted, however, that Appanna used to look after the Press after 1953, though he said that he used to visit the Press once in two or three months before he sold it to P.W.1, and that the correspondence used to be made in his name. He also stated that he had purchased the Press from the Madras Type Foundry Co., for RH. 9,107/ but that the bills were lost, and he added that they were taken away along with the Press, when it was removed. The case of the appellants rested upon the proof of the signature of Pappala Chinna Ramadasu on Es. D 2 and additionally the proof of the signature of Akkala Naidu, beoause if Akkala Naidu signed the document in 1947 and died some four years before the present controversy started, there would be good reason to think that a document of this character could not be a fabricated one. The appellants examined a handwriting expert, Sri B. R. Singh (D.W.8). He stated categorically that Ex. D 2 bore tho signature of Pappala Chimla Ramadasu. The signature of Akkala Naidu was proved by his son, Sri Rangam. He identified the signature of his father not only on that document but also on exhibit D 3, the promissory Dote. He also stated that h father had died in 1951. From this material, the Additional District and Sessions Judge, Srikakulam, found that Ex D 2 13 was not a forged document, as was suggested, but was amply proved as genuine by Pappala Chandrudu (D.W 4) and the combined evidence of Sri Rangam (D. W. 3) and Sri B. R. Singh (D. W. 8). He therefore, held that Pappala Chinna Ramadasu had no right to sell the Pres in 1955 to Boddepalli Lakshminarayana and that his connection with the Press had effectively ceased from. 1953 even as a mere printer. It is unnecessary to examine whether this finding or the finding given by the Judicial Second Class Magistrate, Srikakulam, who held otherwise, was the correct inference from the. facts. The learned Judge of the High Court, who heard the appeal against the acquittal, said nothing about exhibit D 2. According to him, the removal of the Press amounted to theft, even though the appellants removed it under a bona fide claim of right. In this statement of the law, the learned Judge was, with respect, clearly in error. This is what the learned Judge observed: "Further, to a charge of theft, the plea that the property was removed under a bona fide claim of right would not avail. For example a person who bona fide believes that the fountain pen on his neighbour 's desk is his has no right in law to trespass into the neighbour 's house and snatch away the pen without the latter 's content. " The first of the statements is certainly not the law. It is settled law that where a bona fide claim of right exists, it can be a good defence to a prosecution for theft. An act does not amount to theft, unless there be not only no legal right but no appearance or colour of a legal right. in 2 East . 659, the law was stated a long time ago thus: "If there be in the prisoner any fair pretence of property of right, or if it be brought into doubt at all, the court will direct an acquittal." 14 And according to I Hale P.C. 509, the best evidence is that the goods were taken quite openly. The law thus stated by East and Hale has not been altered in modern times. There are numerous cases in which Courts in India have recognised a bone fide claim of right as a defence to the charge of theft. See Ratanlal law of Crimes 19th Ed. p. 933. We are not concerned in this case with the declaration under the Press and Registration of Books Act. A declared keeper of the Press is not necessarily the owner thereof so as to be able to confer title to the Press upon another. The ownership of the Press is a matter of the general law and must follow that law. Whether Pappala Chinna Ramadasu was not only the declared keeper of the Press but also its owner can only be effectively decided by the Civil Court. For purposes of Criminal law, the evidence prima facie pointed to a transfer of the Press by Pappala Chinna Ramadasu and Govindachari to Kuna Appala Naidu. The evidence prima facie also established that the appellants had taken possession of the Press under a bona fide claim of right, and that, in our opinion. was sufficient to dispose of the present case. The Additional District and Sessions Judge, Srikakulam, had rightly held that the matter was for the decision of the Civil Court, and that this was not a case of theft under the Indian Penal Code, and had rightly directed the acquittal of the appellants. The learned Judge of the High Court considered the declaration by Pappala Chinna Ramadasu, which continued Unchanged, as sufficient to prove an offence of theft. In our opinion, in tho circumstances and in the light of the finding given by the District and Sessions Judge with regard to exhibit D 2, it was necessary to go further to see what right Pappala Chinna Ramadasu had to the Press at all. If this had been considered, the learned Judge would have seen that there was some doubt the right of Pappala Chinna Ramadasu 15 to transfer the Press in 1955 to Boddepalli Lakshminarayana, and further that the defence that the appellants took possession of the Press under a bona. fide claim of right was a good defence entitling them to an acquittal. In the result, this appeal must succeed. The convictions of the appellants and the sentences passed on them are set aside, they are acquitted and their bail bonds shall stand discharged. The fines, if realised, are ordered to be remitted. Appeal allowed.

On a complaint by one L, the Magistrate convicted the two appellants of an offence under section 380 of the Indian Penal Code for having removed a printing press alleged to have belonged to L to whom it was sold in 1955 by one R once a declared keeper of the said press under section 4 of the Press Act, 1867. The defence was that the Press originally belonged to one G. In 1947 transferred it to N by exhibit D 2 wherein R joined formally, as declaration of keeper stood in his name. N sold the Press to the second appellant and another, but R 's name continued as a printer and keeper of the press In 1956 the second appellant leased out the press to the first appellant. According to the appellants, the second appellant was the owner in law and fact of the press and the first appellant was the lessee and had removed the press in the bonafide exercise of his right as lessee. The case of the prosecution hinged upon the evidence of R and that of the appellants rested upon the proof of the signature of R on exhibit D 2 which R denied. The handwriting expert stated categorically that exhibit D 2 bore the signature of R. The Judge of the High Court who heard the appeal against the acquittal order, passed by the Additional District and Sessions Judge, said nothing about exhibit D 2 and considered the declaration of R under section Of the Press Act which continued unchanged, as sufficient to prove an offence of theft. According to him, the removal of the Press amounted to theft even though the appellants removed it under a bonafide claim of right. ^ Held, that where a bonafide claim of right exists, it can be a Good defence to a prosecution for theft. An act does not amount to theft, unless there be not only no legal right but no appearance or colour of a legal right. For the purpose of criminal law on the present case the evidence prima facia pointed to a transfer of the press by R and to N. The evidence prima facie also established that the appellants had taken possession of the press under a 9 bonafide claim of right and there was some doubt about the right of R to transfer the press to L and further the defence that the appellants took possession of the press under bonafide claim of right was a good defence entitling them to an acquittal.

ivil Appeal No. 4494 of 1989. From the Judgment and Order dated 31.5.88 of the Central Administrative Tribunal, Allahabad in O.A. No. 427/1986. B. Dutta, ASG. (N.P.), C.V. Subba Rao, A. Subba Rao and P. Parmeshwaran for the Appellants. Harbans Lal and A.K. Mahajan for the Respondents. The Judgment of the Court was delivered by DUTT, J. Special leave is granted. Heard learned counsel for both parties. The respondents were holding the posts of Junior Scien tific Officers (Group 'B ' posts) in the Defence Research & Development Service. They were promoted to the posts of Scientists 'B ' with effect from October 16, 1985 or from the date they would actually assume charge of the posts. The respondents filed an application before the Central Adminis trative Tribunal, Allahabad, claiming that they should have been promoted to the posts of Scientists 'B ' with effect from July 1, 1984. The Tribunal rejected the prayer of the respondents that their promotions should have been made with effect from July 1, 1984. The Tribunal, however, directed that their promotions should be with effect from the date on which the promotional posts were created. 753 The short question involved in this appeal is whether the Tribunal was justified in directing that the respondents ' promotion should be with effect from the date the promotion al posts were created. Under rule 8(1)(a) of the Defence Research & Development Service Rules, 1970, hereinafter referred to as 'the Rules ', all those who have been recruited before the promulgation of the Rules as Junior Scientific Officers in the Defence Research & Development Organisation on regular basis and possess the educational qualifications and experience as laid down for direct recruits, shall be eligible, till they are wasted out, for promotion to the post of Scientist 'B ' up to 50 per cent of the vacancies in the grade. Under the first proviso to rule 8(1)(a), the total number of posts filled in that grade shall at no time exceed 50 per cent of the total sanctioned strength for the grade on the date of promulgation of the Rules, and that this concession shall also be admissible to those persons who are appointed or promoted as Junior Scientific Officers on regular basis on or after the promulgation of the Rules. There were a total number of 512 posts available in the grade of Scientists 'B ' in 1979.1n view of rule 8(1)(a) of the Rules, the Junior Scientific Officers were entitled to be promoted to the 50 per cent of these posts, that is to say to 256 posts. These 256 posts were filled up by promo tion of the Junior Scientific Officers between the period 1979 and 1983. According to the respondents, the posts of Scientists 'B ' to which they have been promoted with effect from October 16, 1985, were created between 1984 and 1985 and that, accordingly, the respondents should have been promoted to these posts with effect from 1st July, 1984. It was the contention of the respondents that on previous occasions up to the year 1983, promotions were given effect from 1st July of the year in which the promotions were granted. It has been already noticed that the Tribunal has overruled the said contention of the respondents and has directed that their promotions should be with effect from the date the said promotional posts of Scientists 'B ' were created. At the same time, it has been found by the Tribunal that the flexible complementing scheme or SITU promotions, as provided in rule 8(2)(f) of the Rules, were not available to the Junior Scientific Officers. It is not disputed that the promotions of the Junior Scientific Officers to the posts of Scientists 'B ' are vacancy based and such promo tions are granted after the assessment by the Assessment Board as provided in the Rules. It has also been observed by the Tribunal that normally the promotions will take effect from the date of the order granting such promotions. The only ground on which the Tri 754 bunal has directed that the promotions of the respondents should take effect from the date the posts of Scientists 'B ' were created, is that up to 1983 such promotions were given effect from 1st July of the year in which the promotions were granted. There is no statutory provision that the promotion to the post of Scientist 'B ' should take effect from 1st July of the year in which the promotion is granted. It may be that, rightly or wrongly, for some reason or other, the promotions were granted from 1st July, but we do not find any justifying reason for the direction given by the Tribu nal that the promotions of the respondents to the posts of Scientists 'B ' should be with effect from the date of the creation of these promotional posts. We do not know of any law or any rule under which a promotion is to be effective from the date of creation of the promotional post. After a post falls vacant for any reason whatsoever, a promotion to that post should be from the date the promotion is granted and not from the date on which such post falls vacant. In the same way when additional posts are created, promotions to those posts can be granted only after the Assessment Board has met and made its recommendations for promotions being granted. If on the contrary, promotions are directed to become effective from the date of the creation of addi tional posts, then it would have the effect of giving promo tions even before the Assessment Board has met and assessed the suitability of the candidates for promotion. In the circumstances, it is difficult to sustain the judgment of the Tribunal. For the reasons aforesaid, we set aside the judgment of the Tribunal directing that the promotions of the respond ents should be not from the date of the orders of promotion, but from the date the posts were created. The orders of the appellants promoting the respondents with effect from Octo ber 16, 1985 will stand. The appeal is allowed. There will, however, be no order as to costs. N .P.V. Appeal allowed.

Under Rule 8(1)(a) of the Defence Research & Development Service Rules, 1970, Junior Scientific Officers in the Defence Research & Development Organisation were eligible for promotion to the posts of Scientists 'B ' upto 50 per cent of the vacancies in the grade. The respondents who were holding the posts of Junior Scientific Officers, and were promoted to the posts of Scientists 'B ' with effect from October 16, 1985 or from the date they actually assumed charge of the posts filed an application before the Central Administrative Tribunal, contending that since the posts to which they had been promoted were created between 1984 and 1985, they should have been promoted with effect from July 1984, as was done on previous occasions upto 1983, when promotions were ef fected from 1st July of the year in which promotions took place. The Tribunal rejected the prayer of the respondents and directed that the promotions should be effective from the date on which the promotional posts were created. The Union of India being aggrieved appealed to the Court. On the question whether the Tribunal was justified in directing the promotions to be effective from the date the promotional posts were created. Allowing the appeal, this Court, HELD: After a post fails vacant for any reason whatsoev er, a promotion to that post should be from the date the promotion is granted and not from the date on which such post falls vacant. Similarly, when additional posts are created, promotions to those posts can be granted 752 only after the Assessment Board has met and made its recom mendations for promotions being granted. If, however, promo tions are directed to become effective from the date of creation of additional posts, then it would have the effect of giving promotions even before the Assessment Board has met and assessed the suitability of the candidates for promotion. [754C E] In the instant case, there is no statutory provision that the promotion to the post of Scientist 'B ' should take effect from 1st July of the year in which the promotion is granted. There is also no law or rule under which a promo tion is effective from the date of creation of the promo tional posts. The Tribunal was, therefore, in error in holding that the promotions should be effective from the date the promotional posts were created. The orders of the appellants promoting respondents from October 16, 1985 will stand. [754B C & F]

Appeals 'Nos. 455 to 457 and 656 to 658 of 1957. Appeals from the judgment and order dated April 29, 1957, of the Bombay High Court in Misc. Applications Nos. 48 to 50 of 1957. G. section Pathak, section K. Kapur, P. N. Bhagwati and Ganpat Rai, for the appellant in C. A. No. 455 of 1957 & respondent in C. A. No. 656 of 1957. Sachin Choudhry, R. J. Joshi, J. B. Dadachanji, Rameshwar Nath and St N. Andley, for the appellants in C. As. Nos. 456 & 457 of 1957 and respondents in C. As. Nos. 657 & 658 of 1957. C. K. Daphtary, Solicitor General for India, G. N. Joshi, K. H. Bhabha and R. H. Dhebar, for respondent No. 4 in C. As. 455 to 457 of 1957 and appellant in C. As. 656 to 658 of 1957. March 28. The Judgment of the Court was delivered by DAS C. J. These six several appeals are directed against a common judgment and order pronounced on 36 282 April 29, 1957, by a Division Bench of the Bombay High Court in three several Miscellaneous Applications under article 226 of the Constitution, namely, No. 48 of 1957 filed by Shri Ram Krishna Dalmia (the appellant in Civil Appeal No. 455 of 1957), No. 49 of 1957 by Shri Shriyans Prasad Jain and Shri Sital Prasad Jain (the appellants in Civil Appeal No. 456 of 1957) and No. 50 of 1957 by Shri Jai Dayal Dalmia and Shri Shanti Prasad Jain (the appellants in Civil Appeal No. 457 of 1957). By those Miscellaneous Applications the petitioners therein prayed for an appropriate direction or order under article 226 for quashing and ,setting aside notification No. section R. 0. 2993 dated ]December 11, 1956, issued by the Union of India in exercise of powers conferred on it by section 3 of the Commissions of Enquiry Act (LX of 1952) and for other reliefs. Rules were issued and the Union of India appeared and showed cause. By the aforesaid judgment and order the High Court discharged the rules and dismissed the applications and ordered that the said notification was legal and valid except as to the last part of cl. (10) thereof from the words " and the action" to the words " in future cases " and directed the Commission not to proceed with the inquiry to the extent that it related to the aforesaid last part of cl. (10) of the said notification. The Union of India has filed three several appeals, namely, Nos. 656, 657 and 658 of 1957, in the said three Miscellaneous Applications complaining against that part of the said judgment and order of the Bombay High Court which adjudged the last part of el. (10) to be invalid. The (hereinafter referred to as the Act), received the assent of the President on August 14, 1952, and was thereafter brought into force by a notification issued by the Central Government under section 1 (3) of the Act. As its long title states, the Act is one " to provide for the appointment of Commissions of Inquiry and for vesting such Commissions with certain powers ". Sub sec tion (1) of section 3, omitting the proviso not material for our present purpose, provides: The appropriate Government may, if it is of 283 opinion that it is necessary so to do, and shall, if a resolution in this behalf is passed by the House of the, People or, as the case may be, the Legislative Assembly of the State, by notification in the Official Gazette, appoint a Commission of Inquiry for the purpose of making an inquiry into any definite matter of public importance and performing such functions and within such time as may be specified in the notification, and the Commission so appointed shall make the Inquiry and perform the functions accordingly." Under sub section (2) of that section the Commission may consist of one or more members and where the Commission consists of more than one member one of them may be appointed as the Chairman thereof. Section 4 vests in the Commission the powers of a civil court while trying a suit under the Code of Civil Procedure in respect of the several matters specified therein, namely, summoning and enforcing attendance of any person and examining him on oath, requiring discovery and production of any document, receiving evidence on affidavits, requisitioning any public record or copy thereof from any court or officer, issuing commissions for examination of witnesses or documents and any other matter which may be prescribed. Section 5 empowers the appropriate Government, by a notification in the Official Gazette, to confer on the Commission additional powers as provided in all or any of the sub sections (2), (3), (4) and (5) of that section. Section 6 provides that no statement made by a person in the course of giving evidence before the commission shall subject him to, or be used against him in, any civil or criminal proceeding except a prosecution for giving false evidence by such statement provided that the statement is 'made in reply to a question which he is required by the Commission to answer or is relevant to the subject matter of the inquiry. The appropriate Government may under section 7 issue a notification declaring that the Commission shall cease to exist from such date as may be specified therein. By section 8 the Commission is empowered, subject to any rules that may be made, to regulate its own procedure including the time and place of its 284 sittings and may act notwithstanding the temporary absence of any member or the existence of any vacancy among its members. Section 9 provides for indemnity to the appropriate Government, the members of the Commission or other persons acting under their directions in respect of anything which is done or intended to be done in good faith in pursuance of the Act. The rest of the sections aye not material for the purpose of these appeals. In exercise of the powers conferred on it by section 3 of the Act the Central Government published in the Gazette of India dated December 11, 1956, a notification in the following terms: MINISTRY OF FINANCE (Department of Economic Affairs) ORDER New Delhi, the 11th December, 1956 section R. O. 2993 Whereas it has been made to appear to the Central Government that: (1) a large number of companies and some firms were promoted and/or controlled by Sarvashri Ramakrishna Dalmia, Jaidayal Dalmia, Shanti Prasad Jain, Sriyans Prasad Jain, Shital Prasad Jain or some one or more of them and by others being either relatives or employees of the said person or persons, closely connected with the said persons; (2) large amounts were subscribed by the investing public in the shares of some of these companies; (3) there have been gross irregularities (which may in several respects and materials amount to illegalities) in the management of such companies including manipulation of the accounts and unjustified transfers and use of funds and assets; (4) the moneys subscribed by the investing public were in a considerable measure used not in the interests of the companies concerned but contrary to their interest and for the ultimate personal benefit of those in control and/or management; and (5) the investing public have as a result suffered considerable losses. 285 And Whereas the Central Government is of the opinion that there should be a full inquiry into these matters which are of definite public importance both by reason of the grave consequences which appear to have ensued to the investing public and also to determine such measures as may be deemed necessary in order to prevent a recurrence thereof; Now, therefore, in exercise of the powers conferred by section 3 of the Commissions of Inquiry Act (No. 60 of 1952), the Central Government hereby appoints a Commission of Inquiry consisting of the following persons, namely : Shri Justice section R. Tendolkar, Judge of the High Court at Bombay, Chairman. Shri N. R. Modi of Messrs A. F. Ferguson & o., Chartered Accountants, Member. Shri section C. Chaudhuri, Commissioner of Income tax, Member. 1.The Commission shall inquire into and report on and in respect of: (1) The administration of the affairs of the companies specified in the schedule hereto; (2) The administration of the affairs of such other companies and firms as the Commission may during the course of its enquiry find to be companies or firms connected with the companies referred to in the schedule and whose affairs ought to be investigated and inquired into in connection with or arising out of the inquiry into the affairs of the companies specified in the schedule hereto; (3)The nature and extent of the control, direct and indirect, exercised over such companies and firms or any of them by the aforesaid Sarvashri Ram Krishna Dalmia, Jaidayal Dalmia, Shanti Prasad Jain, Sriyans Prasad Jain, their relatives, employees and persons connected with them; (4)The total amount of the subscription obtained from the investing public and the amount subscribed by the aforesaid persons and the extent to which the funds and assets thus obtained or acquired were misused, misapplied or misappropriated; (5) The extent and nature of the investments by 286 and/or loans to and/or the use of the funds or assets by and transfer of funds between the companies aforesaid; (6)The consequences or results of such investments, loans transfers and/or use of funds and assets ; (7)The reasons or motives of such investments, loans transfers and use and whether there was any justification for the same and whether the same were made bona fide, in the interests of the companies concerned ; (8) The extent of the losses suffered by the investing public, how far the losses were avoidable and what steps were taken by those in control and/or management to avoid the losses; (9) The nature and extent, of the personal gains made by any person or persons or any group or groups of persons whether herein named or not by reason of or through his or their connection with or control over any such company or companies; (10) Any irregularities frauds or breaches of trust or action in disregard of honest commercial practices or contravention of any law (except contraventions in respect of which criminal proceedings are pending in a Court of Law) in respect of the companies and firms whose affairs are investigated by the Commission which ma come to the knowledge of the Commission and the action which in the opinion of the Commission should be taken as and by way of securing redress or punishment or to act as a preventive in future cases. (11) The measures which in the opinion of the Commission are necessary in order to ensure in the future the due and Proper administration of the funds and assets of companies and firms in the interests of the investing public. SCHEDULE 1. Dalmia Jain Airways Ltd. 2. Dalmia Jain Aviation Ltd., (now known as Asia Udyog Ltd.) 3. Lahore Electric Supply Company Ltd., (now known as South Asia Industries Ltd.) 4. Sir Shapurji Broacha Mills Ltd. 287 5. Madhowji Dharamsi Manufacturing Company Ltd. 6. Allen Berry and Co. Ltd. 7. Bharat Union Agencies Ltd. 8. Dalmia Cement and Paper Marketing Company Ltd., (now known as Delhi Glass Works Ltd.) 9. Vastra Vyavasaya Ltd. Ordered that the Order be published in the Gazette of India for public information. (No. F. 107 (18INS/56)). H.M. Patel Secretary. It should be noted that the above notification did not specify the time within which the Commission was to complete the inquiry and make its report. On January 9, 1957, the Central Government issued another notification providing that all the provisions of sub sections (2), (3), (4), and (5) of section 5 should apply to the Commission. As the notification of December 11, 1956, did not specify the time within which the Commission was to make its report, the Central Government on February 11, 1957, issued a third notification specifying two years from that date as the time within which the Commission of Inquiry should exercise the functions conferred on it and make its report. On February 12, 1957, three several Miscellaneous Applications were filed under article 226 of the Constitution questioning the validity of the Act and the notification dated December 11, 1956, on diverse grounds and praying for a writ or order for quashing the same. It will be convenient to advert to a few minor objections urged before us on behalf of the petitioners in support of their appeals before we come to deal with their principal and major contentions. The first objection is that the notification has gone beyond the Act. It is pointed out that the Act, by section 3, empowers the appropriate Government in certain eventualities to appoint a Commission of Inquiry for the purpose of making an inquiry into any definite matter of public importance and for no other purpose. The contention is that the conduct of an individual person 288 or company cannot possibly be a matter of public importance and far less a definite matter of that kind. We are unable to accept this argument as correct. Widespread floods, famine and pestilence may quite easily be a definite matter of public importance urgently calling for an inquiry so as to enable the Government to take appropriate steps to prevent their recurrence in future. The conduct of villagers in cutting the bunds for taking water to their fields during the dry season may cause floods during the rainy season and we can see no reason why such unsocial conduct of villagers of certain villages thus causing floods should not be regarded as a definite matter of public importance. The failure of a big bank resulting in the loss of the life savings of a multitude of men of moderate means is certainly a definite matter of public importance but the conduct of the. persons in charge and management of such a bank which brought about its collapse is equally a definite matter of public importance. Widespread dacoities in parti cular parts of the country is, no doubt, a definite matter of public importance but we see no reason why the conduct, activities and modes operandi of particular dacoits and thugs notorious for their cruel depredations. should not be regarded as definite matters of public importance urgently requiring a sifting inquiry. It is needless to multiply instances. In each case the question is: is there a definite matter of public importance which calls for an inquiry ? We see no warrant for the proposition that a definite matter of public importance must necessarily mean only some matter involving the public benefit or advantage in the abstract, e. g., public health, sanitation or the like or some public evil or prejudice, e. g., floods, famine or pestilence or the like. Quite conceivably the conduct of an individual person or company or a group of individual persons or companies may assume such a dangerous proportion and may so prejudicially affect or threaten to affect the public well being as to make such conduct a definite matter of public importance urgently calling for a full inquiry. Besides, section 3 itself authorises the appropriate Government to appoint a Commission 289 of Inquiry not only for the purpose of making an inquiry into a definite matter of public importance but also for the purpose of performing such functions as, may be specified in the notification. Therefore, the notification is well within the powers conferred on the appropriate Government by section 3 of the Act and it cannot be questioned on the ground of its going beyond the provisions of the Act. Learned counsel for the petitioners immediately replies that in the event of its being held that the notification is within the terms of the Act, the Act itself is ultra vires the Constitution. The validity of the Act is called in question in two ways. In the first place it is said that it was beyond the legislative competency of Parliament to enact a law conferring such a wide sweep of powers. It is pointed out that Parliament enacted the Act in exercise of the legislative powers conferred on it by article 246 of the Constitution read with entry 94 in List I and entry 45 in List III of the Seventh Schedule to the Constitution. The matters enumerated in entry 94 in List 1, omitting the words not necessary for our purpose, are " inquiries. . for the purpose of any of the matters in this List ", and those enumerated in entry 45 in List III, again omitting the unnecessary words, are " inquiries. . for the purposes of any of the matters specified in List II or List 111. " Confining himself to the entries in so far as they relate to " inquiries ", learned counsel for the petitioners urges that Parliament may make a law with respect to inquiries but cannot under these entries make a law conferring any power to perform any function other than the power to hold an inquiry. He concedes that, according to the well recognised rule of construction of the provisions of a Constitution, the legislative heads should be construed very liberally and that it must be assumed that the Constitution intended to give to the appropriate legislature not only the power to legislate with respect to the particular legislative topic but also with respect to all matters ancillary thereto. Indeed the very use of the words " with respect to in article 246 supports this principle 37 290 of liberal interpretation. He, however, points out that the law, which the appropriate legislature is empowered to make under these entries must be with respect to inquiries for the purposes of any of the matters in the relevant lists and it is urged that the words " for the purpose of " make it abundantly clear that the law with respect to inquiries to be made under these two entries must be for the purpose of future legislation with respect to any of the legislative heads in the relevant lists. In other words, the argument is that under these two entries the appropriate legislature may make a law authorising the constitution of a Board or Commission of Inquiry to inquire into and ascertain facts so as to enable such legislature to undertake legislation with respect to any of the legislative topics in the relevant lists to secure some public benefit or advantage or to prevent some evil or harm befalling the public and thereby to protect the public from the same. But if an inquiry becomes necessary for, say, administrative purposes, a law with respect to such an inquiry cannot be made under these two entries. And far less can a law be made with respect to an inquiry into any wrongs alleged to have been committed by an individual person or company or a group of them for the purpose of punishing the suspected delinquent. This argument has found favour with the High Court, but we are, with great respect, unable to accept this view. To adopt this view will mean adding words to the two entries so as to read " inquiries for the purpose of future legislation with respect to any of the matters in the List or Lists mentioned therein. The matter, however, does not rest here. A careful perusal of the language used in entry 45 in List III does, in our view, clinch the matter. Entry 45 in List III, which is the Concurrent List, speaks, inter alia, of " inquiries for the purpose of any of the matters in List II or List 111. Under article 246 read with this entry, Parliament as well as the Legislature of a State may make a law with respect to " inquiries for the purpose of any of the matters in List II. " Parliament, under article 246, has no power to make a law with respect to any of the 291 matters enumerated in List 11. Therefore, when Parliament makes a law under article 246 read with. , entry 45 in List III with respect to an inquiry for the purposes of any of the matters in List 11, such law can never be one for inquiry for the purpose of future legislation by Parliament with respect to any of those matters in List 11. Clearly Parliament can make a law for inquiry for the purpose of any of the matters in List 11 and none the less so though Parliament cannot legislate with respect to such matters and though none of the State Legislatures wants to Legislate on such matters. In our opinion, therefore, the law to be made by the appropriate legislature with respect to the two legislative entries referred to above may cover inquiries into any aspect of the matters enumerated in any of the lists mentioned therein and is not confined to those matters as mere heads of legislative topic. Quite conceivably the law with respect to inquiries for the purpose of any of the matters in the lists may also be for administrative purposes and the scope of the inquiry under such a law will cover all matters which may properly be regarded as ancillary to such inquiries. The words " for the purposes of " indicate that the scope of the inquiry is not necessarily limited to the particular or specific matters enumerated in any of the entries in the list concerned but may extend to inquiries into collateral matters which may be necessary for the purpose, legislative or otherwise, of those particular matters. We are unable, therefore,to hold that the Inquiry which may be set up by a law made under these two entries is, in its scope or ambit, limited to future legislative purposes only. Learned counsel then takes us through the different heads of inquiry enumerated in the notification and urges that the inquiry is neither for any legislative nor for any administrative purpose, but is a clear usurpation of the functions of the judiciary. The argument is that Parliament in authorising the appointment of a Commission and the Government in appointing this Commission have arrogated to themselves judicial powers which do not, in the very nature 292 of things, belong to their respective domains which must be purely legislative and executive respectively. It is contended that Parliament cannot convert itself into a court except for the rare cases of dealing with breaches of its own privileges for which it may punish the delinquent by committal for contempt or of proceedings by way of impeachment. It cannot, it is urged, undertake to inquire or investigate into alleged individual wrongs or private disputes nor can it bring the supposed culprit to book or gather materials for the purpose of initiating proceedings, civil or criminal, against him, because such inquiry or investigation is clearly not in aid of legislation. It is argued that if a criminal prosecution is to be launched, the preliminary investigation must be held under the Code of Criminal Procedure and it should not be open to any legislature to start investigation on its own and thereby to deprive the citizen of the normal protection afforded to him by the provisions of the Code of Criminal Procedure. This line of reasoning also found favour with the High Court which, after considering the provisions of the Act and the eleven heads of inquiry enumerated in the notification, came to the conclusion that the last portion of el. (10) beginning with the words " and the action " and ending with the words ',in future cases" were ultra vires the Act and that the Government was not competent to require the Commission to hold any inquiry or make any report with regard to the matters covered by that portion of cl. (10), for such inquiry or. report amounts to a usurpation of the judicial powers of the Union or the State as the case may be. While we find ourselves in partial agreement with the actual conclusion of the High Court on this point, we are, with great respect, unable to accept the line of reasoning advanced by learned counsel for the petitioners, which has been accepted by the High Court for more reasons than one. In the first place neither Parliament nor the Government has itself undertaken any inquiry at all. Parliament has made a law with respect to inquiry and has left it to the appropriate Government to set up a Commission of Inquiry under 293 certain circumstances referred to in section 3 of the Act. The Central Government, in its turn, has, in exercise of the powers conferred on it by the Act, set up this Commission. It is, therefore, not correct to say that Parliament or the Government itself has undertaken to hold any inquiry. In the second place the conclusion that the last portion of cl. (10) is bad because it signifies that Parliament or the Government had usurped the functions of the judiciary appears to us, with respect, to be inconsistent with the conclusion arrived at in a later part of the judgment that as the Commission can only make recommendations which are not enforceable proprio vigore there can be no question of usurpation of judicial functions. As has been stated by the High Court itself in the latter part of its judgment, the only power that the Commission has is to inquire and make a report and embody therein its recommendations. The Commission has no power of adjudication in the sense of passing an order which can be enforced proprio vigore. A clear distinction must, on the authorities, be drawn between a decision which, by itself, has no force and no penal effect and a decision which becomes enforceable immediately or which may become enforceable by some action being taken. Therefore, as the Commission we are concerned with is merely to investigate and record its findings and recommendations without having any power to enforce them, the inquiry or report cannot be looked upon as a judicial inquiry in the sense of its being an exercise of judicial function properly so called and consequently the question of usurpation by Parliament or the Government of the powers of the judicial organs of the Union of India cannot arise on the facts of this case and the elaborate discussion of the American authorities founded on the categorical separation of powers expressly provided by and under the American Constitution appears to us, with respect, wholly inappropriate and unnecessary and we do not feel called upon, on the present occasion, to express any opinion on the question whether even in the absence of a specific provision for separation of powers in our Constitution, such as there is 294 under the American Constitution, some such division of powers legislative, executive and judicial is, nevertheless implicit in our Constitution. In the view we have taken it is also not necessary for us to consider whether, had the Act conferred on the appropriate Government power to set up a Commission of Inquiry with judicial powers, such law could not, subject, of course, to the other provisions of the Con stitution, be supported as a law made under some entry in List I or List III authorising the setting up of courts read with these two entries, for a legislation may well be founded on several entries. Learned Counsel appearing for the petitioners, who are appellants in Civil Appeals Nos. 456 and 457 of 1957, goes as far as to say that while the Commission may find facts on which the Government may take action, legislative or executive, although he does not concede the latter kind of action to be contemplated, the Commission cannot be asked to suggest any measure, legislative or executive, to be taken by the appropriate Government. We are unable to accept the proposition so widely enunciated. An inquiry necessarily involves investigation into facts and necessitates the collection of material facts from the evidence adduced before or brought to the notice of the person or body conducting the inquiry and the recording of its findings on those facts in its report cannot but be regarded as ancillary to the inquiry itself, for the inquiry becomes useless unless the findings of the inquiring body are made available to the Government which set up the inquiry. It is, in our judgment, equally ancillary that the person or body conducting the inquiry should express its own view on the facts found by it for the consideration of the appropriate Government in order to enable it to take such measure as it may think fit to do. The whole purpose of setting up of a Commission of Inquiry consisting of experts will be frustrated and the elaborate process of inquiry will be deprived of its utility if the opinion and the advice of the expert body as to the measures the situation disclosed calls for cannot be placed before the Government 295 for consideration notwithstanding that doing so cannot be to the prejudice of anybody because it has no force of its own. In our view the recommendations of a Commission of Inquiry are of great importance to the Government in order to enable it to make up its mind as to what legislative or administrative measures should be adopted to eradicate the evil found or to implement the beneficial objects it has in view. From this point of view, there can be no objection even to the Commission of Inquiry recommending the imposi tion of some. form of punishment which will, in its opinion, be sufficiently deterrent to delinquents in future. But seeing that the Commission of Inquiry has no judicial powers and its report will purely be recommendatory and not effective proprio vigore and the statement made by any person before the Commission of Inquiry is, under section 6 of the Act, wholly inadmissible in evidence in any future proceedings, civil or criminal, there can be no point in the Commission of Inquiry making recommendations for taking any action " as and by way of securing redress or punishment " which, in agreement with the High Court, we think, refers, in the context, to wrongs already done or committed, for redress or punishment for such wrongs, if any, has to be imposed by a court of law, properly constituted exercising its own discretion on the facts and circumstances of the case and without being in any way influenced by the view of any person or body, howsoever august or high powered it may be. Having regard to all these considerations it appears to us that only that portion of the last part of cl. (10) which calls upon the Commission of Inquiry to make recommendations about the action to be taken " as and by way of securing redress or punishment ", cannot be said to be at all necessary for or ancillary to the purposes of the Commission. In our view the words in the latter part of the section, namely, " as and by way of securing redress or punishment ", clearly go outside the scope of the Act and such provision is not covered by the two legislative entries and should, therefore, be deleted. So deleted the latter portion of cl. (10) would read and the action which in the opinion of the Commission 296 should be taken to act as a preventive in future cases ". Deletion of the words mentioned above from cl. (10) raises the question of severability. We find ourselves in substantial agreement with the reasons given by the High Court on this point and we hold that the efficacy of the notification is in no way affected by the deletion of the offending words mentioned above and there is no reason to think that the Government would not have issued the notification without those words. Those words do not appear to us to be inextricably wound up with the texture of the entire notification. The principal ground urged in support of the contention as to the invalidity of the Act and/or the notification is founded on article 14 of the Constitution. In Budhan Choudhry vs The State of Bihar (1) a Constitution Bench of seven Judges of this Court at pages 1048 49 explained the true meaning and scope of article 14 as follows: " The provisions of Article 14 of the Constitution have come up for discussion before this court in a number of cases, namely, Chiranjit Lal Choudhuri vs The Union of India (2) , The State, of Bombay vs F. N.Balsara(3),The state of west Bengal vs Anwar Ali Sarkar (4 ), Kathi Baning Rawat vs The State of Saurashtra(5) Lachmandas Kewalram Ahuja vs The State Of Bombay (6), Qasim Razvi vs The State of Hyderabad (7) and Habeeb Mohamad vs The State of Hyderabad (8). it is, therefore, not necessary to enter upon any lengthy discussion as to the meaning, scope and effect of the article in question. It is now well established that while article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, filled namely, (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together (1) ; (3) ; (5) ; [1952] S.C.R. 433.(6) (7) ; (8) ; 297 from others left out of the group and, (ii) that that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases, namely, geographical, or according to objects or occupations or the like. What is necessary is that there 'Must be a nexus between the basis of classification and the object of the Act under consideration. It is also well established by the decisions of this Court that article 14 condemns discrimination not only by a substantive law but also by a law of procedure. " The principle enunciated above has been consistently adopted and applied in subsequent cases. The decisions of this Court further establish (a) that a law may be constitutional even though it relates to a single individual if, on account of some special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself; (b) that 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; (c) that it must be presumed that the legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds; (d) that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest ; (e) that in order to sustain the presumption of constitutionality the court may take into consideration 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 (f)that 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 38 298 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. The above principles will have to be constantly borne in mind by the court when it is called upon to adjudge the constitutionality of any particular law attacked as discriminatory and violative of the equal protection of the laws. A close perusal of the decisions of this Court in which the above principles have been enunciated and applied by this Court will also show that a statute which may come up for consideration on a question of its validity under article 14 of the Constitution, may be placed in one or other of the following five classes: (i) A statute may itself indicate the persons or things to whom its provisions are intended to apply and the basis of the classification of such persons or things may appear on the face of the statute or may be gathered from the surrounding circumstances known to or brought to the notice of the court. In determining the validity or otherwise of such a statute the court has to examine whether such classification is or can be reasonably regarded as based upon some differentia which distinguishes such persons or things grouped together from those left out of the group and whether such differentia has a reasonable relation to the object sought to be achieved by the statute, no matter whether the provisions of the statute are intended to apply only to a particular person or thing or only to a certain class of persons or things. Where the court finds that the classification satisfies the tests, the court will uphold the validity of the law, as it did in Chiranjitlal Chowdhri vs The Union of India (1), The State of Bombay vs F. N. Balsara (2), Kedar Nath (1) ; (2) ; , 299 Bajoria vs The State of West Bengal (1), V. M. Syed Mohammad & Company vs The State of Andhra (2) and Budhan Choudhry vs The State of Bihar (3). (ii)A statute may direct its provisions against one individual person or thing or to several individual persons or things but, no reasonable basis of classification may appear on the face of it or be deducible from the surrounding circumstances, or matters of common knowledge. In such a case the court will strike down the law as an instance of naked discrimination, as it did in Ameerunnissa Begum vs Mahboob Begum (4) and Ramprasad Narain Sahi vs The State of Bihar (3). (iii)A statute may not make any classification of the persons or things for the purpose of applying its provisions but may leave it to the discretion of the Government to select and classify persons or things to whom its provisions are to apply. In determining the question of the validity or otherwise of such a statute the court will not strike down the law out of hand only because no Classification appears on its face or because a discretion is given to the Government to make the selection or classification but will go on to examine and ascertain if the statute has laid down any principle or policy for the guidance of the exercise of discretion by the Government in the matter of the selection or classification. After such scrutiny the court will strike down the statute if it does not lay down any principle or policy for guiding the exercise of discretion by the Government in the matter of selection or classification, on the ground that the statute provides for the delegation of arbitrary and uncontrolled power to the Government so as to enable it to discriminate between persons or things similarly situate and that, therefore, the discrimination is inherent in the statute itself. In such a case the court will strike down both the law as well as the executive action taken under such law, as it did in State of West Bengal vs Anwar, Ali Sarkar (6), Dwarka Prasad Laxmi Narain vs The State of Uttar Pradesh(7) (1) ; (2) [1954] S.C.R. I 117. (3) (4) (5) ; (6) ; (7) ; 300 and Dhirendra Krishna Mandal vs The Superintendent and Remembrancer of Legal Affairs (1). (iv) A statute may not make a classification of the persons or things for the purpose of applying its provisions and may leave it to the discretion of the Government to select and classify the persons or things to whom its provisions are to apply but may at the same time lay down a policy or principle for the guidance of the exercise of discretion by the Government in the matter of such selection or classification, the court will uphold the law as constitutional, as it did in Kathi Raning Rawat vs The State of Saurashtra (2). (v) A statute may not make a classification of the persons or things to whom their provisions are intended to apply and leave it to the discretion of the Government to select or classify the persons or things for applying those provisions according to the policy or the principle laid down by the statute itself for guidance of the exercise of discretion by the Government in the matter of such selection or classification. If the Government in making the selection or classification does not proceed on or follow such policy or principle, it has been held by this Court, e. g., in Kathi Raning Rawat vs The State of Saurashtra (2) that in such a case the executive action but not the statute should be condemned as unconstitutional In the light of the foregoing discussions the question at once arises: In what category does the Act or the notification impugned in these appeals fall ? It will be apparent from its long title that the purpose of the Act is to provide for the appointment of Commissions of Inquiry and for vesting such Commissions with certain powers. Section 3 empowers the appropriate Government, in certain circumstances therein mentioned, to appoint a Commission of Inquiry for the purpose of making an inquiry into any definite matter of public importance and performing such functions within such time as may be specified in the notification. It seems clear and it has not been controverted that on a proper construction of this (1) (2) ; 301 section, the functions the performance of which is contemplated must be such as are ancillary to and in aid of the inquiry itself and cannot be read as a function independent of or unconnected with such inquiry. That being the position, as we conceive it to be, the question arises as to the scope and ambit of the power which is conferred by it on the appropriate Government. The answer is furnished by the statute itself, for section 3 indicates that the appropriate Government .can appoint a Commission of Inquiry only for the purpose of making an inquiry into any definite matter of public importance and into no other matter. In other words the subject matter of the inquiry can only be a definite matter of public importance. The appropriate Government, it follows, is not authorised by this section to appoint a Commission for the purpose of holding an inquiry into any other matter. Learned Solicitor General, in the premises, submits that the section itself on the face of it, makes. a classification so that this statute falls within the first category mentioned above and contends that this classification of things is based on an intelligible differentia which has a reasonable relation to the object sought to be achieved by it, for a definite matter of public importance may well call for an inquiry by a Commission. In the alternative the learned Solicitor General urges that in any case the section itself quite clearly indicates that the policy of Parliament is to provide for the appointment of Commissions of Inquiry to inquire into any definite matter of public importance and that as there is no knowing when, where or how any such matter may crop up Parliament considers it necessary or expedient to leave it to the appropriate Government to take action as and when the appropriate moment will arrive. In the tempo of the prevailing conditions in modern society events occur which were never foreseen and it is impossible for Parliament or any legislature to anticipate all events or to provide for all eventualities and, therefore, it must leave the duty of taking the necessary action to the appropriate Government. This delegation of authority, however, is not unguided or uncontrolled, 302 for the discretion given to the appropriate Government to set up a Commission of Inquiry must be guided by the policy laid down, namely, that the executive action of setting up a Commission of Inquiry must conform to the condition of the section, that is to say, that there must exist a definite matter. of public importance into which an inquiry is, in the opinion of the appropriate Government, necessary or is required by a resolution in that behalf passed by the House of the People or the Legislative Assembly of the State. If the preambles or the provisions of the statutes classed under the first category mentioned above could be read as making a reasonable classification satisfying the requirements of article 14 and if the preamble to the statute considered in the case of Kathi Raning Rawat (1) could be construed as laying down sufficiently clearly a policy or principle for the guidance of the executive, what objection can there be to construing section 3 of the Act now under our consideration as also making a reasonable classification or at any rate as declaring with sufficient clarity the policy of Parliament and laying down a principle for the guidance of the exercise of the powers conferred the appropriate Government so as to bring this statute at least in the fourth category, if not also in the first category ? On the authorities, as they stand, it cannot be said that an arbitrary and uncontrolled power has been delegated to the appropriate Government and that, therefore, the law itself is bad. Learned counsel for the petitioners next contends that if the Act is good in the sense that has declared its policy and laid down some principle for the guidance of the Government in the exercise of the power conferred on it, the appropriate Government has failed to exercise its discretion property on the basis of a, reasonable classification. Article 14 protects all persons from discrimination by the legislative as well as by the executive organ of the State. "State" is defined in article 12 as including the Government and "law " is defined in article 13 as including any notification or order ' It has to be conceded, therefore, that (1) ; 303 it is open to the petitioners also to question the consti tutionality of the notification. The attack against, the notification is that the Government has not properly implemented the policy or followed the principle laid down in the Act and has consequently transgressed the bounds of the authority delegated to it. It is pointed out that in March, 1946, one Shri Tricumdas Dwarkadas, a solicitor of Bombay, had been appointed an officer on Special Duty to indicate the lines on which the Indian Companies Act was to be revised. He made a report which was, however, incomplete in certain particulars. Thereupon the Government appointed Shri Thiruvenkatachari, the Advocate General of Madras, to make further inquiry. The last mentioned gentleman submitted his report and on the basis of that report, it is said, a memorandum containing tentative proposals was prepared and circulated to elicit the opinions of various organisations. On October 28, 1950, a Committee called the Indian Company Law Committee popularly known as the Bhaba Committee was appointed. That Committee went round and collected materials and made its comprehensive report on the basis of which the new Indian Companies Act has recently been remodeled. As nothing new has since then happened why, it is asked ', should any further inquiry be made ? The conclusion is pressed upon us that there can, in the circumstances, be no definite matter of public importance which can possibly call for an inquiry. We find no force in this argument. In the first place the Bhaba Committee at p. 29 of its Report recommended that further inquiries may, in future, have to be made regarding some matters relating to Companies and, therefore, the necessity for fresh inquiry cannot be ruled out. In the next place the appropriate Government is empowered to appoint a Commission of Inquiry if, in its opinion, it is necessary so to do. The preambles to the notification recite that certain matters enumerated under five heads had been made to appear to the Central Government in consequence of which the Central Government had come to the conclusion that there should be a full inquiry into those matters which, 304 in its opinion, were definite matters of public importance both by reason of the grave consequences which appeared to have ensued to the investing public and for determining such measures as might be deemed necessary in order to prevent a recurrence thereof. Parliament in its wisdom has left the matter of the setting up of a Commission of Inquiry to the discretion of the appropriate Government and if the appro priate Government has formed the opinion that a definite matter of public importance has arisen and calls for an inquiry the court will not lightly brush aside the opinion. Learned counsel for the petitioners argues that granting that the question as to the necessity for constituting a Commission of Inquiry has been left to the subjective determination of the appropriate Government the actual setting up of a Commission is conditioned by the existence 'of some definite matter of public importance. If there be no such definite matter of public importance in existence then no question of necessity for appointing a Commission can arise. Reference is then made to the first preamble to the notification and it is pointed out that all the matters alleged to have been made to appear to the Central Government relate to some supposed act or conduct of the petitioners. The contention is repeated that the act and conduct of individual persons can never be regarded as definite matters of public importance. We are unable to accept this argument as sound, for as we have already stated, the act or conduct of individuals may assume such dangerous proportions as may well affect the public well being and thus become a definite matter of public importance. We do not, therefore, agree that the notification should be struck down for the absence of a definite matter of public importance calling for an inquiry. The point which is next urged in support of these appeals and which has given us considerable anxiety is that the petitioners and their companies have been arbitrarily singled out for the purpose of hostile and discriminatory treatment and subjected to a harassing and oppressive inquiry. The provisions of article 14, 305 it is contended, protect every person against discrimination by the State, namely, against the law as well as the executive action and this protection extends to State action at all its stages. The petitioners ' grievance is that the Government had started discrimination even at the earliest stage when it conceived the idea of issuing the notification. Reference is made to the Memorandum filed by the Bombay Shareholders ' Association before the Bhaba Committee showing that the same or similar allegations had been made not only against the petitioners and their companies but against other businessmen and their companies and that although the petitioners and their companies and those other persons and their companies were thus similarly situate, in that allegations had been made against both, the Government arbitrarily applied the Act to the petitioners and their companies and issued the notification concerning them but left out the others from its operation. It is true that the notification primarily or even solely affects the petitioners and their companies but it cannot be overlooked that Parliament having left the selective application of the Act to the discretion of the appropriate Government, the latter must of necessity take its decision on the materials available to it and the opinion it forms thereon. The appropriate Government cannot in such matters be expected to sit down and hold a judicial inquiry into the truth of the materials brought before it, and examine the informants on oath in the presence of the parties who are or may be likely to be affected by its decision. In matters of this kind the appropriate Government has of necessity to act upon the information available to it. It is the best judge of ' the reliability of its source of information and if it acts in good faith on the materials brought to its notice and honestly comes to the conclusion that the act and conduct of the petitioners and the affairs of their companies constitute a definite matter of public importance calling for an inquiry with a view to devise measures for preventing the recurrence of such evil, this Court, not being in possession of all the facts will, 39 306 we apprehend, be slow to adjudge the executive action to be bad and illegal. We are not unmindful of the fact that a very wide discretionary power has been conferred on the Government and, indeed, the contemplation that such wide powers in the hands of the executive may in some cases be misused or abused and turned into an engine of oppression has caused considerable anxiety in our mind. Nevertheless, the bare possibility that the powers may be misused or abused cannot per se induce the court to deny the existence of the powers. It cannot be overlooked that Parliament has confided this discretion, not to any petty official but to the appropriate Government itself to take action in conformity with the policy and principle laid down in the Act. As this Court 'has said in Matajog Dobey vs H. C. Bhari (1), " a discretionary power is not necessarily a discriminatory power and that abuse of power is not to be easily assumed where the discretion is vested in the Government and not in a minor official. " We feel sure, however, that if this law is administered by the Government " with an evil eye and an unequal hand " or for an oblique or unworthy purpose the arms of this Court will be long enough to reach it and to strike down such abuse with a heavy hand. What, then, we inquire, are the salient facts here ? The Central Government appointed investigators to scrutinise the affairs of three of the petitioners ' concerns. Those investigators had made their reports to the Central Government. The Central Government had also the Bhaba Committee Report and all the Memoranda filed before that Committee. It may also have had other information available to it and on those materials it formed its opinion that the act and conduct of the petitioners and the affairs of their companies constituted a definite matter of public importance which required a full inquiry. Up to this stage there is no question of legal proof of the allegations against the petitioners as in a court of law. The only question is: do those allegations if honestly believed, constitute a definite matter of public importance ? We are unable to say that they do not. (1) , 932. 307 Reference is again made to the several matters enumerated in the five clauses set out in the first, preamble to the notification and it is urged that those matters do not at all disclose any intelligible differentia on the basis of which the petitioners and their companies can be grouped together as a class. On the part of the Union of India reference is made to the affidavits affirmed by Shri H. M. Patel, the Principal Secretary to the Finance Ministry of the Government of India purporting to set out in detail as the background thereof, the circumstances which led to the issue of the impugned notification and the matters recited therein and the several reports referred to in the said affidavit. Learned counsel for the petitioners take the objection that reference cannot be made to any extraneous matter and that the basis of classification must appear on the face of the notification itself and reliance is placed on certain observations in the dissenting judgments in Chiranjitlal Chowdhury 's case (1) and in item (2) of the summary given by Fazl Ali J. in his judgment in F. N. Balsara 's case (2). In Chiranjitlal Chowdhury 's case (1) the majority of the Court read the preamble to the Ordinance which was replaced by the Act which was under consideration there as part of the Act and considered the recitals, reinforced as they were by the presumption of validity of the Act, as prima facie sufficient to constitute an intelligible basis for regarding the company concerned as a class by itself and held that the petitioner there had not discharged the onus that was on him. The dissenting Judges, after pointing out that the petition and the affidavit did not give any indication as to the differentia on the basis of which the company had been singled out, went on to say that the statute also did not on the face of it indicate any basis of classification. This was included in cl. (2) of the summary set out in the judgment in F. N. Balsara 's case (2). Those observations cannot, therefore, be read as meaning that the classification must always appear on the face of the law itself and that reference cannot be made to (1) (2) ; 308 any extraneous materials. In fact in Chiranjitlal Chowdhury 's case (1) parliamentary proceedings, in so far as they depicted the surrounding circumstances and furnished the background, were referred to. In Kathi Raning Rawat 's case (2) the hearing was adjourned in order to enable the respondent to put in an affidavit setting forth the material circumstances. In Kedarnath Bajoria 's case (3) the situation brought about by the war conditions was taken notice of The same may be said of the cases of A. Thanyal Kunju Musaliar vs V. Venkitachulam Potti (4) and Pannalal Binjraj vs Union of India (5). In our judgment, therefore, there can be no objection to the matters brought to the notice of the court by the affidavit of Shri H. M. Patel being taken into consideration along with the matters specified in the notification in order to ascertain whether there was any valid basis for treating the petitioners and their companies as a class by themselves. Learned counsel for the petitioners next urges that even if the matters referred to in Shri H. M. Patel 's affidavits and those appearing on the face of the notification are taken into consideration one cannot deduce therefrom any differentia which may be taken to distinguish the petitioners and their companies from other persons and their companies. The qualities and characteristics imputed to the petitioners and their companies are not at all peculiar or exclusive to them but are to be found equally in other persons and companies and yet they and their companies have been singled out for hostile and discriminatory treatment leaving out other persons and companies which are similarly situate. There is no force in this argument. Parliament has confided the task of the selective application of the law to the appropriate Government and it is, therefore for the appropriate Government to exercise its discretion in the matter. It is to be expected and, until the contrary is proved, it is to be presumed that the Government, which is responsible to Parliament, will act honestly, properly and in conformity with the (1) ; (2) ; (3) ; (4) ; (5) ; 309 policy and principle laid down by Parliament. It may well be that the Central Government thought that even if one, or more of the particular qualities and characteristics attributed to the petitioners and their companies may be found in another person or company, the combination of those qualities and characteristics which it thought were present in the petitioners and their companies was of a unique nature and was not present in any other person or company. In its appreciation of the material facts preparatory to the exercise of the discretion left to it by Parliament the Central Government may have thought that the evil was more pronounced in the petitioners and their concerns than any other person or concern and that the need for an inquiry was more urgent and clear in the case of the petitioners and their companies than in the case of any other person or company. What is the gist and substance of ' the allegations against the petitioners and their companies ? They are that a small group of persons had from before 1946 acquired control over a number of companies including a blanking company and an insurance company ; that some of these companies were private companies and the others were public companies in which the public had invested considerable moneys by buying, shares; that the financial years of some of these companies were different from those of the others; that the funds of ' the limited companies were utilised in purchasing shares in other companies having large reserve funds with a view to get control over them and to utilise those funds for acquiring shares in other companies or otherwise utilise those funds for the personal benefit of these individuals; that the shares were acquired on blank transfer deeds and were not registered in the names of the companies with whose funds they were purchased so as to permit the same shares to be shown in the balance sheets of the different companies having different financial years; that after 1951 several of these companies were taken into voluntary liquidation or their assets were transferred to another company under some pretended scheme of ' arrangement or re organisation; that after getting control of 310 a company they appointed some of themselves as managing director or selling agent on high remuneration and after a while cancelled such appointment on paying fabulous amounts as and by way of compensation; that funds of one company were transferred to another company to cover up the real financial position. It is needless to add other allegations to explain the matter. The question before us is not whether the allegations made on the face of the notification and in the affidavits filed on behalf of the Union of India are true but whether the qualities and characteristics, if honestly believed to be found in the petitioners, are so peculiar or unique as to constitute a good and valid basis on which the petitioners and their companies can be regarded as a class by themselves. We are not of opinion that they do not. It is not for us to say on this application and we do not in fact say or even suggest that the allegations about the petitioners and their concerns are at all well founded. It is sufficient for our present purpose to say that the facts disclosed on the face of the notification itself and the facts which have been brought to our notice by the affidavits afford sufficient support to the presumption of constitutionality of the notification. There being thus a presumption of validity in favour of the Act and the notification, it is for the petitioners to allege and prove beyond doubt that other persons or companies similarly situate have been left out and the petitioners and their companies have been singled out for discriminatory and hostile treatment. The petitioners have, in our opinion, failed to discharge that onus. Indeed nowhere in the petitions is there even an averment that there are other persons or companies similarly situate as the petitioners and their companies. It has to be remembered that the allegations set forth in the memorandum submitted by the Bombay Shareholders ' Association to the Bhaba Committee have not been proved by legal evidence. And further that report itself contains matters which may be taken as calculated to lend support to the view that whether regard is had to the combination of a variety of evils or to their degree, the petitioners may quite conceivably 311 be grouped as a class by themselves. In our judgment the plea of the infraction of the equal protection, clause of our Constitution cannot be sustained. The next contention is that the notification is bad, because the action of the Government in issuing it was mala fide and amounted to an abuse of power. Learned counsel appearing for the petitioner, who is the appellant in Civil Appeal No. 455 of 1957, makes it clear that no personal motive or illwill against the petitioners is imputed to any one, but he points out that the Bhaba Committee had been set up and the Companies Act has been remodelled and, therefore, the present Commission was not set up for any legitimate purpose. The main idea, according to learned counsel, was to obtain information which the Government could not get by following the ordinary procedure under the Code of Criminal Procedure and this ulterior motive clearly makes the governmental action mala fide. This point has been further emphasised by learned counsel appearing for the petitioners, who are appellants in Civil Appeals Nos. 456 and 457 of 1957. He has drawn our attention to the affidavits filed by his clients and contends that it was well known to the Government that none of them was concerned in promoting or managing any of the companies and their position being thus well known to the Government, their inclusion in the notification was both outside the power conferred by the Government and also constituted a mala fide exercise of the power conferred on it. No substantial ground in support of this point has been brought before us and we are not satisfied that the circumstances referred to in the notification and the affidavits filed on behalf of the Union of India, may not, if true, be the basis of a further inquiry into the matter. It will be for the Commission to inquire into the allegations and come to its own findings and make its report containing its recommendations. It is not desirable that we should say anything more on this point. All that we need say is that the charge of mala fides has not been brought home to the Government. 312 A point was taken that the original notification was defective in that it did not fix the time within which the Commission was to complete its report and that a subsequent notification fixing a time could not cure that defect. We do not think there is any substance in this too. The third notification quoted above amended the original notification by fixing a time. There was nothing to prevent the Government from issuing a fresh notification appointing a Commission and fixing a time. If that could be done, there was no reason why the same result could not be achieved by the combined effect of two notifications. In any case the amending notification taken together with the original notification may be read as a fresh notification within the meaning of section 3 of the Act, operative at least from the date of the later notification. It is feebly argued that the notification is bad as it amounts to a delegation of essential legislative function. Assuming that there is delegation of legislative function, the Act having laid down its policy, such delegation of power, if any, is not vitiated at all, for the legislation by the delegates will have to conform to the policy so laid down by the Act. Lastly a point is raised that the notification is bad because it violates article 23 of the Constitution. It is frankly stated by the learned counsel. that this point is rather premature at this stage and that he desires to reserve his client 's right to raise it in future. No other point has been urged before us and for reasons stated above the appeals Nos. 455, 456 and 457 of 1957 are dismissed with costs. Appeals Nos. 656, 657 and 658 of 1957 succeed only in part, namely, to the extent that only the word , " by way of redress or punishment " occurring in the latter portion of el. (10) will be deleted so that the latter portion of cl. (10) will read as: " and the action which in the opinion of the Commission should be taken. . . to act as a preventive in future cases " as indicated above. We make no order as to the costs of these three appeals. C. A. Nos. 455, 456 and 457 of 1957 dismissed. C. A. Nos. 656, 657 and 658 of 1957 Partly allowed.

In exercise of the powers conferred upon it by section 3 of the Commissions of Enquiry Act, 1952, the Central Government by a notification dated December 11, 1956, appointed a Commission of Inquiry to inquire into and report in respect of certain companies mentioned in the Schedule attached to the notification and in respect of the nature and extent of the control and interest which certain persons named in the notification exercised over these companies. By subsequent notifications the Central Government made all the provisions of sub sections (2), (3), (4) and (5) Of section 5 Of the Act applicable to the Commission and fixed a period Of 2 years from February 11, 1957, as the period within which the Commission was to exercise its function and to make its report. The four persons named filed three applications under article 226 of the Constitution before the Bombay High Court questioning the validity of the Act and of the notification and praying for writs for quashing the same. The High Court dismissed the applications and ordered that the said notification was legal and valid except as to the last part of cl. 10 thereof which empowered the Commission to recommend the action which should be taken as and by way of securing redress or punishment or to act as a preventive in future cases. The petitioners as well as the Union of India filed appeals : Held, that the Act wag ' valid and intra vires and that the notification was also valid excepting the words " as and by way of securing redress or punishment " in cl. 10 thereof which went beyond the Act. The Act was enacted by Parliament under entry 94 of List I and entry 45 of List III of the Seventh Schedule of the Constitution which relate to inquiries for the purposes of any of the matters in List I and in Lists 11 and III respectively. The inquiry which may be set up by a law made under these entries is not limited, 280 in its scope and ambit, to future legislative purposes only. Such a law may also be for administrative purposes and the scope of the inquiry under such a law will cover all matters which may properly be regarded as ancillary to such inquiries. The Act does not delegate to the Government any arbitrary or uncontrolled power and does not offend article 14 Of the Constitution. The discretion given to the Government to set up a Commission of Inquiry is guided by the policy laid down in the Act that the executive action is to be taken only when there exists a definite matter of public importance into which an inquiry is necessary. Kathi Raning Rawat vs State of Saurashtra, [1952] section C. R. 435, applied. The Commission is merely to investigate, record its findings and make its recommendations which are not enforceable proprio vigore. The inquiry or report cannot be looked upon as judicial inquiry in the sense of its being an exercise of judicial function properly so called and consequently Parliament or the Government cannot be said to have usurped the functions of the judiciary. The notification was well within the powers conferred on the Government by section 3 Of the Act and did not go beyond the provisions of the Act. The conduct of an individual person or company or a group of individual persons or companies may, in certain circumstances, become a definite matter of public importance within the meaning Of section 3(i) and call for an inquiry. Besides, section 3 authorises the Government to appoint a Commission. of Inquiry not only for the purpose of making an inquiry into a definite matter of public importance but also for the purpose of performing such functions as may be specified in the notification. It has not been established that the petitioners and their companies have been arbitrarily singled out for the purpose of hostile and discriminatory treatment and subjected to a harassing and oppressive inquiry. In matters of this kind the Government has of necessity to act upon the information available to it. It is the best judge of the reliability of the source of the information and if it acts in good faith and honestly comes to the conclusion that the act and conduct of the petitioners and the affairs of their companies constitute a definite matter of public importance the Court will be slow to adjudge the action to be bad and illegal. The bare possibility that the powers may be misused or abused cannot Per se make the power bad. The power having been entrusted to the Central Government and not to any petty official, abuse of power cannot be easily assumed. In determining whether there is any intelligible differentia on the basis of, which the petitioners and their companies have been grouped together it is permissible to look not only at the facts appearing in the notification but also the facts brought to the notice of the Court upon affidavits. The facts in the present case 281 afford sufficient support to the presumption of constitutionality of the notification and the petitioners have failed to discharge the onus which was on them to prove that other people or companies, similarly situated have been left out and that the petitioners and their companies have been singled out for discriminatory and hostile treatment. The recommendations of the Commission of Inquiry are of great importance to the Government in order to enable it to make up its mind as to what legislative or administrative measures should be adopted to eradicate the evil found or to implement the beneficial objects it has in view. There can be no objection to the Commission recommending the imposition of some form of punishment which will, in its opinion, be sufficiently deterrent to delinquents in future. But the Commission cannot be asked to make recommendations for taking any action " as and by way of securing redress or punishment " in respect of wrongs already done or committed as this is the function of a Court of law. Even though the original notification appointing the Commis sion did not fix the time within which the Commission was to complete its report the Government could validly do so by a subsequent notification.

ivil Appeal Nos. 6245 46 of 1983. From the Judgment and order dated 9.1.1981 of the orissa High 256 Court in Miscellaneous Appeal Nos. 285 and 286 of 1980. G.L. Sanghi, D.P. Mohanty, R.K. Mehta, Inderjit Roy, P.N. Misra and R.N. Poddar for the Petitioners. Probir Patil, Y.S. Chitale, Sankar Ghosh, Jitender Sharma, Vinoo Bhagat, Arun Madan, P.N. Misra, D.N. Mukherjee, M.M. Kashtriya P.K. Banerjee, P.K. Mukherjee, Ms. Lily Thomes, Bagga Mrs. S.K. Bagga, B.P. Meheshwari, J.R. Das, Parijat Sinha, and M.A. Firoz for the Respondents. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. This group of appeals raises the question of award of interest by an arbitrator to whom a reference is made without the intervention of the court. Special leave to appeal was granted under article 136 of the Constitution limited to the question of award of interest during the period prior to the reference and during 1:) the pendency of the arbitration proceedings. Special leave was not granted in regard to the award of interest subsequent to the date of the arbitrator 's award. This question, therefore, does not concern us in these appeals. The various references to arbitration in these cases were in regard to work done by different contractors in excess of what was stipulated under the several contracts. The contracts generally contained a clause to the following effect: "Clause 11 The Engineer in charge shall have power to make any alterations in or additions to the original specifications, drawings, designs, and instructions that may appear to him to be necessary or advisable during the progress of the work, and the contractor shall be bound to carry but 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; and any additional work which the contractor may be directed to do in the manner 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 addi 257 tional work bears to the original work bears to the original contract work and the certificate of the Engineer in charge shall be conclusive as to such proportion. And if the additional work includes any class of work, for which no rate is specified in this contract, then such 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 is being carried on and if such last mentioned class of work is not entered in the schedule of rates of the district then the contractor shall within seven days of the date of his receipt of the order to carry out the work inform the Engineer in charge of 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 it out in such manner as he may consider advisable, provided always that if the contractor shall commence work order of any expenditure in regard thereof before the rates shall have been determined as lastly herinbefore mentioned, then and in such case he shall only be entitled to be paid in respect of the work carried out or expenditure incurred by him prior to the date of the determination of the rate as aforesaid according to such rate or 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: Provided always that the contractor shall not be entitled to any payment or any additional work done unless he has received an order in writing from the Engineer in charge for the additional work that the contractor shall be bound to submit his claim for any additional work done during any month on or before the 15th day of the following month accompanied by a 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. " All the contracts also contained a provision for a reference to arbitration in case of disputes. The clause of the contract enabling the reference was as follows: 258 "Clause 23 Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings, and instructions herinbefore 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, drawings, specifications, estimates instructions, orders, or these conditions, or otherwise concerning the work or the execution, or failure to execute the same, where arising during the progress of the work, or after the completion or abandonment thereof shall be referred to the sole arbitration of a Superintending Engineer of the State Public Works Department unconnected with the work at any stage nominated by the concerned Chief Engineer. If there be no such Superintending Engineer it should be referred to the sole arbitration of the Chief Engineer concerned. If 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 these contracts. " Pursuant to the clause in the contracts enabling the Chief Engineer to refer disputes to an arbitrator, references were made. For the purposes of our decision, we are proceeding on the basis that in the notices of demand made by the contractors before the disputes were referred to arbitration interest on the amounts said to be payable was claimed. The general statutory provisions in regard to the award of interest by a court are contained in the Interest Act and the Civil Procedure Code. The Interest Act of 1839 contained only one section and it was as follows: " 1. It is, therefore, hereby enacted that, upon all debts or sums certain payable at a certain time or otherwise, the Court before which such debts or sums may be recovered may, if it shall think fit, allow interest to the creditor at a rate not exceeding the current rate of interest from the time when such debts or sums certain were payable, if such debts or sums be payable by virtue of some written instrument at a certain time; or if payable otherwise, then from the time when demand of payment shall have been made in writing so as such demand shall give notice pay the debtor that 259 interest will be claimed from the date of such demand until the term of payment; provided that interest shall be payable in all cases in which it is now payable by law. " In 1978, the Interest Act of 1839 was repealed and a new Interest Act was enacted. The Statement of objects and Reasons of the new Act recited, "The Law Commission of India in its sixty third report had recommended the revision of the existing Interest Act, 1839. This Act is a very short one; besides a preamble, it contains only one section and a proviso. However, it is a statute of importance, since it prescribes the general law of interest which becomes applicable in the absence of any contractual or statutory provisions specifically dealing with the subject. According to the Commission, almost every phrase used in the Act has given rise to problems of interpretation and judicial decisions have disclosed divergence of views in respect of the same. The Commission has revised the Act comprehensively so as to make its provisions more precise, specific, unambiguous and juristically satisfactory. It is proposed to replace the existing Act by a new Act based on the recommendations of the Law Commission. " The new Act has made some important changes. One of the important changes is that the expression 'court ' is defined to include a tribunal and an arbitrator. Debt is defined as meaning any liability for an ascertained sum of money, including a debt payable in kind, but not including a judgment debt. Section 3(1) enables the court, if it so thinks fit, to award interest, in any proceeding for the recovery of any debt or damages or in any proceeding in which a claim for interest in respect of any debt or damages already paid is made, to the person entitled to the debt or damages or to the person making such claim, for the whole or part of the following period; (a) if the proceeding relates to a debt payable by virtue of a written instrument at a certain time, then, from the date when the debt is payable to the date of institution of the proceedings; (b) if the proceeding does not relate to any such debt, then from the date mentioned in this regard in a written notice given by the person entitled or the person making the claim to the person liable that interest will be claimed, to the date of institution of the proceeding. Section 3(3) provides that 260 nothing in the section shall apply in relation to (i) any debt or damages upon which interest is payable as of right, by virtue of any agreement; or (ii) any debt or damages upon which payment of interest is barred by virtue of an express agreement. Section 3(3)(c) provides that nothing in the section shall empower the court to award interest upon interest. Section 4(1) provides, "notwithstanding anything contained in section 3, interest shall be payable in all cases in which it is payable by virtue of any enactment or other rule of law or usage having the force of law." Section 4(2) further provides notwithstanding anything as section 4, the court shall allow interest in the class of cases specified in section 4(2) from the dates stipulated to the dates stipulated in the provision. Section 5 provides that nothing in the Act shall affect the provisions of section 34 of the Code of Civil Procedure, 1908. It is important to notice at this stage that both the Interest Act of 1839 and the Interest Act of 1978 provide for the award of interest upto the date of the institution of the proceedings Neither the Interest Act of 1839 nor the Interest Act of 1978 provides for the award of pendente lite interest. We must look elsewhere for the law relating to the award of interest pendente lite. This, we find, provided for in section 34 of the Civil Procedure Code in the case of courts. Section 34, however, applies to arbitrations in suits for the simple reason that where a matter is referred to arbitration in a suit, the arbitrator will have all the powers of the court in deciding the dispute, Section 34 does not otherwise apply to arbitrations as arbitrators are not courts within the meaning of section 34 Civil Procedure Code. Again, we must look elsewhere to discover the right of the arbitrator to award interest before the institution of the proceedings, in cases where the proceedings had concluded before the commencement of the Interest Act of 1978. While under the Interest Act of 1978 the expression 'court ' was defined to include an arbitrator, under the Interest Act of 1839 it was not so defined. The result is that while in cases arising after the commencement of the Interest Act of 1978 an arbitrator has the same power as the court to award interest upto the date of institution of the proceedings, in cases which arose prior to the commencement of the 1978 Act the arbitrator has no such power under the Interest Act of 1839. It is, therefore necessary, as we said, to look elsewhere for the power of the arbitrator to award interest upto the date of institution of the proceedings. Since the arbitrator is required to conduct himself and make the award in accordance with law we must look to the substan 261 tive law for the power of the arbitrator to award interest before the commencement of the proceedings. If the agreement between the parties entitles the arbitrator to award interest no further question arises and the arbitrator may award interest. Similarly if there is a usage of trade having the force of law the arbitrator may award interest. Again if there are any other provisions of the substantive law enabling the award of interest the arbitrator may award interest. By way of an illustration, we may mention section 80 of the Negotiable Instruments Act as a provision of the substantive law under which the court may award interest even in a case where no rate of interest is specified in the promissory note or bill of exchange. We may also refer section 61(2) of the Sale of Goods Act which provided for the award of interest to the seller or the buyer as the case may be under certain circumstances in suits filed by them. We may further cite the instance of the nonperformance of a contract of which equity could give specific performance and to award interest. We may also cite a case where one of the parties is forced to pay interest to a third party, say on an overdraft, consequent on the failure of the other party to the contract not fulfilling the obligation of paying the amount due to them. In such a case also equity may compel the payment of interest. Loss of interest in the place of the right to remain in possession may be rightfully claimed in equity by the owner of a property who has been dispossessed from it. We may now refer to the case law. We may start the discussion of the topic with the case of Bengal Nagpur Raiiway Company Limited vs Ruttanji Ramji (65 Indian Appeals 66). There certain rates of payment under an agreement for the construction of a railway line were abandoned by mutual consent of the parties and the contractor was required to be paid at rates which were fair and reasonable for the work done. The question arose whether the contractor was entitled to be paid interest on the amount which the Railway Company was liable to pay. The Privy Council found that the railway was liable to pay to the plaintiff an amount of Rs.66,980 10 6 on July 26, 1925. The suit for recovery of the amount was filed on November 29, 1927. The Privy Council held that award of interest from the date of the institution of the suit was governed by section 34 of the Code of Civil Procedure and went on to observe that the crucial question was whether the court had authority to allow interest for the period prior to the institution of the suit. They observed that the solution of the question depended not upon the Code of Civil Procedure out upon substantive law. Interest for the period prior to the date of suit may be awarded if there was an agreement for the payment of interest at a fixed rate or it was payable by the usage of trade having the force of law or under the provision of H 262 any substantive law entitling the plaintiff to recover interest. Section 80 of the Negotiable Instruments Act was cited as a provision of the substantive law under which the court may award interest when no rate of interest is specified in the promissory note or bill of exchange. In the case before them however, they observed there was neither usage nor any contract, express or implied, to justify the award of interest. Interest was not payable by virtue of any provision of the law governing the case. Under the interest Act of 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 was conceded that the amount claimed in the case was not a sum certain. Referring to the provisions of section 1 of the Interest Act which stated that interest shall be payable in all cases in which interest was then payable by law, the Privy Council observed that the proviso applied to cases in which the court of equity exercised the jurisdiction to allow interest. But then they said that the case before them did not attract the jurisdiction of the court. An example of cases which attract the equitable jurisdiction of the court to award interest was given as the nonperformance of a contract of which equity could give specific performance. Considering next the question whether interest could be awarded by way of damages, it was held that it could not be so done. It was categorically stated that interest could not be allowed by way of damages. It was also pointed out that in England, the law had been amended by the Law Reform Miscellaneous Provisions Act which empowered a court of record to award interest on whole or any part of damages. But there was no such amendment of the law in India (at that time). Seth Thawardas Pherumal vs The Union of India, [1985] 2 SCR 48 was a case which arose out of a decision of the Patna High Court, which is reported in Union of India vs Prem Chand Satnam Das, AIR 1951 Patna 201. Of the facts have been taken by us from the judgment of the Patna High Court as those facts were not evident from the judgment of this court. Pursuant to clause 14 of the contract between the Dominion of India and the contractor which provided that all disputes arising out of or relating to the contract should be referred to the Superintending Engineer, a reference was made on January 21, 1949 and an award followed on May 8, 1949. Before the arbitrator the contractor submitted a claim under 17 heads. Item No. 17 as mentioned in the Statement of claim before the arbitrator was "interest on the amount of money involved in this claim at the rate of six per cent Rs.27,665. This work was finished in May 1946 and it was proper for the Department to have decided all our claims at least by 263 31st December, 1947 . But this was not done. Due to this, a heavy amount remained blocked and we were compelled to take money from our bankers on interest. We pray, therefore, for interest for 15 months from January 1, 1948 to March 31, 1949. " The arbitrator held: "The contract 's contention that his claims should have been settled by January 1948 is, in my opinion, reasonable. I, therefore, award interest at six per cent for sixteen months on the total amount of the awards given, that is, Rs.17,363". The question arose whether the arbitrator could award the interest? The Patna High Court noticed that the contractor did not include any claim for interest for the period March 3 1, 1947 to April 20, 1949 in the bill originally submitted by him to the Chief Engineer and that the claim was made for the first time before the arbitrator during the progress of the arbitration proceedings. The High Court also noticed that the Executive Engineer who appeared on behalf of the Union of India before the arbitrator did not seem to have submitted to the jurisdiction of the arbitrator to decide the question of interest. In those circumstances, the High Court held that it could not be said that the claim for interest was one of the matters referred to arbitration. The arbitrator, it was, therefore, held, had no jurisdiction to entertain the claim and award interest. In the appeal by the contractor, the Supreme Court noticed that the claim under each head on which interest was awarded was for an unliquidated sum and observed that in that kind of case, interest was not payable by law otherwise than by the application of the Interest Act. Reference was made to the Bengal Nagpur Rly. Co. vs Ruttanji Ramji, 65 I.A. 66 as an authority for that proposition. The Court then proceeded to say that even if an arbitrator could be assumed to be a court within the meaning of the Act, which he did not appear to be, none of the four conditions, which required to be fulfilled, was present in the case before them. It was then said that the arbitrator erred in thinking he had the power to allow interest simply because he thought the demand was reasonable. A further argument that interest could be awarded at least from the date of the suit on the analogy of sec. 34 of the Civil Procedure Code was repelled with the following observations: "It was suggested that at least interest from the date of suit could be awarded on the analogy of sec. 34 of the Civil Procedure Code, 1908. But sec. 34 does not apply because an arbitrator is not a court within the meaning of the Code nor does the Code apply to arbitrator, and, but for sec. 34 even a court would not have the power to give interest after the suit. This was, therefore, also rightly struck out from the award." These observations of Bose, J. gave rise to considerable difficulty in later cases, but in the series of cases, Nachiappa Chettier vs Subramaniam Chettier, ; ; Setinder Singh vs Amrao Singh, [1961] 3 264 SCR 676; Firm Madanlal Roshanlal Mahajan vs Hukumchand Mills Ltd., [1967] 1 SCR lO5; Union of India vs Bungo Steel Furniture Pvt. Ltd., [ ; and State of Madhya Pradesh vs M/s. Saith & Skelton Pvt. Ltd., ; , these observations have been explained and it was held that the observations never intended to lay down the broad and unqualified proposition that they appeared to lay down on a first impression. We will presently refer to these cases. At this juncture, it is necessary to note that in Seth Thawardas Pherumal 's case the question of payment of interest was not the subject matter of reference to the arbitrator and that the interest claimed before the arbitrator and awarded by the arbitrator related to the period prior to the reference to arbitration and the period during the pendency of the arbitration. It is also to be noted that the reference was not in the course of a suit. Nachiappa Chettier vs Subramaniam Chettier, (supra) was a case of arbitration in a suit. The arbitrator made an interim award on August 1, 1944 and December 6, 1944. He awarded interest pendente lite as well as future interest until the date of payment. Relying on the observations in Seth Thawardas Pherumal vs Union of India, the award of interest was questioned. The court doubted whether the observations in Seth Thawardas Pherumal 's case were intended to lay down such a broad and unqualified proposition, but did not pursue the matter further as that contention was not urged before the High Court. E Satinder Singh vs Amrao Singh (supra) was a case which arose under the East Punjab Acquisition and Requisition of Immovable Property (Temporary) Powers Act, 1948. The Act containd no provision for payment of interest. It was argued that in the absence of a provision providing for interest could be awarded. The court approved the observation of the Privy Council in that where the owner is deprived of his property "the right to receive the interest takes the place of the right to retain possession and is within the rules. " The court then observed, "it would thus be noticed that the claim for interest proceeds on the assumption that when the owner of immovable property loses possession of it he is entitled to claim interest in place of right to retain possession." and held that this general rule was not excluded by the 1948 Act. Referring then to the observations in Seth Thawardas Pherumal vs Union of India, (supra) what was said in Nachiappa Chettier vs Subramaniam Chether, (supra) was reitereated that no broad and unqualified proposition was intended to be laid down in Seth Thawards Pherumal vs The Union of India. Referring to the Interest Act and the power of the Court to allow 265 interest, it was expressly noticed that the proviso to sec. 1 of the Interest Act, 1939 made it clear that interest shall be payable in all cases in which it was now payable by law. The power to award interest on equitable grounds or under any provisions of the law was held to be expressly saved by the proviso. The award of interest by the arbitrator was upheld on the ground that the right to receive interest in lieu of possession of immovable property taken away either by private treaty or by compulsory acquisition was generally regarded by judicial decisions as an equitable right. In Union of India vs Watkins & Co. (AIR , the question arose when interest could be awarded for the period prior to the date of the institution of the suit. The suit there was for compensation for storage of over 600 tonnes of iron sheets for a period of about five years. It was held that interest could not be awarded for the period prior to the suit as there was no agreement for the payment of interest nor was their any usage of trade having the force of law or any provision of the substantive law which entitle the plaintiff to recover interest. Under the Interest Act, 1839, the court could allow interest if the amount claimed was a sum certain, payable at a certain time, by virtue of a written instrument. The compensation for an unliquidated amount was not a sum certain. Interest prior to the institution of the suit was not awardable. In Union of India vs West Punjab Factories, [ , it was held, that in a suit, interest by way of damages could not be awarded in the absence of any usage or contract, express or implied, or of any provision of law. Bengal Nagpur Railway Co. vs Ruttanji Ramji, (supra) and Seth Thawardas Pherumal vs Union of India, (supra) were relied on Firm Madanlal Roshanlal Mahajan vs Hukumchand Mills Ltd. (supra) was a case where the arbitration was in a suit. Before the arbitrator, no claim was made for interest prior to the institution of the suit, but interest was claimed from the date of institution of the suit till recovery of the amount. The arbitrator awarded interest on the sum determined by him from the date of the award till the date of payment. The award was then filed in the court. One of the objections was to the grant of interest during the pendency of the suit relying on the observations of Seth Thawardas Pherumal vs Union of India, (supra) that sec. 34 CPC did not apply to arbitration proceedings. The court observed that the observations lent colour to the argument that the arbitrator had no power to award pendente lite interest, but the obser 266 vations were not intended to lay down such a broad and unqualified proposition. A reference was made to Nachiappa Chettier vs Subramaniam Chettier, (supra) and Satinder Singh vs Amrao Singh, (supra). It was further observed "In the present case, all the disputes in the suit were referred to the arbitrator for his decision. One of the disputes in the suit was whether the respondent was entitled to pendente lite interest. The arbitrator could decide the dispute and we could award pendente lite interest just as a court could do so under sec. 34 of the Civil Procedure Code. Though, in terms, section 34 of the Code of Civil Procedure does not apply to arbitrations, it was an implied term of the reference in the suit that the arbitrator would decide the dispute according to law and would give such relief with regard to pendente lite interest as the court could give if it decided the dispute. This power of the arbitrator was not fettered either by the arbitration agreement or by the . The condention that in an arbitration in a suit the arbitrator had no power to award pendente lite interest must be rejected. " Thus while the court did not dispute the proposition that the arbitrator was not a court, it held that in a case where the reference was made to arbitration in a suit, the arbitrator would have the same power as the court to award interest. In Union of India vs Bungo Steel Furniture Private Limited, , certain disputes between the Union of India and a contractor in respect of certain contracts for the supply of bedsteads were referred to arbitration. The question arose whether the arbitrator had jurisdiction to award interest on the amount found due by the arbitrator from the date of the award till the date of the decree. This of course is not the question before us. But even so we must say that the observations made therein appear prima facie to justify the view that interest may be awarded by the arbitrator pendente lite. Ramaswamy, J. who spoke for the court, observed that the observations of Bose, B. in Seth Thawardas Pherumal 's case (supra) were not intended to lay down any broad and unqualified proposition and that though sec. 34 of the Code of Civil Procedure did not apply in terms to arbitration proceedings, the principle of that section would be applied by the arbitrator for awarding interest in the classes of cases where the court having jurisdiction in a suit over the subject matter or the proceeding would be competent to award interest. It was said "In the present case, all the disputes in the suit, including the question of interest were referred to the arbitrator for his decision. In our opinion, the arbitrator had jurisdiction, in the present case, to grant interest on the amount of the award from the date of the award till the date of the decree. " The words emphasised by us clearly show that in this case 267 too, the arbitration was in a suit and it was therefore, held that the arbitrator had the same power to award interest as the court would h ave . In M/s. Ashok Construction Company vs Union of India, , there was an arbitration on the intervention of the Court (Deputy Commissioner). Before the arbitrator, a total claim for Rs.4,41,440.20p was made consisting of a claim of Rs.64,006.71 for works done, a claim for Rs. l,83,393.77p for damages at 13 per cent per annum and a claim for Rs.1,91,097.88p for depreciation of the value of money. The arbitrator made an award for a sum of Rs.1,79,843,80p. He gave no reasons for his award. The last item of the claim was wholly unjustified, but there was nothing to show that the arbitrator had taken that claim of account in making the award. Considering the question of award of interest by way of damages, the court referred to the arbitration agreement and on its interpretation held that the terms of the arbitration agreement did not exclude the jurisdiction of the arbitrator, to entertain a claim for interest, award amount due under the contract In State of Madhya Pradesh vs M/s. Saith & Skelton P. Limited; , , with the consent of the parties, the Court appointed an arbitrator and referred all the disputes to him. The arbitrator awarded interest from the date when the amount became payable till the date of the decree. The question arose whether the arbitrator had the power to do so. It was held that, in the case before them, interest prior to the suit could be awarded under sec. 61(2) of the which expressly provides for the award of interest to the seller in any suit by him for the amount of the price from the date of the tender of the goods or from the date on which the price was payable and to the buyer in a suit by him for the refund of the price in a case of the breach of contract on the part of the seller from the date on which the payment was made. In view of the provision of substantive law which enabled the award of interest it was held that interest prior to the suit could be awarded by the arbitrator. In regard to pendente lite interest, it was held that since all the disputes were referred to arbitration by the court, the arbitrator had the same power as the court to award the pendente lite interest. As a result of the discussion of the various cases, we see that Bengal Nagpur Railway Company Ltd. vs Ruttanji Ramji, (supra), Union of India vs West Punjab Factories, (supra) and Union of India vs Watkins & Co. (supra) were cases of award of interest not by an 268 arbitrator, but by the court. It was laid down in these three cases that interest could not.be awarded for the period prior to the suit in the absence of an agreement for the payment of interest or any usage of trade having the force of law or any provision of the substantive law entitling the plaintiff to recover interest. Interest could also be awarded by the court under the Interest Act if the amount claimed was a sum certain payable at a certain time by virtue of a written instrument. In regard to pendente lite interest, the provisions of the Civil Procedure Code governed the same. The question of award of interest by an arbitrator was considered in the remaining cases to which we have referred earlier. Nachiappa Chettier vs Subramanian Chettier, (supra) Sattinder Singh vs Amrao Singh (supra), Firm Madanlal Roshanlal Mahajan vs Hukum Chand Mills Ltd. (supra) Union of India vs Bungo Steel Furniture Private Limited (supra), Ashok Construction Company vs Union of India, (supra) and State of Madhya Pradesh vs M/s. Saith & Skelton Private Limited were all cases in which the reference to arbitration was made by the court, of all the disputes in the suit. It was held that the arbitrator must be assumed in these circumstances to have the same power to award interest as the court. It was on that basis that the award of pendente lite interest was made on the principle of section 34 Civil Procedure Code in Nachiappa Chettier vs Subramaniam Chettier (supra), Firm Madanlal Roshanlal Mahanan vs Hukamchand Mills Limited, (supra), Union of India vs Bungo Furniture Private Limited, (supra) and State of Madhya Pradesh vs M/s. Saith & Skelton Private Limited, (supra). In regard to interest prior to the suit, it was held in these cases that since the Interest Act, 1839 was not applicable, interest could be awarded if there was an agreement to pay interest or a usage of trade having the force of law or any other provision of substantive law entitling the claimant to recover interest. Illustrations of the provisions of substantive law under which the arbitrator could award interest were also given in some of the cases. It was said, for instance, where an owner was deprived of his property, the right to receive interest took the place of the right to retain possession, and the owner of immovable property who lost possession of it was, therefore, entitled to claim interest in the place of right to retain possession. It was further said that it would be so whether possession of immovable property was taken away by private treaty or by compulsory acquisition. Another instance where interest could be awarded was under section 61(2) of the which provided for the award of interest to the seller or the buyer, as the case may be, under the circumstances specified in that section. of the Negotiable Instruments Act was mentioned as an instance of a provision of the substantive law under which interest prior to the institution of the proceedings could be awarded. Interest could also be awarded in cases of non performance of a contract of which equity could give specific performance. Seth Thawardas Pherumal was a case of direct reference to arbitration without the intervention of a court. Neither the Interest Act, 1839 nor the Civil Procedure Code applied as an arbitrator was not a court. Interest could, therefore, be awarded only if there was an agreement to pay interest or a usage of trade having the force of law or some other provision of the substantive law which entitled to plaintiff to receive interest. In that case, interest had been awarded on the ground that it was reasonable to award interest and the court, therefore, held that the arbitrator was wrong in awarding the interest. While this is the position in cases which arose prior to the coming into force of the , in cases arising after the coming into force of the Act, the position now is that though the award of pendente lite interest is still governed by the same principles, the award of interest prior to the suit is now governed by the . Under the , an arbitrator is, by definition, a court and may now award interest in all the cases to which the applies. We were referred to certain English cases: London Chatham and Dover Rly. Co. vs South Eastern Ply. Co., , Chandris vs Isbrandtsen Mollar Co., , Timber Shipping Co. vs London & overseas Freighters Ltd., and President of lndia vs La Pintada Cia Navegacion, [1984] 2 All Eng. Law Reports. Passages from Halsbury 's Laws of England and Russell 's Arbitration were also read out. We have read them out we refrain from referring to those cases and passages because of the abundance of authoritative pronouncements of the Supreme Court of India. Coming to the cases before us, we find that in Civil Appeal Nos. 120 and 12 1 of 1981 before the arbitrator, there was no answer to the claim for interest and we see no justification for us at this stage to go into the question whether interest was rightly awarded or not. Out of the remaining cases we find that in all cases except two (Civil Appeal Nos. 6019 22 of 1983 and Civil Appeal No. 2257 of 1984, the references to arbitration were made prior to the commencement of the new Act which was on August 19, 1981. In the cases to which the applied, it was argued by Dr. Chitale, learned counsel for H 270 the respondents, that the amount claimed was a sum certain payable at a certain time by virtue of a written instrument and, therefore, interest was payable under the for the period before the commencement of the proceedings. In support of his contention that the amount claimed was a sum certain payable at a certain time by virtue of a written instrument, the learned counsel relied upon the decision of this court in State of Rajasthan vs Raghubir Singh, [ 19791 3 SCR 6. The case certainly supports him and in the cases to which the 1978. applies the award of interest prior to the proceeding is not open to question. In regard to pendente lite interest, that is, interest from the date of reference to the date of the award, the claimants would not be entitled to the same for the simple reason that the arbitrator is not a court within the meaning of sec. 34 of the CPC, nor were the references to arbitration made in the course of suits. In the remaining cases which arose before the commencement of the , the respondents are not entitled to claim interest either before the commencement of the proceedings or during the pendency of the arbitration. They are not entitled to claim interest for the period prior to the commencement of the arbitration proceedings for the reason that the Interest Act, 1839 does not apply to their cases and there is no agreement to pay interest or any usage of trade having the force of law or any other provision of law under which the claimants were entitled to recover interest. They are not entitled to claim pendente lite interest as the arbitrator is not a court nor were the references to arbitration made in suits. One of the submissions made on behalf of the respondents was that in every case, all disputes were referred to arbitration and the jurisdiction of the arbitrator to award interest under certain circumstances was undeniable. The award not being a speaking award, it was not permissible to speculate on the reasons for the award of interest and the court was not entitled to go behind the award and disallow the interest. It is difficult to agree with this submission. The arbitrator is bound to make his award in accordance with law. If the arbitrator could not possibly have awarded interest on any permissible ground because such ground did not exist, it would be open to the court to set aside the award relating to the award of interest on the ground of an error apparent on the record. On the other hand, if there was the slightest possibility of the entitlement of the claimant to interest on one or other of the legally permissible grounds, it may not be open to the court to go behind the award and decide whether the award of interest was justifiable. We do not want to enter into a discussion on the legality or properiety of a non speaking award as we understand the question is now awaiting the decision of a Seven Judge Bench. In the light of what we have said above, Civil Appeal Nos. 120 271 and 121 of 1981 are dismissed, Civil Appeal Nos. 6019 22 of 1983 and A Civil Appeal No. 2257 of 1984 are allowed to this extent that interest during the pendency of the arbitration proceedings is disallowed and the rest of the civil appeals are allowed to the extent that both interest prior to the proceedings and interest during the pendency of the proceedings are disallowed. There will be no order as to costs. S.L.P.8640/81 is disposed of on the same lines.

In the appeals by Special Leave to this Court the question for consideration was: whether an arbitrator to whom a reference was made without the intervention of the Court could award interest during the period prior to the reference and during the pendency of the arbitration: ^ HELD: 1. The general statutory provisions in regard to the award of interest by the Court are contained in the Interest Act and the Civil Procedure Code. [258F] 2. The Interest Act of 1839 was repealed and a new Interest Act incorporated in 1978. Both these Acts provide for the award of interest upto the date of the institution of the proceedings. Neither the Interest Act of 1839 nor the Interest Act of 1978 provides for the award of pendente lite interest. [260D] 3. The award of pendente lite interest is provided for in Section 34 of the Civil Procedure Code. Section 34 however, applies to arbitrations in suits for the simple reason that where a matter is referred to arbitration in a suit, the arbitrator will have all the powers of the Court in deciding the dispute. Section 34 does not otherwise apply to arbitrations as arbitrators are not courts within the meaning of section 34 Civil Procedure Code. [260E] 254 4. While under the Interest Act of 1978 the expression 'court ' was defined to exclude an arbitrator, under the Interest Act of 1839 it was not so defined. The result is that while in cases arising after the commencement of the Interest Act of 1978 an arbitrator has the same power to award interest upto the date of institution of proceedings, in cases which arose prior to commencement of the 1978 Act the arbitrator has no such power under the Interest Act of 1839. [260G] 5. Since the arbitrator is required to conduct himself and make the award in accordance with law, the substantive law has to be looked into for the power of the arbitrator to award interest before the commencement of the proceedings. [260H 261A] 6. If the agreement between the parties entitles the arbitrator to award interest no further question arises and the arbitrator may award interest. Similarly, if there is a usage of trade having the force of law the arbitrator must award interest. [261B] 7. Again, there are other provisions of the substantive law enabling the award of interest by the arbitrator. Section 80 of the Negotiable Instruments Act under which the court may award interest even in a case where no rate of interest is specified in the promissory note or bill of exchange, and Section 61(2) of the Sale of Goods Act which provides for the award of interest to the seller or the buyer under certain circumstances in suits filed by them. [261C] 8. There is also the instance of non performance of a contract of which equity could give specific performance and to award interest. [261C] 9. Where one of the parties is forced to pay interest to a third party say on an overdraft, consequent on the failure of the other party to the contract not fulfilling the obligation of paying the amount due to them, equity may compel the payment of interest. [261C] 10. Loss of interest in the place of the right to remain in possession may be rightfully claimed in equity by the owner of a property who has been dispossessed from it. [261D] 11. In the instant appeals, in those cases in which the references to arbitration were made prior to the commencement of the new Act which was on August 19, 1981 and the amount claimed was a certain sum payable at a certain time by virtue of a written instrument, interest is payable under the Interest Act for the period before the commencement of the proceeding. [269H 270A] 255 12. In regard to pendente lite interest, that is, interest from the date of reference to the date of the award, the claimants would not be entitled to the same for the simple reason that the arbitrator is not a court within the meaning of section 34 of the CPC, nor were the references to arbitration made in the course of suits.[1270C] 13. In the remaining cases which arose before the commencement of the , the respondents are not entitled to claim interest either before the commencement of the proceedings or during the pendency of the arbitration. They are not entitled to claim interest for the period prior to the commencement of the arbitration proceedings for the reason that the Interest Act, 1839 does not apply to their cases and there is no agreement to pay interest or any usage of trade having the force of law or any other provision of law under which the claimants were entitled to recover interest. They are not entitled to claim pendente lite interest as the arbitrator is not a court nor were the references to arbitration made in suits. [270D E] 14. The arbitrator is bound to make his award in accordance with law. If the arbitrator could not possibly have awarded interest on any permissible ground because such ground did not exist, it would be open to the court to set aside the award relating to the award of interest on the ground of an error apparition the record. On the other hand, if there was the slightest possibility of the entitlement of the claimant to interest on one or other of the legally permissible grounds, it may not be open to the court to go behind the award and decide whether the award of interest was justifiable. [270F G] Bengal Nagpur Railway Company Limited vs Ruttanji Ramji 6S Indian Appeals 66; Thawardas Pherumal vs The Union of India, ; Union of India vs Prem Chand Satnam Das, AIR 1951 Patna 20l; Nachiappa Chettiar vs Subramaniam Chettiar, ; ; Satinder Singh vs Amrao Singh, ; ; Firm Madanlal Roshanlal Mahajan vs Hukumchand Mills Ltd., [1967] 1 SCR lO5; Union of India vs Bungo Steel Furniture Pvt. Ltd., ; and State of Madhya Pradesh vs M/s. Saith & Skelton Pvt. Ltd., ; , referred to.

Civil Appeal Nos. 1306, 1310, 1370 1380 and 1422 to 1424 of 1975. Appeals by special leave from the judgment and orders dated the 9th July 1975 of the Punjab & Haryana High Court at Chandigarh in Civil Writ Petitions Nos. 733, 595, 725, 681, 720, 723, 726, 728, 777, 780, 781, 833, 892, 884, 885 and 887 of 1975 respectively. M. C. Bhandare, (In 1306) and Mrs. section Bhandare for the appellants in C.As. 1306, 1370 1980 and 1422 1424 of 1975. F. section Nariman, A. K. Srivastava and B. P. Singh for the appellants in C.A. 1310. A. K. Sen, (In CA 1306), Dr. L. M. Singhvi, (In 1310), K. K. Jain, Bishamber Lal, section K. Gupta and P. Dayal for the Respondent No. 2 in all the appeals. L. N. Sinha, Sol. General (In CAs. 1306 and 1310) and R. N. Sachthey for Respondent No. 1 in all the appeals. Several connected Writ Petitions were disposed of by the High Court of Punjab & Haryarna by a common Judgment and this judgment will govern all the cases which had been heard together by us. Civil Appeal No. 1306/1975 is by M/s Northern India Iron & Steel Co. Ltd. and arises out of Writ Petition No. 733/1975. We may state a few necessary facts of this case; those of the other cases being more or less similar. The appellant owns a factory and manufactures alloy steel and steel castings. It is a large consumer of electricity supplied by the Board. As per the contract between the appellant and the board be total connected load of the installation in question is 8687, 649 Kilowatts and its contract demand is the same. At the ratio of one K.V. to 0.85 KW, the corresponding K.V. Of the contract demand works to 10,221 K.V. The appellant was allotted 1,06,590 units on daily basis as its power quota by the Board. There was shortage of electric energy in the State of Haryana. The State Government, there are, issued orders and directions for maintaining the supply and securing the equitable distribution of the energy. Orders were issued by the State Government under section 679 228 of the Indian Electricity Act, 1910 hereinafter called the 1910 A Act, restricting considerably the supply of electric energy by the Board lo the large industrial consumers as a result of which power cut was introduced. It is not necessary to give the facts and figures of the amount of power cut, suffice it to say that at the relevant time there were substantial power cuts and the appellant was not able to get supply of energy according to demand as per the quantity mentioned in the contract. In these circumstances a dispute arose between the parties as to whether the Board was entitled to get any demand charge, if so to what extent, and whether the State could demand any duty on such charge. Under Section 49 of the hereinafter called the 1948 Act, the Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and may for the purposes of such supply frame uniform tariffs of course, the power of the Board is subject to the other provisions of the Act and regulations, if any made in this behalf There are two well known systems of tariffs one is the flat rate system and the other is known as the two part tariff system. Under the former a flat rate is charged on unit of energy consumed. The letter system is meant for big consumers of electricity and it comprised of (1) demand charges to cover investment, installation and the standing charges to some extent and (2) energy charges for the actual amount of energy consumed. The Board has framed in exercise of its power under section 49 of the 1948 Act certain terms and conditions and procedure in regard to supply of electricity to its consumers. They are applicable in the cases of the appellants also. Demand Charge has been defined in clause 1(h) thus: "Demand charge" shall mean the amount chargeable per month in respect of Board 's readiness to serve the con summer irrespective of whether he consumes any energy or not, and is based upon the connected load, the maximum demand or the contract demand, as the case may be and as prescribed in the relevant schedule of tariff. And in sub clause (1) "Energy Charge" has been defined thus: "Energy charge" shall mean the charge for energy actually taken by the consumer and is applicable to the units consumed by him in any month. This is in addition to any demand charge, if applicable. A schedule of tariff for supply of energy which is amended from time to time has been framed by the Board. Such schedule of tariff for steel furnace power supply mentions in item 2 the character of service. Clause 3 provides for tariff and clause 4 deals with the demand assessment. The two part tariff mentioned in clause 3 in case of the appellant was "Demand Charges Rs. 12/ per KVA per month PLUS Energy charges Rs. 7.00 passe per Kwh". There was some surcharge on the above rates. The relevant Sub clauses of clause 4 i.e., Demand Assessment may now be quoted here: 680 "(a) The demand for any month shall be defined as the highest average load measured in Kilovolt amperes during any consecutive minutes period of the month. (b) The monthly demand charges shall be based on (1) the actual maximum demand during the month or (ii) 65%% of the contract demand or (iii) 75% of the highest maximum demand during the preceding eleven months or (iv) 100 KVA whichever is the highest. For the first 11 months from the commencement of Supply alternative (iii) shall not be applicable. (c) The contract demand means the maximum K.W. KVA for the supply of which the Board undertakes to provide facilities from time to time. NOTE In case the consumer exceeds his contract demand in any month by more than 71/2% a surcharge of 25 % will be levied on the SOP/Monthly minimum charges (industrial, Factory lighting and colony supply). (d) If in any case the maximum demand is being measured in KW the same shall be converted into KVA by the use of actual power factor and KVA tariff applied for working out the demand charges. (e) In case the supply has been given on restricted hours basis then a reduction of 30% in demand charges will be given if supply is for 12 hours or less, occasional break downs or shut downs if any, on the part of the supplier, shall, however, not entitle a consumer to any reductions. (f) Force Majeure: In the event of lock out, fire or and other circumstances considered by the supplier to be beyond the control of the consumer the consumer shall be entitled to a proportionate reduction of demand charges/minimum charges provided he serves at least 3 days notice on the supplier for shut down of not less than 15 days duration. It appears from the judgment of the High Court that some reduction (perhaps upto 60%) was given by the Board in the demand charges because of the inability of the Board to supply energy as per the requirement of the appellant consumers due to power cuts imposed by the Government. But the appellant seems to have taken the stand that either there should be no demand charge at all when the Board was not in a position to supply electric energy as per is requirement or there should be a proportionate reduction of the demand charge. Hence it filed a Writ petition. The High Court has noted the reduction made by the Board and has held that the Board is entitled to the demand charge. It has, however, not been 681 decided as to what should be the basis for and in what proportion the demand charges be reduced. The stand of the appellant as respects the charge of duty by the State Government under the Punjab Electricity (Duty) Act, 1958 hereinafter called the Duty Act, was that no duty could be levied on the demand charge. The High Court has repelled this contention. The two questions which fall our determination in these appeals are: (1) Whether on the facts and in the circumstances of the cases the Board is entitled to claim any demand charge; if so, to what extent? (2) Whether any duty is leviable on the demand charge; if so, to what extent ? An argument was advanced before us in the first instance by counsel for the appellants with reference to the definition of the demand change in clause 1(h) of the terms and conditions of supply framed by the Board that since the Board was not ready to serve the consumer and the consumer was ready to consume maximum electric energy the former was not entitled to ask for any demand charge. This argument, in the beginning was combated with equal force, if not more, on behalf of the Board and it was asserted that the Board was entitled to assess and claim the full demand charge as per clause 4 of the tariff irrespective of the fact whether it was in a position to supply the energy according to the demand of the consumer or not. Such an extreme stand on either side appeared to us a bit puzzling and leading to inequitable results. The difficulty was not easy to solve. If we were to hold that for the Board 's inability to supply a fraction of the consumer 's demand as per the contract it could claim only the energy charge and not the demand charge, it would have been very hard and injurious to the Board and the consumer would have unjustifiably got the supply at a very cheap rate If on the other hand, we were to say that the consumer was liable to pay the entire demand charge as per the method of assessment provided in clause 4 of the tariff even when for no fault of it, it could get only a fraction of its demand fulfilled, resulting in its not being able to run the industry to its full capacity, it would be liable to pay a huge amount per month, and this will not only be uneconomical but would seriously affect its economic structure. But we were happy to find that a just, equitable and legal solution of the difficulty was provided during the course of the argument on either side and that is with reference to sub clause (f) of clause 4 of the tariff. It is, therefore, not necessary to resolve the extreme stand taken on either side. Under clause 4(f) the consumer is entitled to a proportionate reduction of demand charges in the event of lock out, fire or any other circumstances considered by the supplier beyond the control of the 682 consumer; that is to say, if the consumer is not able to consume any part of the electric energy due to any circumstance beyond its control and which is considered by the Board to be so, then it shall get a proportionate reduction in the demand charge. The circumstance of power cut which disabled the Board to give the full supply to the appellant because of the Government order under section 228 of the 1910 Act, undoubtedly would be a circumstance which disabled the consumer from consuming electricity as per the contract. And this was circumstance which was beyond its control and could not be considered otherwise by the Board. It entitled the consumer to a proportionate reduction of the demand charges. This interpretation of subclause (f) of clause 4 of the tariff was accepted to be the correct, legal and equitable interpretation on all hands. In our opinion it is so. In a circumstance like this, it is plain, the obligation of the consumer to serve at least 3 days notice on the supplier as per the latter part of sub clause (f) was not attracted, as the requirement of notice was only in the case of shut down of not less than 15 days duration. We are, therefore, of the view that the inability of the Board to supply electric energy due to power cut or any other circumstance beyond its control as per the demand of the consumer according to the contract will be reflected in and considered as a circumstance beyond the control of the consumer which prevented it from consuming electricity as per the contract and to the extent it wanted to consume. The monthly demand charge for a particular month will have to be assessed in accordance with sub clause (b) of clause 4 of the tariff and therefore from a proportionate reduction will have to be made as per sub clause (f). We hope, in the light of the judgment, there will be no difficulty in working out the figures of the proportionate reduction in any of the cases and for any period. In case of any difference or dispute as to the quantum of the demand charge or the proportionate reduction, parties will be at liberty to pursue their remedy as may be available to them in accordance with law. Coming to the question of duty, we have no hesitation in an out right rejection of the extreme contention put forward on behalf of the appellants that no duty is leviable at all on the demand charge. But it is clear, and this was fairly conceded to by the Solicitor General appearing for the State of Haryana, that the amount of duty payable will be on the actual amount of demand charge realisable from the consumer after the proportionate reduction under clause 4(f) of the tariff. Section 3 of the Duty Act says that there shall be levied and paid to the State Government on the energy supplied by the Board to a consumer a duty to be called the "electricity duty", computed at the rates indicated in the various clauses of sub section (1) of section 3. The expression used in the various clauses is "where the energy is supplied" to a particular type of consumer, then the rate of duty will be as specified therein. On the basis of the said expression the argument put forward on behalf of the appellant was that the duty could be levied only on the energy charges for the actual amount of energy 683 supplied. Such an argument is too obviously wrong to be accepted. Reading the clauses as a whole it would be seen that the duty is chargeable on the price of energy supplied in a month. The price of energy in a two part tariff system would mean and include the energy charge as also the demand charge. This is made further, clear by the manner of calculation provided in Rule 3 of the Punjab Electricity (Duty) Rules, 1958. Sub rule (1) says: "The duty under clause (iii) and (iv) of sub section (1) of section 3 of the Act shall be calculated on the price of the energy recoverable at the net rate of the Board which will include the demand charge when the Supply is governed by a two part tariff. " It is therefore, manifest that the duty under the Duty Act is chargeable not only on the energy charge but also on the demand charge when the supply is governed by two part tariff and it is chargeable on the actual amount of demand charge realisable from the consumer For the reasons stated above, we allow these appeals in part to the extent indicated above. In the circumstances we shall make no order as to costs in any of the appeals. P.B.R. Appeals partly allowed.

The State Electricity Board had framed, in exercise of its power under section 49 of the , certain terms and conditions and, the procedure in regard to supply of electricity to its. consumers. For big consumers the system of tariff is the two part tariff system comprising of (1) Demand charge and (ii) Energy charge. A "Demand charge" means the amount chargeable per month in respect of the Electricity Board 's readiness to serve the consumer irrespective of whether he consumes any energy or not and is based upon certain factors. "Energy charge" means the charge for energy actually taken by the consumer and is applicable to the units consumed by him in any Month. This was in addition to any demand charge, if applicable. A schedule of tariff of energy was framed by the Board. 4(b) mentions how the monthly demand charge shall be calculated and sub clause (f) of this clause states that in the event of lock out, fire or any other circumstances considered by the supper to be beyond the control of the consumer, the consumer shall be entitled to a proportionate reduction of demand charges/minimum charges. As a result of shortage of electricity the State Electricity Board considerably restricted the supply to large industrial concerns. Because of this the Board allowed some reduction in the demand charges. The appellant, who was a bulk consumer of electricity, could not get the full quantity as per the contract between the parties. The appellant, therefore, filed a writ petition that there should be either no demand charge at all. when the Board was not in a position to supply electric energy, or there should be a proportionate reduction of the demand charge. The High Count noted the reduction made by the Board and held that the Board was entitled to the demand charge. It did Dot, however decide as to what should be the basis for and in what proportion the demand char o should be reduced. The appellant also contended that no duty was lovable on the demand charge, under the Punjab Electricity (Duty) Act, 1958 but only on the energy charge, for the actual amount of energy supplied but the High Court rejected this contention. Allowing the appeal in part on the first contention, ^ HELD: (1) The circumstance of power cut which disabled the Board to give the full supply to the appellant would be a circumstance which disabled the consumer from consuming electricity as per the contract and this was a circumstance which was beyond it control and could not be considered otherwise by the Board. It entitled the consumer to a proportionate reduction of the demand charge. In a circumstance like this the obligation of the consumer o serve at least 3 days ' notice on the supplier as per the later part of sub clause (f) was not attracted as the requirement of the notice was only in the case of shut down of not less than 15 days ' duration [682 A, B, C] Therefore, the inability of the Board to supply electric energy due to power cut as per the demand of the consumer according to the contract will be reflected in and considered as n circumstance beyond the control of the consumer which prevented him from consuming electricity as per the contract to the extent it wanted to consume. [682, D] 2 L159SCT/76 678 (2) A reading of the clauses of the Schedule of tariff as a whole makes it clear that the duty under the Punjab Act is chargeable on the price of energy supplied in a month. Therefore, the duty is chargeable not only on the energy charge but also on the demand charge. It is, however, chargeable on the actual amount of demand charge realizable from the consumer.

Civil Appeal Nos. 53, 54 57, A 202 04 and 255 of 1982. From the Judgment and Order dated 27th November, 1981 of Allahabad High Court in Civil Miscellaneous Writ Petitions Nos. 29]5, 2888 2914, and 2974 of 1981. J. P. Goyal, section N. Kacker, Shanti Bhushan, V. K. Verma, V. J. Francis, Mahabir Singh and N. section Malik for the appearing Appellants. V. M. Tarkunde, K. K. Venugopal, Prithviraj, B. section Chauhan, Rani Chhabra, R. K. Jain, Mrs. Shobha Dikshit and Raju Ramachandran for the appearing Respondents. The Judgment of the Court was delivered by VENKATARAMIAH, J. The lamentable delay of nearly fourteen years involved in the State Government of Uttar Pradesh passing its order under section 68D of the (hereinafter referred to as `the Act ') on a scheme published under section 68C thereof has been the main cause of these appeals by special leave filed against the judgment of the High Court of Allahabad dated November 27, 1981. E A notification dated November 17, 1971 was published under section 68C of the Act by the State transport undertaking of the State of Uttar Pradesh in the U. P. Gazette dated November 27, 1971 inviting objections to a draft scheme providing for the exclusive operation of its own stage carriages over thirteen routes within the jurisdiction of the Regional Transport Authority of Meerut. It is unfortunate that no decision has yet been taken by the State Government under section 68D of the Act for one reason or the other. In the meanwhile the members of the public as well as the motor operators have become subject to several constraints arising from the publication of such a scheme. Chapter IVA of the Act was introduced by Act 100 of 1956 into the Act with the object of making provision for operation of motor vehicles to the exclusion, complete or partial, of other persons for the purpose of providing an efficient, adequate, economical and properly co ordinated transport service to the community. The provisions contained in Chapter 1VA of the Act and the Rules made 794 thereunder are declared as having overriding effect on the provisions in Chapter IV of the Act which contains provisions relating to control of transport vehicles and all other laws. Section 68C of the Act provides that where any State transport undertaking is of opinion that for the purpose of providing an efficient, adequate, economical and properly co ordinated road transport service, it is necessary in the public interest that road transport services in general or in any particular class of such service in relation to any area or route or portion thereof should be run and operated by the State transport undertaking, whether to the exclusion, complete or partial, of other persons or otherwise, the State transport undertaking may prepare a scheme giving particulars of the nature of the services proposed to be rendered, the area or route proposed to be covered and such other particulars respecting thereto as may be prescribed, and shall cause every such scheme to be published in the Official Gazette and also in such other manner as the State Government may direct. On the publication of the scheme, any person already providing transport facilities by any means along or near the area or route proposed to be covered by the scheme, any association representing persons interested in the provision of road transport facilities recognised in this behalf by the State Government and any local authority or police authority within whose jurisdiction any part of the area or route proposed to be covered by the scheme lies may, within thirty days from the date of the Publication of the scheme in the official Gazette, file objections to it before the State Government. The State Government may after considering the objections and after giving an opportunity to the objector or his representatives and the representatives of the State transport undertaking to be heard in the matter if they so desire, approve or modify the scheme. This is the substance of sub sections (1) and (2) of section 68D of the Act. Under subsection '3) thereof the scheme approved or modified has to be published in the official Gazette and such scheme is called the approved scheme and the area or route to which it relates is called the notified area or notified route The provisions of section 68C and section 68D of the Act clearly indicate that any scheme which is intended for providing efficient, adequate, economical or properly co ordinated transport service should be approved either as it is or in a modified form or rejected, as the case may be, within a reasonably short time as any extraordinary delay is bound to upset all or any of the factors, namely, efficiency, adequacy, economy or coordination which ought to govern an approved scheme under Chapter IVA of the Act. On account of various reasons such as the growth 795 of population and the development of the geographical area adjacent to the area or route in question, any unreasonable delay may render the very proposal contained in the scheme antiquated, outmoded and purposeless. Hence there is need for speedy disposal of the case under section 68D of the Act. The other legal constraints flowing from the publication of the scheme under section 68C of the Act also lead us to the same conclusion. Section 68F (ID) of the Act provides that save as otherwise provided in sub section (1 A), or sub section ( 1C) thereof no permit shall be granted or renewed during the period intervening between the date of publication under section 68C of any scheme and the date of publication of the approved or modified scheme, in favour of any person for any class of road transport service in relation to an area or route or portion thereof covered by such scheme The proviso to sub section (ID) of section 68F of the Act, however, states that where the period of operation of a permit in relation to any area, route or portion thereof specified in a scheme published under section 68C expires after such publication, such permit shall be renewed for a limited period, but the permit so renewed shall cease to be effective on the publication of the scheme under sub section (3) of section 68D of the Act. This provision overrides the provisions in section 58 of the Act which provides for the renewal of motor vehicle permits issued under Chapter IV of the Act. As regards the issue of fresh permits for operating motor vehicles of the class referred to in the scheme in the area or on the route in question between the date of publication of the scheme under section 68C of the Act and the date of publication of the approved or modified scheme under section 68D of the Act, subsections (IA) and (1C) of section 68F of the Act alone have to be resorted to. Sub Section (IA) of section 68F gives preference to the State transport undertaking regarding the issue of such permits. It provides that where any scheme has been published by a State transport undertaking under section 68 C, that undertaking may apply for a temporary permit, in respect of any area or route or portion thereof specified in the said scheme, for the period intervening between the date of publication of the scheme and the date of publication of the approved or modified scheme, and where such application is made, the State Transport Authority or the Regional Transport Authority, as the case may be, shall, if it is satisfied that it is necessary to increase, in the public interest the number of vehicles operating in such area or route or portion thereof, issue the temporary permit prayed for by the State transport undertaking 796 Such temporary permit shall be effective if the scheme is published under sub section (3) of section 68D of the Act until the grant of the permit to the State transport undertaking under sub section (1) of section 68F of the Act or if the scheme is not published accordingly, until the expiration of one week from the date on which the order under sub section (2) of section 68D of the Act is made. If no application for the temporary permit is made under sub section (IA) of section 68F of the Act by the State transport undertaking, the State Transport Authority or the Regional Transport Authority, as the case may be, may under sub section (1C) of section 68P of the Act grant, subject to such conditions as it may think fit, temporary permit to any person in respect of the area or route or portion thereof specified in the scheme and the permit so granted shall cease to be effective on the issue of a permit to the State transport undertaking in respect of that area or route or portion thereof. Sub sections ( IA ) and ( 1C ) of section 68 of the Act read together indicate that what can be granted under either of the said sub sections is only a temporary permit which can last during the period between the date of publication of the scheme under section 68C of the Act and the date on which the order under section 68D of the Act is made subject to the provisions contained in subsection (IB) of section 68F of the Act. The life of such temporary permit cannot extend to an unreasonably long period, as even a renewable permit issued under Chapter IV of the Act is subject to the restrictions contained in section 58 of the Act as regards its duration and renewal and that a temporary permit issued under section 62 of the Act cannot be in force in any case for more than four months. Necessarily, therefore, the State Government is required by law to pass its orders under section 68D of the Act as early as possible. Delay in performance of statutory duties amounts to an abuse of process of law and has to be remedied by the court particularly when the public interest suffers, thereby. Hence if there is an unreasonably long and unexplained delay in the State Government passing orders under section 68D of the Act, the Court may issue a mandamus to the State Government to dispose of the case under section 68D of the Act within a specific time or may in an appropriate case even issue a writ in the nature of certiorari quashing the scheme and a writ in the nature prohibition directing the State Government not to proceed with the consideration of the scheme published under section 68C of the Act because section 68D does not confer an unfettered discretion on the State Government to deal with the case as it likes. The power under section 68D has to be exercised having due regard to the public interest. 797 In the cases before us the appellants are aggrieved by the A quashing of the temporary permits which had been issued on January 10, 1980 under section 68F (1C) of the Act by the Regional Transport Authority, Meerut in their favour to operate stage carriages on some of the routes covered by the scheme nearly nine years after its publication. It appears that the Regional Transport Authority felt that it was necessary to increase the strength of the stage carriage Services on nine routes out of the thirteen routes covered by the scheme and accordingly it decided by its order dated December 17, 1979 to invite applications for temporary carriage permits. This decision was taken by the Regional Transport Authority after it had allowed the amalgamation and extension of certain existing permits held by 102 operators Pursuant to the invitation by the Regional Transport Authority, a large number of persons including the appellants applied for the temporary permits before the last date specified for making such applications i. e. December 31, 1979. On January 10, 1980, the U. P. State Transport Undertaking having not made any application under section 68F (IA) of the Act, the l? applications of the appellants and a large number of other persons who were about 800 in number were considered by the Regional Transport Authority and the appellants were granted in all nineteen temporary permits. Some persons who felt aggrieved by the resolutions of the Regional Transport Authority passed on December 17 1979 and January 10, 1980 filed revision petitions before the State Transport Appellate Tribunal, Lucknow. The Tribunal by its order dated June 3, 1981 set aside both the resolutions dated December 17, 1979 and January 10, 1980 passed by the Regional Transport Authority. The main ground for setting aside the resolution dated December 17, 1979 was that the amalgamation and extension of permits granted in favour of the existing operators after the publication of the scheme under section 68C of the Act was contrary to the provisions of Chapter IVA of the Act. The Tribunal, however, did not hold that there was no necessity for increasing the number of stage carriage services on the routes in question and for issuing temporary permits under section 68F of the Act. Thereafter the appellants filed writ petitions before the High Court under Article 226 of the Constitution questioning the correctness of the order setting aside the temporary permits granted in their favour on January 10, 1980. The existing operators who had been granted amalgamation and extension of their permits by the Regional Authority on December 17, 1979, however, did not challenge the order of the Tribunal even though the orders passed in their favour were also set aside. The High Court dismissed the writ petitions filed 798 by the appellants holding that since the grant of temporary permits in favour of the appellants was dependent upon the order dated December 17, 1979 to which the appellants were not parties, the temporary permits granted in their favour on January 10, 1980 were also liable to be set aside. These appeals by special leave are filed against the judgment of the High Court in the above writ petitions. On the facts and in the circumstances of these appeals, we are constrained to observe that both the Tribunal and the High Court overlooked the relevant issues affecting the public interest which should always be the guiding principle in deciding cases relating to the grant of motor vehicles permits under the Act. The Tribunal and the High Court have both failed to notice that the scheme had been published in the year 1971 and the order issuing temporary permits had been passed nearly nine years after its publication, after the Regional Transport Authority was satisfied that there was necessity for granting them. The Tribunal and the High Court did not seek to elicit information about the reasons for the inordinate delay in the State Government passing its order under section 68D of the Act and failed to consider the adverse effect on the travelling public. The Tribunal and the High Court took a highly technical view in disposing of the matter. We are of the view that it is needless at this stage to go into the grounds in detail on which the Tribunal and the High Court found that the orders of the Regional Transport Authority were untenable since nearly fourteen years have elapsed form the date of publication of the scheme. The High Court appears to have given more attention to the validity of the grant of extensions to the existing operators on December 17, 1979 which was not at all in issue before it than to the correctness of the order of the Tribunal in setting aside the temporary permits granted to the appellants on January 10, 1980 which had been challenged by the appellants in the writ petitions. Admittedly the region in which the routes in respect of which the scheme is published are lying is a thickly populated part of the State of Uttar Pradesh. There has been a lot of development in the region in recent years on the agricultural front as well as the commercial front The Regional Transport Authority had found that there was need for issuing the said temporary permits for some of the routes in question after it had granted extensions to the permits held by 102 existing operators. On the cancellation of the slid extensions the need for providing additional travelling facilities become further intensified and therefore there was certainly no case for setting aside the temporary permits granted in favour of the appellants. The cancellation of the temporary permits issued in favour of the appellants 799 has resulted in grave public prejudice. We are also of the opinion that the extra ordinary delay in the disposal of the proceedings before the State Government under section 68D of the Act has brought about a stalemate which should be terminated quickly in the interests of the general public. We, therefore, consider that in the interests of justice it is appropriate to being to an end the proceedings under section 68D of the Act expeditiously. We would have perhaps considered the question of quashing the scheme itself at this stage but since no such contention is urged before us, we feel that it is sufficient to issue a direction to the State Government to pass orders under section 68D (2) of the Act approving the scheme with or without any modification or rejecting it or to pass any other order thereon which it may pass under that provision on or before July 31,1985. We issue a direction accordingly. If the State Government approves the scheme with or without any modification, such approved scheme shall be published under section 68D (3) of the Act on or before August 31,1985. If the State Government fails to dispose of the matter according within the time specified above, the scheme published under section 68C of the Act shall stand quashed with effect from August 31, 1985. The order of the Tribunal and the order of the High Court to the extent they cancel the temporary permits issued in favour of the appellants are set aside. The appellants are permitted to operate their services under the temporary permits issued to them under section 68F (1C) of the Act oh January 10, 1980 and the operation of the said temporary permits shall come to an end in accordance with law. The appeals are accordingly disposed of There shall be no order as to costs. N. V. K. Appeals allowed.

Stage carriages of State Transport Undertaking Exclusive operation of Draft scheme published No decision taken thereon by State Government for nine years Increased transport facilities Need and necessity arising Regional Transport Undertaking granting temporary permits Action whether valid and legal Statutory duty imposed by section 68C Speedy exercise with due regard to public interest Necessity of. Administrative Law: Statutory duty Delay in performance of Abuse of process of law To be remedied by Court. Practice and Procedure: Motor Vehicle Permits Grant of Delay in Performance of statutory duty duty of Court to enforce by issuance of writ. A notification dated November 17, 1971 was published under section 68C of the , inviting objections to a draft scheme providing for exclusive operation of stage carriages of the State Transport Undertaking over thirteen routes in a district. At the Regional Transport Authority felt that it was necessary to increase the strength of the stage carriage services of nine routes out of the thirteen routes covered by the said scheme, it decided by its order dated December 17, 1979 to invite applications for temporary carriage permits. This decision was taken after it had allowed amalgamation and extension of certain existing permits held by 102 operators. Pursuant to this invitation by the Regional Transport Authority, a large number of persons including the appellants applied for the temporary permits. On January 10, 1980, the State transport undertaking having not made any applications under section 68F(IA) 791 the application of the appellants and a large number of other persons about 800 were considered by the Regional Transport Authority and the appellants were granted nineteen temporary permits. Some Operators who felt aggrieved by the resolutions of the Regional Transport Authority passed on December 17, 1979 and January 10, 1980 filed Revision Petitions before the State Transport Appellate Tribunal. The Tribunal by its order dated June 3, 1981 set aside both the resolutions dated December 17, 1979 and January 13, 1980 of the Regional Transport Authority, on the ground that the amalgamation and extension of permits granted in favour of the existing operators, after the publication of the scheme under section 68C was contrary to the provisions of Chapter IVA of the Act. The appellants filed writ petitions which were dismissed by the High Court, which held that since the grant of temporary permits in favour of the appellants was dependent upon the order dated December 17, 1979 to which the appellants were not parties, the temporary permits granted in their favour on January 10, 1980 were also liable to be set aside. Allowing the Appeals to this Court, ^ HELD: 1. The order of the Tribunal and the order of the High Court to the extent they cancel the temporary permits in favour of the appellants are set aside. The appellants are permitted to operate their services under the temporary permits issued to them under section 68F (IC) on January 10, 1980 and the operation of the said temporary permits shall come to an end in accordance with law. [799E] 2. A direction is issued to the State Government to pass orders under section 68D (2) approving the scheme with or without any modification or rejecting it or to pass any other order thereon which it may under that provision on or before July 31, 1985. Such approved scheme shall be published under section 68D (3) on or before August 31, 1985. Failure to do so, the scheme published under section 68C shall stand quashed with effect from August 31, 1985. [799C D] 3. (i) Both the Tribunal and the High Court overlooked the relevant issues affecting the public interest which should always be the guiding principle in deciding cases relating to grant of motor vehicles permits under the Act. [798B] (ii) The Tribunal and the High Court both failed to notice that the scheme had been published in the year 1971 and the order issuing temporary permits had been passed nearly nine years after its publication, after the Regional Transport Authority was satisfied that there was necessity for granting them. [i] (iii) The Tribunal and the High Court did not seek to elicit information about the reasons for the inordinate delay in the State Government passing its order under section 68D of the Act and failed to consider the adverse effect on the travelling public. [798D] 792 4. The Regional Transport Authority had found that there was need for issuing the said temporary permits for some of the routes in question, after it had granted extension to the permits held by 102 existing operators. On the cancellation of the said extensions, the need for providing additional travelling facilities became further intensified and therefore there was certainly no case for setting aside the temporary permits granted in favour of the appellants. The cancellation of the temporary permits issued in favour of the appellants has resulted ill grave public prejudice. [798G H] 5. Delay in performance of statutory duties amounts to an abuse of process of law and has to be remedied by the court particularly when the public interest suffers thereby. [796F] 6. (i) The provisions of section 68C and section 68D of the clearly indicate that any scheme which is intended for providing efficient, adequate, economical or properly by coordinated transport service should be approved either as it is or in a modified form or rejected as the case may be within a reasonably short time as any extraordinary delay is bound to upset all or any of the factors, namely efficiency, adequacy, economy of coordination which ought to govern an approved scheme under Chapter IVA of the Act. [194G H] (ii) On account of various reasons such as the growth of population and the development of the geographical area adjacent to the area or route in question, any unreasonable delay may render the very proposal contained in the scheme antiquated, outmoded and purposeless. Hence there is need for speedy disposal of the case under section 68D of the Act. [795A B] (iii) The power under section 68D has to be exercised having due regard to the public interest. [796H] (iv) If there is an unreasonably long and unexplained delay in the State Government passing orders under section 68D of the Act, the Court may issue a mandamus to the State Government to dispose of the case under section 68D of the Act within a specified time or may in an appropriate case even issue a writ in the nature of certiorari quashing the scheme and a writ in the nature of prohibition directing the State Government not to proceed with the consideration of the scheme published under section 68C of the Act because section 68D does not confer an unfettered discretion on the State Government to deal with the case as it likes. [796F G] 7. Sub sections (IA) and 1C of section 68F of the Act read together indicate that what can be granted under either of the said sub sections is only a temporary permit which can last during the period between the date of publication of the scheme under section 68C of the Act and the date on which the order under section 68D of the Act is made subject to the provisions contained in sub section (IB) of section 68F of the Act. The life of such temporary permit cannot extend to an unreasonably long period, as even a renewable permit issued under Chapter IV of the Act is subject to the restrictions contained in section 58 of the Act as regards its duration and renewal and that a temporary permit issued under section 62 of the Act cannot be in force in any case for more than four months. The State Government is necessarily therefore required by law to pass its orders under section 68D of the Act as early as possible. [796C E] 793

Civil Appeal Nos. 285 89 of 1969. (From the judgment and order dated 7th December, 1966 of the Bombay High Court in Special Civil Appeal Nos. 4 to 8 of 1965) 610 G.L. Sanghi and A.G. Ratnaparkhi for the Appellant. M.C. Bhandare, Mrs. Sunanda Bhandare, T. Sridharan and Miss C.K Sucharita, for the Respondents. The Judgment of the Court was delivered by DESAI, J. In the wake of agrarian reforms initiated by the Bombay Tenancy and Agricultural Lands Act, 1948 ( 'Tenancy Act ' for short) an amendment of far reaching and revolutionary character was introduced in 1956 so as to eliminate every intermediary between the tiller of the soil and the state. The title of the landlord to the land passes immediately to the tenant on the tillers ' day and there is a completed purchase or sale thereof as between the landlord and the tenant. The title of the land which was vested originally in the landlord passes to the tenant on the tillers ' day or the alternative period prescribed in that behalf. This title is defeasible only in the event of the tenant failing to appear or making a statement that he is not willing to purchase the land or committing default in payment of the price thereof as determined by the Agricultural Lands Tribunal (See Sri Ram Ram Narain Medhi vs The State of Bombay. Section 32 provided that on April 1, 1957 styled the tillers ' day, a tenant of agricultural land covered by the Tenancy Act would become the owner of the land held by him if other conditions specified in the section were fulfilled. A forum styled Agricultural Lands Tribunal was set up and a procedure was prescribed in the Act to determine the price payable by such tenant to the erstwhile landlord on becoming owner of the land held by him. Accordingly five tenants of five different pieces of agricultural land made five separate applications on August 27, 1962 against a common landlord, the appellant herein before the Agricultural Lands Tribunal ( 'ALT ' for short), Raver, under section 32 of the Tenancy Act for determining the price of land held by each of them as tenant. The land lord appeared in each proceeding and contested the right of the tenant to purchase the land, inter alia, contending that under a deed of settlement dated May 22, 1930, she acquired a right only to usufruct of land involved in the dispute and thus she is a limited owner and the settlement imposes certain disability on her precluding her from dealing with the property which would indicate that she 611 could not have leased out the land thereby creating an encumbrance which would be impermissible under the deed of settlement and consequently the tenant of each piece of land could not be said to be lawfully cultivating the land so as to become the deemed tenant under section 4 of the Tenancy Act. It was also contended that, the applicant (respondent herein) before ALT was not a tenant within the meaning of the Tenancy Act and therefore he could not have become the owner of the land on the tillers ' day. Alternatively, it was contended that the minor children of the landlord who being the limited owner, had acquired a vested right in the land involved in the dispute under the deed of settlement and therefore as the landlords were minors the date of compulsory purchase in the case of such minor landlord would be postponed under section 32 and therefore the ALT had no jurisdiction to determine the price under section 32 G. The ALT held that the appellant was the landlord and the tenant in each case was a deemed tenant under section 4 of the Tenancy Act and on 1st April, 1957 by the operation of law he became the owner thereof. It was also held that the ALT was under a statutory obligation to determine the price under section 32 G. The ALT accordingly proceeded to determine the price in each case. Five separate appeals were preferred by the appellant landlord in each case to the Collector of Jalgaon. The Collector held that the present appellant landlord had a limited interest in the land and thus as her interest fell short of ownership, she could not be regarded as landlord within the meaning of the expression in the Tenancy Act, Consequently, the Collector held that the tenant in each case could not be deemed to be a tenant within the meaning of the expression in the Tenancy Act. It was accordingly held that the tenant in each case did not become the deemed purchaser under section 32 and therefore the ALT had no jurisdiction to determine the price. The Collector allowed all the five appeals and dismissed the five applications preferred by the tenant in each case. The tenant in each case preferred a revision petition under section 76 of the Tenancy Act before the Maharashtra Revenue Tribunal. The Special Bench of the Maharashtra Revenue Tribunal by a common judgment allowed five revision petitions preferred by the tenants and set aside the order of the Collector and restored the order made by the ALT holding that even though the landlord in these cases was a limited owner the instrument settling the property 612 on the landlord did not prohibit the landlord from leasing the land and lease was accordingly valid and therefore under section 4, the tenant would be a deemed tenant within the meaning of the Tenancy Act and such deemed tenant would become the owner of the land held by him on the tillers ' day. The landlord approached the High Court under article 227 of the Constitution. The Division Bench of the Bombay High Court by a common judgment disposed of the five special civil applications filed by the landlord. The High Court relying on the decision of this Court in Dahya Lal and Others vs Rasul Mohammed Abdul Rahim held that the deed of settlement did not prohibit the landlord from leasing the land and if the lease is created by such a limited owner not precluded from leasing the land, it would confer on the J tenant of such landlord, the status of a deemed tenant under section 4 and such a tenant would be deemed to have purchased the land held by him on the tillers ' day. The High Court negatived the contention that the children of the landlord had a vested interest in the land involved in the dispute during the life time of the landlord and The children being minors, the date of purchase would be postponed under section 32 F. The High Court accordingly rejected the special civil applications but remanded the case to the Collector to give an opportunity to the landlord to agitate the contention about the quantum of price which Contention was not dealt with by the Collector on merits. The landlord by certificate under article 133 (1) (a) and (b) of the Constitution preferred these five appeals Expression 'Tenancy ' has been defined in section 2 (17) of the Act to mean "relationship of landlord and tenant". 'Tenant ' is defined in section 2 (18) as under: 'Tenant" means a person who holds land on lease and includes: (a) a person who is deemed to be a tenant under section 4; (b) a person who is a protected tenant; and 613 (c) a person who is a permanent tenant;" Section 4 which is material for the present appeal reads as under: "4. A person lawfully cultivating any land belonging to another person shall be deemed to be a tenant if such land is not cultivated personally by the owner and if such person is not: (a) a member of the owner 's family, or (b) a servant on wages payable in cash or kind but not in crop share or a hired labourer cultivating the land under the personal supervision of the owner or any member of the owner 's family, or (c) a mortgagee in possession. " There are two explanations appended to this section which are not material for the present purpose. Section 32 (1) which was introduced in 1956 provided that on the 1st day of April, 1957, called the tillers ' day, every tenant, subject to the provisions of the next succeeding sections, be deemed to have purchased from his landlord, free of all encumbrances subsisting thereon on the said day, the land held by him as tenant if he satisfied the conditions set out in the section. Section 32G provided that as soon as may be after the tillers ' day, the ALT shall publish or cause to be published a public notice in the prescribed form in each village within the jurisdiction calling upon: (a) all tenants who u/s 32 are deemed to have purchased the lands: (b) all landlords of such lands, and (c) all other persons interested therein; to appear before the ALT on the date specified in the notice. The ALT shall then proceed to record statement of the tenant whether he is or is not willing to purchase the land held by him as a tenant If the tenant is willing to purchase, the Tribunal shall after giving an opportunity to the tenant and landlord and all the other persons 614 interested in such land to be heard and after holding an enquiry determine the purchase price of such land in accordance with the provisions of section 32 and sub section 3 of section 63A. Section 32 post pones the date of statutory purchase in the case where a landlord is a minor or a widow or a person subject to any mental or physical disability or a serving member of the armed forces to a date one year from the expiry of the period during which such landlord is entitled to terminate the tenancy under section 31. Having noticed the relevant provisions of the Act, it is necessary first to refer to the deed of settlement under which the landlord acquired land involved in this appeal. By the deed of settlement Exh. 2 A dated May 22, 1930 Devidas Devlal Seth father and Sheo Parshad Devidas Seth, brother of the appellant landlord settled on trust the properties more particularly described in the deed. At the time of settlement, appellant the beneficiary under the trust was a minor and the deed provided for the consequences to ensue on her attaining majority. The relevant portion of the deed of trust in this behalf reads as under: "After the girl completes 21 years and while she is physically and mentally in good condition, the right of carrying on the 'vahivat ' (management) of the estate and of spending the income thereof is with her alone, during her life time. However, she has no right in any way either to purchase the aforesaid estate or to create in any way a charge (Translation is disputed and is stated that 'encumbrance ' is the appropriate rendering) thereon; nor she has a right to dispose of the said estate under a will. " The deed provides for the disposal of the estate on the death of beneficiary, the appellant giving 2/3rd of the estate to her male issues and 113rd to the female issues. In this behalf the recital in the deed is: that the children as many as will be alive at the time of her death are to get the estate according to the terms mentioned in the deed and if no child will be living the estate is to go to her grand children according to the terms in the deed. The direction was given that 2/3rd and 1/3rd share shall be given to the children who will be living at the time of her death and in the event that there is no child of a particular sex the whole estate was to go to the children 615 of the other sex. There is also a provision about disposal of the estate in the event the appellant has no child of her own. The contention which Mr. G.L. Sanghi, the learned counsel for the appellant put in the forefront was that the appellant being a limited owner under the deed of settlement was not entitled to lease the land and therefore respondents could not be said to be said to be lawfully cultivating the land and therefore could not become deemed tenants under section 4. Consequently, they could not have become deemed purchasers on the tillers ' day. As a corollary it was contended that in any event as the children have a vested remainder in the estate the date of purchase would be postponed as provided in section 32 of the Act, and therefore ALT could not entertain an application under section 32 and proceed to determine the price on the footing that the tenant has become a deemed purchaser. Under the deed of settlement appellant acquired a life interest and the reversion remainder was in her children. During her life time she was entitled to enjoy the income of the property but she could not dispose of the property by will, gift or sale. She was also under a disability to encumber the estate and it was urged that lease is an encumbrance. The substantial question is whether a limited owner of agricultural land governed by the Tenancy Act during his/her life time was entitled to lease the land and if he or she did lease the land whether the tenant inducted by the holder of life estate could be said to be lawfully cultivating the land so as to acquire the status of a deemed tenant under section 4 and as a corollary would become a deemed purchaser on the tillers ' day. Section 4 has been extracted hereinbefore. It comprehends within its sweep any person lawfully cultivating any land belonging to another person. If land belongs to one person and another is lawfully cultivating it, unless such person falls under any of the excepted categories; he would acquire the status of a deemed tenant. The excepted categories are: (a) a member of the owner 's family, or (b) a servant on wages payable in cash or kind but not in crop share of a hired labourer cultivating the land under the personal supervision of the owner or any member of the owner 's family, or (c) a mortgagee in possession. It would thus appear that if the land belonging to one person is being lawfully cultivated by another person and that such other person is not a member of the owner 's family or a servant on wages payable in cash or kind but not in crop share or a hired labourer or a mortgagee in possession then such cultivator lawfully cultivating the land would be deemed 616 to be a tenant. The legal fiction of clothing a lawful cultivator of land belonging to other person has widened the traditional concept of expression 'tenant ' which would normally imply contractual relationship. Under the deed of settlement appellant was given a life estate. She was the owner of the land during her life time with a limitation that she could not will, gift or sell the property or encumber the same. In view of these four limitations she is undoubtedly a limited owner. But this limited owner holding the life estate has been given the right to administer the estate after she attained majority. Administration of the estate would normally include leasing of the property except where a specific condition is prescribed precluding the administrator from leasing the property. There is no such limiting or restrictive condition prohibiting the appellant in the course of her management from leasing the land. The appellant beneficiary being a woman, the settlors must have thought that she may not be able to personally carry on agricultural operations and therefore when the settlors authorised her, on attaining majority, to administer the estate it would per se in the absence of a limiting or restricting condition to the contrary enable her to lease the land. Thus, if the appellant as beneficiary after attaining majority took over the administration and as part of the administration leased the land, the person so inducted by her on the land would be lawfully cultivating the land belonging to the appellant and being not in any of the excepted categories would be deemed to be a tenant. On a plain reading of the deed and the admitted position that she had leased the land to each of the respondents and keeping in view the requirements of section 4, the conclusion that the respondents would be deemed tenants under section 4 of the Act is inescapable. The view which we are taking, is borne out by the observations of this Court in Dahyalal and Ors. vs Rasul Mohammed Ahdul Rahim (supra). In that case the tenant was inducted on the land by a mortgagee in possession and the contention was that as the mortgagee in possession would not be deemed to be a tenant because he is in the excepted categories set out in section 4, the tenant inducted by him would not acquire the status of a deemed tenant. After analysing the provisions of the Tenancy Act, this Court held that all persons other than those mentioned in clauses (a), (b) and (c) of section 4 who lawfully cultivate land belonging to other persons whether or not their authority is derived directly from the owner of the land must be deemed tenants of the land. The execution of 617 mortgagee in possession from the category of deemed tenant was explained on the ground of public policy in that to confer such status upon mortgagee in possession would be to invest him with rights inconsistent with his fiduciary character. However, the tenant inducted by a mortgagee in possession in discharge of his liability of prudent management cast by section 76(a) of the Transfer of Properly Act as also under the authority derived from the mortgagor would be lawfully cultivating the land. Accordingly the person inducted would be a deemed tenant who would be entitled to the protection of the Act even after the mortgage is redeemed. Once such a tenant enjoys the status of a deemed tenant and holds land in that capacity, on the tillers ' day he would become the deemed purchaser. A contention was raised that this Court overlooked in Dahyalal 's ease a vital point that a transferor cannot confer a better title on another than he himself possesses and that therefore in view of section 76(a) of the Transfer of Property Act a mortgagee in possession cannot create an interest to endure beyond redemption of mortgage to bind the mortgagor. It was urged that if a mortgagee in possession is specifically excluded from acquiring status of a deemed tenant, ipso facto tenant inducted by him cannot acquire that status. The court negatived the contention. It would be advantageous in this context to refer to Prabhu vs Ramdeo and Ors. where this Court held that a tenant of a mortgagee in possession can invoke the benefit of subsequent tenancy legislation which provided that such a tenant could not be evicted except in the circumstances set out in that legislation. The mortgaged property in that case was land used for agricultural purposes and the mortgage was usufructory mortgage. After redemption the original mortgagor sued for actual possession from tenant inducted by the erstwhile mortgagee alleging that on redemption of mortgage, the tenant has to surrender possession. In the meantime, Rajasthan Tenancy Act of 1955 had been introduced and the tenant claimed protection against eviction under it. This Court after referring to Mahabir Gope and Others vs Harbans Narain Singh and others and Harihar Prasad Singh and Another vs Must. of Manshi Nath Prasad and Others held that rights of the tenants inducted by the mortgagee may 618 conceivably be improved by virtue of statutory provisions which may meanwhile come into operation. Such a case would clearly be an exception to the general rule prescribed by the Transfer of Property Act that mortgagee in course of management cannot create an interest which would endure beyond the redemption of mortgage. It was next contended that in any event the appellant having been given a life estate with the vested remainder in her children, she had no vested interest in the property during her lifetime but her interest would be contingent interest and therefore even during her lifetime, the children would be the owners and as they were minors the date of statutory purchase would be postponed under section 32 F. Looking to the terms of the deed of settlement, subject to the limitations therein prescribed the appellant had a vested interest with a right to take over management on attaining majority and to deal with the property in her own way. Assuming without deciding that she had no right to will, gift, sell or encumber the property yet assuming she did deal with it in the manner prohibited it would nonetheless be binding during her lifetime. The property would devolve on the heirs named in the deed and the devolution would take place on her death. Therefore, upon a pure literal construction of deed coupled with intendment of the settlement it is difficult to accept Mr. Sanghi 's submission that her interest in the property during her life time was contingent interest. This will further be borne out by the provision contained in section 13 of the Transfer of Property Act inasmuch as she was given life or limited interest and the remainder to her children none of whom was in existence at the time of transfer. Even if transfer is in favour of unborn person, at the date of transfer to be valid there has to be a prior interest created by the very transfer. This prior interest though limited would not be contingent but vested interest. In fact the interest of future born children would be contingent till the death of the appellant. The deed of settlement cannot be construed as a transfer in favour of unborn person, yet it settles property on trust and the unborn children, under trust, may be beneficiaries but they can claim interest only after the death of the appellant and no interest in her life time. Under the deed of settlement an interest is created in favour of the children of the appellant and the interest would take effect on the happening of specified uncertain event uncertain as to time namely, the death of the appellant, then till the death of the appellant the interest of the children would be contingent. It is nothing short of spes 619 successionis. Mr. Sanghi, however, referred to Rajes Kanta Roy vs Santi Debi and urged that by a parity of reasoning we must hold that the interest of the appellant was a contingent interest. In that case one Ramani created an endowment in respect of some of his properties in favour of his family deity and appointed his three sons as shebaits. After the death of one of his sons, widow of the deceased son instituted a suit against other members of the family for a declaration that she as an heir of her deceased husband, was entitled to function as shebait, in place of her husband. The suit ended in a consent decree recognising the right of the widow as a co shebait. Subsequently the settlor Ramani and his two other sons filed a suit against widow of the pre deceased son for a declaration that the consent decree was null and void. During the pendency of the suit the settlor Ramani executed a registered trust deed in respect of his entire property. The eldest son was appointed trustee to hold property under trust subject to certain powers and obligations. The second suit which was pending at the death of settlor Ramani ended in a consent decree. One of the terms of the consent decree was that widow of the predeceased son gave up her rights under the earlier consent decree by which she obtained status of co shebait and she was paid Rs. 475/ per month as allowance. Complaining of a default in the payment of allowance she filed an application for execution to realise the arrears and she sought attachment and sale of certain properties. The eldest son filed an objection contending that under the settlement of trust his interest in the property was contingent till the debts are paid and as the precondition is not satisfied the contingent interest is not attachable. Negativing this contention, it was held that the determination of the question as to whether any interest created by trust deed is vested or contingent has to be guided by the principles recognised under sections 19 and 21 of the Transfer of Property Act and the Indian Succession Act. After referring to certain English authorities and text books by writers it was held that the question is really one of intention to be gathered from a comprehensive view of all the terms of a document. After examining all the terms of the deed of trust, this Court held that even though the debts were not discharged the appellants, namely, the sons acquired a vested interest and not a contingent one. Having examined the trust deed before us, we are satisfied that the appellant had the vested interest in the property during 620 her life time and the children had only contingent intermediating that period. It was lastly contended that as the appellant was prohibited from creating an encumbrance on the property, she had no right to lease the property because in a certain way lease is also an encumbrance. Without going into the wider question whether the expression 'encumbrance ' in the context in which it is used would comprehend lease within its fold we would dispose of the contention on the short ground that the right to administer the property confined on the appellant on her attaining majority inheres the right to lease the property. If it be so, it is futile to contend that restraint on the right to encumber would preclude her from leasing the land. The right to manage or administer an immovable property such as agricultural land as a prudent man, comprehends the right to lease, save where the contrary intention is indicated. It is equally well recognised that a limited owner or a life estate holder in agricultural land, unless a clear intention to the contrary is expressed, would be entitled to lease the land during his or her life time. Reading the deed of settlement as a whole, we do not find any such contrary intention and, therefore, we must negative the contention . Having examined all the contentions of Mr. Sanghi, we find no merit in any of them and therefore all these appeals fail and are dismissed with costs. Hearing fee in one set. V.D.K . Appeals dismissed.

Under the deed of settlement (exhibit 2A) dated May 22,1930, the appellant landlady acquired a life interest in certain agricultural lands under dispute and the reversion remainder was in her children. During her lifetime she was entitled to enjoy the income of the property but she could not dispose of the property by will, gift or sale. She was also under a disability to encumber the estate though she had the right of carrying on the "vahivat" (management). By virtue of the provisions of section 32 of the Bombay Tenancy and Agricultural Lands Act, 1948, providing that on April 1, 1957 styled as tillers ' day, a tenant of Agricultural land covered by the said Act would be the owner of the land held by him, if other conditions specified therein are fulfilled, the respondents made five separate applications on August 27, 1962 against the appellant before the Agricultural Lands Tribunal, Raver under section 32G for determining the price of the land held by each of them as tenant. The appellant contested the right of the tenant to purchase the land, inter alia contending that under the deed of settlement she acquired a right only to usufruct of land involved in the dispute and she being a limited owner and the settlement imposing certain disability on her precluding her from dealing with the property which would indicate that she could not have leased out the land thereby creating an encumbrance which would be impermissible under the deed of settlement and consequently the tenant of each piece of land could not be said to be lawfully cultivating the land so as to a become the deemed tenant under section 4 of the Tenancy Act. The respondents not being tenants within the meaning of the Tenancy Act could not have become the owner of the land on the tillers ' day. Alternatively it was contended that the minor children of the appellant, she being a limited owner had acquired a vested right in the land and, therefore, as they were minors the date of compulsory purchase would be postponed under section 32F ousting the jurisdiction of the tribunal to determine the price under section 32G. The Tribunal allowed 608 the applications and negatived the appellant 's contentions. All the five appeals preferred by the appellant were allowed by the Collector of Jalgaon. The revision petitions filed by the tenants under section 76 of the Tenancy Act before the Maharashtra Revenue Tribunal were allowed holding that even though the landlady in these cases was a limited owner the instrument settling the property on the landlady did not preclude her from leasing the land and the lease was accordingly valid under section 4, the tenant would be a deemed tenant within the meaning of the Tenancy Act and such deemed tenant would become the owner of the land held by him on the tillers ' day. The appellant approached the High Court under Article 227 of the Constitution. While rejecting the special civil applications the High Court remanded the case to the Collector to give an opportunity to the appellant to agitate the contention about the quantum of price as it was not dealt with by the Collector on merits. The appellant having obtained a certificate under Article 133(1) (a) and (b) of the Constitution preferred these five appeals. Dismissing the appeals, the Court, ^ HELD: 1. On a plain reading of the deed and the admitted position that the appellant had leased the land to each of the respondents and in view of the requirements of section 4 of the Tenancy Act, 1948, it is clear that the respondents would be deemed tenants under that section. [616 E F] 1 :1. Section 4 comprehends within its sweep any person lawfully cultivating any land belonging to another person. If land belongs to one person and another is lawfully cultivating it, unless such person falls under any of the excepted categories; he would acquire the status of a deemed tenant. The excepted categories are: (a) a member of the owner 's family, or (b) a servant on wages, payable in cash or kind but not in crop share or a hired labourer cultivating the land under the personal supervision of the owner or any member of the owner 's family, or (c) a mortgagee in possession. It would thus appear that if the land belonging to one person is being lawfully cultivated by another person and that such other person is not a member of the owner 's family or a servant on wages payable in cash or kind but not in crop share or a hired labourer or a mortgagee in possession then such cultivator lawfully cultivating the land would be deemed to be a tenant. The legal fiction of clothing a lawful cultivator of land belonging to other person has widened the traditional concept of expression "tenant" which would normally imply contractual relationship. [615 E H, 616A] 1:2. Under the deed of settlement appellant was given a life estate. She was the owner of the land during her life time with a limitation that she could not will, gift or sell the property or encumber the same. In view of these four limitations she is undoubtedly a limited owner. But this limited owner holding the life estate has been given the right to administer the estate after she attained majority. Administration of the estate would normally include leasing of the property except where a specific condition is prescribed precluding the administrator from leasing the property. There is no such limiting or restrictive condition prohibiting the appellant in the course of her management from leasing the land. The appellant beneficiary being a woman, the settlors must have thought that she may not be able to personally carry on agricultural operations and therefore when the settlors authorised her, on attaining majority, to administer the estate 609 it would per se in the absence of a limiting or restricting condition to the countrary enable her to lease the land. Thus, if the appellant as beneficiary after attaining majority took over the administration and as part of the administration leased the land, the person so inducted by her on the land would be lawfully cultivating the land belonging to the appellant and being not in any of the excepted categories would be deemed to be a tenant.[616 B E] Dahyalal and Ors. vs Rasul Mohammed Abdul Rahim, ; , followed. Upon a pure literal construction of deed coupled with intendment of the settlement, the appellants ' interest in the property was a vested interest during the life lime with a right to take over management on attaining majority and to deal with the property in her own way, and the children had only contingent interest during the period. The property would devolve on the heirs named in the deed and the devolution would take place on her death. Section 13 of the Transfer of Property Act makes this position clear since none of her children to whom the remainder was given was in existence at the time of transfer. Even if transfer is in favour of unborn person, at the date of transfer to be valid there has to be a prior interest created by the very transfer. This prior interest though limited would not be contingent but vested interest. In fact the interest of future born children would be contingent till the death of the appellant. The deed of settlement cannot be construed as a transfer in favour of unborn person, yet it settles property on trust and the unborn children, under trust, may be beneficiaries but they can claim interest only after the death of the appellant and no interest in her life time. Under the deed of settlement an interest is created in favour of the children of the appellant and the interest would take effect on the happening of specified uncertain event uncertain as to time namely, the death of the appellant the interest of the children would be contingent. It is nothing short of spes successionis [618 D H, 619 A] Rajes Kanta Roy vs Santi Debi, ; , discussed and distinguished. The right to administer the property conferred on the appellant on her attaining majority inheres the right to lease the property. If it be so, it is futile to contend that restraint on the right to encumber would preclude her from leasing the land. The right to manage or administer an immovable property such as agricultural land as a prudent man, comprehends the right to lease, save where the contrary intention is indicated. It is equally well recognised that a limited owner or a life estate holder in agricultural land, unless a clear intention to the contrary is expressed, would be entitled to lease the land during his or her life time. Reading the deed of settlement as a whole no such contrary intention could be found. [620 B D]

Appeals Nos. 228 to 230 of 1960. Appeals from the judgment and decree dated February ' 4, 1957, of the Madhya Pradesh High Court (Indore Bench) at Indore in Civil Reference No.15 of 1952. B. Se??,, B. K. B. Yaidu and 1. N. Shroff, for the appellants. A. V. Viswanatha Sastri, K. A. Chitale, J. B. adachanji, section N. Andley, Rameshwar Nath and P. L. Vohra for the respondents. April 3. AYYANGAR, J. Rule 4 (1)(b) of Sch. 1 headed ((Rules for the computation of profits for the purposes of War Profits Tax" of the Gwalior War Profits Tax Ordinance, Samvat 2001 (hereinafter referred to as the Ordinance), provided: "4. In computing the profits of a business carried on by a company, no deduction shall be made in respect of (1) remuneration paid to directors if during any part of the accounting period concerned they had controlling interest in the company; 207 Provided that this sub rule shall not apply (a). . . . . . . . (b) to the remuneration of any managing agent where such remuneration is included in the profits of The managing agents ' business for the purposes of the War Profits Tax". The respondent Binod Mills Co. Ltd. which had its business at Ujjain in the State of Gwalior was a company whose profits were liable to War Profits Tax under the Ordinance. The company was managed by a managing agency firm M/s. Binodiram Balchand which had, by reason of its shareholding exceeding 50% of the issued sharecapital, a controlling interest in the company. The respondent company was assessed to War Profits Tax for three chargeable accounting, periods July 1, 1944, to December 31, 1944 , January 1, 1945, to December 31, 1945, and January 1, 1946, to June 30, 1946. During each of these accounting periods the respondent company had paid remuneration to its managing agents and claimed to deduct the remuneration so paid in the computation of its business profits during these three periods. The assessingofficer disallowed the claim on the ground that the remuneration received by the managing agency firm had not been factually assessed in the hands of the managing agent and that consequently the matter was covered by the opening words of r. 4 and not saved by proviso (b) to the rule. An appeal against this order of assessment was dismissed by the appellate authority and thereafter by the Commissioner of War Profits Tax in revision. But at the request of the respondent the Commissioner submitted a reference under section 46 (1) of the Ordinance to the 208 High Court of Madhya Pradesh of the following question for its decision: "Whether in computing the profits of a business carried on by a company deduction shall be made in respect of any remuneration to any managing agent where such remuneration is included in the profits of the managing agent 's business for the purposes of the War Profits Tax ?" There was a consolidated reference in respect of the three chargeable accounting periods. The learned Judges of the High Court answered the question in favour of the respondent and held that the remuneration, even though paid to a managingagent who had a controlling interest in the company, was a permissible deduction for the purpose of computing the profits of the company for the purposes of the War Profits Tax. The High Court was thereafter moved by the appellant for the grant of certificates of fitness for appeals to this Court under section 47 of the Ordinance and the certificates having been granted these three appeals, which relate to the three chargeable accounting periods have been preferred to this Court. Before proceeding further it might be convenient to set out certain facts to appreciate the form of the question which might provoke some enquiry. There was not much dispute, and even if there was, it was abandoned fairly early, that M/s. Binodiram Balchand were "directors" of the company within the meaning of the Ordinance and bad a controlling interest in the company. In this connection we might advert to the definition of ,director ' in section 2(10) of the Ordinance: "2. 'director ' includes any person occupying the position of a director by what ever name called and also includes any person who (i) is a manager of the company or 209 concerned in the management of the business; and (ii) is remunerated out of the funds of the business; and (iii) is the beneficial owner of not less than 20 per cent of the ordinary share capital of the company". The controlling interest being established, it was common ground that the remuneration paid to the managing agent could not be deducted in computing the profits of the company unless it fell within proviso (b) of r. 4(1). Before the departmental authorities it was suggested on behalf of the company that the expression 'included ' in proviso (b) meant ",disclosed in the return of the director" and on this basis it was contended that as M/s Binodiram Balchand had. , in the statement of their own Profit & Loss account for Samvat 2000, 2001 and 2002, disclosed the managing agency commission received by them the remuneration had been "included" in their profits for the purposes of the War Profits Tax, though for reasons which are unnecessary to discuss they claimed that the sum was not liable to be brought to tax and this claim was accepted. This argument which was rejected by the departmental authorities is however responsible for the form of the question referred to the High Court. This contention however was not apparently repeated before the High Court and does not figure in the judgment as part of the reasoning of the learned Judges in the judgment now under appeal and has not been relied upon before us. We shall therefore say no more about it, but proceed to deal with the substantial question raised. The facts being as above stated the entire question in the appeals turns on the mean of the 210 expression "is included in the profits of the managing Agency business" in r.4(1) proviso (b) of Sch. 1 of the Ordinance. Before however entering on a discussion of the words underlined and of proviso (b) in particular, it would be necessary to set out broadly the scheme underlying the levy of the tax under the Ordinance. Section 4(1) of the Ordinance is the charging section and it enacts : "4. (1) Subject to the provisions of this Ordinance, there shall, in respect of any business to which this Ordinance applies, be charged, levied and paid on the amount by which the profits during any chargeable period exceed the standard profits, an excess profit tax (in this Ordinance referred to as the 'War Profits Tax ') which shall be equal to 60 per cent. of the aforesaid amount. " The "business" to which the Ordinance applies has to be gathered from the terms of section 2 (5) which defines the term 'business '. That clause reads : " business ' includes any trade, commerce or manufacture or any adventure in the nature of trade, commerce or manufacture or any profession or vocation ' but does not include a profession carried on by an individual or by individuals in partnership, if the profits of the profession depend wholly or mainly on his or their personal qualifications, unless such profession consists wholly or mainly in the making of contracts on behalf of other persons or the giving to other persons of advice of a commercial nature in connection with the making of contracts : Provided that where the functions of a company or of a society incorporated by or under any enactment consist wholly or mainly in the holding of investments or other property or both, the holding thereof shall be 211 deemed for the purpose of this definition to be a business carried on by such company or society; Provided further that all businesses to which this Ordinance applies carried on by the same person shall be treated as one business for the purposes of this Ordinance". The second proviso uses the term 'person ' which is defined by section 2 (13) to include "any company or body of individuals or any other association of persons whether incorporated or not and also includes a Hindu undivided family". The 'Profits ' which is referred to in the charging section is, by reason of the definition of the term in section 2 (16), to mean ,profits as determined in accordance with the provi sions of this Ordinance and its First Schedule". The provisions of the Ordinance relating to the computation of profits do not bear upon the point now in controversy, but what is of relevance are certain of the Rules for the computation of the profits in Sch.1. From the terms of the charging section read with the other provisions of the Ordinance to which we have adverted it would be seen that it is the profits accruing from business that is brought to charge and that each person whether he be an individual or comprehended within the inclusive definition of the term ',person" is an independent unit of assessment whose profits are computed by aggregation of all of its sources of income from every business which that unit may carry on. How the profits of each unit is to be computed for the purposes of tax has to be gathered, apart from the provisions of the Ordinance which, as stated earlier, are not relevant to the present case, from Sch. 1 headed "Rules for the computation of profits for the purposes of War Profits Tax". Rule 1 of these Rules which generally follows the pattern of the Indian Income Tax Act in setting out the list of 212 permissible deductions, provides as one of such deductions in r. I. (1) '(xi) ,,any expenditure (not being in the nature of capital expenditure or personal expense of the person to whose business this Ordinance applies) laid out or expanded wholly and exclusively for the purposes of such business". If this provision were applied for computing the profits of a company as an unit of assessment, there, could be no dispute that generally speaking the remuneration paid to a managing agent would be an admissible deduction. It hardly needs to be mentioned that the remuneration received by a managing agent would be profits from business on which he would be, liable to tax under the Ordinance, being a profit from business as defined in section 2(5) subject only to the condition that the amount of the profit brought it within the taxable limit. To this prima facie rule as regards the manner in which the profits derived by a company are to be computed r. 4 enacts an exception, in the case of those companies in which the Directors have a controlling interest. But the application of this special rule as regards companies under the management of Directors with controlling interest is, however, subject, among others, to proviso (b) not applying to the case. In other words, if proviso (b) saved the case, the special rule as to controlled companies would cease to be applicable and the remuneration paid would be deductible in the computation of the companies ' profits. This turns on whether the remuneration paid to the managing agent "is included in the profits of the managing agent 's business". The words used being "is included" there is no doubt that an actual inclusion is posited. But this, however, does not solve the problem, for the , 'inclusion in the profits" might refer to three distinct "inclusions" : (1) the inclusion by the managing agents as an assessee for the purposes of his individual assessment, i.e., in his return, (2) the inclusion by the assessing authority in the order of 213 assessment made against the managing agent, (3) the inclusion under the terms of the Ordinance of the remuneration as an amount chargeable to the tax as part of the profits of the managing agent. In passing we might observe that r. 7 (2) (b) of Sch. 1 to the Excess Profits Tax Act, 1940, on which the Ordinance is modeled is in the same terms as the proviso (b) to r.4(1) of the Ordinance but the proper interpretation of the rule in the Excess Profits Tax Act has never come up before the Courts for decision. The contention urged on behalf of the appellant, before the learned Judges of the High Court was that the inclusion referred to an inclusion by the "essment officer of the remuneration in the assessment of the managing agent and that unless the remuneration sought to be excluded in the computation of the profits of the company was actually assessed in the hands of the managing, the company could not claim the benefit of proviso (b). The learned Judges repelled this submission by holding that the proviso could not be construed as to vest in the assessing authority an absolute discretion to assess either the company or the managing agent. They read the words ",is included" as equivalent to "is liable to be included" and that as it was not contested before them that if the assessment officer had been so minded he could have included this sum in the profits of the managing agent 's business, the terms of proviso (b) were satisfied. Mr. Sen learned Counsel for the appellant did not pursue the same line of argument as in the Court below. We should add that we consider that Mr. Sen was right in not attempting to support the argument which was rejected by the learned Judges of the High Court. Though tax laws occasionally make provision for the assessing authority to proceed against a particular unit of assessment on one or 214 more alternative bases, it would require 'very explicit and unambiguous language to permit an assessing authority to choose one of two units for assessment, particularly in, the context of there being no provision for the inter se adjustment of the rights and liabilities in the event of one unit benefiting at the expense of the other by reason of the exercise of the option and when admittedly the unit does not receive the income as agent for the other unit. Besides, if the company had been first assessed to tax because let us say its return had been filed earlier, or the enquiry as regards the correctness of the return was completed earlier, there is no provision /in the Ordinance or in the Rules for excluding the sum in the personal assessment of the managing agent, so that it could not be urged that the assessing authority had any option in the matter to tax either the company or the managing agent. If the managing agent is ex roncessis liable to have his remuneration included in his assessment for the tax, unless the income or the business is not within the Ordinance, it would be most anomalous to suggest that in order that the benefit of proviso (b) should be available to a company, the assessment of the managing agent should have been completed first a matter not always within the control of a company. We do not think it necessary to dilate further on this construction since Mr. Sen did not commend it for our acceptance. His submission, on the other hand, was that this was a special provision designed to meet the cases of companies in which the directors had a controlling interest. In such cases it was these directors who had to submit and submitted the return on behalf of the company and who, of course, had to submit their own returns in their individual capacity as persons in receipt of taxable profits. In these circumstances 215 he urged that the proviso should be read as conferring an option upon the directors either to include their remuneration in their own returns, get them taxed and pay the tax themselves or to include it in the company 's return and have the amount taxed in the company 's assessment. His further submission was that having regard to the manner in which the proviso was worded, where the managing agent failed to include his remuneration in his own return and have it assessed as part of his profits, the effect was the same as if he had opted to have the sum taxed in the company 's assessment. The option, it was urged, was that of the managing agent who controlled the affairs of a company and therefore in effect represented it and who in one capacity acted for himself and in another acted for the company. In effect the submission of learned Counsel was that the provision was designed to obviate double taxation of the same income and for this purpose vested the controlling Director with a discretion to render the company immune from tax where the sum was included in his own return and was assessed in his hands. The theory propounded regarding the provision being one for avoidance of double taxation in the manner above indicated by vesting a discretion in the controlling Director breaks even on a cursory examination. Let us assume that the managingagent opts to have the company taxed and submits a return on behalf of the company in which no deduction is claimed in respect of this item and an assessment is made accepting that return. On the terms of the Ordinance this would not afford any relief to the managing agent in his personal assessment, for admittedly there is, as pointed out earlier, no provision in the Ordinance or in the Schedule exempting the managing agent from the inclusion of this remuneration in his taxable profits, and this 216 must obviously be so, because for the purposes of the charging section he would be an independent unit of assessment. He would have to include in the computation of his personal income for the purpose of the War Profits Tax the remuneration received by him. This might be expressed in a slightly different form by stating that proviso (b) to r. 4(1) does not operate in the reverse direction, that is by exempting the managing agent from tax on the remuneration derived by him, merely because the deduction of that item has been denied to the company. Obviously therefore r. 4(1)(b) is not a rule designed for the avoidance of double taxation in the sense in which learned Counsel for the appellant suggests that it is. There are also other reasons why we find it unable to accept the submission of Mr. Sen that by the words is "included" is meant the inclusion in the return by the managing agent with the result that in cases where he does not so include, the company would not be entitled to the deduction. The option suggested by Mr. Sen to the managing agent was that he might either elect to pay the tax himself or get the company to pay it. Obviously it would always be in the interest of the managing agent to have the tax paid by the company if by that means, as is suggested by Mr. Sen, he could obtain absolution from the obligation of paying the tax himself, for if the tax is paid by the company the loss involved in the payment of the tax would fall on him only to the extent of his shareholding, being for the rest shared by the other share holders of the company. It is really difficult to understand the principle by which one could construe a rule of this nature as enabling a managing agent who holds, say 51% of the share capital of the company to visit 49% of the burden of tax which normally one would expect to be paid by him, to be paid by the other shareholders of the company merely because 217 he happens to be the managing agent holding a controlling interest by the extent of his share holding. We consider that the construction suggested by Mr. Son which leads to such an unreasonable result and inflicts an unjust injury on the other shareholders is not any proper interpretation of the provision. Besides, there are other grounds why the meaning attributed to the words "is included" as referring to "included ' by the managing agent" cannot be accepted. Suppose the managing agent includes it in his return but the assessing authority does not include it in the computation of his return but prefers to disallow the deduction in the case of a company. Would that be "inclusion in his pro fits?" Again, suppose the managing agent does not include it in his return but the assessing authority does, and tax is paid by the managing agent, would there be no exclusion? These illustrations serve to bring out the anomalies that would arise if it were held that the words ",is included" meant "is included in his return by the managing agent". This leaves for consideration the meaning that "is included" refers to the inclusion under the provisions of the Ordinance. If this meaning were accepted it would not matter whether the managing agent has or has not included the sum in his return or whether the assessing authorities have or have not done their duty by having the remuneration included in the taxable profits of the managingagent. If the managing agent has not done so being under an obligation imposed by the law to include it, the return would be liable to be revised by the assessing officer and if the failure to include the sum was due to any suppression, the managing agent would, besides having the sum included in his assessable profits, be liable to appropriate penalties for filing a wailfully incorrect return. Similarly, the assessing officer being under a statutory duty to include the sum in the assessment of the managingagent would, if he failed to do so, render the order 218 liable to be revised. The remedy for the failure either of the managing agent or of the assessing authorities to conform to the requirements of the law certainly cannot be the disallowance of the sum in the computation of the profits of the company. The entirety of this reasoning, it would be noted, proceeds on the basis that the managing agent was liable to include his remuneration in his assessable profits. In such a contingency it stands (to reason that neither the default of the managing agent as an assessee or of the assessing authority to include the sum in the profits of the managing agent could prejudice the rights of the company in the matter of the computation of its income. Where the remuneration of the managingagent was not under the Ordinance liable to be brought to tax the position would be different and that is just what is indicated as that which would render the proviso inapplicable. For instance, section 5(1) of the Ordinance enacts; ". Provided further that this Ordinance shall not apply to (a). . . . . . . . . (b) profit from a business carried on wholly on behalf of a religious or charitable institution and the profits of which are applied solely to the purpose of the institution and enure for the benefit of the public, and (i) the business is carried on in the course of the carrying out of a primary purpose of the institution, and (ii) the work in, connection with the busi ness is carried on by the beneficiaries of the institution". If for instance, the business of the managing agency was being carried on for or on behalf of a trust of 219 the character indicated by the provision just now read, the remuneration of the managing agent would not be liable to tax for the reason that it is outside the ambit of the Ordinance and to such a case the terms of proviso (b) to r. 4(1) would not be attracted, with the result that the managingagent not being liable to tax under the Ordinance on the remuneration derived by him, the company, if it were a controlled company. would not be entitled to the deduction of that remuneration in the computation of its profits. Except in case where the remuneration received by a managing agent is not liable to tax under the Ordinance, it is the managing agent that would be liable to pay tax on his remuneration and notwithstanding that the company is a controlled company the remuneration paid by it to the managing agent would be a permissible deduction by reason of the exception to the opening words of r. 4(1) contained in proviso (b). It is unnecessary for our present purpose to consider whether besides section 5(1)(b), already referred to, there are other contingencies in which remuneration received by a Director could be held not to be ,included ' in the latter 's profits under the Ordinance, since in the case before us it is admitted that the remuneration received by the managing agent was liable to be include in the computation of his profits for the purposes of the War Profits Tax and therefore neither the fact that the managing agent did not "include" the sum in his return, nor the default of the assessing authority to correct this error by " 'including" the sum in his assessment, is any reason for depriving the respondent company of the benefit of proviso (b) to r. 4(1). We therefore consider that the learned Judges of the High Court answered the question referred to them correctly. The appeals fail and are dismissed with costs. Appeals dismissed.

Sub rule (1) of r. 4 of Sch. 1 to the Gwalior. War Profits Tax Ordinance, Samvat 2001, provided: "In computing the profits of a business carried on by a company, no deduction shall be made in respect of the remuneration paid to directors if during any part of the accounting period concerned, they had controlling interest in the company; provided that this sub rule shall not apply (a). . (b) to the remuneration of any managing agent where such remuneration is included in the profits of the managing agents ' business for the purposes of the War Profits Tax". The respondent company was ' managed by a managing agency firm which had, by reason of its shareholding exceeding 50% of the issued share capital, a controlling interest in the company. The company was assessed to War Profits Tax under the provisions of the Gwalior War Profits Tax Ordinance, Samvat 2001, for three chargeable accounting periods between 1944 and 1946. During each of these accounting periods the company had paid remuneration to its managing ,agent and claimed to deduct the remuneration so paid in the computation of its business profits during these three periods. The assessing officer disallowed the claim on the ground that as the remuneration received by the managing agency firm had not been factually assessed in the hands of the managing agent, proviso (b) to r.4(1) of Sch. I was not applicable. It was found that the managing agents had in their statement of their own Profit and Loss account for the relevant years disclosed the managing agency commission received by them but they claimed before the assessing authority that the sum was not liable to be taxed and this claimed was accepted. Held, that the remuneration paid to the managing agents, even though they had a controlling interest in the 206 company, was a permissible deduction for the purpose of computing the profits of the company under the War Profits Tax Ordinance, Samvat 2001, ' because by virtue of proviso (b) to r.4(i) of Sch. 1 to the Ordinance, the managing agent was liable to include this remuneration in his assessable profits. The words "is included" in proviso (b) to r.4(1) refer to the inclusion under the provisions of the Ordinance. Neither the default of the managing agent as an assessee nor of the assessing authority to include the sum in the profits of the managing agent could prejudice the rights of the company in the matter of the computation of its income.

No. 1275 of 1989 etc. (Under Article 32 of the Constitution of India). Ms. Rani Chhabra, K. Ramkumar, Govind Mukhoty and Vimal Dave for the Petitioners. M.K. Ramamurthy (NP), K.K. Venugopal, H.S. Gururaj Rao, Ms. Chandan Ramamurthi, M.A. Krishnamurthi, T.V.S.N. Chaff, section Markandeya, W.A. Nomani, G.S. Giri Rao and A.K. Raina for the Respondents. The Judgment of the Court was delivered by RANGANATH MISRA, J. These are petitions under article 32 of the Constitution. Petitioners are promotee Engineers of the Roads & Buildings Wing of the Andhra Pradesh Engineering Service and challenge mainly is to certain earlier decisions of this Court resolving similar disputes by judgments ren dered in writ petitions and to the guidelines formulated by the State Government in the matter or ' the drawing up of the seniority list by way of implementation of this Court 's directions. 705 Facts are not in dispute. Shortly stated, under the Rules substantive vacancies in the category of Assistant Engineers have to be filled up from two sources 37 I/2 per cent by direct recruitment and the remainder of 62 1/2 per cent by transfer of Supervisors and Draughtsmen and by promotion of Junior Engineers. Regular direct recruitment had not been made as and when due and promotees beyond the limit had been put in in the place of direct recruits. While disposing of a group of petitions in a contest of this type in K. Siva Reddy & Ors. vs State of A.P. & Ors. , ; , a two Judge Bench of this Court instead of disturbing the entire group of promotee Engineers in excess of the quota, made the following direction: "Reopening the question of inter se seniority on the basis of non enforcement of the rules from the very beginning may create hardship and that would be difficult to mitigate but we see no justification as to why the benefit of the scheme under the rules should not be made available to direct recruits at least from 1982. When the State Government by rules duly framed prescribed the method of recruitment and put the scheme into operation it had the obligation to comply with it. The explanation offered by the State Govern ment for non compliance of the requirements of the rules does not at all impress us. We, therefore, direct that as on December 31, 1982, the State Government must ascertain the exact substantive vacancies in the category of Assistant Engineers in the service. On the basis that 37 1/2 per cent of such vacancies were to be filled up by direct recruit ment, the position should be worked out. Promotees should be confined to 62 1/2 per cent of the substantive vacancies and in regard to 371/2 per cent of the vacancies the shortfall should be filled up by direct recruitment. General Rules shall not be applied to the posts within the limits of 37 1/2 percent of the substantive vacancies and even if promo tees are placed in those posts, no seniority shall be count ed. The State Government shall take steps to make recruitment of the shortfail in the direct recruitment vacancies within the limit of 37 1/2 per cent of the total substantive vacan cies up to December 31, 1987 within four months from today by following ,the normal method of recruitment for direct recruits. The seniority list in the cadre of Assistant Engineers shall be redrawn up, as directed by the Tribunal, by the end of September 1988, keeping the directions re ferred to above in view. There 706 shall be a direction issued to the State of Andhra Pradesh to make recruitment to the category of Assistant Engineers by strict compliance of Special Rules henceforth. " The State Government came forward to implement the direction and published the draft seniority list drawn up on the basis of discussed guidelines. Keeping the directions in view the draft list placed the 1982 direct recruits from serial nos. 234 to 269 without disturbing promotees upto serial No. 233 and the remainder of promotees given promo tion prior to 1982 were placed against serial nos. 270 to 300. Writ petition No. 369 of 1989 C. Radhakrishna Reddy & Ors. vs State of A. P. & Ors., had earlier raised the same dispute. By judgment dated November 10, 1989, while dismiss ing the said writ petition a two Judge Bench of this Court said: "In Siva Reddy 's case this Court found that promotees had exceeded the quota and even got regularised in respect of the posts in excess of the limit. Taking into consideration the fact that regularisation had been done after the promo tees had put in some years of service and disturbing regu larisation would considerably affect the officers concerned, regularisation was not interfered with. This Court 's inten tion obviously was not to take away the benefit of regulari sation in respect of the officers belonging to the promotee group in excess of their quota but the Court did not intend to allow such regularised officers in excess of the quota to also have the benefit of such service for purposes of sen iority. A reading of the judgment in Siva Reddy 's case clearly indicates that this Court intended what the Govern ment have laid down by way of guideline. We see no justifi cation to interfere with the Government direction. A draft seniority list on the basis of such direction has already been drawn up and has been circulated. We are told that objections have been received and would be dealt with in usual course by the appropriate authorities. This writ petition had been entertained in view of the allegation that the Government direction was on a misconception of what was indicated in the judgment and in case there was any such mistake the same should be rectified at the earliest. Now that we have found that the Government order is in accord with the Court direction, this writ petition must be dis missed and individual grievances, if any, 707 against the draft seniority list would, we hope, be consid ered on the basis of objections filed by the competent authority. " At the hearing Mr. Mukhoty, appearing in support of the main petition, vehemently contended that serious injustice had been done to the promotees and accrued rights of theirs had been disturbed. He submitted that some of the direct recruits had been given the benefit of seniority by counting service prior to their actual recruitment and relied upon observations made by this Court in some cases to the effect that for computation of length of service the period prior to selection was being counted by a deeming position of employment prior to recruitment. When called upon to sub stantiate his allegation, he has not been able to do so. On the other hand, the Court had taken a very equitable view in not disturbing the regularisation contrary to the quota and had taken every care to ensure that the cause of justice was not made to suffer and a balance was maintained by an appro priate admixture of relief by confining the reconsideration for a period after 1982. The year 1982 was fixed, as the reasonings indicate, on account of two features (i) that regular disputes had been raised from that time; and (ii) a period of 5 6 years was not too long a period to give rise to a sense of conclusiveness generated by long lapse of time. The promotee Engineers should have been happy and thankful to their lot that their regularisation was not disturbed and even seniority prior to 1982 was not being affected. Oblivious of these benefits which they have re tained though acquired out of turn, they have proceeded on the footing that their cause has been affected and justice to them has been denied by placing a group of them below the 1982 recruits. We do not think that for dismissing this group of petitions anything more should be said excepting to quote with approval what this Court had said in Dr. G. Marulasiddaiah vs Dr. T.G. Siddapparadhya & Ors., ; "The canker of litigiousness has spread even to a sphere of life where discipline should check ambition concerning personal preferment. " A government servant is justified in taking legal action when he feels that a stigma or punishment is undeserved but he is expected to bear with fortitude and reconcile himself to his lot suppressing disappointment when he finds a co worker raised to a position which he himself aspired after. 708 Ordinarily, we would have awarded exemplary costs but with a view to allowing an appropriate reconciliation of the petitioners to their lot and not to give them a feeling of infliction of any new injury, we refrain from doing so. P.S.S. Petitions dis missed.

Sub rule 3(a) of rule 3 of the Andhra Pradesh (Roads and Buildings) Engineering Service Rules, 1965 prescribes that the substantive vacancies in the category of Assistant Engineers 37 1/2 per cent shall be filled up by direct recruitment and the remaining 62 1/2 per cent by transfer and promotion of junior officers. In K. Siva Reddy vs State of Andhra Pradesh, ; , filed by direct recruits, the Court had directed the State Government to ascertain the exact sub stantive vacancies in the category of Assistant Engineers in the service as on December 31, 1982, work out the quota prescribed under rule 3(3)(a) of the Rules and draw up a seniority list accordingly. In the draft seniority list drawn up by the State Gov ernment on the basis of the guidelines, it placed the 1982 direct recruits from serial Nos. 234 to 269 without disturb ing promotees upto serial No. 233 and the remainder of promotees given promotion prior to 1982 were placed against serial Nos. 270 to 300. In C. Radhakrishna Reddy vs State of A.P., W.P. No. 369 of 1989 decided on November 10, 1989 the Court found the said list in accord with the directions. In these writ petitions preferred by the promotee As sistant Engineers, it was contended for them that serious injustice had been done to them as the accrued rights of theirs had been disturbed and some of the direct recruits had been given the benefit of seniority above them by count ing service prior to their actual recruitment. Dismissing the writ petitions, the Court, HELD: 1. A Government servant is justified in taking legal action 704 when he feels that a stigma or punishment is undeserved but he is expected to bear with fortitude and reconcile to his lot suppressing disappointment when he finds a co worker raised to a position which he himself aspired after. [707G] Dr. G. Marulasiddaiah vs Dr. T.G. Siddapparadhya & Ors., ; , referred to. In K. Siva Reddy 's case, the Court had taken a very equitable view in not disturbing the regularisation contrary to the quota and had taken every care to ensure that the cause of justice was not made to suffer and a balance was maintained by an appropriate admixture of relief by confin ing the reconsideration for a period after 1982. The year 1982 was fixed on account of two features, (i) that regular disputes had been raised from that time, and (ii) a period of 5 6 years was not too long a period to give rise to a sense of conclusiveness generated by long lapse of time. The promotee engineers should have been happy and thankful to their lot that their regularisation was not disturbed and even seniority prior to 1982 was not being affected though they had acquired these benefits out of turn. [707C E]

Civil Appeal No. 2398 of 1978. Appeal by Special Leave from the Judgment and Order dated 24 1 1978 of the Kerala High Court at Ernakulam in T.R.C. No. 2 of 1976. M. M. Abdul Khader, V. J. Francis and M. A. Firoz for the Appellant. section T. Desai, P. A. Francis and Mrs. section Gopalakrishnan for the Respondent. The Judgment of the Court was delivered by PATHAK, J. This appeal by special leave is directed against the judgment of the Kerala High Court holding that the turnover of pineapple fruit purchased for preparing pineapple slices for sale in sealed cans is not covered by s.5 A(1)(a) of the Kerala General Sales Tax Act, 1963. The respondent, Messrs. Pio Food Packers ("the assessee"), carries on the business of manufacturing and selling canned fruit besides other products. In its return for the year 1973 74 under the Kerala General Sales Tax Act, 1963 the assessee claimed that a turnover of Rs. 3,64,138 89 representing the purchase of pineapple fruit was not covered by section 5 A(1)(a) of the Act. It was asserted that the pineapple was converted into pineapple slices, pineapple jam, pineapple squash and pineapple juice. Section 5 A(1) (a) of the Act provides: "5 A. Levy of purchase tax (1) Every dealer who, in the course of his business, purchases from a registered dealer or from any other person any goods the sale or purchase of which is liable to tax under this Act, in circumstances in which no tax is payable under section 5, and either (a) consumes such goods in the manufacture of other goods for sale or otherwise; or . . . . . . . shall, whatever be the quantum of the turnover relating to such purchase for a year, pay tax 1274 on the taxable turnover relating to such purchase for the year at the rates mentioned in section 5." The assessee maintained that by the conversion of pineapple fruit into its products no new commodity was created and it was erroneous to say that there was a consumption of pineapple fruit "in the manufacture of" those goods. The Sales Tax Officer did not accept the contention and completed the assessment on the finding that a manufacturing process was involved and that, therefore, the case fell within section 5 A(1)(a). In revision before the Sales Tax Appellate Tribunal, the assessee conceded that pineapple jam and pine apple squash would be covered by section 5 A(1)(a), and in regard to pineapple juice the Tribunal found that section 5 1(a) was attracted. The only question which remained was whether the preparation of pineapple slices fell within section 5 A(1)(a). On that question two members of the Tribunal found in favour of the assessee, and the third member found in favour of the Revenue, The Revenue then applied in revision to the High Court and the High Court has, by its judgment dated 24th January, 1978, maintained the order of the Tribunal. It appears that the pineapple purchased by the assessee is washed and then the inedible portion, the end crown, skin and inner core are removed, thereafter the fruit is sliced and the slices are filled in cans, sugar is added as a preservative, the cans are sealed under temperature and then put in boiling water for sterilisation. Is the pineapple fruit consumed in the manufacture of pineapple slices ? Section 5 A(1)(a) of the Kerala General Sales Tax Act envisages the consumption of a commodity in the manufacture of another commodity. The goods purchased should be consumed, the consumption should be in the process of manufacture, and the result must be the manufacture of other goods. There are several criteria for determining whether a commodity is consumed in the manufacture of another. The generally prevalent test is whether the article produced is regarded in the trade, by those who deal in it, as distinct in identity from the commodity involved in its manufacture. Commonly, manufacture is the end result of one or more processes through which the original commodity is made to pass. The nature and extent of processing may vary from one case to another, and indeed there may be several stages of processing and perhaps a different kind of processing at each stage. With each process suffered, the original commodity experiences a change. But it is only when the change, or a series of changes, take the commodity to the point where 1275 commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article that a manufacture can be said to take place. Where there is no essential difference in identity between the original commodity and the processed article it is not possible to say that one commodity has been consumed in the manufacture of another. Although it has undergone a degree of processing, it must be regarded as still retaining its original identity. A large number of cases has been placed before us by the parties, and in each of them the same principle has been applied: Does the processing of the original commodity bring into existence a commercially different and distinct article ? Some of the cases where it was held by this Court that a different commercial article had come into existence include Anwarkhan Mehboob Co. vs The State of Bombay and Others (where raw tobacco was manufactured into bidi patti), A Hajee Abdul Shukoor and Co. vs The State of Madras (raw hides and skins constituted a different commodity from dressed hides and skins with different physical properties), The State of Madras vs Swasthik Tobacco Factory (raw tobacco manufactured into chewing tobacco) and Ganesh Trading Co. Karnal vs State of Haryana and Another, (paddy dehusked into rice). On the other side, cases where this Court has held that although the original commodity has undergone a degree of processing it has not lost its original identity include Tungabhadra Industries Ltd., Kurnool vs Commercial Tax Officer, Kurnool (where hydrogenated groundnut oil was regarded as groundnut oil) and Commissioner of Sales Tax, U.P., Lucknow vs Harbilas Rai and sons (where bristles plucked from pigs, boiled, washed with soap and other chemicals and sorted out in bundles according to their size and colour were regarded as remaining the same commercial commodity, pigs bristles). In the present case, there is no essential difference between pineapple fruit and the canned pineapple slices. The dealer and the consumer regard both as pineapple. The only difference is that the sliced pineapple is a presentation of fruit in a more convenient form and by reason of being canned it is capable of storage without 1276 spoiling. The additional sweetness in the canned pineapple arises from the sugar added as a preservative. On a total impression, it seems to us, the pineapple slices must be held to possess the same identity as the original pineapple fruit. While on the point, we may refer to East Texas Motor Freight Lines vs Frozen Food Express, where the U.S. Supreme Court held that dressed and frozen chicken was not a commercially distinct article from the original chicken. It was pointed out: "Killing, dressed and freezing a chicken is certainly a change in the commodity. But it is no more drastic a change than the change which takes place in milk from pasturising, homogenizing, adding vitamin concentrates, standardising and bottling. " It was also observed: ". . . there is hardly less difference between cotton in the field and cotton at the gin or in the bale or between cottonseed in the field and cottonseed at the gin, than between a chicken in the pen and one that is dressed. The ginned and baled cotton and the cottonseed, as well as the dressed chicken, have gone through a processing stage But neither has been "manufactured" in the normal sense of the word. " Referring to Antheuser Busch Brewing Association vs United States the Court said: "Manufacture implies a change but every change is not manufacture and yet every change in an article is the result of treatment, labour and manipulation. But something more is necessary. . . .There must be transformation; a new and different article must emerge, having a distinctive name, character or use." And further: "At some point processing and manufacturing will merge. But where the commodity retains a continuing substantial identity through the processing stage we cannot say that it has been "manufactured". The comment applies fully in the case before us. Although a degree of processing is involved in preparing pineapple slices from 1277 the original fruit, the commodity continues to possess its original identity, notwithstanding the removal of inedible portions, the slicing and thereafter canning it on adding sugar to preserve it. It is contended for the Revenue that pineapple slices have a higher price in the market than the original fruit and that implies that the slices constitute a different commercial commodity. The higher price, it seems to us, is occasioned only because of the labour put into making the fruit more readily consumable and because of the can employed to contain it. It is not as if the higher price is claimed because it is a different commercial commodity. It is said that pineapple slices appeal to a different sector of the trade and that when a customer asks for a can of pineapple slices he has in mind something very different from fresh pineapple fruit. Here again, the distinction in the mind of the consumer arises not from any difference in the essential identity of the two, but is derived from the mere form in which the fruit is desired. Learned counsel for the Revenue contends that even if no manufacturing process is involved, the case still falls within section 5 A(1) (a) of the Kerala General Sales Tax Act, because the statutory provision speaks not only of goods consumed in the manufacture of other goods for sale but also goods consumed otherwise. There is a fallacy in the submission. The clause, truly read, speaks of goods consumed in the manufacture of other goods for sale or goods consumed in the manufacture of other goods for purposes other than sale. In the result, we hold that when pineapple fruit is processed into pineapple slices for the purpose of being sold in sealed cans there is no consumption of the original pineapple fruit for the purpose of manufacture. The case does not fall within section 5 A(1)(a) of the Kerala General Sales Tax Act. The High Court is right in the view taken by it. The appeal fails and is dismissed with costs. S.R. Appeal dismissed.

The respondent assessee, Pio Food Packers carries on the business of manufacturing and selling canned fruit besides other products. The Pineapple purchased by the assessee is washed and then the inedible portion, the end crown, skin and inner core are removed, thereafter the fruit is sliced and the slices are filled in cans, sugar is added as a preservative, the cans are sealed under temperature and then put in boiling water for sterilisation. In its return for the year 1973 74 under the Kerala General Sales Tax Act, 1963 the assessee claimed that a turnover of Rs. 3,84,138 89 representing the purchase of pineapple fruit was not covered by Section 5 A(1)(b) of the Act. It was asserted that the pineapple was converted into pineapple slices, pineapple jam, pineapple squash and pineapple juice. The assessee maintained that by the conversion of pineapple fruit into its products no new commodity was created and it was erroneous to say that there was a consumption of pineapple fruit "in the manufacture of" these goods. The Sales Tax Officer did not accept the contention and completed the assessment on the finding that a manufacturing process was involved and that, therefore, the case fell within section 5 A (1) (a). In revision before the Sales Tax Appellate Tribunal, the assessee conceded that pineapple jam and pineapple squash would be covered by section 5 A(1)(a), and in regard to pineapple juice the Tribunal found that section 5 1(a) was attracted. The only question which remained was whether the preparation of pineapple slices fall within section 5 A(1)(a). On that question two members of the Tribunal found in favour of the assessee, and the third member found in favour of the Revenue. The Revenue then applied in revision to the High Court and the High Court, has by its judgment dated 24th January, 1978, maintained the order of the Tribunal. Dismissing the appeal, by special leave, the court ^ HELD : 1. When pineapple fruit is processed into pineapple slices for the purpose of being sold in sealed cans, there is no consumption of the original pineapple fruit for the purpose of manufacture within the meaning of Section 5A(1)(a) of the Kerala General Sales Tax Act, 1963 [1277 E F] 2. Section 5 A(1)(a) of the Kerala General Sales Tax Act envisages the consumption of a commodity in the manufacture of another commodity. The goods purchased should be consumed, the consumption should be in the process of manufacture, and the result must be the manufacture of other goods. 1272 There are several criteria for determining whether a commodity is consumed in the manufacture of another. The generally prevalent test is whether the article produced is regarded in the trade, by those who deal in it, as distinct in identity from the commodity involved in its manufacture. Commonly, manufacture is the end result of one or more processes through which the original commodity is made to pass. The nature and extent of processing may vary from one case to another, and indeed there may be several stages of processing and perhaps a different kind of processing at each stage. With each process suffered, the original commodity experience a change. But it is only when the change, or a series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article that a manufacture can be said to take place. Where there is no essential difference in identity between the original commodity and the processed article it is not possible to say that one commodity has been consumed in the manufacture of another. Although it has undergone a degree of processing, it must be regarded as still retaining its original identity. [1274 F H, 1275 A B] In the present case, there is no essential difference between pineapple fruit and the canned pineapple slices. The dealer and the consumer regard both as pineapple. The only difference is that the sliced pineapple is a presentation of fruit in a more convenient form and by reason of being canned it is capable of storage without spoiling. The additional sweetness in the canned pineapple arises from the sugar added as a preservative. The pineapple slices continue to possess the same identity as the original pineapple fruit. [1275 G H, 1276 A] Tunghabhadra Industries Ltd., Kurnool vs Commercial Tax Officer, Kurnool, [1960] 10 S.T.C. 827 (SC); Commissioner of Sales Tax, U.P., Lucknow vs Harbilas Rai & Sons, [1968] 21 S.T.C. 17 (SC); followed. East Texas Motor Freight Lines vs Frozen Food Express, ; ; Anheuser Busch Brewing Association vs United States, 52 L. ed. 336 338; quoted with approval. Anwarkhan Mahboob Co. vs The State of Bombay and Ors., [1960] 11 STC 698, A Hajee Abdul Shukoor and Co. vs The State of Madras, [1964] 15 STC 719; The State of Madras vs Swasthik Tobacco Factory, [1966] 17 STC 316 and Ganesh Trading Co. Karnal vs State of Haryana and Anr., [1973] 32 STC 623; held inapplicable. The fact that the pineapple slices have a higher price in the market than the original fruit does not imply that the slices constitute a different commercial commodity. The higher price, is occasioned only because of the labour put into making the fruit more readily consumable and because of the can employed to contain it. It is not as if the higher price is claimed because it a different commercial commodity. [1277 A B] 4. The fact that the pineapple slices appeal to a different sector of the trade and that when a customer asks for a can of pineapple slices he has in mind something very different from fresh pineapple fruit does not give to the canned pineapple slices a separate identity either. The distinction in the mind of the consumer arises not from any difference in the essential identity of the two, but is derived from the mere form in which the fruit is desired. [1277 B C] 1273 5. Clause (1) (a) of Section 5 A of the Kerala General Sales Tax Act, speaks of goods consumed in the manufacture of other goods for sale or goods consumed in the manufacture of other goods for purposes other than sale.[1277 C D]

Civil Appeal No. 179 of 1983. Appeal by special leave from the Award dated the 13th June, 1979 of the Industrial Tribunal, Maharashtra at Bombay in Ref (IT) No. 453 of 1975. Jitender Sharma for the Appellant. Dr. Y.S. Chitale, O.C. Mathur, section Kumar and Ms. Meera Mathur for the Respondent. The Judgment of the Court was delivered by DESAI, J. It is most unfortunate that all those unhealthy and 644 injudicious practices resorted to for unduly delaying the culmination of civil proceedings have stealthily crept in, for reasons not unknown, in the adjudication of industrial dispute for the resolution of which an informal forum and simple procedure were devised with the avowed object of keeping them free from the dilatory practices of civil courts. Times without number this Court, to quote only two D.P. Maheswari vs Delhi Administration & Ors. and S.K. Verma vs Mahesh Chandra & Anr. disapproved the practice of raising frivolous preliminary objections at the instance of the employer to delay and defeat by exhausting the workmen the outcome of the dispute yet we have to deal with the same situation in this appeal by special leave. The Government of Maharastra by its order dated October 22, 1975 referred a dispute between Hindustan Lever Ltd. ( 'employer ' for short) and the workmen employed by them for adjudication under Sec. 10 of the to the Industrial Tribunal, Maharashtra. The schedule annexed to the order of reference specified the dispute as under: "All the employees who are acting continuously in higher grades (as per annexure) for more than three months should be confirmed in the respective grades immediately and all the benefits should be given to the concerned employees with retrospective effect had they been confirmed immediately after three months or their continuous acting. " After the workmen governed by the reference filed a statement of claim, M/s Hindustan Lever Ltd., the employer, appeared and contested the reference on diverse grounds. A preliminary objection was raised that the reference was incompetent because the dispute raised by the workmen and referred by the Government to the Industrial Tribunal for adjudication was not an industrial dispute within the meaning of the expression in the Industrial Dispute Act, 1947. Elaborating the contention, it was submitted that the dispute is not an industrial disputes because if the demand as raised is conceded, it would tantamount to allowing the workmen to decide the strength of the work force required in various grades and it is well settled that determining and deciding the strength of work force 645 required in any industry is a managerial function. There were other contentions with which we are not concerned in this appeal at this stage. The Industrial Tribunal held that whatever camouflage of the language in which the demand is couched, the attempt is to obtain promotion which cannot be claimed as a matter of right, it being a managerial function. The Tribunal in terms held that promotion is the function of the management and the Industrial Tribunal will have no power and jurisdiction to take away the function of the management and direct that such and such workmen should be promoted to a particular post. In this view of the matter ' the Tribunal held that the dispute was not an industrial dispute within the meaning of the expression and rejected the reference as incompetent. Hence this appeal by special leave. Sec.10(1) confers power on the appropriate Government to refer an existing or apprehended industrial dispute, amongst others, to the Industrial Tribunal for adjudication. The dispute therefore, which can be referred for adjudication, of necessity, has to be an industrial dispute which would clothe the appropriate Government with power to make the reference and the Industrial Tribunal to adjudicate it. The expression 'Industrial dispute ' is defined in Sec. 2(k) to mean 'any dispute or difference between employers and employers or between employers and workmen, or between workmen and workmen, which is connected with the employment or non employment or the terms of employment or with the conditions of labour, of any person '. The question is: whether a demand for confirmation in the promoted post after a lapse of a certain time would be a dispute which is connected with the terms of employment or the condition of labour in the facts and circumstance of this case ? The expression 'industrial dispute ' has been the subject matter of numerous decisions of this Court and the High Courts. The one feature common to all the decisions is that the expressions has been so widely defined as not to leave anything out of its comprehension and purview involving the area of conflict that may develop between the employer and the workmen and in respect of which a compulsory adjudication may not be available. This is recognised to be the width and comprehension of the expression. Keeping in view this extensive definition, let us approach the contention in this appeal. It cannot be gain said that the dispute is between the employer 646 and their workmen. The question is whether the dispute is connected (leaving aside the words not necessary) with the terms of employment of the workmen ? Since the introduction of the (1946 Act for short), it has been made obligatory for the employer in an industrial establishment to prepare a draft of standing orders and get them certified under the Act. 4 of the 1946 Act requires the employer to make provision in the standing orders for every matter set out in the Schedule which is applicable to the industrial establishment. The Schedule provides amongst others for making provision in the standing orders for classification of workmen for example, whether permanent, temporary, apprentices, probationers or badlis. This classification of workmen by the employer is thus made obligatory and has to be provided for in the standing orders. It is also well settled that certified standing orders which have a statutory flavour prescribe the conditions of service and they shall be deemed to be incorporated in the contract of employment of each workman with his employee Sudhir Chandra Sarkar vs Tata Iron & Steel Co. Ltd. It would therefore follow as a corollary that the employer will have to classify the workmen and failure to classify would be violative of the 1946 Act. Now if there is a statutory obligation to classify workmen under the 1946 Act, the classification would be permanent, temporary, apprentices, probationers and all other known categories such as acting, officiating etc. In respect of the classification, a dispute can conceivably arise between the employer and the workman because failure of the employer to carry out the statutory obligation would enable the workman to question his action which will bring into existence a dispute. It would become an industrial dispute because it would be connected with the conditions of employment. It becomes a condition of employment because necessary conditions of service have to be statutorily prescribed, one such being classification of workmen. Therefore, without anything more where the demand of the workmen was to confirm employees employed in an acting capacity in a grade, it would unquestionably be an industrial dispute. This conclusion gets reinforced by a slightly different approach. 7 A of the provides that 647 the appropriate Government may by notification in the official Gazette constitute one or more Industrial Tribunal for the adjudication of industrial dispute relating to any matter whether specified in the Second Schedule or the Third Schedule. Entry at plecitum 7 in the Third Schedule reads 'Classification by Grades '. If there is any dispute in respect of classification by grades, it will necessarily be an industrial dispute. This was not only not questioned but would flow indisputably from the language of Sec. 7 A, which provides for setting up of Industrial Tribunal for adjudication of industrial dispute relating to any matter specified amongst others, in the Third Schedule. Therefore, even if one does not reach the conclusion that the dispute raised in question would be an industrial dispute by reference to the standing orders certified under the 1946 Act, a mere reference to Entry 7 of the Third Schedule read with Sec. 7 A would clinch the issue. Let it be recalled that the demand of the workmen was for confirmation of employees promoted to the higher grade and acting in the higher grade for more than 3 months. In other words, the demand was for classification of the workmen officiating in the higher grades either as permanent or temporary and they should not be continued indefinitely as temporary by making them permanent on rendering of continuous service in the higher grade for a period of three months. The demand involves both the classification of employees and classification by grade. Unfortunately, the Industrial Tribunal overlooked this obvious fact situation by mis interpreting the demand and reached a wholly untenable conclusion that the demand was for promotion which appeared to the Tribunal to be a managerial function and beyond the reach of adjudication. It appears to have been contended before the Tribunal and vigorously re canvassed before us that removing the camouflage of language, the demand in terms seeks promotion to higher grade and promotion being a managerial function, the Industrial Tribunal had no jurisdiction to entertain the same. The Tribunal after referring to the decision of this Court in Management of Brooke Bond India (P) Ltd. vs Workmen held that the demand shorn of verbiage is one for promotion which is the managerial function and therefore cannot be the subject matter of industrial adjudication. To recall the words of the Tribunal, 'to seek confirmation of a workman in 648 a particular higher grade would mean a promotion as a confirmed workman who is entitled to some of the benefits such as not being removed from service without following certain procedure or promotion to higher post which benefits may not be available to a temporary hand, ' and this is nothing short of demanding promotion which is a managerial function. We are unable to appreciate this approach unwarranted in the facts and circumstances of this case, because the decision in the Brooke Bond Case has to be understood in the context of the demand that was referred to the Industrial Tribunal for adjudication. The demand was as under: "All things being equal, seniority shall count for promotion. If the senior person has been overlooked in the question of promotion, he is at liberty to ask the concern for the reason why he has been overlooked, in which case the concern shall give him the reasons, provided that it does not expose the concern or the officer giving reasons, to any civil or criminal proceedings. " The Tribunal in that case after accepting that promotion was a management function and had to be left to the discretion of the management which had to make choice from amongst the employees for promotion proceeded to hold that the action of management in the facts and circumstances of the case was malafide. In appeal against this award of the Tribunal, a Constitution Bench of this Court observed as under: "Generally speaking, promotion is a management function; but it may be recognised that there may be occasions when a tribunal may have to interfere with promotions made by the management where it is felt that persons superseded have been so superseded on account of mala fides or victimisation. " This view was also reiterated in the case of the present employer in The Hindustan Lever Ltd, vs The Workmen wherein the Court observed that it was not disputed before them that ordinarily promotion is a management function. 649 In the heyday of laissez faire and market economy, wage determination, hours of work, disciplinary measures including quantum of punishment, in short prescribing all enveloping conditions of service were the preserve of management, styled as managerial functions. This relic of the past is slowly withering away since the introduction of the Constitution ushering in socioeconomic revolution through law. Most of the managerial functions in relation to work force have been swept away by legislative enacments enacted to give effect to articles 38, 39 and 41 of the Constitution yet the Tribunal dug out from the bebris of the past, the concept of managerial function and by a distorted construction of the language of the reference comprehended it in the concept of managerial function and denied to itself the jurisdiction to adjudicate it. In the process the Tribunal failed to take note of the development of law since the decision in Brooke Bond Case. Since the decision of the Constitution Bench of this Court in All India S.M. and A.S.M. 's Association vs General Manager, Central Railway it is well settled that equality of opportunity in the matter of public employment guaranteed by article 16 (1) not only ensures it at the time of entry in public employment but ensures it even in the matter of promotion. If equality in the matter of promotion is constitutionally guaranteed as the fundamental right, it is time to reconsider this archaic view of the laissez faire days that promotion is a management function. The whole gamut of labour legislation is to check, control and circumscribe uncontrolled managerial exercise of power with a view to eschew the inherent arbitrariness in the exercise of such functions. In the decisions of this Court it is assumed without controversy that promotion is a managerial function. It may have to be re examined in an appropriate case. But it is not necessary to go so far in this case and we would proceed on the assumption that the passing observation made by the Constitution Bench in Brooke Bond case settled the law as far as this country is concerned that promotion is a management function though we would like to point out that the expression 'terms of conditions of employment ' would ordinarily include not only the contractual terms and conditions but those terms which are understood and applied by the parties in practice or habitually or by common consent without ever being incorporated in the contract. In England, it is settled law that promotion is comprehended in the 650 expression ' terms of employment of the employees. ' In British Broadcasting Corporation vs Hearn & others and in R. Industrial Disputes Tribunal & Anr. Ex parte Queen Mary College, University of London it was held that claim for promotion is connected with terms of the employment of the employees. Even on the footing of the law, as it stands at present in this country, that promotion is a management function, the industrial dispute referred to the Tribunal was not one for claiming promotion. The Tribunal committed a grave error in so mis interpreting the dispute referred to it. The Tribunal overlooked the fact that the demand was in respect of workmen already promoted i.e. in respect of whom managerial function of selecting personal for promotion had been already performed. The demand was in respect of already promoted workmen, may be in an officiating capacity, for their classification from acting or temporary to confirmed that is permanent, in the higher grade to which they were promoted, after a reasonable period of service which according to the Union be three months of service. By no cannon of construction, this demand could be said to be one for promotion. Therefore, the decision in Brooke Bond case and followed in the case of this very employer had no application to the facts of this case and the Tribunal misdirected itself in rejecting the reference on this narrow ground. Accordingly, this appeal succeeds and is allowed and the award of the Industrial Tribunal on the preliminary issue is quashed and set aside and the matter is remitted to the Tribunal for disposing of the reference on merits. As the matter is an old one and we were told that persons continuously officiating in the higher grade for more than five years are not confirmed, the Tribunal is directed to give top priority to the reference and dispose it of as early as possible and not later than six months from today. The respondent shall pay the costs of the appellant quantified at Rs. 2,000. M.L.A. Appeal allowed.

Section 2(k) of the (the Act, for short) defines an 'industrial dispute ' to mean any dispute or difference between employers and employers, or between employers and workmen or between workmen and workmen, which is connected with the employment or non employment or the terms of employment or with the conditions of labour, of any person. Section 7 A of the Act provides that the appropriate Government may by notification in the Official Gazette constitute one or more Industrial Tribunal for the adjudication of industrial disputes relating to any matter whether specified in the Second Schedule or the Third Schedule. Entry at plecitum 7 in the Third Schedule reads 'Classification by grades '. Sec, 4 of the (1946 Act, for short) also requires the employer in an industrial establishment to make provision in the standing orders for every matter set out in the Schedule which is applicable to the industrial establishment. The Schedule provides, amongst others, for making provision in the standing orders for classification of workmen for example, whether permanent, temporary apprentices, probationers or badlis. The Government of Maharashtra referred to the Industrial Tribunal a dispute between appellants workmen and the respondent employer as to whether "All the employees who are acting continuously in higher grades for more than three months should be confirmed in the respective grades immediately and all the benefits should be given to the concerned employees with retrospective effect had they been confirmed immediately after three months of their continuous acting. " The respondent raised a preliminary objection that the dispute was not an industrial dispute within the meaning of the expression in the Act, because if the demand as raised is conceded, it would tantamount to allowing the workmen to decide the work force required in various grades which is a managerial function. The Industrial Tribunal up 642 held the preliminary objection and rejected the Reference as incompetent holding that the demand shorn of verbiage is one for promotion which is the managerial function and therefore cannot be the subject matter of industrial adjudication. Hence this appeal by special leave. Allowing the appeal and remitting the matter to the Tribunal for disposing of the Reference on merits, ^ HELD: (1) It is well settled that certified Standing Orders under the 1946 Act which have a statutory flavour prescribe the conditions of service and they shall be deemed to be incorporated in the contract of employment of each workman with his employer. Since there is a statutory obligation on the employer in an 'industrial establishment ' to classifi workmen under the 1946 Act, the classification would be permanent, temporary, apprentices, probationers and all other known categories, such as, acting, officiatingetc. In respect of the classification, a dispute can conceivably arise between the employer and the workmen because failure of the employer to carry out the statutory obligation would enable the workman to question his action which will bring into existence a dispute. It would become an industrial dispute because it would be connected with the condition of employment. It becomes a condition of employment because necessary conditions of service have been statutorily prescribed one such being classification of workmen. Therefore, without anything more where the demand of the workmen was to confirm employees employed in an acting capacity in a grade, it would unquestionably be an industrial dispute. [646C G] Sudhir Chandra Sarkar vs Tata Iron & Steel Co. Ltd., , referred to. (2) Even if one does not reach the conclusion that the dispute raised in question would be an industrial dispute by reference to the Standing Orders certified under the 1946 Act, a mere reference to Entry 7 of the Third Schedule read with Sec. 7 A would clinch the issue. Entry at plecitum 7 in the Third Schedule reads "Classification by grades". If there is any dispute in respect of classification by grades, it will necessarily be an industrial dispute. This would flow indisputably from the language of section 7 A which provides for setting up of Industrial Tribunal for adjudication of industrial dispute relating to any matter specified, amongst others, in the Third Schedule. In the instant case, the demand of the workmen was for classification of the workmen officiating in the higher grades either as permanent or temporary and they should not be continued indefinitely as temporary by making them permanent on rendering of continuous service in the higher grade for a period of three months. The demand involves both the classification of employees and classification by grade. Therefore, the Industrial Tribunal overlooked this obvious fact situation by mis interpreting the demand and reached a wholly untenable conclusion that the demand was for promotion which appeared to the Tribunal to be a managerial function and beyond the reach of adjudication. [647 C E] (3) Even on the footing of the law as it stands at present in this country that promotion is a management function, the industrial dispute referred 643 to the Tribunal was not one for claiming promotion. The Tribunal committed a grave error in so misinterpreting the dispute referred to it. The Tribunal overlooked the fact that the demand was in respect of workmen already promoted i.e. in respect of whom managerial function of selecting personnel for promotion had been already performed. The demand was in respect of already promoted workmen, may be in an officiating capacity, for their classification from acting or temporary to confirmed, that is, permanent, in the higher grade to which they were promoted, after a reasonable period of service which according to the Union must be three months of service. By no canon of construction this demand could be said to be one for promotion. [550 B D] Management of Brooke Bond India (P) Ltd. vs Workmen ; and The Hindustan Lever Ltd. vs The Workmen ; held inapplicable. In the decisions of this Court in Management of Brooke Bond India (P) Ltd. vs Workmen ; and The Hindustan Lever Ltd. vs The Workmen it is assumed without controversy that promotion is a managerial function. But in view of the decision of this court in All India S.M. and A.S.M. 's Association vs General Manager, Central Railway ; , it is time to reconsider this archaic view of the laissez faire days that promotion is a management function. The expression "terms and conditions of employment" would ordinarily include not only the contractual terms and conditions but those terms which are understood and applied by the parties in practice or habitually or by common consent without ever being incorporated in the contract. [649 E G] British Broadcasting Corporation vs Hearn & Others, and R. Industrial Disputes Tribunal & Anr. vs Ex parte Queen Mary College University of London, , referred to.

Civil Appeal No. 282 of 1955. Appeal by special leave from the judgment and order dated March 20, 1953, of the Bombay High Court in Income tax Reference No. 31 of 1951. A. V. Viswanatha Sastri and I. N. Shroff, for the appellants. K. N. Rajagopal Sastri and D. Gupta, for the respondent. April 12. The Judgment of the Court was delivered by KAPUR, J. This is an appeal against the judgment and order of the High Court of Bombay in a reference under section 8(5) of the Taxation on Income (Investigation Commission) Act, 1947 (Act XXX of 1947), hereinafter termed the 'Act '. The assessee company was the applicant before the High Court and is the appellant 919 before us and the Commissioner of Income tax, Bombay City, was the respondent in the High Court and is the respondent here also. Being a reference under section 8(5) of the Act, it was heard and decided by three judges of the High Court. The assessee company is a private limited company which was incorporated on May 6, 1943, with a paid up capital of Rs. 20 lacs. It was promoted by two groups of persons who for the sake of convenience may be called the 'Morarka Group ' and the 'Bubna Group '. The Apollo Mills Co., Ltd. of Bombay with a capital of Rs. 50 lacs divided into 25 lacs shares of Rs. 2 each, had as its Managing Agents M/s. E. D. Sassoon & Co. Ltd., who for the sake of brevity, will be referred to in this judgment as the Sassoons '. They held 19,76,000 shares out of the 25 lacs. The promoters of the assessee company entered into an agreement with the Sassoons on April 27, 1943, by which the Sassoons agreed to transfer their Managing Agency in the Mill Co. for Rs. 12 1/2 lacs to the promoters of the assessee company and the whole of their holding of 19,76,000 shares at Rs. 4 4 0 per share, i.e., for Rs. 83,98,000. These shares were to be transferred to the promoters or to the company which they were proposing to float. By clause (3) of this agreement the sale of the Managing Agency and the transfer of the shares was to be simultaneously completed and neither party could require the completion of the one without the other. On November 1, 1943, a tripartite agreement was entered into between the Sassoons as Assignors, the promoters of the company as Confirming Parties and the assessee company as Assignees. By that agreement the Managing Agency rights were for .ally transferred to the assessee company so also the Share Certificates for the whole of holding of the Sassoons in the Mill Co. and the necessary blank transfer deeds went) Before the agreement of April 27, 1943, and during the course of negotiations with the Sassoons the promoters of the assessee company entered into an arrangement with some share brokers for the sale of a large portion of the total holding of 19,76,000 shares 920 of the Mill Co. The price of these shares varied from Rs. 5 8 0 to Rs. 5 13 0. In all 10,00,000 shares out of the total holding of the Mill Co. were sold to these brokers and: they in turn sold these block of shares in smaller lots to a number of purchasers. Some shares were sold later; 1,20,000 shares were transferred to 13 nominees of the Morarka Group at cost price. As a result of sale of all these 13,74,000 shares the assessee company received a sum of Rs. 16,52,600 as excess over the purchase price. The remaining shares the assessee company retained. The assessee company submitted that the profits of the entire holding of the shares had not been worked out and had therefore not been transferred to the profit and loss account. The assessee company was taxed by the Income tax Officer but the sum of Rs. 16,52,600 which was the excess of the sale price over the purchase price of 13,74,000 shares was held not to be profit and therefore not taxable. When the Act came into force the case of the assessee company was referred to the Investigation Commission by the Central Government and the Investigation Commission made its report on November 9, 1949, in Case No. 406A. By this report the Commission directed that appropriate assessment be made under the Indian Income tax Act for the assessment year 1945 46 and the Excess Profits Tax Act for the corresponding chargeable accounting period. At the instance of the assessee company the Commissioner of Income tax, Bombay City, by his order dated May 1, 1951, referred the following question to the High Court: "Whether on the facts found by the Commission the sum of Rs. 16,52,600 being the excess price realised by the sale of 13,74,000 shares of the Mill Company, was 'profit ' and as such taxable or whether it was either of the nature of a capital appreciation or a casual and non recurring receipt and as such exempt from taxation under Section 4(3)(vii) of the Income tax Act." The High Court reformulated the question as follows: 921 "Whether there were materials to justify the finding of the Tribunal that the transaction of purchase and sale of 13,74,000 shares was an adventure in the nature of trade?" and answered the question so formulated in the affirmative and therefore against the assessee company. In its application for reference under section 8(5) of the Act the assessee company wanted some other questions also to be referred but the Investigation Commission only referred the question which has been set out above. The assessee company therefore took out a Notice of Motion on November 8, 1952, which was dismissed by the High Court on the ground that either the questions which were sought to be raised did not arise out of the finding of the Commission or they were included in the question which had been referred and answered by the High Court. Although the High Court did not so hold, the Notice of Motion was barred by time, being filed after more than six months allowed under section 66(2) of the Indian Income tax Act. Against this judgment and order of the High Court the assessee company has come in appeal to this Court by special leave. This appeal is brought against the judgment of the High Court answering the question referred and therefore in its advisory jurisdiction. The jurisdiction which this Court exercises in appeal is of the same character and therefore any question which was not referred to the High Court cannot be allowed to be raised at this stage. Consequently the constitutional question in regard to discrimination under article 14 of the Constitution which is now sought to be raised cannot be raised. The main question which would then survive for decision is the nature of transaction relating to the sale of 13 lacs odd shares and whether or not the sale was an adventure in the nature of trade and therefore the amount of Rs. 16,52,600 the excess of sale price over the purchase price of the share is a Revenue Receipt and therefore taxable profits or is it a Capital Receipt and therefore not liable to tax. The Investigation Commission by their order dated May 1, 1949, found: 922 (1) that a distinction should be made between the 6 lacs shares which the assessee company intended to and did retain and the 13 lacs odd shares which it intended to and did sell; the former was kept in order to enable the assessee company to make their Managing Agency rights effective. (2) During the negotiations between the Sassoons and the promoters of the. assessee company, the promoters of the assessee company had started negotiations with certain brokers for the transfer of 13 lacs odd shares soon after the arrangement between the Sassoons and the assessee company was completed. (3) From the very beginning the intention of the promoters of the assessee company was to sell all the 13 lacs odd shares and in pursuance thereof they were sold. (4) The paid up capital of the assessee company was Rs. 20 lacs only and according to the agreement they had to take the whole block of shares belonging to the Sassoons and pay for the shares as well as for the Managing Agency both of which were separately valued in the agreement. It was therefore necessary and it was intended to sell the 13 lacs odd shares in order to pay off the Sassoons both for the Managing Agency and the shares. The inference drawn from this by the Commission was that a distinction had to be drawn between the 6 lacs shares which the assessee company intended to retain and did in fact retain and the 13 lacs odd shares which they intended to sell and did sell. (5) that the intention to sell which the assessee company entertained from the very outset was a complete answer to the argument that the acquisition was in the nature of an investment. In giving its finding the Commission said: "Aggregating the 121 lakhs paid for the Manag ing Agency right and the full price of 6 lakhs and odd shares at Rs. 4 4 0 per share, the capital investment must amount to 121 lakhs and 251 lakhs, i.e., 38 lacs and odd. By deducting therefrom the profits of Rs. 16,52,600, the Company showed a capital investment of Rs. 21,54,200 and with the addition 923 of a few sundry items, it was brought up to Rs. 22,06,408 (see para 7 supra). " From this finding the inference drawn by the Commission was that the sale of 13 lacs odd shares was an adventure in the nature of trade. The High Court reformulated the question which has already been quoted and it was contended that the High Court was in error in narrowing down the scope of the question referred by the Commission. It is not necessary to adjudicate upon this argument because in our opinion taking the question as referred to be a proper question arising out of the report of the Investigation Commission the answer to the first part thereof would,still be in the affirmative. Inconsidering the question whether the transaction is or is not an adventure in the nature of trade we have to take into consideration the intention of the assessee keeping in view the "legal requirements which are associated with the concept of trade or business". The inference from the facts found by the Investigation Commission, i.e., whether the assessee company 's transaction in purchasing and selling 13 lacs odd shares is or is not an adventure in the nature of trade is a mixed question of law and fact and the legal effect of the facts found by the Investigation Tribunal is a question of law. See M/s. Ramnarain Sons (Pr.) Ltd. vs Commissioner of Income tax, Bombay (1). It was argued on behalf of the assessee company that: (1) that the dominant idea with which the whole transaction was entered into was to obtain the Managing Agency of the Apollo Mills; (2) that the assessee company was forced to buy the whole block of shares, i.e., 19,76,000 shares by the Sassoons because they were not prepared to part with the Managing Agency without the whole of their stock in the mill company; (3) that as the assessee company did not not have sufficient amount of money, their capital being only Rs. 20 lacs, it was to implement the tripartite agreement dated November 1, 1943, that the sale was made; and (1) (1961] 2 S.C.R. 904, 908. 924 (4) that the Memorandum of Association of the assessee company showed that it was a holding company and dealing in shares was not one of its objects. The agreement shows that the Sassoons had separately evaluated the Managing Agency and the shares held in the Apollo Mills Co. As the Investigation Commission has found, it was never the intention of the assessee company to retain the whole block of shares. Before the agreement was entered into they had made arrangement for the sale of the bulk of shares which were to be transferred by the Sassoons and therefore division of the shares into two sets was made by the promoters of the assessee company and the assessee company themselves and was not the result of anything done by the Investigation Commission. In; support of his contention that the amount of Rs. 16,52,600 was in the nature of Capital Receipt, reliance was placed on the judgment of this Court in M/s. Ramnarain 's case (1) but there are certain features and details which distinguish that case from the present case. It was held in that case that the question had to be decided in the light of the intention of the assessee and the assessee in that case bad purchased the shares of the Dawn Mills not as a business transaction. That was clear from the fact that the assessee bad purchased the shares at Rs. 2,321 8 0 per share and the market price was only Rs. 1,610, and the purpose of acquisition of such a large block of shares at a price exceeding the market price by a million rupees was the acquisition of the Managing Agency, which yielded the inference that the intention of purchasing the shares in that case was not to acquire them as a part of the trade of the assessee in shares but for obtaining the Managing Agency of the Mills. There was no separate price paid for the Managing Agency and the shares purchased and the Managing Agency acquired were both assets of a capital nature and the shares did not constitute stock in trade of a trading venture. In the present case the facts as shown were entirely different. (1) ; , 908. 925 Counsel for the assessee company also relied on Kishan Prasad & Co. Ltd. vs Commissioner of Income tax, Punjab (1). In that case the Managing Director of the company which was formed for the purpose of carrying on general business and trade of commercial undertaking and dealing in bills, hundis and other securities, entered into an agreement with a sugar syndicate by which the company was to be given the Managing Agency of a Mill of the sugar syndicate when such mill was erected in lieu of the company subscribing shares worth 3 lacs, and undertaking to sell shares worth 2 lacs. It was further provided that if the mill was not erected the assessee company was to be paid a commission on the amount invested by them. The Managing Director died and the assessee company sold the shares and thus received Rs. 2 lacs more than they had expended. The question was whether Rs. 2 lacs were receipts from business and not a mere appreciation in capital. It was held that that amount was not a result of an adventure in the nature of trade but was merely the result of an investment. It was found as a fact that the object of the company was merely to obtain the Managing Agency of the mill which would have been an asset of an enduring nature bringing profits but there was from the very inception no intention on the part of the company to resell the shares either at profit or otherwise. It appears that it was not contested that the conclusion to be drawn from those facts was that the investment in the purchase of shares in the circumstances of the case of a capital nature, and profits arising therefrom were an accretion to the capital. In that ease the court was trying to find out the intention of the assessee (the company) and taking all the circumstances into consideration it, came to the conclusion that it was a case not of profits arising out of an adventure in the nature of trade but the, intention of the assessee company was to invest its monies and therefore the excess arising out of sale of the shares was an accretion to the capital. That case must be taken to have been decided on its facts as (1) 926 indeed was the decision in M/s. Ramnarain Son 's case (1). Counsel for the assessee company referred to other cases: Tata Hydro Electric Agencies, Bombay vs The Commissioner of Income tax, Bombay Presidency & Aden (2); Commissioner of Income tax, Central and United Provinces, Lucknow vs Messrs. Motiram Nandram (3), Jones vs Leeming (4) and Commissioner of Inland Revenue vs Reinhold (5). It is unnecessary to re view these cases in any detail because they are clearly distinguishable in material respects and were decided on their own special facts. In Tata Hydro Electric Agencies ' case (2) the question for decision was whether 25% of the commission earned which was paid to the two financiers was expenditure deductible under section 10(2)(ix) and it was held that it was not because the obligation to make the payment was in consideration of acquiring the Managing Agency and the right to conduct business and not for the purpose of producing profits in the conduct of business. Similarly in Commissioner of Income tax vs Messrs. Motiram Nandram (3) the expenditure was for securing the agency which was to carry on business. Sir George Rankin said at p. 81: "The question in such a case a,% the present must be "what is the object of the expenditure?" and it must be answered from the standpoint of the assessees at the time they made it that is, when they were embarking upon the business of organizing agents for the company." Jones vs Leeming (4) was a case of an isolated transaction. The finding was that it was not in the nature of trade. Commissioner of Inland Revenue vs Reinhold(5) was ' decided on its own facts. Another case decided by this court upon which counsel for the appellant relied was Saroj Kumar Mazumdar vs Commissioner of Income tax, West Bengal, Calcutta (6) but that case was also decided on its own facts and it was held that there was no clear evidence in support of (1) [1961] 2.C.R. 004, 908 (3) (1939) L. R. 67 I. A. 71 (5) (1953) 34 T C. 389. (2) (1937) L. R. 64 I. A. 215. (4) (6) [1959] SUPP. 2 S C.R. 846. 927 the inference of the Appellate Tribunal that the land was purchased with the sole intention of selling it later at a profit. The English and Scottish cases on which the appellant relied were considered by the House of Lords in Edwards vs Bairstow (1).In that case the assessees who were the respondents embarked on a joint venture to purchase and complete a spinning plant agreeing between themselves not to hold it but to make a quick resale. With that object in view they approached and there were diverse negotiations and the whole plant was sold in about two years ' time at a profit of about pound 18,000 and for that purpose incurred commission for help in effecting sales, for insurance and other expenses. The General Commissioners found that it was not an adventure in the nature of trade to justify an assessment to income tax under Case 1 of Schedule D to the Income tax Act, 1918. It was held that the facts led inevitably to the conclusion that the transaction was an adventure in the nature of trade and that the Commissioner 's inference to the contrary should be set aside. Counsel for the respondent next relied on a Judgment of this Court in G. Venkataswami Naidu & Co. vs The Commissioner of Income tax (2) in which it was held that the presence of all the relevant factors may help the Court to draw the inference that the transaction is in the nature of trade but it is not a matter of counting the number of facts and circumstances for and against. What is important is to consider the distinctive character and it is the total effect of all the relevant factors that determines the character of the transaction. All these cases are illustrative. As was said by Gajendragadkar, J., in the above mentioned case the totality of circumstances of a case and the pros and cons have to be considered and inference drawn from those facts whether a particular transaction was in the nature of trade or was merely an investment and the resulting excess from the transaction was therefore profit which was taxable or was merely an accretion to the capital. In the instant case (1) ; (2) [1959] SUPP. 1 S.C.R. 646. 928 the pi of its from the transaction that consisted of buying the Managing Agency of the Mill Company and the block of shares held by the Sassoons were in our view the profits of an adventure in the nature of trade. The two groups, Morarka and Bubnas, put Rs. 20 lacs into the assessee company which was floated for the acquisition of the Managing Agency and shares of the Mill Company which were beyond the holding capacity of the assessee company. That company never intended to hold the whole block of shares. It or its promoters before even entering into the agreement of purchase and during the course of negotiations for the purchase had entered into arrangements with different brokers for the sale of shares or at least of a bulk of those shares which were subsequently sold at a profit and but for that sale the transact ion could not have been completed by the assessee company. The purchase of shares was not with the intention of holding them, the intention of the assessee was just the contrary and by the sale at a profit of the shares actually sold the assessee company expected to and did finance the completion of the transaction and thus was enabled to secure the Managing Agency and keep 6 lacs shares. This inescapably was a transaction of a commercial nature. It had all the attributes of an adventure in the nature of trade. The contention that dealing in buying and selling of shares was not one of its objects is without substance. The Investigation Commission found that dealing in shares was within the objects of the assessee company and this is one circumstance in the totality of the circumstances which must be considered, though by itself it is not determinative of the question. All the circumstances lead to the inference which was rightly drawn by the Investigation Commission and by the High Court. The answer to the first part of the question referred by the Investigation Commission must therefore be in the affirmative. It was contended that the question should not have been reframed and we have therefore proceeded to answer the question as framed by the Investigation Commission. In our opinion the question even as framed must be answered in the affirmative. 929 The Notice of Motion to raise other questions in the High Court was rightly dismissed. Apart from the fact that the Notice of Motion was barred by time and there was no application for condonation of delay, the questions which were sought to be raised were rightly held either to be covered by the question answered or they did not arise at all. The constitutional question under article 14 of the Constitution cannot be raised in these proceedings because as we have said above this Court is exercising its advisory jurisdiction and its power is confined to the questions which arise in an appeal. This appeal must therefore be dismissed with costs. Appeal dismissed.

The assessee company was promoted with the idea of obtaining the Managing Agency of the Appollo Mills from M/s. Sassoon total of 25 lakhs shares of RS. 2 each. According to the agreement the assessee company bad to take the whole of the block of shares belonging to the Sassoons and pay at Rs. 4 4 0 per share Rs. 12 1/2 lakhs for the managing agency. As the assessee company had only RS. 20 lakhs as its paid up capital, it was necessary to sell 13 lakhs odd shares in order to pay off the Sassoons both for the Managing Agency and the shares. Therefore during the course of negotiations the promoters of the assessee company entered into an agreement with some brokers for the sale of Rs. 19,76,000 shares. As a result of the sale of shares the assessee company received a sum of Rs. 16,52.600 as excess over the purchase price which amount on taxation was held by the Income tax Officer not to be profits and therefore not taxable. The case of the assessee company was referred to the Investigation Commission. The Commission found that it was not the intention of the assessee company to retain the whole block of shares and that the sale of 13 lakhs odd shares was an adventure in the nature of trade, and directed that appropriate assessment be made, under the Indian Income tax Act and Excess Profits Tax Act. At the instance of the assessee company the question was referred to the High Court under section 8(5) of the Taxation on Income (Investigation Commission) Act, 1947, which held that there were materials to justify the finding of the Commission that the purchase and sale of about 13 lakhs odd shares was an adventure in the nature of trade. An appeal was taken to the Supreme Court against this order. Held, that in considering the question whether the transac tion was or was not an adventure in the nature of trade, the court had to take into consideration the intention of the assessee 918 keeping in view the "legal requirements which are associated with the concept of trade or business" In the present case, the transaction that consisted of buy ing the managing agency of the Mill Company and the block of shares held by Sassoons was inescapably one of a commercial nature and had all the attributes of an adventure in the nature If of trade. Held, further, that the jurisdiction which this Court would exercise in appeal was of the same character that a High Court would exercise. Thus the question under article 14 of the Constitution could not be raised in these proceedings because this Court like the High Court was exercising its advisory jurisdiction and its power was confined to the question which arose before the High Court. M/s. Ramnarain Sons (Pr.) Ltd. vs Commissioner of Income tax, Bombay; , , Tata Hydro Electric Agencies, Bombay vs The Commissioner of Income tax, Bombay Presidency & Aden, (1037) L.R. 64 I.A. 215, Commissioner of, Income tax, Central and United Provinces, Lucknow vs M/s. Motiram Nandram, (1939) L.R. 67 I.A. 71, Jones vs Leeming, [1930) A.C. 415, Commissioner of Inland Revenue vs Reinhold, and Saroj Kumar Mazumdar vs Commissioner of Income tax, West Bengal, Calcutta, [1959] SUPP. 2 S.C.R. 846, distinguished. Kishan Prasad & Co. vs Commissioner of Income tax, Punjab, , Edwards vs Bairstow, ; and G. Venkataswami Naidu & Co. vs The Commissioner of Income tax, [1959] SUPP. 1 S.C.R. 646, discussed.

Civil Appeals Nos. 2475 to 2477 and 2579 of 1969 From the judgment and order dated the 15th April, 1969 of the Judicial Commissioner 's Court at Goa, Daman and Diu in Civil Appeal Nos. 3217, 3334/64 and 3466 of 1965 and 3467 of 1965. V.M. Tarkunde, Bernardo Doss Reis and Naunit Lal for the Appellants in CA. 2476/69. S.D. Tamba, Girish Chandra and Miss A. Subhashini, for the Respondents. The Judgment of the Court was delivered by PATHAK, J. These appeals by certificate granted by the Additional Judicial Commissioner of Goa, Daman and Diu arise out of suits for the recovery of loans made to the appellants at various branches of the Banco Nacional Ultramarino in Goa during Portuguese rule, 19 The territories, of Goa, Daman and Diu constituted the Estado de India of the sovereign State of Portugal. The Banco Nacional Ultramarino (the National overseas Bank) with its Head office at Lisbon in Portugal, carried on banking business in Goa at different Branches, some of them being situate at Vasco Da Gama, Margao and Panjim. It was also a currency issuing Bank and discharged the functions of a Government Treasury. It issued Portuguese currency notes in Goa, and in its banking capacity it received deposits and granted loans. On December 20, 1961 the territories of Goa, Daman and Diu were liberated from Portuguese rule and integrated with India. On the eve of the transfer of power the Banco Nacional Ultramarino closed its Branches at Goa and removed a substantial portion of the valuable assets held there to its Head office at Lisbon and to other places overseas. To provide for the administration of the liberated territories the President of India promulgated the Goa, Daman and Diu (Administration) ordinance, 1962, which on March 27, 1962 was replaced by enacted by Parliament. By virtue of sub section (1) of section 5 of the Act all laws in force immediately before "the appointed day" (December 20, 1961) in Goa, Daman and Diu were to continue to be in force therein until amended or repealed by a competent legislature or other competent authority. The clo sure of the Branches of the Banco Nacional Ultramarino at Goa gave rise to considerable confusion. It was necessary to take measures for the exchange of over nine crore rupees worth of Portuguese currency notes for Indian currency, and likewise to provide for the repayment of moneys and the return of valuables deposited with the Branches. As the Banco Nacional Ultramarino had closed those Branches no one could operate on them. To relieve the common confusion and distress, the President of India promulgated, under Article 240 of the Constitution, the Goa, Daman and Diu (Banks Reconstruction) Regulation, 1962 (hereinafter referred to as "the Regulation"). Section 3 declared that in view of the closure of the branches and the transfer of a substantial portion of their assets out of India on or about the "appointed day" and the difficulties experienced by depositors, the 20 Branches would, as from that day, be reconstructed in the interests of the general public in accordance with the provisions of the Regulation. An examination of the provisions which follow shows that the Branches were integrated into a fully constituted Bank independent of the Banco Nacional Ultramarino, the purpose being to dispose of the business pending on December 20, 1961, with no fresh business being undertaken, and its functions being confined to the discharge of existing liabilities and the recovery of existing debts and other assets with a view to the ultimate winding up of the Bank. A Custodian was appointed by the Central Government to take charge of the Bank. The properties and assets as well as the obligations and liabilities of the Bank stood transferred to and vested in him, and he was empowered to realise any debts or other amounts due to the said Branches including any debts or other amounts due from the Head office of the Banco Nacional Ultramarino. On March 30, 1963, the Custodian filed a suit in the Court of the Civil Judge at Ilhas, Panaji against the Agencia Commercial International, its managing partner, Jose Antonio Gouveia and his wife Geraldina Pereira Gouveia, alleging that the branch of the Banco Nacional Ultramarino at Panaji had, pursuant to a request of the Agencia, opened a current account in its favour upto the limit of Escudos 300.000$00 for three months renewable at 4% interest, 3% fine, 1 1/4% quarterly commission, penal interest at 6% and court expenses, the loan account being secured by a promissory note with its maturity date in blank, executed by the Agencia and guaranteed by the managing partner and his wife. The limit was raised subsequently, and the excess was also guaranteed by a promissory note with its maturity date in blank and signed by the defendants. The plaintiff stated that the loan account showed a debit balance of Escudos 428.612$37, equivalent to Rs. 71,435.40, in favour of the Panjim branch of the Banco Nacional Ultramarino, the account being closed on December 20, 1961 and the balance thereof becoming payable. It was stated further that the promissory notes were not in the possession of the plaintiff and could be presumed to have been removed to Portugal. The plaintiff prayed for a joint and several decree against the defendants for Rs. 71,435.40 with accrued interest, Penal interest, commission, fine and court expenses. 21 The suit was resisted by the defendants, principally on the ground that the Banco Nacional Ultramarino was a public limited company with its head office at Lisbon, that the Branch at Panjim did not possess a separate juridical personality from the Company and could not be said to possess assets or liabilities of its own, that transactions by the Panjim Branch were made under the direct superintendance of the Head office and credit was granted directly by B the Head office, and that the credit in question was incorporated in promissory notes lying with the Banco Nacional Ultramarino which had already informed its debtors that it would take action on the bills directly or by transferring them to a third party. It was also pleaded that the debtors could be compelled to pay the credit incorporated in a promissory note only when the creditor returned the promissory note for payment, so that future duplication of payment would be avoided. The defendants asserted that Escudos 25,794$45, equivalent to Rs. 4,234.09, had been entered to their credit in the Bank account and that they were entitled to a set off. The plaintiff filed a replication to the written statement of the defendants, and the defendants followed with a rejoinder. Civil suits were also filed by the Custodian against other defendants in respect of similar transactions, and a substantially similar defence was set up in all of them. The suits were instituted in the Court of the Civil Judge, Senior Division at Margao. Some of the suits filed at Margao were tried by Shri E.S. Silva, Comarca Judge, while the other by Shri Justino Coelho, Comarca Judge. The preliminary objections to the maintainability of the suits found favour with Shri Silva, and he dismissed the suits before him altogether. Sheo Coelho, however, found it necessary to try the suits instituted in his court on their merits, and he decreed them against the original debtor as well as the guarantor and surety. The lone suit decided by Shri Ataide Lobo, the Comarca Judge, Ilhas at Panaji was decreed against the principal debtor but dismissed against the guarantors. Ten appeals were filed before the Addl. Judicial Commissioner. The Additional Judicial Commissioner dismissed the appeals against the judgment of Shri Ataide Lobo. Allowing the appeals against the judgments of Shri E.S. Silva, he decreed the suits and granted the reliefs claimed by the Custodian. The appeals against the judgment of Shri Justino Coelho were dismissed except that the appeal tiled by Amalia Gomes Figueiredo, one of the guarantors, was allowed and the suit dismissed as against her. 22 The Additional Judicial Commissioner held that the Regulation effected a reconstruction of the Branches in Goa, Daman and Diu of the Banco Nacional Ultramarino, that the rights and obligations of the Branches referred to in the Regulation must be understood to mean the rights acquired and the obligations undertaken by the Banco Nacional Ultramarino through those Branches and therefore the Custodian was entitled to maintain the suits and sue for the realisation of debts arising out of transactions entered into through those Branches. The Additional Judicial Commissioner also held that as the execution of the negotiable instruments had been admitted in the written statements and it was commonly agreed that they were not within the reach of the Custodian, having been removed by the officers of the Banco Nacional Ultramarino to Lisbon or elsewhere on December 20, 1961, there was nothing to preclude the Custodian claiming relief without producing those negotiable instruments. He also repelled the contention that the bills of exchange and the promissory notes could on endorsement by the Banco Nacional Ultramarino in favour of others result in the defendants having to make payment a second time. He recorded an oral undertaking furnished by the Custodian that in the event of a decree in such suits the Custodian would render compensation to the defendant to the extent that the Custodian had made realisation pursuant to the decrees under appeal. Having regard to Article 53 of the Uniform Law on Bills of Exchange and Promissory Notes, the Additional Judicial Commissioner held that the holder had lost his right of recovery against all except the acceptor in respect of whom, observed the Judicial Commissioner, the suits were within time in view of Article 70 of the Uniform Law. Shri V.M. Tarkunde appearing for the appellants in Civil Appeal No. 2476 of 1969 contends that the loans were granted by the Head office of the Banco Nacional Ultramarino, and not by the Branches at Goa, and that as the properties and assets, rights and claims of the Branches alone vested in the Custodian under the Regulation, the Custodian was not entitled to sue for recovery of the loans granted by the Head office. Shri Tarkunde relies on the distinction made by the Regulation between the Head office and the Branches of the Bank and says that they have been regarded as separate entities. Shri Tarkunde further says that even if the suits are held maintainable, the Additional Judicial Commissioner erred in not proceeding further to determine whether the appellants were 23 entitled to credit for the adjustments claimed by them in the loan accounts. Shri Naunit Lal, appearing for the appellants in Civil Appeals Nos. 2475, 2477 and 2579 of 1979, adopts the submissions of Shri Tarkunde. Shri F.S. Nariman, appearing for the appellants in Civil Appeals Nos. 2464 to 2468 of 1969, also disputes the maintainability of the suits. He has strenuously urged that no dichotomy can be envisaged between the Head of the Banco Nacional Ultramarino and its Branches in Goa, and it is only the Banco Nacional Ultramarino at its Head office at Lisbon which can sue for recovery of the debts. Alternatively he contends that even if the Head office and the Branches can be regarded in law as separate entities some, if not all, of the loans had been extended directly by the Mead office and in respect of them, he says, the Regulation cannot be applied. He also urges that even if all the transactions are held covered by the Regulation, the suits cannot be decreed as there is no statutory discharge of the appellants ' liability to the Banco Nacional Ultramarino in respect of the debts. The indemnity offered by the Custodian, he urges, is of no value in law. Another reason why the suits cannot be decreed, says Shri Nariman, is because the promissory notes have not been produced. There has been considerable dispute on the point whether the transactions were entered into by the Branches of the Banco Nacional Ultramarino or could be attributed to the Head office at Lisbon. It seems to us clear from the material on the record that the appellants entered into the loan agreements with the Banco Nacional Ultramarino, and the Head office of the Bank at Lisbon authorised the relevant Branch at Goa to give effect to the agreement. The evidence is clear that the agreements were signed on behalf of the bank by the Manager of the relevant branch and the loan accounts were opened by the branches in their books, that payments were made by the Branches to the appellants, that deposits by way of repayment were made by the appellants in these accounts maintained by the Branches, and the appellants pledged or hypothecated their goods in favour of the branches; in short while the Head office authorised the Branch to execute the agreements the transactions were regarded for all purposes as transactions pertaining to 24 the respective Branches, to be actually controlled and worked out by them. The suits, it may be noted, were filed on the basis of the balance recorded in the accounts books of the relative Branch. Now it is indisputable as a general proposition that a body corporate and its branches are not distinct and separate entities from each other, that the branches constitute mere components through which the corporate entity expresses itself and that all transactions entered into ostensibly with the branches are in legal reality transactions with the corporate body, and it is with the corporate body, that a person must deal directly. But it is also now generally agreed that in the case of a Bank which operates through its Branches, the Branches are regarded for many purposes as separate and distinct entities from the Head office and from each other. This Court observed in The Delhi Cloth and General Mills Co. Ltd. vs Harnam Singh and others :(1) "In banking transactions the following rules are now settled: (1) the obligation of a bank to pay the cheques of a customer rests primarily on the branch at which he keeps his account and the bank can rightly refuse to cash a cheque at any other branch: Rex v Lovitt (1912) A.G. 212 at 219, Bank of Travancore vs Dhrit Ram (69 I.A. 1, 8 and 9) and New York Life Insurance Company vs Public Trustee , 110 at page 117; (2) a cumtomer must make a demand for payment at the branch where his current account is kept before he has a cause of action against the bank: Joachimson vs Swiss Bank Corporation (1921) 3 K.B. 119 quoted with approval by Lord Reid in Arab Bank Ltd. vs Barclayas Bank , 531) The rule is the same whether the account is a current account or whether it is a case of deposit. The last two cases refer to a current account; the Privy Council case Bank of Travancore vs Dhrit Ram (supra) was a case of deposit. Either way, there must be a demand by the customer at the branch where the current account is kept, or where the deposit is made and kept, before the bank need pay, and for these reasons the English Courts hold that the (3) at 422. 25 situs of the debts is at the place where the current account is kept and where the demand must be made. " It was explained further that if the bank wrongly refused to pay when a demand was made at the proper place and time, then it could be sued at its head office as well as at its branch office, but the reason was that "the action is then, not on the debt, but on the breach of the contract to pay at the place specified in the agreement", and reference was made to Warrington, L.J. at page 116 and Atkin, L.J. at page 121 of New York Life Insurance Co. vs Public Trustee.(l) That is the position in regard to banking law and practice, and it is apparently in that light that the Regulation has been framed. The Regulation was intended to achieve what emergency legislation was designed to secure in a somewhat different context by somewhat comparable methods. In England, during the First World War the Trading with the Enemy Amendment Act, 1916 provided for the winding up of the business carried on in England by companies incorporated in Germany. That Act was considered by the court In re W. Hagelberg Aktien Gesellschaft(2) and it was observed that although the branches and agency of a business could not be regarded as distinct from the principal business of. the owner, nonetheless, if a statute was enacted to create that effect, effect had to be given to the statute for the purposes incorporated therein. During the Second World War the courts in England were called upon to consider the Defence (Trading with the Enemy) Regulation, 1940 under which a winding up order could be made in respect of the business of any enemy bank carried on at its London offices. In Re The Banca Commercial Italiana(3) the court observed that having regard to the language of the statute and previous cases on the point "a winding up order made under the regulation must be held to create for the purpose of winding up a new entity, namely, the business ordered to be wound up, and this entity is considered as one which can possess assets and have liabilities of its own." Corresponding legislation in India during the Chinese invasion and (1) (2) [1916] Chancery Division 503. (3) [1943] 1 All Eng. L.R. 480. 26 the Indo Pakistan Wars was incorporated in the Defence of India Rules framed from time to time. In all these cases there is a departure from the general rule that the branches and agencies of a business are no more than the components through which the entire enterprise is carried on, and that they cannot be considered as distinct or separate from the Head office. The departure was necessitated by an emergent or a normal situation, and incorporated and regulated by specific legislation enacted for the purpose of coping with the problems arising out of such a situation. It is only right then that the true scope of what is intended by the legislation should be determined by close reference to the express terms of the legislation. It is abundantly plain from the object and purpose of the Regulation and the provisions which seek to realise them that all transactions effected by or through the Branches of the Banco Nacional Ultramarino were intended to be brought within the compass of the Regulation. As observed earlier, although the loan agreements may have been entered into with the Banco Nacional Ultramarino, the Branches were authorised by the Head office to give effect to those agreements, and accordingly the Branch concerned embarked upon the execution of the agreements and the working out of the transactions. The entire business involved in those transactions and dealings was effected by the Brancn concerned, and it was only when occasion strictly so required that the Branch made reference to the Head office for authority to amend or enlarge the scope of the operation. The transaction and the business nonetheless remained throughout those of the Branch, and this is fully affirmed by the existence and operation of the loan accounts in the books of the Branch, by the pledge or hypothecation of goods in almost all cases in favour of the Branch and by the overall nature and character of the transaction as an ordinary banking transaction falling within the normal business of a Branch. It will be noticed that section S of the Regulation expressly speaks of "properties and assets, all rights, powers, claims, demands, interests, authorities and privileges and all obligations and liabilities" of the Branches and of "all contracts, deeds, bonds, agreements. " to which the Branches are a party or which are in their favour. It proceeds clearly on the basis that the Branches must be regarded as entering into and carrying out transactions identifiable as theirs. These are transactions distinct from those exclusively carried on by 27 the Head office of the Banco Nacional Ultramarino, with which transactions in their essence the Branches had nothing to do. It will also be noticed that by sub section (2) of section 7 the Regulation envisages financial transactions between the Branches and the Head office. The entire purpose of the Regulation is to reconstruct by operation of statute the closed Branches of the Banco Nacional Ultramarino and to constitute them into a Bank and to work out existing transactions and square up all pending business with a view to ultimately winding up the affairs of the Branches. section 14 of the Regulation provides: "The Central Government shall, on the expiry of twelve years, and may, at any time before such expiry, direct that the books of account and affairs of the branches of the Banco Nacional Ultramarino in Goa, Daman and Diu shall be inspected by the Reserve Bank or by such other agency as the Central Government may determine and that a report on the basis of such inspection shall be made and the Central Government may, after considering the said report, direct the winding up of the affairs of the said branches on such terms and conditions to be specified by that Government which shall, as far as practicable, be in consonance with the provisions relating to winding up of a banking company under the Banking Companies Act, 1949". To accept the contentions advanced by the appellants would be to negative the very object and purpose of the Regulation and to nullify its provisions. Such a construction of the Regulation is not open to the Court, for it could never be supposed that in enacting the Regulation the President intended an exercise in futility. It is well settled that the construction put by a court on the provision of a statute should accord with the object and purpose of the statute, and in that behalf the rule in Heydon 's case(1) relied on by this Court in R.M.D. Chamarbaugwalla vs The Union of India(2) is attracted. What was the law before the statute was passed, what was the mischief or defect for which the law had not provided, what remedy had the legislation appointed and what was the reason of the remedy ? That substantially was also the test laid down in (1) ; (2) ; 28 Vrajlal Manilal & Co. & Ors. vs State of Madhya Pradesh & ors.(1) It was observed in Kanai Lal Sur vs Paramnidhi Sadhukhan:(2) "When the material words are capable of two cons tructions, one of which is likely to defeat or impair the policy of the Act whilst the other construction is likely to assist the achievement of the said policy, then the courts would prefer to adopt the latter construction. " We are of opinion that the transactions under consideration in these appeals fall within the scope of the Regulation and the Custodian is fully entitled to sue for the recovery of the debts covered by the loan agreements. The contention of the appellants to the contrary is rejected. We now turn to the remaining points raised in these appeals. It has been urged that the statutes cannot be decreed because the Promissory Notes and the Bills of Exchange have not been produced by the Custodian before the trial court. Now, it is not disputed that the documents have been removed from Goa to Portugal or to other places overseas and are no longer in the possession of the Branches. The debts were sought to be proved on the basis of the accounts maintained in the books of account of the relevant Branches. This was permissible by virtue of sub section (1) of 8. 8 of the Regulation which provides: "8. (1) If for the prosecution of any suit, appeal or other legal proceeding by the Custodian in any court it is necessary to produce any document or other particulars and the said document or particulars are proved to the satisfaction of the Court to have been removed to Portugal or to any of the territories under Portuguese control, it shall be lawful for the Court, in disposing of the suit, appeal or other legal proceeding to base its decree or decision on the books of account of the branches of the Banco Nacional Ultramarino in Goa, Daman and Diu and on the evidence which can be otherwise produced." (1) ; , 410. (2) ; 367. 29 Having regard to the circumstances, it is within the competence of the court to base its decree on the books of account of the Branches in Goa and on other evidence which can be produced. It was not necessary for the Custodian, indeed it was not possible, to produce the Promissory Notes and Bills of Exchange. Our attention has been invited to a passage in Byles on Bills of Exchange (1) which declares that "in any action or proceeding upon a bill, the court or a judge may order that the loss of the instrument shall not be set up provided an indemnity be given to the satisfaction of the court or judge against the claims of any other person upon the instrument in question". The provisions of Rule 16 of order VII of the Code of Civil Procedure and section 81 of the were also referred to. It is true that those provisions require the plaintiff to furnish an indemnity before a suit can be decreed if the negotiable instrument on which the suit is founded is proved to have been lost or cannot be produced. It seems to us that resort to those provisions cannot be justified inasmuch as the cases fall to be determined under the Regulation and the Portuguese law which continued in force in Goa. Even in respect of the Portuguese law, that is to say, provisions in the Portuguese Commercial Code and the Portuguese Uniform Law, to which our attention has been specifically drawn, we are of opinion that it stands superseded by reason of the express provisions contained in sub section (1) of section 8 of the Regulation. No indemnity can be reasonably required of the Custodian when it has been proved to the satisfaction of the court that the document has been removed to Portugal or to any of the territories under Portuguese control. The sub section plainly makes no provision for indemnifying the debtors against any further claims made against them. Such a measure was not considered necessary, because the Regulation vested the entire right in the Custodian to recover the debt and no further right was left in anyone else; The debts were regarded as properties and assets of the Branches, and all rights in respect of them stood transferred to and vested in the Custodian by virtue of sub section (I) of section 5. Having regard to the provisions of the Regulation and the object with which it was enacted it is not possible to conceive that it would be open to the Head office of the Banco Nacional Ultramarino to sue the debtors for recovery of those debts. Shri Nariman contends that an express provision was neces (1) 22nd Edn. p. 389 para. 30 sary in the Regulation to effect a complete discharge of the debtors from further liability as was the case in section 11 (2) of the Pakistan Ordinance considered in The Delhi Cloth and General Mills Co. Ltd. vs Harnam Singh and others.(1) We think it is not necessary that there should be such a specific provision. rt is sufficient if the same conclusion can be drawn from a proper construction of the general provisions of the Regulation and the object with which it has been enacted. We may point out that although reference was made by this Court in The Delhi Cloth and General Mills Co. Ltd. vs Harnam Singh and others (supra) to section 11 (2) of the Pakistan Ordinance, it was also observed on page 425 that alternatively: "Such payment would operate as a good discharge even under the English rules: see Fouad Bishara Jabbour vs State of Israel(2) where a number of English authorities are cited, including a decision of the Privy Council in Odwin vs Forbes.(3) That was also the result of the decisions in the following English cases, which are similar to this, though the basis of the decisions was the situs of the debt and the multiple residence of corporations: Fouad Bishara Jabbour vs State of Israel (supra), Re. Bangue Des March ands De Moscou Barclays Bank(4), Arab Bank Lrd. vs Braclays Bank(5). The Learned Additional Judicial Commissioner has reached the same conclusion, but in doing so he has relied on certain provisions of the Portuguese Uniform Law. We have not found it possible to examine the validity of his reasons because a complete statement of the Portuguese Uniform Law is not before us, and therefore we can find no justification for disturbing the basis on which he has come to his finding. The learned Additional Judicial Commissioner has also adverted to an undertaking offered by the Custodian to indemnify the debtors against any action by anyone else for recovery of the debts, but on the view that we have taken we need not examine the validity or sufficiency of that undertaking, (1) , 425. (2) @ 154. (3) (4) (5) , 529. 31 We are satisfied that the discharge of the debts under the Regulation amounts to their complete discharge and it is not open to anyone else to sue for their recovery. No indemnity is required to be furnished by the Custodian on the ground that the relevant documents cannot be produced. It is faintly urged that the suits filed by the Custodian were premature. This point was not raised before the courts below and we cannot allow it to be raised at this stage. There is one point, however, which, in our opinion, requires consideration by the trial court. In some of the suits it has been pleaded by the appellants that they were entitled to a set off by reason of certain credits in their favour. The learned Additional Judicial Commissioner has held that the trial court was justified in declining to enter into those claims. We think that in this regard the courts below have erred. It was necessary to do complete justice between the parties having regard to the peculiar circumstances of these cases, and we are of opinion that so far as these claims are concerned the trial court should now examine them on their merits. In the result, the appeals are dismissed subject to the direction that the trial court will take up the suits again solely for the purpose of examining the validity of the claims to set off made by the appellants in those suits. We make no orders as to costs of these appeals. P.B.R. Appeals dismissed.

The Banco Nacional Ultramarino (B.N.U.) with its head office at Lisbon in Portugal carried on banking business in Goa, Daman and Diu. On the eve of the liberation of these territories from Portuguese rule and their integration with India the B.N.U. removed a substantial portion of valuable assets held there to its head office at Lisbon. To relieve the distress closure to the people by reason of the closure of the B.N.U. the President promulgated regulations by which the branches at these places were integrated into a fully constituted bank independent of the B.N.U. and a Custodian was appointed to take charge of the bank. The Custodian was empowered to realise all debts due to the branches including any debts from the head office of the B.N.U. The Custodian filed a suit against the appellants stating that the loan accounts of the appellants showed a debit balance in favour of the branch. It was also stated that the promissory notes were not in his possession but that they could be presumed to have been removed to Portugal. While suits similar in nature filed in some courts had been dismissed, suits filed in other courts were decreed against the original debtor as well as tho guarantor and surety. The Additional Judicial Commissioner on appeal decreed the suits against tho appellants and granted the reliefs claimed by the Custodian, holding that the 17 Custodian was entitled to maintain the suits and sue for the realisation of debts arising out of the transactions entered into through the branches. He further hold that the execution of the negotiable instruments having been admitted in the written statement and these documents having been removed by the B.N.U. to Lisbon there was nothing to preclude the Custodian from claiming relief without producing those negotiable instruments. In appeal to this Court, it was contended on behalf of the appellants that since the loans had been granted by the head office of the B.N.U. and not its branches, the Custodian was not entitled to sue for recovery of loans granted by the head office. Dismissing the appeals, ^ HELD: The transactions under consideration fell within the scope of the regulations and the Custodian was fully entitled to sue for the recovery of the debts covered by the loan agreements. [28 C] It is settled law that a body corporate and its branches are not distinct and separate entities from each other, that the branches constitute mere components through which the corporate entity expresses itself and that all transactions entered into ostensibly with the branches are in legal reality transactions with the corporate body and that it is with the corporate body that a person must deal directly. In the case of a bank which operates through its branches, however, the branches are regarded for many purposes as separate and distinct entities from the head office and from each other. If the bank wrongly refuses to pay when a demand is made at the proper place and time, then it can be sued at its head office as well as at its branch office the reason being that the action is then not on the debt, but on the breach of the contract to pay at the place specified in the agreement. The regulations had been made apparently in the light of this banking law and practice. [24 B C; 25 B] The Delhi Cloth and General Mills Co. Ltd. vs Harnam Singh and others, at 422, referred to. The regulations were intended to achieve what emergency legislation was designed to secure. In all such emergency laws there is a departure from the general rule that the branches and agencies of a business are no more than components through which the entire enterprise is carried on and that they cannot be considered as distinct and separate from the head office. [26 A B] It is abundantly plain from the object and purpose of the regulations and the provisions which seek to realise them that all transactions effected by or through the branches of the B.N.U. were intended to be brought within the compass of the Regulations. [26 D] New York Life Insurance Co. vs Public Trustee, ; In re: W. Hagelberg Aktien Gesellschaft, 1916 Chancery Division 503 and Re The Banca Commercial Italiana, [1943] 1 All England Law Reports 480, referred to. 18 In the instant case although the loan agreements might have been entered into with the B.N.U, the branches were authorised by the head office to give effect to those agreements and accordingly the branch concerned embarked upon the execution of the agreements and the working out of the transactions. The entire business involved in those transactions and dealings was effected by the branch concerned and it was only when occasion strictly so required that the branch made reference to the head office for authority to amend or enlarge the scope of the operation. The transaction and the business nonetheless remained throughout those of the branch and this is fully affirmed by the existence and operation of the loan accounts in the books of the branch by the pledge or hypothecation of goods in almost all cases in favour of the branch and by the overall nature and character of the transaction as an ordinary banking transaction falling within the normal business of a branch. [26 E F] The discharge of the debts under the Regulation amounted to their complete discharge and it was not open to anyone else to sue for their recovery. No indemnity was required to be furnished by the Custodian on the ground that the relevant documents could not be produced. Having regard to the circumstances of this case it was within the competence of The Court to base its decree on the books of account of the branches in Goa and on other evidence. The Portuguese law stands superseded by reason of the express provisions of regulation 8 (1). [31 A] The Delhi Cloth and General Mills Co. Ltd. vs Harnam Singh and others, , 425, distinguished.

Appeal No. 143 of 1956. Appeal by special leave from the judgment and decree dated September 23, 1952, of the Bombay High Court in First Appeal No. 57 of 1949. section P. Desai and I. N. Shroff for the appellant. A. V. Viswanatha Sastri, J. B. Dadachanji, S.N. Andley, Rameshwar Nath and P.L. Vohra, for the respondents. 642 1961. September 13. The Judgment of the Court was delivered by DAS GUPTA, J. The appellant and the Second respondent are both descendants of Vallabhacharyaji, a great Vaishnava teacher who flourished more than 400 years ago. Vallabhacharyaji left his native place near Champaranya in South India, and coming to Gujarat and other parts of India established shrines for the worship of Vishnu at several places. His descendants became the priests and Shebaits of such shrines and also of other shrines established thereafter. These came to be known as Gadis. While each of these Gadis had a temple for the worship of Vishnu, considerable properties, movable and immovable were acquired for them from time to time by gift or otherwise. One such shrine was established more than 100 years ago at Nadiad and about the year 1899 A. D. a descendant of Vallabhacharyaji who on adoption took the name of Anniruddhalalji Murlidharji became the head of the Nadiad shrine and was thus possessed of the movable and immovable properties appertaining to the Gadi. This gentleman also became by, adoption head of another shrine known as the Moti Haveli at Jamnagar in the year 1913 and then took a slightly different name Annirudhalalj 'i Brijeshji. Both these adoptions were in accordance with the Goda Dattak custom of adoption which prevailed among the members of the Vallabhacharya community. Aniruddhalalji Murlidharji (alias Aniruddhalalji Brijeshji) died on December 17, 1935 leaving a widow Mahalaksbmi Bahuji Maharaj, who is the first respondent before Us. The question of adopting an heir to him assumed importance immediately on his death and it appears there was some talk. of adopting by the Goda Dattak custom one of the sons of the present appellant, who it is necessary to mention. was the natural brother of Aniruddhalalji. The talks however proved fruitless and ultimately on June 1, 1946, 643 the second respondent who as already stated was also a descendant of Vallabhacharya was adopted. The present suit was brought by the appellant in respect of the Haveli and other properties left by Anniruddhalalji at Nadiad. In this he, challenges the validity of the adoption of the second respondent by the first respondent, Mahalakshmi Bahuji Maharaj. The main prayer in the suit is for a declaration that respondent No. 2 was not the legally adopted son of Aniruddhalalji and did not acquire any right or shares in his property by the alleged adoption. The other prayers included one for a declaration that he the appellant was the nearest heir of the deceased, that the first respondent had no other right in the property except as a Hindu widow, for an injunction restraining her from frittering away the property or any part thereof, for an order on her to produce the balance of the sale proceeds of Maharaja 's Bag which she had sold off and for an order on both these respondents , to render accounts of the properties of Goswami Anniruddhalalji which might have come into their hands. It is no longer in dispute that the plaintiff would be the nearest heir on the death of the widow if there has been no valid adoption of the second respondent to Aniruddhalalji. The appellant challenged the validity of the adoption on three main grounds. The first was that under the custom ' of the Vallabharcharya community under which Goda Dattak adoption is made, the adoptee (using that word to denote the boy taken in adoption) must be only from the family of the adoptive father if this be possible and in the present case even though the plaintiff himself as well as his two sons were available for adoption the second respondent was adopted in preference to them. The second ground was that under the Goda Dattak custom the wife 's sister 's husband cannot be validly adopted. The third around was that Aniruddhalalji 644 had expressed his desire in this matter of adoption in such a manner that there was an implied prohibition by him from taking in adoption anybody except the present appellant or one of his sons. The first two grounds were raised in Issue No. 8 of the 19 Issues that were framed by the Trial Court while the third ground was raised in Issue No. 12. These Issues are in the following words : Issue No 8 Does the. plaintiff prove the custom that in Goda adoption: (i) a widow cannot adopt her sister 's husband as a son to her husband ? (ii) the adoptee should belong to the family of the adopter ? Issue No. 12: Does the plaintiff prove that the Defendant No. 1 was prohibited by Anniruddhalalji from adopting in the Goda form any one except the plaintiff or one of his sons ? It may be mentioned that an Issue was framed as, regards the factum of adoption in Issue, No. 6, viz., whether Defendant No. 2 's adoption is proved, in view of what was said in paragraph 14 of the plaint that he was not aware whether Defendant No. 1 and Defendant No. 2 had performed any ceremonies or rites according to the Goda Dattak form of adoption or as required by Hindu Law. This issue was answered in the affirmative and the correctness of that answer has not been challenged before us. The Trial Court held that the plaintiff had riot been able to establish the alleged custom for Goda Dattak that a widow could not adopt her sister 's husband as a son to her husband nor that the adoptee should belong to the family of the adopter and accordingly answered Issue No. 8 in the negative. As regards Issue No. 12 the plaintiff relied on a letter which was marked exhibit 115, apart from his own evidence and evidence of some of his witnesses. The Trial Court accepted Defendant No. 1 's contention that this letter had 645 been inspired by the plaintiff himself and so No. reliance could be placed on ' it. The oral testimony given by the plaintiff and other witnesses in support of the story that Aniruddhalalji had in his life time given certain directions in the matter of adoption of a son to him was also found not reliable. Accordingly, Issue ,No. 12 was also answered in the negative. One other argument addressed to the Trial Court was that Defendant No. 1 had not obtained the consent of her husband 's sapindas for this adoption and so under the Madras School of Mitakshara Law, which it is said governed the parties, the adoption was invalid. The Trial Court considered this argument even though the, question whether the Madras School of Mitakshara governed the parties and so the adoption was invalid without the consent of the husband 's, sapindas had not been specifically raised in the pleadings nor had any issue been framed on , ,his. The learned Judge however rejected the argument, being of opinion that "the ordinary law of adoption which puts restrictions on the widow 's right to adopt in Madras cannot be taken to be prevailing in the case of customary adoption in the Goda form by widow in the Goswami families. " Holding that the Defendant No.2 's adoption could not be held to be invalid the Trial Court dismissed the suit with costs. The plaintiff 's appeal to the High Court of Bombay met a similar fate. The learned Judges of High Court agreed with the Trial Court that the plaintiff had not been able to prove either that the wife 's sister 's husband was not eligible for adoption under the Goda Custom or that the son to be adopted must if possible come from the family of their adoptive father. On the question whether there was an implied prohibition to adopt anybody other than the plaintiff or his sons, .also, they agreed with, the Trial Court even though they were not prepared to 646 say that the letter (exhibit 115) was written by the Defendant No., 1 under undue influence of the plaintiff., The learned Judges of the High Court refused to consider the further question raised on behalf of the appellant that the adoption was invalid in the absence of consent of the Sapindas as the proper. pleading on which, such a question could have been raised had not been made in the plaint and no issue had been framed. The High Court refused to frame an issue then, but Rave time to the plaintiff to make an application for amendment of the plaint. An application for amendment was duly made but was rejected by the learned judges who were of opinion that the application had not been made in good faith. The appeal was dismissed with costs. The plaintiff has filed the present appeal against the decision of the High Court after obtaining special leave from this Court. The appellant contends that the Courts below were wrong in holding, firstly. that a custom which barred the adopted of the wife 's sister 's husband in the Goda form of adoption had not been proved. secondly that a custom that if possible the adoptee must be from the family of the adoptive father had not been proved; and lastly that the alleged implied prohibition against adopting anybody excepting the plaintiff and one of his sons had not been established. It was also urged that the High Court was wrong in refusing to entertain the plea that the adoption was invalid in the absence of the consent of the husband 's sapindas and in any case totally wrong in allowing the application for amendment of the plaint seeking to raise such a plea. Before coming to the several grounds urged on behalf of the appellant we have to consider a preliminary objection raised on behalf of the respondent. It is urged that this appeal has become infructuous by reason of, the operation of section 14 of the Hindu Succession Act, It is said that, as 647 admittedly respondent No. 1, Mahalakshmi Bahuji Maharaj, was in possession of the properties in suit at the date of the commencement of the Hindu Succession Act, she became the full owner of the properties in question in case the adoption by her of respondent No. 2 is invalid. There maybe some force in this argument if the properties in question are the private secular properties of Anniruddhalalji. The position may well however be different if these properties were the Devattar properties belonging to the Thakur of which Anniruadhalalji was a Shabeit. It appears that a suit has actually been brought by certain Vaisnavas seeking a declaration that these properties are all Devattar properties of the Thakur. In view of this position we are of opinion that it would not proper for us to decide in the present case whether under section 14 of the Hindu Succession Act Defendant No. 1 had become the full owner of the properties in suit if the adoption by her was invalid. We shall therefore decide this appeal on merits leaving it open to the 1st respondent to pursue her claim under section 14 of the Hindu Succession Act if that becomes necessary. Coming now to the merits of the appeal it is necessary to consider first the question of the alleged limitation on the power to adopt by Goda practice as regards the wife 's sister 's husband or a member from another Vallabhacharya family even though members of the adoptive father 's family be available. It will be helpful to consider in this con nection first the objects of Goda adoption. These objects have been mentioned by plaintiff 's own witness Chandras Shankar Laxmishakar Upadhyaya who appears to have a fair amount of knowledge of Goda Dattaka adoptions, to be three fold. The primary object was mentioned by him to be that 1 & "person going in "Goda" adoption can perform "several (worship) etc., of the Thakorji (idol) and that tradition of "sewa" (worship etc.,) can be ' continued". The second object mentioned by him is "that, after. the death of the 648 person taking in adoption, the person going in adoption can perform his "shraddha" ceremonies etc " ' The third object according to him is "to continue the line of the person taking in adoption. " Other witnesses who have given evidence on this point have said more or less the same thing. It is obvious that if the above be the objects of Goda adoption it must be implicit In the nature of Goda adoption that anybody who would be incapable of accomplishing any of these objects would be ineligible for adoption. It is on this basis that it was urged that wife 's sister 's husband 's son was not eligible. The argument is that the wife 's sister 's husband would be unable to perform the Shradha of the adoptive father because the adoptee would not cease to be the Shadu of the person to whom the adoption is made, it was further said that the adoptee would the incapable of performing the Sradh of the adoptive maternal grand father as the latter would be the adoptee 's father in law. Unfortunately however for the plaintiff 's case 'his witnesses were unable to quote any authority except their own ipso dixit for this proposition that the adoptee would be incapable of performing the Sradh of his adoptive father or adoptee maternal grand father. The plaintiff 's witness Anantkrishna Sastri a Mahamahopadhyaya, made a statement that according to Dharmashastras a wife 's sister 's husband cannot be adopted. As authority for this proposition he relied on a passage in Dattak Mimanea which prohibits the adoption of a daughter 's son, a sister 's son and a mother 's sister 's son and adds thus: "This clearly proves that a daughter 's son and a mother 's sister 's son are (in this respect) equal to a sister 's son. This is just proper because there is in these three, the same degree of (prohibited) marriageship (Viruddha Sambandha). " It is true that Dattak Mimansa has in a later passage gone further and said that son of a woman who could not be married because of Virudha Sambsndhar relationship should be excepted from adoption 649 We have however held in Mrs. Abhiraj Kuer vs Debendra Singh(1) in which judgment has been delivered to day that this rule in Dattaka Mimansa against Viruddha Sambandha putra is only recommendatory and not mandatory. Apart from that it is difficult to see how the wife 's sister 's husband can be considered to be ViruddhaSambandha putra. It is thus clear that even if the limitations of the orthodox Dattak adoption apply to Goda adoption there is no bar to the adoption of, the wife 's sister 's husband. On the materials on the record we are also satisfied that there is no custom barring the adoption of the wife, is sister 's husband in Goda Dattak form. On the question whether in Goda Dattak adoptions the adoptee must if possible be from the family of the adoptive father, it is important to notice that the several objects for which Goda Dattak adoptions are made may well be satisfied even if the adoptee be from some other Vallabhacharya family. Practically the only evidence given in support of the case that there is a custom as alleged that if possible the adoptee must be from the adoptive father 's family is by the plaintiff himself. His witness Lakshmi Shankar Upadhaya, who, as al. ready stated, appears to have considerable ex perience of Goda Dattaka adoptions does not speak of any such custom. Even his witness Hari Krishna Virji Sastri who appears rather partial to him it may be mentioned that he admits having read even the plaint on being sent for by the plaintiff does not speak of any such custom. Against the plaintiff 's own evidence that there is such a custom we, find defendant No. 2 giving three instances where boys from other families were adopted in Goda Dattak even though members in the adoptive father 's family were present. It is true that the evidence does not show whether such adoptions from other family (1) C.A. No. 379 of 1958 decided on 15.9,61, 650 took, place only after members in the adoptive father 's family who might have been available for adoption declined to be adopted. It will be unreasonable however to expect such evidence as to the exact circumstances under which adoptions were made from other families even in the presence of members in the adoptive father 's family. But even if it be correct to say that the defendant has not established clearly that members from other families were adopted even though members in the adoptive father 's family were willing to be adopted, the fact remains that the plaintiff has not been able to establish by either any authoritative texts or from the opinion of some person well learned about the Goda Dattaka customs that a custom exists barring the adoption of members from other Vallabhacharya families if it were possible to adopt members from the adoptive father 's family. This brings us to the contention most vehemently urged before us that the evidence establishes an implied prohibition by Anniruddhalalji of the adoption of any person other than the plaintiff or one of his two sons. Reliance is placed first on the letter exhibit 115. We are inclined to agree with the High Court that this letter was written by Mahalakahmi Bahuji Maharaj of her own accord and cannot be brushed aside as having been written under the influence of the plaintiff. All that the letter shows however is that Anniruddhalalji had expressed a desire that Gokul Nath (who is plaintiff 's son) should be taken in adoption to him. While a reasonable reading of this letter would show that Anniruddhalalji authorized Mabalakshmi Bahuji Maharaj to make an adoption and that he expressed his preference for the adoption of Gokal Nath, the letter does not show even remotely that Anniruddhalalji indicated any wish that no body except Gokul Nath should be adopted. It is interesting to remember in this connection that plaintiff 's own in the Plaint is not that Anniruddhalalji had 651 declared any wish that nobody other than Gokul, Nath should be adopted but that his desire was that, "no body other than the 1 plaintiff or any one of hit sons should be adopted. " The plaintiff in his own testimony has no doubt said that Anniruddhalalji after asking the plaintiff to give his eldest son in Goda adoption told Mahalakshmi Bahuji Maharaj that ,only his brother 's son should be adopted". if, this was true it is difficult to understand why the plaintiff tried to make a case in the plaint that Anniruddhalalji had declared a wish that nobody except the plaintiff himself or one of his sons should be adopted. The plaintiff 's witnesses who have spoken as regards the declaration by Anniruddhalalji of his wish in this matter of adoption have not stated that Anniruddhalalji said that only his brother 's son should be adopted. His witness Nateswarji the brother of Anniruddhalalji 's, first wife says that "during his last illness Anniruddhalalji had spoken in my presence and in the presence of Defendant No. 1 that his desire was to adopt Bhaiya Raja and he had inquired of Defendant No. 1 what her desire was". Defendant No 1 had replied that her desire was the same as his desire. Such a talk had taken place only once in my presence. " Accepting that Nateshwarji has stated the full truth here his evidence does not show anything more than was indicated in the letter exhibit 115 itself and does not show that Defendant No. 1 prohibited even by implication the adoption of anybody else excepting Bhaiya Raja (the plaintiff 's son). The plaintiff 's witness Gobardhan stated in hip, evidence : Anniruddhalalji was speaking to all persons in touch with him that he wanted to take Bhaiya Raja in "Goda Dattak" and later that "he was spoken to by Maharaj that he wanted to take Bhaiya Raja in adoption". Even this witness who goes to the length of saying that a date was actually fixed by Anniruddhalalji for the adoption of Bhaiya Raja & story which none of the other witnesses give is not prepared to say that Anniruddhalalji said to Defendant No. 1 or to anybody else that nobody other 652 than Bhaiya Raj should be adopted. It is not possible in this state of the evidence to accept as true the plaintiffs uncorroborated testimony that Anniruddhalalji said to defendant No. 1, Mahalakshmi Bahuji Maharaj that only the plaintiff 's son should be adopted. We are therefore of opinion that the High Court is right in its conclusion that no implied prohibition by Anniruddhalalji of adoption of anybody other than the plaintiff or his sons has been proved. The last argument that the parties being governed by the Madras School of Mitakshara, the adoption is invalid in the absence of consent by the husband 's sapindas must be rejected, for the simple reason that the letter exhibit 115 and the evidence of the plaintiffs own witnesses justify the conclusion that in his life time Anniruddhalalji authorised Mahalakshmi Bahuji Maharaj to make an adoption after his death though at the same time indicating his preference for one particular boy. The necessity of consent of the husband 's sapindas would arise if the Madras School of Mitakshara law was applicable only where there was no authority from the husband. In the present case there was authority from the husband to adopt and so even if the rule of Orthodox Dattak adoption was applicable and Anniruddhalalji was governed by the Madras School of Mitakshara the question of any consent of husband 's sapindas does not arise at all. In the view we have taken of this argument it is unnecessary for us to consider whether the High Court was right in rejecting the application for amendment of the plaint that was made by th plaintiff in order to induce the High Court to consider this very argument. It is also not necessary for us to enter into the question on which some evidence appears to have been led 1 though no issue was framed, viz. whether Goda Dattak adoption is a mere variant 653 of the orthodox Dattak adoption or an affiliation altogether different from Dattak adoption. We therefore express no opinion on this question. The appeal is dismissed with costs. Appeal dismissed.

The first respondent on the death of her husband who was a descendant of the famous Vaishnava teacher Vallabhacharyaji and was possessed of certain Devattar properties belong to the Thakur of which be was the Shebait, adopted her sister 's husband as a son under the Goda Dattak Custom of adoption which prevailed amongst the Vallabhacharya community. The appellant who was the own brother of the deceased adoptive father contended inter alia that under the Goda Dattak custom a widow could not adopt her sister 's husband as a son to her husband, that the adoptee should belong to the family of the adopter and that the widow should obtain the ,consent of her husband 's sapindas for the adoption. Held, that the rule in Dattaka Mimansa against the adoption of the son of a woman who could not be married because of Viruddha Samandha relationship is recommendatory and even if the limitation of the orthodox Dattak adoption apply to Goda adoption there is no bar to the adoption of the wife 's sister 's husband. Abhiraj Kuer vs Devendra Singh, C. A. No. 379 of 1961 decided on 15 9 61, referred to. In the present case it has not been proved that under the Goda Dattak customs a custom existed barring the adoption of members of other Vallabhachari families if it were possible to adopt members from the adoptive father 's family. As in the present case there was authority from the husband to adopt the question of the consent of the sapindas of the ' husband did not arise even if he was governed by the Madras School of Mitakshara.

ivil Appeal No. 1617 of 1968. Appeal by special leave from the judgment and decree dated March 19, 1968 of the Allahabad High Court in Second ' Appeal No. 2296 of 1961. 1. P. Goyal and A. G. Ratnaparkhi, for the appellant. C.B.Agarwala and R. Mahalingier, for the respondent. The Judgment of the Court was delivered by Hegde, J. The question of law that arises for decision in this appeal by special leave is not free from difficulty. That question is whether a decree for eviction obtained in a suit instituted after obtaining the permission of the Commissioner under sub section 3 of section 3 of the U.P. (Temporary) Control of Rent and Eviction Act, 1947 (to be hereinafter referred to as the Act) becomes unenforceable if the State Government acting under section 7(F) of that Act revokes the permission granted by the Commissioner after the decree is passed ? The appellant was a tenant of the respondent in respect of a shop in Balugani in Agra. On January 2, 1959, the respondent applied to the District Magistrate under section 3(1) of the Act for permission to institute a suit against the appellant for evicting him from the shop in question. That application was rejected by the District Magistrate as per his order of July 9, 1959. The respondent took up the matter in revision to the Commissioner under sub section 2 of section 3. The Commissioner reversed the order of the District Magistrate and granted the permission asked for on October 16, 1959. As against that order the appellant moved the State Government under section 7(F) on November 17, 1959. On January 299 1, 1960, the respondent served on the appellant a notice under section 106 of the Transfer of Property Act. The appellant replied to that notice on January 6, 1960. In that reply he informed the respondent that he had already moved the State Government to revoke the permission granted by the Commissioner. On February 13, 1960 the respondent instituted suit No. 115 of 1960 in the Court of Munsiff, Agra seeking the eviction of the appellant from the suit premises. The appellant filed his written statement in that case on May 7, 1960. Therein again he took the plea that the permission granted by the Commissioner is not final as he had moved the Government to revoke the same. The suit was decreed by the learned Munsiff on November 2, 1960. The appellant went up in appeal as against that order to the Civil Judge, Agra. On January 27, 1961, the State Government revoked the permission granted by the Commissioner during the pendency of the appeal. Relying on this order the Civil Judge of Agra allowed the appeal of the appellant on February 9, 1961. As against that decision the respondent went up in second appeal to the High Court. The High Court allowed the second appeal on 19th March 1968 following the Full Bench decision of the Court in Bashi Ram vs Mantri Lal(1). This appeal is directed against that decision. The Act was intended as a temporary measure as could be gathered from its title as well as the preamble. It is deemed to have come into force on the 1st day of October 1946 though it was passed in 1947. Under the Act as originally stood, the decision of the District Magistrate under section 3 was neither appealable nor revisable. As per the amendments effected in 1952 a Limited power of revision was conferred on the Commissioner. By the Amending Act 17 of 1954, the power conferred on the Commissioner was enlarged and section 7(F) was incorporated in the Act which says that: "the State Government may call for the records of any case granting or refusing to grant permission for the filing of a suit for eviction referred to in section 3 . . and make such order as appears to it necessary for the ends of justice. " The only sections in the Act material for the purpose of this appeal are sections 3 and 7(F). Section 3 reads thus. : "Restrictions on evictions. Subject to any order passed under sub section ( 3 ), no suit shall: without the permission of the District Magistrate, be filed in any civil court against a tenant for his eviction from any accommodation, except on one or more of the following grounds: (1) (1965) 1 A11. 300 (a) that the tenant is in arrears of rent for more than three months and has ,failed to pay the same to the landlord within one month of the service upon him of a notice of demand; (b) the at the tenant has wilfully caused or permitted to be caused substantial damage to the accommodation; (c) that the tenant has, without the permission in writing of the landlord, made or permitted to be made any such construction as, in the opinion the court, has materially altered the accommodation or is likely substantially to diminish its value; (d) that the tenant has created a nuisance or has done any act which is inconsistent with the purpose for which he was admitted to the tenancy of the accommodation, or which is likely to affect adversely and substantially the landlord 's interest therein; (e) that the tenant has on or after the 1st day of October, 1946, sub let the whole or any portion of the accommodation without the permission of the landlord; (f) that the tenant has renounced his character as such or denied the title of the landlord and the latter has not waived his right or condoned the conduct of the tenant; (g) that the tenant was allowed to occupy the accommodation as a part of his contract of employment under the landlord and his employment has been determined. Explanation. For the purposes of sub section (e) lodging a person in a hotel or a lodging house shall not be deemed to be sub letting. (2) Where any application h:as been made to the District Magistrate/or permission to sue a tenant for eviction from any accommodation and the District Magistrate grants or refuses the permission, the party aggrieved by his order may within 30 days from the date on which the order is communicated to him, apply to the Commissioner to revise the order. (3) The Commissioner shall hear the application made under sub section (2), as far as may be, 301 within six weeks from the date of making it, and he may, if he is not satisfied as to the correctness, legality or propriety of the order passed by the District Magistrate or as to the regularity of proceedings held before him, alter or revise his order, or make such other order as may be just and proper. (4) The order of the Commissioner under subsection (3) shall, subject to any order passed. ' by the State Government under section 7 (F) be We have earlier quoted the relevant portion of section 7 (F). Conflicting opinions were expressed by different Benches of the Allahabad High Court as to the scope of section 3, till the decision of the Full Bench in Bashi Ram 's case(x). The Full Bench held that a decree obtained in a suit for eviction instituted after obtaining the requisite permission will not become unenforceable even if the State Government revoked, after the decree is passed, the permission granted, in exercise of its powers under section 7(F). Majority of the Judges in that case further held that once a suit is instituted after obtaining the permission of the District Magistrate, any further order made either by the Commissioner or the State Government cannot affect the course of that suit or the decree passed therein. Dwivedi J. the other Judge did not express any opinion on that question but even according to him in the appeal filed against the decree, the appellate court cannot receive in evidence the order made by the State Government which means that the decree cannot be reversed on the ground that the State Government had revoked the permission granted. The correctness of the Full Bench decision is challenged by the appellant in this appeal. In support of his interpretation of sections 3 and 7(F) he placed reliance on the decision of a Division Bench of the High Court of Allahabad in Dr. S.L. Khoparji vs State Government(a). He also sought support from the decision of a Single Judge of that Court in Basant Lal Sah vs Bhagwan Prasad Sah(3). It is not necessary to refer to the various decisions of the Allahabad High Court on this question. Suffice it to say that in that Court there was serious cleavage of opinion on the question that we are considering in this appeal till the decision of the Full Bench in Bashi Ram 's case(x). We were given to understand that Dhavan, j. had doubted the correctness of the decision of the Full Bench and had requested the Chief Justice to constitute a larger Bench to consider the correctness of the decision in Bashi Ram 's case(1) but in view of the pendency of this appeal, the constitution of a larger bench was not considered necessary. (1) (1965) 1 All. (3) A.I.R. 1964 All p. 210. (2) 302 The contention of Mr. Goyal, the learned Counsel for the appellant was that the Act generally speaking, ' has restricted the right of the landlord to evict his tenant, to one or other of the grounds mentioned in cls. (a) to. (g) of section 3(1 ); but in order to meet any exceptional case, it is provided in section 3 (1 ) that a suit for eviction may be instituted on any ground other than those mentioned in cls. (a) to (g) if the permission of the District Magistrate is obtained; the order made by the District Magistrate is revisable both by the Commissioner as well as the State Government; the only order that is final is that made by the State Government. If a landlord chooses to institute a suit on the basis of the permission granted by the District Magistrate or the Commissioner without waiting for the decision of the State Government he takes the risk; if the State Government revokes the permission granted by the District Magistrate or the Commissioner then the suit must be deemed to have been instituted without permission and consequently not maintainable. Mr. Goyal urged that if the decision in Bashi Ram 's case(1) is accepted as correct then so far as the tenant is concerned, generally speaking, he cannot invoke the powers of the State Government under section 7(F) because immediately after the decision of the Commissioner, if the same is in his favour, the landlord is likely to institute a suit for eviction and thus nullify the power of the State Government under section 7(F). He urged that as section 7(F) empowers the State Government to revise the order made by the subordinate authorities whether the same is in favour of the landlord or the tenant we should not place an interpretation on section 3 which would affect the power of the State Government to do justice to the tenants for whose benefit the Act has been enacted. On the other hand it was urged by Mr. C.B. Aggarwal, learned Counsel for the respondent that the landlord has a right to sue for the eviction of his tenant under the provision of the Transfer of Property Act subject to the restrictions stipulated therein. That is a statutory right. The provisions contained in the Act to the extent they encroach upon the rights of the landlord either specifically or by necessary implication further control the rights of the landlord. In other respects the landlord 's rights under the Transfer of Property Act remain unaffected. According to him the only restriction placed on the landlord in the matter of instituting a suit for eviction on grounds other than those mentioned in cls. (a) to (g) of section 3(1) is to obtain the prior permission of the District Magistrate subject to the order made under sub section (3) of section 3 by the Commissioner; once a suit is validly instituted in accordance with those provisions, no order of the State Government can either interfere with the course of that suit or invalidate the decree obtained therein. He urged that if the position is as (1) 1965) 1 Ali. 545 303 contended by the. learned Counsel for the appellant, curious results are likely to follow. Section 7 (F) does not fix any period within which the State Government must act. It can exercise its power under that provision at any time it pleases may be after 10 years or 20 years; the power conferred on the State Government is extremely wide as observed by this Court in Shri Bhagwan and anr. vs Ram Chand and anr.(1). Therefore it can revoke the permission granted after the decree for eviction is confirmed by the High Court or even the Supreme Court and thus make a mockery of the judicial process; this could not have been the intention of the legislature. According to Mr. Aggarwal from the very scheme of the Act and from the very nature of the power conferred on the State Government, it cannot be exercised after a suit is instituted after complying with the requirements of subs. (1 ) of section 3. His further contention was that on a proper construction of sub section ( 1 ) of section 3, it would be seen that the suit instituted after obtaining the required permission being a validly instituted suit, its progress cannot be interrupted; the permission required under section 3 (1 ) is the permission of the District Magistrate subject to any order under section 3(3) by the Commissioner; in other words the permission given by the District Magistrate is not final till affirmed by the Commissioner; till then it remains tentative; once the Commissioner affirms the same or grants the permission asked for it becomes final and thus amounts to a valid permission to sue; hence a suit filed on the basis of that permission is a validly instituted suit unless the permission granted was revoke by the State Government before the institution of the suit. Proceeding further he stated that it is true that the order of the Commissioner though final yet it is subject to any order that may be passed by the State Government; but section 3 (1 ), the provision dealing with the permission to file a suit for eviction does not refer to the order under section 7(F); it only speaks of the permission granted by the District Magistrate subject to the order of the Commissioner and not further subject to any orders made by the State Government. In this connection he invited our attention to the fact that as against the order passed by the District Magistrate under subs. ( 1 ) of section 3, a revision petition can be filed before the Commissioner within 30 days of that order and not thereafter. The Commissioner has not even the power to condone the delay in filing the revision petition. Further under subs. (3) of section 3, the Commissioner is required to hear the application made under sub section (2) of section 3, as far as may be, within six week from the date of making it. All these provisions indicate that the legislature was of the opinion that the proceedings under section 3 should be carded_on expeditiously and the decision of the Commissioner should be considered as final. According to Mr. Aggarwal the question of granting or refusing to grant the permission under s, 3 are primarily to be (1) [1965] 3 S.C.R.218, 304 dealt with only by the District Magistrate and the Commissioner. They are the only tribunals in the hierarchy of the tribunals constituted for that purpose. The power given to the Government under section 7(F) is merely a supervisory power. That is why no limitation is imposed on the exercise of that power either in the matter of time within which it should be exercised or the circumstances under which it can be exercised. Such a power according to him is a reserve power and therefore has to be exercised before the court 's jurisdiction is invoked, He particularly laid emphasis on the fact that sub section (1) of section 3, the compliance of which is necessary before validly instituting the suit does not at all refer to an order under section 7(F). After examining the provisions of this Act, we are constrained to observe that the drafting of this Act leaves considerable room for improvement despite the fact that it was amended twice over. Though it was intended to be a temporary measure when it was originally enacted it has now reminded in the statute book for over 20 years and there is no knowing how long the same will continue to be in force. Therefore it is but appropriate that the provisions of this Act should be clear and unambiguous. From sub section (1 ) of section 3 it is not possible to find out the contents of the powers of the District Magistrate. No guide lines are laid down therein to regulate the exercise of the powers of the District Magistrate. It is not possible to find out from that provision under what circumstances the District Magistrate can grant the permission asked for and under what circumstances he can refuse the same. It is likely that different District Magistrates are exercising that power in different ways. One consideration may appeal to one District Magistrate and a totally different consideration may influence another District Magistrate. It would have been appropriate if the legislature had defined the scope of the powers of the District Magistrate or at least laid down certain guide lines for regulating his discretion. Sub section (3 ) of section 3 says that if the Commissioner is not satisfied as to the correctness, legality or propriety of the order passed by the District Magistrate, he may alter or reverse the order of the District Magistrate or make such other order as may be just and proper. It is not possible to find out on what basis the Commissioner can determine the correctness, legality or propriety of the order made by the District Magistrate. As seen earlier, no restrictions are placed on the powers of the District Magistrate in granting or refusing to grant the permission asked for under section 3 (1 ). Therefore the only thing the Commissioner can do is to exercise his discretion in preference to the discretion exercised by the District Magistrate. Now coming to the power conferred on the State Government under section 7 (F), it would be seen that it is a power of wide amplitude. It can be exercised by it in any way it pleases. No restriction either as to the time 305 within which it can be exercised or as to the circumstances under which it can be exercised is placed on the State Government. Under these circumstances the anomalies pointed out by Mr.Goyal as well as by Mr. Agarwal are inevitable. Therefore in construing this Act, no useful purpose will be served by taking into consideration the hardship to the parties. In whatever way we may construe sections 3 and 7(F) hardship to one party or the other is inevitable. Neither Counsel suggested to us any interpretation which could steer clear of the anomalies pointed out at the bar. Therefore we have to fall back on the grammatical construction of sub section (1 ) of section 3 and leave out of consideration all other rules of construction for finding out the intention of the legislature. Section 3(1) does not. restrict the landlord 's right to evict his tenant on any of the grounds mentioned in cls. (a ) to (g) of that sub section. But if he wants to sue his tenant for eviction on any ground other than those mentioned in those clauses then he has to obtain the permission of the District Magistrate whose discretion is subject to any order passed under sub section (3) of section 3 by the Commissioner. These are the only restrictions placed on the power of a landlord to institute a suit for eviction of his tenant. If a landlord files a suit for the eviction of his tenant without obtaining the permission of the District Magistrate that suit is not maintainable but if he files a suit after obtaining the permission of the District Magistrate and if the Commissioner revokes the permission granted by the District Magistrate in a properly instituted application under section 3(2) then the suit instituted by him will be considered as having been filed without the permission of the District Magistrate because section 3 (1 ) in specific terms says that the permission given by the District Magistrate is subject to any order passed under sub section In other words the permission given by the District Magistrate does not acquire any finality until either the period fixed for filing an application under sub section (2) of section 3 expires and no application under that section was filed within that time or if an application had been filed within that time, the same had been disposed of by the Commissioner. The permission to file a suit for eviction assumes finality under section 3 (1 ) once the Commissioner decides the revision petition pending before him. In fact sub section (4) of section 3 says that the order of the Commissioner is final. It is true that that order despite the fact that it is final is subject to any order passed by the State Government under section 7(F). There is no provision in the Act providing that a suit validly instituted after getting the required permission under section 3 (1 ) ceases to be maintainable because of any order made by the State Government under section 7(F). Similarly there is no provision in the Act invalidating a decree passed after the Act came into force in a validly instituted suit. Section 14 provides : 306 "no decree for the eviction of a tenant from any accommodation passed before the date of commencement of this Act shall, in so far as it relates to the eviction of such tenant be executed against him 'as long as this Act remains in force except on any of the grounds mentioned in section 3: Provided that the tenant agrees to pay to the landlord "reasonable annual rent" or the rent payable by him before the passing of the decree whichever is higher ." This provision applies only to decrees passed before the date of the commencement of the Act. A decree of a Court in a suit validly instituted is binding on the parties to. the same. It is true that the finality or the force of a decree can be taken away by a statute, but the Court will not readily infer that a decree passed by a competent Court has become unenforceable unless it is showy that a provision of law has specifically or by necessary implication made that decree unenforceable. No such provision was brought to our notice. On an examination o/the relevant provisions of the Act our conclusion is that when the Commissioner sets aside the order passed by the District Magistrate granting permission to file a suit for ejecting a tenant, the order of the Commissioner prevails. If he cancels the permission granted by the District Magistrate there is no effective permission left and the suit instituted by the plaintiff without awaiting his decision must be treated as one filed without any valid permission by the District Magistrate. To this extent we are in agreement with the decision of Upadhyaya, J. in Munshi Lal and anr. vs Shambhu Nath Ram Kishan(1). From this it follows that the Full Bench decision in Bashi Ram 's case(2) to the extent it held that a suit filed by the landlord after obtaining the permission of the District Magistrate cannot become infructuous even if the Commissioner revokes the permission, is incorrect. But we agree with the Full Bench that a suit validly instituted after obtaining a permission as required by section 3 (1 ) does not cease to be maintainable even if the State Government revokes after the institution of the suit, the permission granted. If the State Government revokes the permission granted before the institution of the suit then there would be no valid permission to sue. In other words the State Government 's power to revoke the permission granted under section 3(1) gets exhausted once the suit is validly instituted. For the reasons mentioned above, this appeal fails and the same is dismissed. But in the circumstances of the case, we make no order as to costs. R.K.P.S. Appeal dismissed.

The appellant was a tenant of the respondent in respect of a shop in Agra, Uttar Pradesh. The respondent applied to the District Magistrate under section 3(1) of the U.P. (Temporary) Control of Rent and Eviction Act, 1947 for permission to institute a suit against the appellant for evicting him from the shop. The application was rejected by the District Magistrate, but the Commissioner, by order under section 3(3 ), granted the permission. The appellant thereupon moved the State Government under section, 7(F) of the Act, but it was only after the respondent had flied a suit and ,obtained a decree that the State Government passed an order revoking the permission granted by the Commissioner. The first Appellate Court, in view of the order under 7(F) act aside the decree of the trial Court. However in second appeal the High Court, relying upon a Full Bench decision of that Court in Bashi Ram vs Mantri Lal (1965) 1 All 545, decided in favour of the respondent. In appeal before this Court by. special leave, the question for consideration was whether a decree for eviction obtained in a suit instituted after obtaining the permission of the Commissioner under section 3(3) of the Act becomes unenforceable if the State Government acting under section 7(F) of the Act revokes the permission granted by the Commissioner after the decree is passed. HELD: The order of the District Magistrate is by section 3(1) specifically made subject to the order of the Commissioner in revision under section 3(3 ), but the Commissioner 's order according to section 3 (4 ) is final though subject to the order of the State Government under section 7(F). There is no provision in the Act providing that a suit validly instituted after getting the required permission under section 3 (1 ) ceases to be maintainable because of any order made by the State Government under section 7(F). [305 G H] Similarly there is no provision in the Act invalidating a decree passed after the Act came into force in a validly instituted suit. The finality or the force of a decree can be taken away by a statute, .but the Court will not readily infer that a decree passed by a competent Court has become unenforceable unless it is shown that a provision of law has specifically or by necessary implication made that decree unenforceable. [305 H 306 C D] On an examination of the relevant provisions of the Act the conclusion must be that when the Commissioner sets aside the order passed by the District Magistrate granting permission to file a suit for ejecting a tenant, the order of the Commissioner prevails. If he cancels the permission granted by the District Magistrate, there is no effective permission left and the suit instituted by. the plaintiff without awaiting his decision must be treated as one filed without any valid permission by the District Magistrate. To this extent the decision in Munshi Lal and ant. Shambhu Nath Ramkishan, was correct. [305 D F] Sup. C1/69 2 298 It follows that the Full Bench decision in Bashi Ram 's case to the extent it held that a suit filed by the landlord after obtaining the permission of the District Magistrate cannot become infructuous even if the Commissioner revokes the permission, was incorrect. [306 F] Bashi Ram 's case was however correctly decided in so far as it held that a suit validly instituted after obtaining a permission as required by section 3(1) does not cease to be maintainable even if the State Government revokes, after the institution of the suit, the permission granted. if the State Government revokes the permission granted before the institution of the suit, then there would be no valid permission to sue. In other words the State Government 's power to revoke the permission granted under section 3(1) gets exhausted once the suit is validity instituted. [306 G] Bashi Ram vs Mantri Lal, (1965) 1, All. 545 and Munshi Lal and ant. vs Shambhu Nath Ram Kishan, (1958) A.L.J., p. 584; considered. Dr. S.L. Khoparji vs State Government, (1958) A.LJ., p. 724; Basant Lal Sah vs Bhagwan Prasad Sah, A.I.R. 1964 All. p. 210 and Shri Bhagwan and ant. vs Ram Chand and anr. ; , ; referred

APPEAL NO. 691 of 1976. (From the Judgment & Order dated the 16th December 1975 of the Gujarat High Court in Special Civil Appln. No. 572 of 1975). G.L. Sanghi and Girish Chandra, for the Appellants. 480 V.M. Tarkunde, K.L. Hathi and Mrs. P.C. Kapur, for respondent No. 1. The Judgment of the Court was delivered by GOSWAMI, J. This appeal on certificate is from the judgment of the High Court of Gujarat. The appellants 1 and 2 are respectively the Union of India and the Regional Provident Fund Commissioner. Dhrangadhra Chemical Works Kamdar Sangh (hereinafter to be described as the union) is the first respondent. The second respondent is Dhrangadhra Chemical Works (hereinafter to be described as the employer). With respect to the dearness allowance (D.A.) of the workers under the employer there was a reference No. 70/70 before the Industrial Tribunal at Ahmedabad. The parties arrived at a settlement of the said industrial dispute and an award was passed in terms of the settlement. According to the award the employer was to pay D.A. to its employees at the rate of the quarterly average cost of living index as settled by the Simla Bureau, popularly known as "All India Consumers Price Index" for the relevant quarter. Thus for the 'months of January, February and March, 1974, the rate of D.A. was on the basis of the average cost of living index for the months of July, August and September 1973 as pub lished by the said Bureau and this was to follow for every quarter. It is the accepted position that for the months of April, May and June 1974 the D.A. worked out at Rs. 78/ per month, but for the quarter. commencing on 1st July, 1974, and ending on 30th September, 1974, it worked out at Rs. 88.50 per month. In other words, it was an agreed position between the union and the employer that the rate of D.A. payable to all the workers from 1st July, 1974, was at the rate of Rs. 88.50 per month. With effect from 6th July, 1974, The Additional Emolu ments (Compulsory Deposit) Ordinance 1974 came into force. This Ordinance was replaced by The . (Act No. 37 of 1974) (briefly the Act) and the Act is deemed to have come into force on the 6th day of July 1974. We have already made a detailed reference to the aim and object of the Act and also dealt with the material provi sions thereof in dealing with a similar question in Civil Appeal No. 690 of 1976 in which we have delivered our judg ment to day(1). It is, therefore, not necessary to repeat those observations here. The short question that arises in this particular appeal turns on the Explanation I to section 2(b) of the Act. We will, therefore, read that provision: "2(b) 'additional dearness allowance ' means such dearness allowance as may be sanc tioned from time to time, after the appointed day, over and above the amount of dearness allowance payable in accordance with the rate in force immediately before the date from which such sanction of additional dearness allowance is to take effect. (1) [1977] 2 S.C.R.472. 481 Explanation I. Where payment of dearness allowance is linked to a cost of living index or any other factor, any automatic payment, after the appointed day, of dearness allowance in consequence of any rise in such cost of living index or in consequence of any change in such other factor shall, notwithstanding the provisions of this clause, be deemed to be the additional dearness allowance. " It is clear under section 2(b) that additional D.A. has to be sanctioned after the appointed day. "Sanctioned" is the heart of the definition clause. Since additional D.A. is defined to mean such D.A. as may be sanctioned from time to time after the appointed day, Explanation I 'to the definition is inserted to. deal with a situation to avoid any controversy about the sanction while there is an auto matic rise in D.A. linked to a cost of living index. Where D.A. is linked to a cost of living index any automatic payment, after the appointed day, of D.A. in consequence of any rise in such cost of living index shall be deemed to be the additional D.A. In the absence of Explanation I there would have been scope for controversy whether additional D.A. which is paid automatically with the rise in the cost of living index, as agreed upon, can be said to be D.A. sanctioned from time to time. Such a controversy is set at rest by insertion of Explanation I which is a deeming clause. The question that arises for consideration in this appeal is whether the rise in the cost of living index has also got to be after the appointed day. The union contends that the D.A. of Rs. 88.50 which is payable from 1st of July, 1974, for the quarter 1st July, 1974 to 30th Septem ber, 1974 is an pursuance of the rise of cost of living index between January to March 1974 which is prior to the appointed day, namely, 6th July, 1974. It is, therefore, submitted that no additional D.A. is deductible under the Act. The High Court has accepted the contention of the union and allowed the application under Article 226 of the. Con stitution granting a Mandamus restraining the employer from deducting additional D.A. from the emoluments of the em ployees. The High Court also granted certificate to appeal to this Court. it is common knowledge that when D.A. is linked to a cost of living index, actual determination of the D.A. takes place after the index is published and known. The index, therefore, is always of a past period by the yardstick of which D.A. is adjusted. This being the concept about link age of D.A. to cost of living index, Explanation I makes it clear that when payment of D.A. is linked to a cost of living index any automatic payment after the appointed day of D.A. in consequence of any rise in the cost of living index shall. notwithstanding the provisions of this clause, be deemed to be the additional D.A. The non obstante clause in the Explanation takes note of the definition clause where sanction after the appointed day has been mentioned. Explanation I therefore, plays its role, not withstanding whatever is stated in section 2(b), the definition clause. We do not find anything in Explana tion I to warrant the conclusion that rise of the cost of living index should be after the appointed day. What is to be after the appointed day is "any automatic payment of D.A. in consequence of any 482 rise . "and not that any rise in the cost of living index should be after the appointed day. We are, therefore, unable to agree with the High Court that the rise of cost of living index also should be after the appointed day. It is sufficient for the purpose of Explanation I if payment of D.A., in consequence of rise of cost of living index, takes place after the appointed day on account of rise in the cost of living index even prior to the appointed day. The nexus for the purpose of Explana tion I is with the payment after the appointed day and not with the rise in the cost of living index. The specified percentage of additional D.A. which is 50% of the rise, being the difference, between Rs. 78/ and Rs. 88.50 is, therefore, deductible under section 6(2)(b) of the Act and the High Court was not correct in holding to the contrary. The appeal is allowed and the judgment of the High Court is set aside. There will be, however, no order as to costs. P.B.R. Appeal allowed.

Section 2(b) of the defines additional dearness allowance to mean such dearness allowance as may be sanctioned from time to time after the appointed day over and above the amount of dearness allowance payable in accordance with the rate in force immediately before the date from which such sanction of additional dearness allowance is to take effect. Expla nation I to the clause states that where payment of dearness allowance is linked to the cost of living Index any auto matic payment after the appointed day of dearness allowance in consequence of any rise in such cost of living index or in consequence of any change in such other factor shall, notwithstanding the provisions of this clause, be deemed to be the additional dearness allowance. Dearness allowance was paid to the employees of the respondent at the rate of quarterly average cost of living index for the relevant quarter. The rate of dearness allow ance for one quarter e.g. the first quarter of 1974 was paid on. the basis of the average cost of living index for the months of July September, 1973. For the quarter July September, 1974 there was a rise in the cost of living index and consequently there was a rise in the dearness allowance payable to the employees. In a writ petition under article 226 of the Constitution the employees contended that the increased dearness allowance payable for the quar ter July September, 1974 was as a result of rise in the cost of living index between January March, 1974 which was before the appointed day in July 6, 1974 and, therefore, no additional dearness allowance was deductible under the Act. The High Court granted the writ. Allowing the appeal, HELD: The High Court was wrong in its view that the rise of cost of living index should be after the appointed day. The nexus, for the purpose of the explanation, is with the payment after the appointed day and not with the rise in the cost of living index. There is nothing in the Explanation to warrant the conclusion that rise in the cost of living index should be after the appointed day. What is to be after the appointed day is any automatic payment of dearness allowance in consequence of any rise in such cost of living index and not that any rise in the cost of living index should be after the appointed day. [482B: 481H] When D.A. is linked to the cost of living index, actual determination of the D.A. takes place after the index is published and known. The index, therefore, is always of a past period by the yard stick of which D.A. is adjusted. This being the concept about linkage of D.A. to cost of living index. Explanation I makes it clear that when pay ment of D.A. is linked to cost of living index any automatic payment after the appointed day of D.A. in consequence 'of any rise in the cost of living index shall, notwithstanding the provisions of this clause, be deemed to be the addition al D.A. [481G]

Appeal No. 1551 of 1966. Appeal by special leave from the Award dated February 28, 1966 of the Industrial Tribunal, Madras 'in I. D. No. 21 of 1965. H. R. Gokhale and D. N. Gupta, for the appellant. M. K. Ramamurthi, Shyamala Pappu and vineet Kumar, for the respondents. The Judgment of the Court was delivered by Shelat, J. On demands for revision of wage scales, dearness allowance, medical benefit, bonus for the year 1963 64, gratuity 937 etc. having been made by the workmen of the appellant company in its Madras and the other branches in that region and disputes thereabout having arisen between the company and its said workmen, the Government of Madras referred them by its notification dated April 6, 1965 for adjudication to the Industrial Tribunal, Madras. The Tribunal granted some and rejected the rest of the demands. Aggrieved by the award the company filed this appeal under special leave granted by this Court. Though the award dealt with a number of demands counsel for the appellant company restricted its challenge against the award on three subjects only. Consequently, we are, concerned in this appeal with those three subjects only, namely, bonus for the year 1963 64, medical benefits and revision by the Tribunal of the company 's existing gratuity scheme. As regards the bonus, the company had already paid to the workmen bonus at the rate of 4 months ' basic pay as against the demand for the maximum bonus calculated in accordance with the , and on consolidated as against the basic wages. The Tribunal conceded that demand and granted bonus at 209% of the consolidated wages. In view, however, of this Court 's decision in Jalan Trading Co. vs Mill Mazdoor Union,(1) Mr. Ramamurthi for the workman conceded. that the Act cannot apply in respect of the year in question and that the bonus payable for that year will have to be calculated on the basis of the Full Bench Formula as approved by this Court. The award to that extent, therefore, has to be set aside and remanded to the Tribunal for determining the bonus in accordance with the said Formula. On the question of medical facilities, the workmen 's demand is contained in paras 27 to 31 of their statement of claim filed before the Tribunal according to which the workmen wanted the company to reimburse all medical expenses incurred by them on production of bills therefore. In paras 27 and 28 of the statement, it was stated that the company had a scheme for medical benefit for its workmen at Calcutta made under the consent award of 1962 and that there was no reason "why this amenity should be refused to the workmen in this region". Para 30 of the statement stated that there was a discussion between the parties regarding this demand when the company agreed to appoint a medical officer for consultation by the workmen and also to meet the cost of medicines upto Rs. 100 for a workman per year. This offer, however, was rejected on three grounds: (1) that the condition as to the ceiling was discriminatory, (2) that the ceiling was too low and (3) that there was no warrant for not extending the benefit to workmen of the branch offices outside Madras. (1) ; 938 This demand is dealt with by the Tribunal in para 14 of the award. It is clear therefrom that the union 's contention before the Tribunal was that there was no reason why "this amenity of medical facility which the company has granted to its Calcutta workmen should be refused to the workmen of the Madras region". The contention thus clearly was that the company having made a scheme for its Calcutta employees, it was discriminatory to refuse such a scheme to its workmen in Madras region. It is equally clear that the offer made by the company and referred to in the statement of claim by the workmen was rejected as it contained a ceiling which was not in its Calcutta scheme, and it was, therefore, that its offer was considered discriminatory. In view of these contentions the Tribunal agreed that a scheme for medical benefit for this region was called for. The Calcutta scheme was not produced before the Tribunal and therefore the Tribunal proceeded to frame its own scheme. The Tribunal rejected the demand for reimbursement of all medical expenses in respect of which bills would be produced as it felt that such a provision would lead to abuses including the obtaining of false bills. Instead, the Tribunal directed that the company should pay the cost of such medicines as are prescribed by the company 's doctor, if supported by genuine bills, and should also pay all cost of hospitalisation if and when it was recommended by the company 's doctor. Counsel for the company objected to this part of the award on the grounds (1) that the Tribunal was not justified in throwing on the company the entire burden of medical expenses including the cost of hospitalisation even in cases of major diseases which workmen might suffer or contact, (2) that it was no part of the employer 's obligation to provide for such expenses and that too to an unlimited degree, and (3) that the award should have provided a ceiling both in respect of the cost of medicines and of hospitalisation. The argument was that the grievance of the workmen was that denial of the medical amenity to them as the one given to its Calcutta workmen was discriminatory, and therefore, if the Tribunal decided to concede the demand, it should have been on the same lines as the Calcutta scheme. Mr. Rama murthi, on the other hand, contended that (a) it was an accepted principle that though a company may have an all India organisation, it was not necessary that if should have uniform conditions of service in all the regions and that, therefore, merely because the company has a medical scheme for its Calcutta office it did not follow that scheme must also be applied to its workmen in Madras region, and (b) that the scheme framed by the Tribunal was fair and should not be interfered with in order only to bring it in line with that of Calcutta. 939 In a recent decision concerning this very company and its, workmen in Bangalore, Hyderabad and Kerala branches (Remington Rand of India vs The Workmen)(1), this Court had to consider this very question. The Tribunals in those cases. had, as in this case, made schemes which imposed the burden of medical facilities on the company without any ceiling and extended therein such benefit to the family members of the workmen also. In those cases, on our finding the company 's Calcutta scheme to be fair and reasonable, we substituted it for the schemes framed by the, respective Tribunals. The Calcutta scheme is thus in operation in those areas also. Counsel for the workmen has not shown to us any substantial difference between those areas and the Madras region affecting, the question of medical benefit. We,, therefore, find no legitimate reason why the Calcutta scheme should not be applied to these workmen. It is true that medical benefit is excepted in that scheme for certain diseases of a contagious and epidemic nature. That presumably was done on the ground that for such diseases the primary duty to give relief is of the State and not of the employer. For the reasons given in that decision, we set aside the directions given by the Tribunal in this. behalf and substitute them by the following scheme : 1. When a workman during the course of his duty requires medical attention, and where such attention is given by the company 's doctor (i.e. a doctor or doctors nominated by the company including a doctor nominated as a part time doctor) and medicines are prescribed by him, the cost of such prescription should be borne by the company; 2. In the event of a workman falling sick at his residence and the illness is other than a venereal disease, leprosy, smallpox, typhoid or cholera, he should be paid the cost of the medicines prescribed; 3. Bills or cash vouchers pertaining to such prescription should be produced for counter signature of the company 's doctor before payment is authorised; 4. Disease of a serious nature requiring hospitalisation will be subject to consideration by the company; 5. At the time of employment the company will be entitled to get the prospective employees examined by the company 's doctor and their employment will be subject to being found medically fit; 6. All company employees who are presently employed or those employed in future will be medically (1) C.A. Nos. 856. 1475 and 2119 of 1968, decided on December 10, 1968. 940 examined by the company 's doctor once a year or at such other periodical intervals determined by the company but the results of such medical examinations will not be prejudicial to the workmen 's employment; 7. In case a workman is found medically unfit to continue in service, the company will decide his case in consultation with the union 's secretary; and 8. This scheme will come to an end as and when the Employees ' State Insurance Scheme is extended to the employees concerned. The question of laying down any ceiling need not be con sidered as the company, we are told, is agreeable to extend this scheme in this region. The third item in respect of which the company challenges the award is the revision made by the Tribunal of the existing gratuity scheme. The workmen 's demand in this respect was : (1) that the maximum limit of 15 months ' salary should be enhanced to 20 months ' salary, and (2) that the provision in the existing scheme that no gratuity would be payable to a workman dismissed on the ground of misconduct should be substituted by a provision that even in such cases gratuity should be payable but the company would be entitled to deduct from such gratuity amount the amount of financial loss, if any, resulting from such misconduct. The Tribunal 's view was that these demands were reasonable and accordingly made modifications in the existing scheme. At first, Mr. Gokhale objected to this part of the award. first ly on the ground that the Tribunal ought not to have allowed gratuity even in cases of dismissal for misconduct, and secondly, that the qualifying period in the case of termination of service by the company otherwise than for misconduct should be 10 years and not the graded periods from 5 to 15 years as provided in the award. On second thoughts he did not press the second objection. and therefore, nothing need be said about it. He, however, contended that if gratuity even in cases of dismissal for misconduct is to be made payable, a provision should be made that it would be forfeited if the misconduct is a gross one involving violence, riotous behaviour etc. and for the rest of the cases, the qualifying period should be 15 years of continuous service. These objections involve a principle, and therefore, need serious consideration. The principle invoked by Mr. Gokhale is, firstly, that since gratuity is paid as a reward for long and meritorious service it would be inconsistent with that principle to award gratuity in cases of dismissal for misconduct, for. such cases cannot be treated as cases of meritorious service, and 941 secondly, the provision in such cases for deduction only of financial loss resulting from misconduct committed by the workman is neither proper nor consistent with the principle on which gratuity is made payable by an employer. A workman may be guilty of gross misconduct, such as riotous behaviour or assault on a member of the staff. Such misconduct may not result in any financial loss to the company, and therefore, the workman would be paid full gratuity amount. The contention was that it would be a serious anomaly that while a workman, who has caused some damage to the company 's property and is dismissed on the ground that he was guilty of misconduct would have the gratuity amount payable to him reduced to the extent of that damage, another workman, who, for instance, assaults and causes injury, even a serious injury, to another employee would, though liable to be dismissed, be entitled to the full gratuity merely because the misconduct of which he is guilty, though graver in nature, does not result in pecuniary loss to the company. In support of his contention, Mr. Gokhale leaned heavily on two recent decisions of this Court in Calcutta Insurance Co. Ltd. vs Their Workmen(1) and The Delhi Cloth & General Mills Company Ltd. vs The Workmen(2). Relying on these decisions, he urged, that in cases of dismissal for misconduct, the qualifying period should not be as prescribed by the Tribunal but must be 15 years of continuous service. Mr. Ramamurthi, on the other hand, contended that the principle that gratuity is a reward for long and meritorious service and that for a single misconduct after such service, such misconduct should not result in deprivation of gratuity except to the extent of the actual monetary loss caused to the employer has been long accepted in industrial adjudication and should not be abandoned, and that the two decisions relied on by Mr. Gokhale should not be construed as having the cumulative result of enhancing the qualifying period and also depriving gratuity in cases of dismissal for misconduct. The first decision, according to him, lays down an increase in the qualifying period from 10 years, which generally used to be the period for earning gratuity, to 15 years, and the second lays down Certain exceptions to the accepted rule that deduction of monetary loss resulting from misconduct was sufficient. He argued that neither of the two decisions lays down that both the consequences must follow where a workman is dismissed for misconduct, even if such misconduct has not resulted in any monetary loss to the employer. In view of these contentions it becomes necessary for us to examine the earlier decisions cited before us before we come to (1) ; (2) ; 942 the cases of Calcutta Insurance Co. Ltd.(1) and the Delhi Cloth & General Mills Co. Ltd.(2). The question as, to whether gratuity should be, payable even though the concerned workman is dismissed for misconduct appears to have been raised for the first time is The Garment Cleaning Works vs Its Workmen(3). The objection there raised related to cl. 4 of the gratuity scheme: framed by the Tribuml which provided that even if a workman was dismissed or discharged for misconduct, gratuity would still be payable except that if such a misconduct resulted in financial loss, to the works, gratuity should be paid after, deducting such loss. The contention urged by counsel, but which failed,, was that such a clause was, inconsistent with the principle on, which gratuity claims were based, namely, that they were in the nature of retiral benefit based ' on. long and meritorious, service. Therefore, if a workman was guilty of misconduct and was dismissed or discharged, it would be a blot on his long and meritorious service and in such a case it would not be open to him to claim gratuity. This was a general argument and was repelled as such is clear from what the Court said at page 715 of the Report : "On principle, if gratuity is earned by an employee for long and meritorious service it is, difficult to understand why the benefit thus earned by long and meritorious service should not be available to the employee even though at the end of such service he may have been found guilty of misconduct which entails his dismissal. Grautuity is not paid to the employee gratuitously or merely as a matter of boon. It is paid to him for the service rendered by him to the employer, and when it is once earned it is difficult to understand why it. should neceasarily be denied to him whatever may be, the nature of misconuct for his dismissal Therefore we do, not. think that it would be possible to accede to the general argument that in all cases where the &mice of an employee is terminated for misconduct gratuity should riot be paid to him. " The words "why it should necessarily be denied to him whatever may be the nature of misconduct occurring in the earlier part of the passage and the words "general argument that in all cases where the service of an employee is terminated for misconduct gratuity should not be paid" and the reference by the Court to certain awards made by tribunals where simple misconduct was distinguished from grave misconduct and forfeiture of gratuity (1)[1967] 2 S.C.R. 596. (2) ; (3) 943 was provided for the letter occurring after this passage clearly show firstly that the Court was dealing with and repelled the general proposition that without any distinction between simple and gross misconduct there should be forfeiture in all cases of dismissal for misconduct of whatsoever nature, and secondly, that though the Court approved the scheme which provided that gratuity should be paid after deducting financial loss resulting from the workman 's misconduct, the Court did not lay down any principle that gratuity should be paid in cases of grave misconduct involving even violence which though it may not result in financial damage may yet be more serious than the one which results in monetary loss. The decision thus is not an authority for the proposition that even if a workman were guilty of misconduct, such as riotous behaviour or an assault on another employee, in dustrial adjudication should not countenance a provision for forfeiture of gratuity in such cases merely because it does not result in monetary loss or that such a provision would be inconsistent with the principle that gratuity is not a boon or a gratuitous payment but one which is earned for long and meritorious service. In Motipur Zamindari (P) Ltd. vs Workmen(1) the only question considered was whether the award was justified in providing forfeiture of gratuity in a case where the misconduct involved moral turpitude. The Court following Garment Cleaning Works ( 2 ) directed that instead of forfeiture, the clause should provide deduction of the amount of monetary loss, if any, caused by such misconduct. It is clear that no one canvassed the question as to whether a provision in a gratuity scheme that a workman should forfeit gratuity in the event of his committing misconduct involving violence or riotous behaviour within or around the works premises would be justified or not. Nor was it con sidered whether it would be anomalous to provide for exaction of compensation from gratuity amount in case of misconduct involving moral turpitude while not making any provi sion against misconduct, such as the use of violence or force, which though not resulting in monetary loss, yet is unquestionably of a graver nature. The case of Employees vs Reserve Bank of India(3) was again a case wherethere was a general clause in the gratuity scheme providing forfeiture in cases of dismissal for misconduct whatsoever and where in view of the decision in Garment Cleaning Works (2 )" the Bank conceded to:substitute the rule by providing deduction from gratuity the amount of monetary loss occasioned by the misconduct for which dismissal is ordered. Thus, in none of the cases cited before us the question as to; what should be the minimum qualifying period in cases of dismissal (1) (2)[1962].2 S.CR.,711. (3) ; , at 58. 944 for misconduct and the question as to whether a provision for forfeiture of gratuity in the event of such dismissal having been ordered for misconduct involving violence were either canvassed or considered. On the other hand, in a recent decision between this very company and its workmen in Bangalore region (Remington Rand of India Ltd. vs Their Workmen)(1), the gratuity scheme made by the Tribunal provided for a qualifying period in cases of termination of service otherwise than for misconduct, but no qualifying period was provided for cases where termination of service was by way of punishment for misconduct. This Court accepted the objection of the company on the ground of this omission and laid down the qualifying period of 15 years ' service in such cases. In this decision the Court followed the earlier decision in Calcutta Insurance Co.(2) In another such case (Remington Rand of India vs The Workmen(3), where the dispute concerned the workmen of the company in Kerala region 15 years service was provided as the qualifying period in cases of dismissal for misconduct. In the case of Calcutta Insurance Co.(2) on a contention having been raised that the qualifying period for earning gratuity in cases of retirement and resignation should be 15 years ' service and that no gratuity should be payable in cases of dismissal for misconduct, the Court examined the earlier decisions commencing from the Indian Oxygen & Acetylene Co. Ltd.(4) to the case of Garment Cleaning Works(5) 'and registered its demurrer against the observation made in the latter case that as gratuity was earned by an employee for long and meritorious service, it should consequently be available to him even though at the end of such service he may have been found guilty of misconduct entailing his dismissal. In so doing the Court at page 608 of the Report remarked : "In principle, it is difficult to concur in the above opinion. Gratuity cannot be put on the same level as wages. We are inclined to think that it is paid to a workman to ensure good conduct throughout the period he serves the employer. "Long and meritorious service" must mean long and unbroken period of service meritorious to the end. As the period of service must be unbroken, so must the continuity of meritorious service be a condition for entitling the workman to gratuity. if a workman commits such misconduct as causes financial loss to his employer, the employer would under the general law have a right of action against the employee for (1) [19681 (2) ; (3) , at 168. (4) (1956] (5) 945 the loss caused and making a provision for withholding payment of gratuity where such loss caused to the employer does not seem to aid to the harmonious employment of laborers or workmen. Further, the misconduct may be such as to undermine the discipline in the workers a case in which it would be extremely difficult to assess the financial loss to the employer. " Continuity, in other words, must govern both the service and its, character of meritoriousness. The Court further observed that a mere provision in a gratuity scheme enabling an employer to, deduct from the gratuity amount the actual loss caused as a. result of misconduct for which the workmen incurs the punishment of dismissal or discharge cannot subserve industrial peace and harmony, firstly, because an employer even without such a. provision has under the law the right of action for claiming damages, a right not taken away by industrial law, and secondly,. because a misconduct resulting in dismissal may be such as may undermine discipline in the workmen, in which case it would be extremely difficult to assess the financial loss. As regards the qualifying period, the Court laid down 10 years service in cases, of resignation or retirement and "following the principles laid down in the former decisions of this Court" provided 15 years ' service for qualifying for gratuity in cases of dismissal for mis conduct. In the case of Delhi Cloth & General Mills Co. Ltd. (1) an objection was raised on behalf of the workmen to cl. 3 of the gratuity scheme framed by the Tribunal. That clause provided as follows : "On termination of service on any ground whatsoever except on the ground of misconduct as in cl. 1 (a) and 1 (b) above. " Cl. 1 (a) and 1 (b) provided for payment of gratuity in the eventof the death of an employee while in service or on his being physically and mentally incapacitated for further service and ' laid down the rates and the qualifying periods as follows : (a) After 5 years continuous service and less than 10 years ' service 12 days ' wages for each completed year of service (b) After continuous service of 10 years 15 days ' wages for each completed year of service. The effect of cl. 3, therefore, was that in case of termination of service an employee would be entitled to get gratuity at the above (1) C.A. Nos.2168, 2569 of 1966 and 76, 123 and 560 of 1967, decided on September 27, 1968. 946 rates if he had put in service for the aforesaid periods, but would forfeit it if the termination was due to any misonduct committed by him. The objection was that this provision was inconsistent with the decisions so far given by this Court, that according to those decisions the only provision permissible to the Tribunal was to enable Ox employer to deduct actual monetary loss arising from misconduct, and that therefore, the mere fact that a work man 's service was terminated for misconduct was no ground for depriving him altogether of gratuity earned by him as a result of his long and meritorious service, until the date, when he commits such misconduct. In examining, the validity of this contention the Court analysed the previous decisions and pointed out that none of them laid down a general principle, that an industrial tribunal cannot _justifiably provide that an employer need not be made to pay gratuity even where, the workman had incurred termination of service on account of his having committed misconduct, not merely technical but of a grave character. The Court observed that in some decisions this Court, no doubt, had held that the fact that dismissal of a workman on account of his having committed misconduct need not entail forfeiture and that it would be sufficient to forfeit partially the gratuity payable to him to the extent of monetary loss caused to the employer. But then no decision had laid down as a principle that a provision for such forfeiture cannot be justified, however grave the misconduct may be, provided it had not caused monetary loss. The Court noticed that the trend in the earlier decisions was to deny gratuity in all cases where the, workman 's service was terminated for misconduct but that in later years in cases such as the Garment Cleaning Works(1) "a less rigid approach" was adopted. The Court then observed: "A bare perusal of the Schedule (Model Standing Orders) shows that the expression "misconduct ' covers a large area of human conduct. On the one hand arc the habitual late attendance, habitual negligence and neglect of work on the other hand are riotous or disorderly behaviour during working hours at the establishment or any act subversive of discipline, wilful insubordination or disobedience. Misconduct falling under several of these latter heads of misconduct may involve no direct loss or damage to the employer, but would render the functioning of the establishment impossible or extremely hazardous. For instance, assault on the manager of an establishment may not directly involve the, employer in any loss or damage, which could be equated in terms of money, but it would render the working of the establishment impossible. One may also (1) 947 envisage several acts of misconduct not directly involving the establishment in any loss, but which are destructive of discipline and cannot be tolerated. In none of the cases cited any detailed examination of what mis conduct would or would not involve to the employer loss capable of being compensated in terms of money was made. It was broadly stated in the cases which have come before this Court that notwithstanding dismissal for misconduct a workman will be entitled to gratuity after deducting the loss occasioned to the employer. If the cases cited do not enunciate any broad principle we think that in the application of those cases as precedents a distinction should be made between technical misconduct which leaves no trail of. indiscipline, misconduct resulting in damage to the employer 's property, which may be compensated by forfeiture of gratuity or part thereof, and serious misconduct which though not directly causing damage,, such as acts of violence against the management or other employees or riotous or disorderly behaviour, in or near the place of employment is conducive to grave indiscipline. The first should involve no forfeiture: the second may involve forfeiture of an amount equal to the loss directly suffered by the employer in consequence of the misconduct and the third may entail forfeiture of gratuity due to the workmen. The precedents of this Court, e.g., Wenger & Co. vs Its Workmen [1963(2) L.L.J. 388], Remington Rand of India Ltd. 's case [1968(1) L.L.J. 542] and Motipur Zamindari (P) Ltd. 's case [1965(2) L.L.J. 139] do not compel us to hold that no misconduct however grave may be visited with forfeiture of gratuity. In our _judgment, the rule set out by this Court in Wenger & Co. 's case and Motipur Zamindari (P) Ltd. 's case applies only to those cases where there has be en by actions wailful or negligent any loss occasioned to the property of the employer and the miscon duct does not involve acts of violence against the management or other employees, or riotous or disorderly behaviour in or near the place of employment. In these exceptional cases the third class of cases the employer may exercise the right to forfeit gratuity; to hold otherwise would be to put a premium upon con duct destructive of maintenance of discipline. " In this view, the Court modified cl. 3 of the scheme by adding an explanation, the effect of which was that though the employer could not deprive the workman of the gratuity in all cases of misconduct, he could do so where it consisted of acts involving violence against the management or other 'employees or riotous 5Sup. Cl/70 15 948 or disorderly behaviour in or near the place of employment and also gave right to the employer to deduct from gratuity such amount of loss as is occasioned by the workman 's misconduct. We may mention that the Court did not alter the qualifying period in cases of misconduct since no objection appears to have been raised on that ground. As against the contention that a provision in accordance with these two decisions should be introduced in the scheme under examination, Mr. Ramamurthi submitted that the two decisions should not be construed as if they laid down principles which should have the cumulative effect, firstly, as to the qualifying period, and secondly, as to deprivation of gratuity in cases specified in the Delhi Cloth & General Mills case(1). It is true that this decision does not lay down that the qualifying period in cases of misconduct should be 15 years as was held in Calcutta Insurance Company(2). But, as aforesaid, that was because that ques tion was not raised, while in the Calcutta Insurance Co. case(2) it was expressly raised and the Court laid down that in such cases it would be proper to provide 15 years continuous service as a criterion. Once the principle that gratuity is paid to ensure good con duct throughout the period that the workman serves his employer is accepted as laid down in Calcutta Insurance Co.(2) some distinction in the matter of the qualifying period between cases of resignation and retirement on the one hand and dismissal for misconduct on the other becomes logically necessary. Such a distinction cannot legitimately be assailed as unreasonable. Similarly, if the object underlying schemes of gratuity is to secure industrial harmony and satisfaction among workmen it is impossible to equate cases of death, physical incapacity, retirement and resignation with cases of termination of service incurred on account of misconduct. Besides, a longer qualifying period in the latter cases would ensure restraint against wailful use of violence and force neglect etc. No serious argument was advanced that such a distinction would not be reasonable. The objection was against the insertion of both and not against the merit of such distinction. As regards the clause as to misconduct, it is not possible to disagree with the proposition laid down in the Delhi Cloth & General Mills case( ) that acts amounting to misconduct as defined in the standing orders, where they are made, or the model standing orders, where they are applicable, differ in degree of (1) 11969] 2 S.C.R. 307. (2) (19671 2 S.C.R. 596. 949 gravity, nature and their impact on the discipline and the working of the concern, and that though grave in their nature and results, all of them may not result in loss capable of being calculated in terms of money. Amongst them there would be some which would forthwith disentitle the workman from retaining his employment and justifying his dismissal. For the reasons given in the Delhi Cloth & General Mills ' case(1) with which we, with respect, concur, we must agree with counsel for the company that it is necessary to modify the scheme and to add in cl. 5 thereof a proviso that in cases where there has been termination of service on account of an employee found guilty of act or acts involving violence against the management or other employees or riotous or disorderly behaviour in or near the company 's premises, the company would be entitled to forfeit the gratuity which would otherwise be payable to the concerned workman. 5 should also be modified so as to introduce therein 15 years continuous service as the qualifying period for earning gratuity in cases where the service of the employee has been terminated on account of misconduct and that such gratuity should be payable at the rate prescribed in cl. 3(d) of the scheme. The appeal is allowed and the award is set aside to the extent aforesaid. The gratuity scheme and the scheme for medical benefit, as revised by the Tribunal, are modified as stated above. So far as the question of hours is concerned, that question is remanded to the Tribunal to decide it in accordance with the observations made hereinabove. The Tribunal will give liberty to the parties to adduce for that purpose such further evidence as they think necessary. There will be no order as to costs. Y.P. Appeal allowed.

An industrial dispute between the appellant company and its workmen relating,. inter alia, to bonus, medical benefits anti gratuity was, referred by the State Government of. Madras on April 6, 1965 to the Industrial Tribunal for adjudication. Tribunal awarded bonus at 2O,% of the consolidated wages as provided in the . As to medical benefit& the Tribunal diverted that the company should pay the cost of medicines prescribed by the company 's doctor and the full cost of hospitalisation when it was. recomanded by the company 's doctor. The Tribunal modified, the company '& gratuity scheme in accordance with the workmen 's demands. The company appealed to, this Court against the award The question of bonus had to be considered, in, the light of this Courts decision in Japan Trading, Company 's law. On the question. of medical benefits the Court had to consider whether the company 's scheme for its Calcutta employees could be extended to Madras Region. In regard to gratuity the main questions for consideration were as, to, the qualifying, period for payment of gratuity to workmen who were guilty of misconduct, and whether gratuity should be payable for workmen whose misconduct consisted of violence, riotous behaviour etc. HELD: (i) In View of this Court 's decision in Jalian Trading Company 's case the. Payment of Bonus Act, 1965 was not applicable in respect of the year in question, and the bonus payable had to be calculated in accordance with, the Full Bench, Formula. The award to that extent therefore had to be set aside and remanded, to the Tribunal for determining the bonus in accordance with the said Formula [937 E] Jalam Trading Co. vs Mill Mazdoor Union, ; , referred to. (ii) In the appellant company 's earlier cases relating to its Bangalore, Hyderabad and Kerala Branched this Court had held that the Company 's Calcutta scheme relating to medical benefit for its workmen was fair and reasonable and had made the said scheme applicable to these areas also. No substantial difference had been shown between these areas and the Madras region affecting the question of medical benefit. These areas and the no legitimate reason why the Calcutta scheme should not be applied to the workmen in the present case. [The Court framed an eight point scheme for medical benefit based on the Calcutta scheme] [939 A 940 C] Remington Rand of India vs The Workmen, C.A. Nos. 856/68 etc. 10 12 1968, applied. (iii.) Once the principal, that gratuity is paid to ensure good conduct throughout the period that the workman serves his employer as laid drown 936 in Calcutta Insurance Co. some distinction in the matter of the qualifying period between cases of resignation and retirement on the one hand and dismissal for misconduct on the other becomes logically necessary. Such a distinction cannot legitimately be assailed as unreasonable. Similarly if the object underlying the scheme of gratuity is to secure industrial harmony and satisfaction among workmen it is impossible to equate cases of death, physical incapacity, retirement and resignation with cases of termination of service incurred on account of misconduct. Besides, a longer qualifying period in the latter cases would ensure restraint against wailful use of violence and force, neglect etc. [948 E] As laid down in Delhi Cloth & General Mills case that acts amounting to misconduct as defined in the standing orders, when they are made, or the model standing orders, where they are applicable differ in degree of gravity, nature and their impact on the discipline and the working of the concern, and that though grave in their nature all of them may not result in loss capable of being calculated in terms of money. Amongst, them there would be some which would forthwith disentitle the workman from retaining his employment and justifying his dismissal. For the reasons given in the Delhi Cloth & General Mills case it was necessary to modify the scheme of gratuity and to add in cl. 5 thereof a proviso that in cases where there has been termination of service on account of an employee found guilty of act or acts involving violence against the management or other employees or riotous or disorderly be haviour in or near the company 's premises, the company would be entitled to forfeit the gratuity which would otherwise be payable to the concerned workmen. Clause 5 should also be modified so as to introduce therein 15 years continuous service as the qualifying period for earning gratuity in cases when the service of an employee has been terminated on account of misconduct and that such gratuity should be payable at the rate prescribed in cl. 3(d) of the scheme. [948 G 949 D] Calcutta Insurance Co. Ltd. vs Their Workmen, ; and Delhi Cloth & General Mills Co. Ltd. vs The Workmen, ; , applied. Garment Cleaning Works vs Its Workmen, , Motipur Zamindari (P) Ltd. vs Workmen, , Employees vs Reserve Bank of India, ; , 58, Remington Rand of India Ltd. vs ' Their Workmen, , Remington Rand of India vs The Workmen, , 168 and Indian Oxygen & Acetylene Co Ltd. case , considered.

ition No. 8991 of 1983. (Under Article 32 of the Constitution of India.) Petitioner in person alongwith Mukul mudgal K. Parasran, Attorney General, K. G. Bhagat Addl. Solicitor General, R.N. Poddar for the Respondent. The Judgment of the Court was delivered by RANGANATH MISRA, J. Shri Shiv Dayal Shrivastava, the petitioner before us in this application under Article 32 of the Constitution praying for a writ of mandamus to the Union of India, retired as Chief Justice of the Madhya Pradesh High Court with effect from February 28, 1978. At the time of retirement he was drawing salary of Rs. 4,000 per month as provided under Constitution. This Court in the case of Union of India vs Gurnam Singh(1) decided that under the ( 'Act ' for short), Judges were entitled to cash equivalent of leave salary in respect of the period of earned leave at their credit on the date of retirement as provided in Rule 20B of the All India Services (Leave) Rules, 1955 ( 'Leave Rules ' for short). The Accountant General of Madhya Pradesh authorised the petitioner to draw cash equivalent of leave, salary amount as to Rs. 15,240 by his communication dated July 17, 1982. The petitioner informed the Accountant General that he was drawing the amount as indicated in the communication without prejudice to his right to claim Rs. 24,000 to which sum under the law he was entitled. On July 19, 1982, the petitioner was authorised to draw a further sum of Rs. 750 thus in all Rs. 15,990 only. On February 2, 1983, the Union of India in the Ministry of Law, Justice & Company Affairs indicated to the several authorities including the Registrars of all the High Courts that while in view of the decision of this Court referred to above, the Central Government were advised that Judges of the High Courts were entitled to payment of cash equivalent of leave salary in respect of the period of earned leave at their credit, the expression 'earned leave ' does not occur in the Act. On the analogy of the Leave Rules the cash equivalent of leave salary to be paid would be the cash equivalent of the unutilised leave due on 855 full allowances as defined in sections 3 and 9 (1) of the Act. In making calculations of the cash equivalent of the leave salary the ceiling of five months mentioned in section 5 (3) of the Act would be applicable. Relying on the aforesaid letter of the Central Government, the Accountant General of Madhya Pradesh on March 25, 1983, intimated the petitioner that he was entitled to payment of cash equivalent of unutilised earned leave subject to the ceiling of five months; leave and, therefore, he had been paid an excess sum of Rs. 2,220 which should be refunded. That has led the petitioner to move this Court. Rule nisi was issued to the Union of India and this Court directed separate notice to the Attorney General. A return has been made to the rule by the Union of India. No dispute has been raised to payability of the cash equivalent on the basis of Rule 20B of the Leave Rules Reliance has been placed on the provisions of the Act to justify the circular letter of February 18, 1983. Learned Attorney General has been heard and he has furnished written submissions also. The decision of this Court in Gurnam Singh 's case has been accepted by the Union of India and steps have been taken to implement the same. In that case this Court held: ". . it must be regarded as a provision absorbed by rule 2 of the High Court Judges Rules, 1956, into the statutory structure defining the conditions of service of a Judge of a High Court. We may observe that even as a right to receive pension, although accruing on retirement, is a condition of service, so also the right to the payment of the cash equivalent of leave salary for the period of unutilised leave accruing on the date of retirement must be considered as a condition of service". Two questions require decision, viz., (1) whether in view of the provisions of section 5 (3) of the Act, the limit has to be confined to five months equal to 150 days and not 180 days as in Rule 20B; and (2) whether for calculating the equivalent of leave salary admissible to a Judge the provisions of section 9 (1) of the Act would apply ? We may now refer to rule 20B of the Leave Rules as also to the two provisions of the Act: 856 "20B Payment of cash equivalent of leave salary The Government shall suo motu sanction to a member of the service who retires from the service under sub rule (1) of rule 16 of the All India Services (Death cum Retirement Benefits) Rules, 1958, having attained the age of 58 years on or after the 30th September, 1977 the cash equivalent of leave salary in respect of the period of earned leave at his credit on the date of his retirement subject to a maximum of 180 days. " Section 5 (3) of the Act reads: "5 (3). Subject to the provisions of sub section (2) of section 5A, the maximum period of leave which may be granted at one time shall be, in the case of leave on full allowances, five months and in the case of leave with allowances of any kind, sixteen months. " Section 9 (1) provides: "9 (1). The monthly rate of leave allowances payable to a Judge while on leave on full allowances shall be for the first forty five days of such leave, a rate equal to the monthly rate of his salary, and thereafter two thousand two hundred and twenty rupees. Provided that where leave on full allowances is granted to a Judge on medical certificate the monthly rate of leave allowances shall, for the first one hundred and twenty days, of such leave, be a rate equal to the monthly rate of his salary." Chapter II of the Act deals with leave. Section 3 provides the kinds of leave admissible to a Judge. Section 4 makes provision for a leave account to be maintained. Section 5 deals with agree gate amount of leave which may be granted. Section 5A make provision for commutation of leave on half allowances into leave on full allowances while sections 6, 7 and 8 deal with grant of leave of specific kinds. These provisions in the Act deal with leave which has to be asked for and taken during the tenure of working as a Judge. Leave necessarily implies authorised absence from duty or employment (see Webster 's Third New International Dictionary). Rule 20B makes provision for payment of cash equivalent of leave 857 due under the appropriate provisions but subject to a maximum of 180 days. We have already indicated that the ratio of Gurnam Singh 's case has not been disputed. It would necessarily mean acceptance of the position that the Act did not make provision for payment of the retirement benefit contemplated under rule 20B; otherwise rule 20B could not have been applied. The scheme in rule 20B is that the payment would be made suo motu and without any application for it. Leave referred to under the Act is one which has to be asked for and is intended to meet a different situation. For calculating the benefits under rule 20B, section 5 (3) of the Act is not relevant and in case in the leave account maintained under section 4 of Act leave is due, the benefit under rule 20B has to be worked out subject to the upper limit of 180 days, equal to six months. The claim made by the petitioner that he was entitled to the benefit of six months is, therefore, justified subject, of course, to admissibility of leave to the extent of 180 days in the leave account. No dispute was raised before us that as a fact petitioner had to his credit more than 180 days of leave. Once we hold that the benefit under rule 20B is not controlled by Chapter II of the Act, the manner of calculation indicated in section 9 (1) of the Act would also apply. The petitioner would thus become entitled to cash equivalent of six months ' salary which would work out at Rs. 24,000. As he has been paid a sum of Rs. 15,990 he is entitled to Rs. 8,010. A writ in the nature of mandamus be issued to the Union of India to pay him the said amount within one month from today. Parties are left to bear their own costs before us. We would like to add that it is manifest that in view of the enunciation of law by us in this judgment, the principles governing the cash equivalent of leave would apply not only to the petitioner but also to Judges who have already retired or who may retire hereafter, from the date from which this facility was made available to the members of the Central Services holding the rank of Secretary to the Government of India or its equivalent. H.S.K. Petition allowed.

In Union of India vs Gurnam Singh ; , this Court decided that under the Judges were entitled to cash equivalent of leave salary in respect of the period of earned leave at their credit on the date of retirement as provided under rule 20B of the All India Service (Leave) Rules, 1955. The two question which arose for consideration in this petition under article 32 filed by a retired Chief Justice of Madhya Pradesh High Court were (1) whether in view of the provisions of section 5(3) of the Act, the limit has to be confined to five months equal to 150 days and not 180 days as in Rule 20B; and (2) whether for calculating the equivalent of leave salary admissible to a Judge the provisions of section 9 (1) of the Act would apply ? Allowing the petition and answering the questions in the negative. ^ HELD: The ratio of Gurnam Singh 's case has not been disputed. It would necessarily mean acceptance of the position that the Act did not make provision for payment of the retirement benefit contemplated under rub 20B; otherwise rule 20B could not have been applied. For calculating the benefits under rule 20B, section 5 (3) of the Act is not relevant and in case in the leave account maintained under section 4 of the Act leave is due, the benefit under rule 20B has to be worked out subject to the upper limit of 180 days, equal to six months [857 B C] Once it is held that the benefit under rule 20B is not controlled by Chapter II of the Act, the manner of calculation indicated in section 9 (1) of the Act would also not apply. [857 E] The principles governing the cash equivalent of leave would apply not only to the petitioner but also to Judges who have already retired or who may retire hereafter, from the date from which this facility was made available to the members of the Central Services holding the rank of Secretary to the Government of India or its equivalent. [857 E G] 854

iminal Appeal No. 278 of 1975. Appeal by special leave from the judgment and order dated the 16th October, 1974 of the Madhya Pradesh High Court in Misc. Criminal Case No. 786 of 1974. Gopal Subramaniam for the Appellant. P.D. Sharma, for the Respondent. The Judgment of the Court was delivered by: SEN, J. The short question involved in this appeal by special leave from the judgment and order of the Madhya Pradesh High Court is, whether an application for 'leave ' to appeal under sub section (3) of section 378 of the Code of Criminal Procedure, 1973 (hereinafter referred to as 'the Code '), without which no appeal under sub section (1) or sub section (2) thereof can be entertained, being an integral part of the appeal must be laid before a Bench of two Judges of the High Court, under r. 1 (q) (ii), Chap. I, Part I, of the Madhya Pradesh High Court Rules, or can be heard and disposed of by a Single Judge of the High Court under r. 1 (q) of the Rules. The material facts giving rise to the appeal are these. The State Government of Madhya Pradesh having decided to prefer an appeal under sub section (1) of section 378 of the Code, filed an application for 'leave ' to appeal under sub section (3) thereof, setting out therein the grounds of appeal. According to the practice prevalent in the Madhya Pradesh High Court, the application was listed before a Single Judge, as per rule 1 (q), Chapter I, Part I of the Madhya Pradesh. High Court Rules, The learned Single Judge refused to grant leave to appeal under sub section (3) of section 378 on the ground that the judgment of acquittal was based on appreciation of evidence and was not perverse or unreasonable. The State Government applied for grant of a certificate under article 134 (1) (c) of the Constitution. The application for grant of a certificate was placed before and heard by a Division Bench. The contention on behalf of the State Government was that an application for grant of leave under sub section (3) of section 378 of the Code must be treated as a part of the appeal preferred by the State Government under sub section (1) thereof, and 84 therefore, should have been placed before a Bench of two Judges and consequently the order of the learned Single Judge rejecting the application for grant of leave under sub section (3) of section 378 of the Code was a nullity. The Division Bench, following the decision of another Division Bench in the State of Madhya Pradesh vs Narendrasingh, rejected the contention of the State that the learned Single Judge had no jurisdiction to entertain or decide the application for leave to appeal under sub section (3) of section 378 of the Code. It however, noticed the incongruity of the requirement that an appeal under sub section (1) or sub section (2) of section 378 should be placed before a Bench of two Judges under r. 1 (q) (ii) of the Madhya Pradesh High Court Rules and the hearing and disposal of an application for leave under sub s (3) thereof should be by a Single Judge, and observed: "The matter is being examined by the rule making Committee. It is rather anomalous that under rule 1 (q) item (ii) of Chapter I of the Madhya Pradesh High Court Rules, an appeal against acquittal filed by the State Government has to be heard by a Division Bench, still the application for leave under section 378 (3) of the Code should be laid before a Single Judge. " As the case involved an important question relating to procedure and practice, and as the correctness of the decision of the High Court in Narendrasingh 's case was open to question, special leave was granted by this Court. It appears that a practice was prevalent in the Madhya Pradesh High Court, requiring the State Government or the Central Government, desirous of preferring an appeal under sub section (1) or sub section (2) of section 378 of the Code, to make an application for leave under sub section (3) thereof, and it was registered as a Miscellaneous Criminal Case and treated as a petition and as such placed before a Single Judge for hearing as per r. 1 (q), Chap. I, Part 1, of the Madhya Pradesh High Court Rules. It was only when the Single Judge granted leave to appeal under sub section (3), that the petition for Leave was registered as a Criminal Appeal and placed before a Division Bench for admission under sub section (1) of section 384 of the Code. 85 The contention that there was inherent lack of jurisdiction on the part of a Single Judge to hear and decide an application for leave under sub section (3) of section 378 of the Code and, therefore, the proceedings were null and void is based on the provisions contained in r. 1 (q)(ii), Chap. I, Part I, of the Madhya Pradesh High Court Rules, which read as follows: "l. The following matters shall ordinarily be heard and disposed of by a Judge sitting alone: xx xx xx xx (q) An appeal, petition or reference under the Code of Criminal Procedure, other than; xx xx xx xx (ii) an appeal by the Provincial Government under section 417 of the Code from an order of acquittal. " The heading of Chap. I in which the rule finds place is "Jurisdiction of a Single Judge and of Benches of the Court. " It is urged that any breach of the rule would render the judgment a nullity. Rule 4 of the said Rules provides that 'Save as provided by law or by rules or by special orders of the Chief Justice, all matters shall be heard and disposed of by a Bench of two Judges '. By reason of section 8 (2) of the , reference to an appeal against acquittal under section 417 (1) of the Code of Criminal Procedure, 1898 (hereinafter referred to as 'the old Code ') by the Provincial Government has to be read as an appeal against acquittal by the State Government under sub section (1) of section 378. It is contended on behalf of the State Government that the making of an application for leave under sub section (3) of s 378 of the Code is tantamount to filing an appeal under sub section (1) thereof, and the High Court can grant leave and entertain the appeal at one and the same time, inasmuch as such an application by the State Government under sub section (3) is transmuted into an appeal against acquittal under sub section (1) of section 378, when leave is granted under sub section (3) and, therefore, the application for leave under sub section (3) had to be heard by a Bench of two Judges. It is urged that a com 86 parison of the language employed in sub sections (3) and (4) of section 378 would make it clear that the Parliament never intended, in the case of an acquittal, that the State Government should first make an application for leave under sub (3) of section 378, and then, if leave is granted, present an appeal under sub section (1) of section 378. It is further urged that the jurisdiction of a Single Judge is limited by the words 'other than ' in r. 1 (q) of the Madhya Pradesh High Court Rules, and an appeal preferred by the State Government under sub section (1) of section 37.8 of the Code could be heard and decided only by a Bench of two Judges as required by r. 1 (q) (ii) of the Rules. The submission advanced on behalf of the respondents, on the other hand, is that the introduction of the new provision in sub section (3) of section 378 and the use of the words 'leave of the High Court ' and the word 'entertained ' clearly indicates the legislative intent to prescribe for two different stages: (1) the making of an application for leave under sub section (3) of section 378, and (2) then, if leave is granted, presenting the petition of appeal under section 382 of the Code. It is urged that the State Government must obtain 'leave ' of the High Court under sub section (3) of section 3.78, before an appeal against acquittal is preferred under sub section (1) thereof, as in the case of a private complainant under sub section (4) of section 378, and the difference in language in sub section (3) and sub section (4) is of little consequence. In Narendrasingh 's case, the State Government being. desirous of preferring an appeal against acquittal under sub section (1) of section 378, made an application for grant of leave under sub section (3) and the proposed memorandum of appeal was annexed thereto. An application was filed on behalf of the State Government stating that the prayer for grant of leave under sub section (3) be treated as a part of the appeal itself and not separately. It was further prayed that the case, which had originally been registered as a Miscellaneous Criminal Case relating to the grant of leave, should be registered as a 'Criminal Appeal '. The matter was, therefore, placed before a Division Bench. The learned Judges of the High Court referred to the report of the Law Commission and observed that the legislative object in re enacting the provisions of section 417 of the old Code with the addition of the new provision contained in sub section (3) 87 of section 378 of the Code, was that there had to be a further scrutiny of a State appeal by the Court even prior to the stage of admission, requiring the Court to consider at the very outset whether the appeal should be entertained or not. It was only after the appeal was entertained with the 'leave ' of the Court that it had to be heard for admission and it may be dismissed summarily without notice to the other side. It was further observed that the legislature brought about the change while accepting the recommendation of the Law Commission to retain the power of the High Court to dismiss State appeals summarily without notice to the respondents. In substance, the decision in Narendrasingh 's case, as expressed in the words of the learned Judges, may be thus stated: "(A) the very outset on an appeal against acquittal being lodged by the State, the High Court is to consider whether leave should be granted or not. It is only when leave is granted under section 378(3) that the appeal is entertained. On the appeal being so entertained as a con sequence of the grant of leave, it is to be listed for admission and in case it is not dismissed summarily under section 384 (1) notice is to be issued to the accused under section 385 (1) (iv). xx xx xx xx The appeal being entertained only on the grant of leave under sec. 378 (3), the matter relating to grant of leave has to be ordinarily heard and disposed of by a Single Bench of this Court according to Rules. The appeal itself being entertained only when leave is granted, there is, in fact, no appeal as such till the leave is granted, even though it may have been lodged while praying for leave. The matter has, therefore, to be initially registered only as a 'Miscellaneous Criminal Case ' and it is only when the leave is granted resulting in the appeal being entertained that it can be registered as a criminal appeal. Thereafter it has to be listed before the Division Bench for admission. " In making these observations the learned Judges appear to have been swayed by a practice which was prevalent in their Court. 88 The jurisdiction of the Court in these matters is, however, statutory and the Court is not entitled to go outside the provisions of a statute but must interpret them as they are. The answer to the question involved must turn on a proper construction of sub section (3) of section 378 of the Code. Section 378 of the Code corresponds to section 417 of the old Code, as amended in 1955. Sub section (1) of section 378 of the Code is in terms the same as sub section (1) of section 417 of the old Code and it provides that 'Save as otherwise provided in sub section (2) and subject to the provisions of sub sections (3) and (5), the State Government may, in any case, direct the Public Prosecutor to present an appeal to the High Court from an original or appellate order of acquittal passed by a court other than a High Court '. Sub section (2) of section 378 corresponds to sub section (2) of section 417 and confers the right of appeal on the Central Government in certain class of cases subject to the provisions of sub section (3) from such an order of acquittal. Sub section (3) of section 378 is a new provision inserted to implement the recommendation of the Law Commission made in its 48th Report on Appeals against Acquittals, and provides that: "3. No appeal under sub section (1) or sub section (2) shall be entertained except with the leave of the High Court. " Sub section (4) and sub section (5) deal with an order of acquittal passed in any case instituted upon a complaint. Sub section (4) provides that if an order of acquittal is passed in such a case, and the High Court on an application made to it by the complainant in that behalf, grants 'special leave ' to appeal from the order of acquittal, the complainant may present such an appeal to the High Court. Sub section (5) provides for two distinct periods of limitation. No application under sub section (4) for grant of special leave to appeal from an order of acquittal in a complaint case shall be entertained by the High Court at the expiry of six months where the complainant is a public servant and sixty days in other cases computed from the date of the order of acquittal. There is no period of limitation prescribed for presenting an application for grant of leave to appeal under sub section (3) of section 378 from an order of acquittal passed in a case instituted otherwise than upon a complaint, obviously because the Code does not contemplate the making of an application for leave under sub section (3) of section 378 of the Code. Thus, the period of limita 89 tion in such a case, is for an appeal from an order of acquittal Under sub section (1) or sub section (2) of section 378 of the Code, as prescribed by article 114 of the . The period of limitation prescribed therefor is sixty days from the date of the order appealed from. Under the scheme of the Code, the State Government or the Central Government may prefer an appeal under sub section (1) or sub section (2) of section 378 of the Code, but such appeal shall not be entertained unless the High Court grants 'leave ' under sub section (3) thereof. The words 'No appeal under sub section (1) or sub section (2) shall be entertained ' used in sub section (3) of section 378 create a qualified bar to the entertainment of an appeal filed by the State Government or the Central Government under sub section (1) or sub section (2) from an order of acquittal passed in a case instituted otherwise than upon a complaint. The Code, by enacting sub section (3) of section 378, therefore, brought about a change in that there is no longer an unrestricted right of appeal against the orders of acquittal passed in such cases. The making of an application for grant of leave to appeal by the State Government or the Central Government under sub section (3) of section 378 is, however, not a condition precedent to the entertainment of such an appeal. The prayer for grant of leave under sub section (3) may, as it should, be contained in the petition of appeal filed under section 382 of the Code. There is no warrant for the view expressed by the High Court in Narendrasingh 's case that the legislative object in re enacting the provisions of section 417 of the old Code with the addition of the new provision contained in sub section (3) of section 378 of the Code, was that there was to be a preliminary scrutiny of a State appeal by the Court even prior to the stage of admission, requiring the Court to consider at the very outset whether the appeal should be entertained or not, and that it was only after the appeal was entertained with the leave of the Court that it was to be heard for admission under sub section (1) of section 384 read with sub section (1) of section 385 of the Code. The High Court appears to rest its decision more on the Report of the Law Commission than the actual language of sub section (3) of section 378 of the Code, in coming to the conclusion that sub section (3) contemplated two stages. Sub section (3) of section 378 is not susceptible of any such construction. The Law Commission in its 48th Report had observed. 90 "While one may grant that cases of unmerited acquittals do arise in practice, there must be some limit as to the nature of cases in which the right should be available." And, keeping in view the general rule in most common law countries not to allow an unrestricted right of appeal against acquittals, it recommended: "With these considerations in view, we recommend that appeals against acquittals under section 417, even at the instance ' of the Central Government or the State Government, should be allowed only if the High Court grants special leave. It may be pointed out that even now the High Court can summarily dismiss an appeal against an acquittal, or for that matter, any criminal appeal. (Section 422, Criminal P.C.). Therefore, the amendment which we are recommending will not be so radical a departure as may appear at the first sight. It will place the State and the private complainant on equal footing. Besides this, we ought to add that under section 422 of the Code, it is at present competent to the appellate Court to dismiss the appeal both of the State and of the complainant against acquittal at the preliminary hearing. " The recommendations of the Law Commission were not, however, fully carried into effect. Sub section (3) of section 378 of the Code was introduced by Parliament to create a statutory restriction against entertainment of an appeal filed by the State Government or the Central Government under sub section (1) or sub section (2) of section 378 from an order of acquittal passed in a case instituted otherwise than upon complaint. At the same time, Parliament re enacted sub sections (3) and (4) of section 417 as sub sections (4) and (5) of section 378, which deal with an order of acquittal passed in any case instituted upon a complaint. The result of this has been that there is a difference in the procedure regulating entertainment of State appeals against acquittals under sub section (1) or sub section (2) of section 378 and appeals against acquittals filed by a complainant under sub section (5) of section 378. On a comparison of the language employed in sub section (3) and sub section (4) of section 378, it is clear that the legislature has chosen to treat State appeals in a manner different 91 from appeals by a complainant in the matter of preferring appeals against acquittals. In the case of an appeal from an order of acquittal passed in a case instituted otherwise than upon complaint preferred by the State Government or the Central Government under sub section (1) or sub section (2) of s 378, the Code does not contemplate the making of an application for leave under sub section (3) thereof, while the making of an application under sub section (4) of section 378 is a condition precedent for the grant of 'special leave ' to a complainant under sub section (5), The difference in language used in sub section (3) and sub section (4) of section 378 manifests the legislative intent to preserve a distinction between the two classes of appeals by prescribing two different procedures in the matter of entertainment of appeals against acquittals. It, therefore, follows that the State Government or the Central Government may, while preferring an appeal against acquittal under sub section (1) or sub section (2) of section 378, incorporate a prayer in the memorandum of appeal for grant of leave under sub section (3) thereof, or. make a separate application for grant of leave under sub section (3) of section 378, but the making of such an application is not a condition precedent for a State appeal. In the State of Rajasthan vs Ramdeen & Ors., this Court dealt with a case where the Rajasthan High Court granted the State Government leave to appeal under sub section (3) of section 378 of the Code, but dismissed the appeal filed thereafter on the ground that it had not been filed within ninety days from the judgment appealed from and was therefore barred by limitation under article 114 of the . The application for grant of leave under sub section (3) contained all the requisites of a memorandum of appeal and had been filed within ninety days from the date of order of acquittal but was not accompanied by a petition of appeal. It was held that an appeal under sub section (1) of section 378 was an integral part of an application for leave to appeal under sub s (3): Accordingly, the order passed by the High Court dismissing the appeal as barred by limitation was set aside. In dealing with the question, it was observed: "Under the law it will be perfectly in order if a composite application is made giving the necessary facts and circumstances of the case along with the grounds which may be urged in the appeal with a prayer for leave to enter 92 tain the appeal. It is not necessary, as a matter of law, that an application for leave to entertain the appeal should be lodged first and only after grant of leave by the High Court an appeal may be preferred against the order of acquittal. If such a procedure is adopted, as above, it is likely, as it has happened in this case, the appeal may be time barred if the High Court takes more than ninety days for disposal of the application for leave. The possibility that the High Court may always in such cases condone the delay on application filed before it does not, in law, solve the legal issue. The right conferred by section 378 (1), Cr. P.C., upon the State to prefer an appeal against acquittal will be jeopardised if such a procedure is adopted, for in certain cases it may so happen that the High Court may refuse to exercise its discretion to condone the delay. The right conferred under the section cannot be put in peril by an interpretation of section 378 Cr. P.C., which is likely to affect adversely or even perhaps to destroy that right. " The view expressed by the High Court in Narendrasingh 's case being in conflict with the decision of this Court in Ramdeen 's case must be overruled. It must accordingly be held that the learned Single Judge had no competence to entertain, hear or dispose of the question of grant of leave under sub section (3) of section 378, as it had virtually entailed dismissal of the appeal preferred by the State Government under sub section (1) thereof. The matter should have been dealt with by a Bench of two Judges in terms of r. 1 (q) (ii), Chap. 1, , of the Madhya Pradesh High Court Rules. The question at issue has now become academic. As already stated, the High Court while refusing the grant of certificate of fitness, had adverted to the fact that the matter was being examined by the Rule Making Committee. It has since amended r. 1 (q) and made a distinction between appeals from orders of acquittals under sub section (1) of section 378 in respect of: (1) offences punishable with sentence of death or imprisonment for life and triable by Court of Sessions, and (2) other offences. All appeals falling under category (1), together with applications for leave under sub section (3) of section 378, have to be heard by a Bench of two Judges, and other appeals falling under category (2), together with applications for leave under sub s, (3) of section 378, are to be heard by a Single Judge. 93 In the result, the appeal must succeed and is allowed. The order passed by the High Court, dismissing the application for leave under sub section (3) of section 378 of the Code of Criminal Procedure, 1973, filed by the State Government of Madhya Pradesh, is set aside, and it is directed that the application shall be dealt with by a Bench of two Judges as required by r. 1 (q) (ii), Chap. I, Part I, of the Madhya Pradesh High Court Rules, prior to its amendment. H.L.C. Appeal allowed.

The Code of Criminal Procedure, 1973, provides inter alia, by sub section (3) of section 3.8 that no appeal against an order of acquittal passed by a lower court shall be entertained under sub section (1) or sub s.(2) except with the leave of the High Court. A practice was prevalent in the Madhya Pradesh High Court, requiring the State Government or the Central Government, desirous of preferring an appeal under sub section (1) or sub section (2) of section 378 of the Code, to make an application for leave under sub section (3) thereof, and it was registered as a Miscellaneous Criminal Case and treated as a petition and as such placed before a Single Judge for hearing as per r. 1 (q), Chapter I, Part I, of the Madhya Pradesh High Court Rules. It was only when the Single Judge granted leave to appeal under sub section (3), that the petition for leave was registered as a Criminal Appeal and placed before a Division Bench for admission under sub section (1) of section 384. The State Government of Madhya Pradesh having decided to prefer an appeal under sub section (1) of section 378 filed an application for leave to appeal under sub section (3) setting out therein the grounds of appeal and the Single Judge who heard it refused to grant the leave. The State Government made an application for grant of certificate under Article 134 (1) (c) of the Constitution. The application was heard by a Division Bench. The contention was that there was inherent lack of jurisdiction on the part of the Single Judge to hear and decide an application for leave under sub section (3) of section 378 of the Code, inasmuch as under r. 1 (q) (ii) of the Madhya Pradesh High Court Rules, Chapter I, Part 1, the matter had to be dealt with by a Bench of two Judges. The High Court, following its earlier decision in State of Madhya Pradesh vs Narendrasingh, (1974) MPLJ (N) 102, rejected the contention, holding that the State had to obtain 'leave ' of the High Court under sub section (3) of section 378, before an appeal against acquittal was preferred under sub section (1) thereof and therefore the learned Single Judge had jurisdiction to deal with tho application for leave under sub section 82 In appeal to this Court the State Government contended that the making of an application for leave under sub section (3) of section 378 is tantamount to filing an appeal under sub section (1) thereof, that the High Court could grant leave and entertain the appeal at one and the same time inasmuch as an application under sub section (3) would be transmuted into an appeal under sub section (1) when leave is granted under sub section (3) and, therefore, the application for leave under sub section (3) must have been laid before a Bench of two Judges under r. 1 (q) (ii) of the High Court Rules. Allowing the appeal, ^ HELD: 1. An application for 'leave ' to appeal under sub section (3) of section 378 without which no appeal under sub section (I) or sub section (2) thereof can be entertained, being an integral part of the appeal, must be laid before a Bench of two Judges of the High Court under r. 1 (q) (ii), Chapter I, Part I of the Madhya Pradesh High Court Rules (as it stood before the amendment) and could not be heard and disposed of by a Single Judge of the High Court under r. 1 (q) of the Rules, as it stood prior to its amendment. [92 E F; 83 D] 2. Sub section (3) of section 378 was introduced by Parliament to create a statutory restriction against entertainment of an appeal filed by the State Government or the Central Government under sub section (1) or sub section (2) thereof from an order of acquittal passed in a case instituted otherwise than upon a complaint. T here is a difference in the procedure regulating entertainment of State appeals under sub section (1) or sub section (2) of section 378 and appeals against acquittals filed by a complainant under sub section (4) of section 378. On a comparison of the language employed in sub section (3) and sub section (4) of section 378, it is clear that in the case of an appeal by the State Government or the Central Government under sub section (1) or sub section (2), the Code does not contemplate the making of. an application for leave under sub section (3) while making of an application under sub section (4) is a condition precedent for the grant of special leave to a complainant under sub section The difference in language used in sub section (3) and sub section (4) of section 378 manifests the legislative intent to preserve a distinction between the two classes of appeals by prescribing two different procedures in the matter of entertainment of appeals against acquittals. While a period Of limitation has been prescribed in sub section (5) of section 378 for an application of the complainant under sub section (4), there is no period of limitation prescribed for an application for grant of Leave to appeal under sub section (3), obviously because the Code does not contemplate the making of an application for leave under sub section (3) of section 378. It, therefore, follows that the State Government or the Central Government may, while preferring an appeal under sub section (1) or sub section (2) of section 378 incorporate a prayer in the memorandum of appeal for grant of leave under sub section (3) thereof, or make a separate application for grant of leave under sub section (3) of section 378, but the making of such an application is not a condition precedent for a State appeal. [90 F H; 91 A C; 88 G H; 91 C D] State of Madhya Pradesh vs Narendra Singh, [1974] MPLJ (N) 102 over ruled. State of Rajasthan vs Ramdeen & ors. [1977] 3 S.C.R. 139 relied on. 83

Civil Appeal No. 6 of 1976. From the Judgment and Order dated 12.11.1973 of the Madras High Court in Writ Appeal No. 390 of 1969. V.C. Mahajan, C.V. Subba Rao and K.M.M. Khan for the Appellants K.N. Bhat and Vineet Kumar for the Respondent. PG NO 1053 The Judgment of the Court was delivered by SHARMA, J. This appeal arises out of a writ application allowed by the Madras High Court striking down Clause (a) of the Proviso (3) of the Notification dated the 1st March, 1964 issued by the Union of India in the Ministry of Finance, under Rule 8(1) of the Central Excise Rules, 1944 and granting consequential relief. The aforesaid notification granted certain exemptions from payment of excise duty, but the benefit was denied to the writ petitioner, respondent before this Court, in view of the impugned clause. The respondent assessee, a business concern functioning under the name of M/s. Dhanalakshmi Paper and Board Mills, decided to set up a factory for the manufacture of paper and paper boards and allied products, and obtained a lease of certain premises in June 1963 and put up a suitable structure for the factory by August 1963. The necessary machineries for running the factory, however, were received in April 1964 and application for licence therefor was filed on 27.4.1964. The licence was granted on 6.5.1964 and production in the factory started the next day, i.e. 7.5.1964. The respondent claimed that the duty in respect of the paper boards manunactured in the factory during the period 7.5.1964 to June 1966 was payable at the concessional rate allowed by the Notification, relevant portion whereof reads as follows: GOVERNMENT OF lNDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) NEW DELHI,THE 1ST MARCH, 1964/PHALGUNA 11, 1885 (SAKA) NOTIFICATION CENTRAL EXCISE CSR: In exercise of the powers conferred by Sub rule (1) of Rule 8 of the Central Excise Rules, 1944, and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 57/60 Central Excise dated 20th April. 196() and No. 37/63 Central Excise dated the 1st March, 1963 the Central Govt. hereby exempts strawboard and pulpboard including, greboard, calling under Sub item (3) of Item No. 17 of the First PG NO 1054 Schedule to the (1 of 1944), takes together up to the quantity prescribed in column (1) of Table 1 (omitted), cleared by any manufacturer for home consumption during any financial year, from so much of the leviable thereon as is in excess of the amount specified in the corresponding entry in column (2) of the same Table: TABLE 1 (being not relevant, omitted) Provided that (1). . . . . . (2) . . . . . . . TABLE 2 (being not relevant, omitted) (3) nothing contained in this notification shall apply to a manufacturer who applied or applies for a licence on or after the 9th day of November 1963, unless he satisfies the Collector of Central Excise (a) that the factory for which the licence was or is applied for was owned on the 9th day of November, 1963, by the applicant;" The benefit of the Notification claimed by the respondent assessee was denied by the appellants on the ground that the factory did not come into existence on or before the 9th day of November, 1963, the date mentioned in the impugned clause (a). The respondent moved the High Court in its writ jurisdiction under Article 226 of the Constitution, and the application was allowed by a learned Single Judge. An appeal therefrom under Clause 15 of the Letters Patent was dismissed in limine. The appellants have by special leave challenged the decision before this Court. The ground urged on behalf of the assessee which found favour with the High Court is arbitrary nature of the date, '9th of November, 1963 ' mentioned in the impugned clause (a). It has been contended that the said date does not have any significance whatsoever and does not bear any rational relationship to the object sought to be achieved by the Notification. The learned counsel for the appellant defended the validity of the impugned provision on the ground that the date (9.11.1963) was selected because an PG NO 1055 earlier notification bearing No. 110 had required applications to be made on or after 9.11.1963. This notification is not on the records of the case and the learned counsel has stated th8t he has also not been able to examine the same inspite of his unsuccessful request to the Department concerned for a copy thereof. He has mentioned about this notification in his argument on the basis of the reference in the judgment of the High Court. The High Court judgment does not throw any light on the nature of the notification No. 110, and the learned counsel could not draw any inference about its provisions from the judgment. It is not claimed that the said notification was before the High Court or the Judges had any occasion to examine it. The present appeal was filed in 1976 and even now the learned counsel for the appellants is not in a position either to produce it or to tell us what it was about. The result is that no explanation for the choice of the date in clause (a) is forthcoming. Sri V.C. Mahajan, learned counsel for the appellants, contended that a statutory provision has necessarily to be arbitrary in the choice of date and it cannot be challenged on that ground. He relied upon the observations of this Court in Union of India vs M/s Parmeswaran Match Works etc., 119751 2 SCR 573 (at page 578) as quoted below: "To achieve that purpose, the Government chose September 4, 1967, as the date before which the declaration should be filed. There can be no doubt that any date chosen for the purpose would to a certain extent, be arbitrary. That is inevitable" Reliance was also placed on Jagdish Pandey vs The Chancellor, University of Bihar and Another, and U.P.M. T.S.N.A. Samiti, Varanasi vs S ate of U. P. and Others, We are afraid, the argument has no merit and has to be rejected. In Union of India vs M/s P. Match Works, (supra) the question related to concessional rate of excise duty leviable on the manufacture of match boxes. Match factories were classified on the basis of their output during the financial year and matches produced in different categories of factories were subject to varying rates of dutyhigher rate being levied on matches produced in factories having higher output. In pursuance of a change in the policy, the match factories were later classified as mechanised units and non mechanised units and by a notification dated July ' PG NO 1056 l, 1967 a concessional rate of duty was allowed in respect of units certified according to the provisions therein. The notification also contained a proviso. The purpose of these provisions was to grant the benefit of concessional rate of duty only to small manufacturers. This Court while analysing the notification observed that the proviso "would have defeated the very purpose of the notification, namely, the grant of concessional rate of duty only to small manufacturers". In order to cure this self defeating position, the notification dated July 21, 1967 was amended by Notification No. 205 of 1967 dated September 4, 1967. The latter notification mentioned the 4th September, 1967 as the cut off date. The attach on the choice of this date was met by the observations relied upon by the learned counsel for the appellants and quoted earlier. It will be observed that the date, September 4, 1967, was the date on which the amending Notification itself was issued. The crucial date, therefore, could not be condemned as one "taken from a hat ' . It was the date of the notification itself. A rule which makes a difference between past and present cannot be condemned as arbitrary and whimsical. In cases where choice of date is not material for the object to be achieved, the provisions are generally made prospective in operation. In that sense this Court observed in M/s P. Match Works case that the date chosen would to a certain extent be arbitrary and this was inevitable. In the present case the relevant Notification was dated March 1, l964 and not 9.11.1963. It is true that as mentioned in the High Court judgment some other notification required applications referred therein to be made on or after ',h 11.1963, but unless the nature and contents of that notification and its relevance with reference to the present notification are indicated, it is futile to try to defend the choice of the date on its basis. The appellants have miserably failed to do so. inspite of more than a decade available to them 6. The other two cases relied upon On behalf of the appellants instead of supporting their case. indicate that the view taken by the High Court is correct in U.P.P.M.T.S.N.A. Samiti,Varanasi vs State of U.P. and Others (supra) this Court observed in paragraph l of the judgment: "The legislature could not arbitrarily adopt January 1984, as the cut off date . " After examining the circumstances of the case it was held in paragraph 2: "We agree with the High Court that fixation of the date January 3 1984 for purposes of regularisation was not arbitrary or irrational but had a reasonable nexus with the object sought to be achieved. " PG NO 1057 Similarly in Jagdish Pandey vs The Chancellor, University of Bihar and Another it was held: "There is no doubt that if the dates are arbitrary, section 4 would be violative of article 14 for then there would be no justification for singling out a class of teachers who were appointed or dismissed etc. between these dates and applying s.4 to them while the rest would be out of the purview of that section . The Court then proceeded to examine the purpose of the legislation and the attendant circumstances and upheld the section 7. Another learned counsel who appeared on behalf of the appellants for the final reply placed reliance on paragraphs 38, 44 and 45 of the judgment in Dr. Sushma Sharma and Others vs State of RaJasthan and Others, [1985] SUPP. SCC 45. In paragraph 38 it was said that wisdom or lack of wisdom in the action of Government or Legislature is not justiciable by the Court, and to find fault with the law is not to demonstrate its invalidity. We are afraid, this aspect is wholly irrelevant in the case before us. In paragraph 44, the Case of Union of India vs M/s. P. Match Works Ltd., already discussed above. was mentioned. In paragraph 45 the case of D.S.Nakara vs Union of India, [1983] I SCC 305, was distinguished in the following words: "But as we have mentioned hereinbefore, Nakara case dealt with the problem of benefit to all pensioners. The choice of the date of April l. 1979 had no nexus with the purpose and object of the Act. The facts in the instant case are, however, different." In the present case also benefit of concessional rate was bestowed upon the entire group of assesses referred therein and by clause (a) of Proviso (3) the group was divided into two classes without adopting any differentia having a rational relation to the object of the Notification, and the benefit of one class was withdrawn while retaining it in favour of the other. It must, therefore, be held that the impugned clause (a) of the Proviso (3) of the Notification in question is ultra vires and the benefit allowed by Notification is available to the entire group including the respondent. We, therefore, hold, There is no merit in this appeal which is dismissed without costs. R.S.S. Appeal dismissed.

The respondent assessee built up a factory for the manufacture of paper and paper boards, which started production on 7.5.1964. The respondent claimed that the duty in respect of the paper boards manufactured in the factory during the period 7.5.1964 to June 1966 was payable at the concessional rates allowed by the Government of India notification dated 1st March, 1964. The claim was however rejected by the Revenue on the ground that the factory had not come into existence on or before the 9th day of November, 1963 as stipulated in clause (a) of Proviso (3) of the said notification. The respondent 's writ application before the High Court was allowed by the Single Judge and the appellant 's Letters Patent appeal was dismissed in limine. The High Court has accepted the respondent 's contention that the date '9th of November, 1963 ' mentioned in the notification was arbitrary. On behalf of the Revenue it was contended that the date (9.11.1963) was selected because an earlier notification bearing No. 110 had required applications to be made on or after 9.11.1963. It was further contended that a statutory provision had necessarily to be arbitrary in the choice of date and it could not be challenged on that ground. On behalf of the respondent it was contended that the said date did not have any significance whatsoever and did not bear any rational relationship to the object sought to be achieved by the notification. PG NO 1051 PG NO 1052 Dismissing the appeal, it was HELD: 1. A rule which makes a difference between past and present cannot be condemned as arbitrary and whimsical. [1056D] 2. In cases where choice of the date is not material for the object to be achieved. the provisions are generally made prospective in operation. [1056D] 3. The Revenue has not been able to produce notification No. l 10. Unless the nature and contents of notification No. 110 and its relevance with reference to the present notification are indicated, it is futile to try to defend of the choice of the date in clause (a) on its basis. [1055A;1056E] 4. In the present case, the benefit of concessional rate was bestowed upon the entire group of assesses referred therein and by clause (a) of Proviso (3) the group was divided into two classes without adopting any differentia having a rational relation to the object of the Notification. [1057F] 5. Clause (a) of the Proviso (3) of the Notification was ultra vires and the benefit allowed by the Notification would be available to the entire group including the respondent. [1057G] Union of India vs M/s. P. Match Works [1975]2 SCR 573 Jagdish pandey vs The chancellor, University of Bihar. [19681 I SCR 237 and U.P. M. T. S.N.A. Samiti, Varanasi vs State of U.P.,[1987]2 SCR 453, distinguished. Dr .Sushma Sharma vs State of Rajasthan, [1985] Supp. SCC 45; and D.S. Nakara vs Union of lndia, [1983] I SCC 365 referred to.

minal Appeal No. 131 of 1967. Appeal from the judgment and order dated January 9, 1967 of the Judicial Commissioner 's Court Tripura, Agartala in Criminal Appeal Case No. 8 of 1963. M. K. Ramamurthi, J. Ramamurthi and Vineet Kumar, for the appellant. H. R. Khanna and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Dua, J. Pursuant to a complaint by Shri Joy Shanker Bhattacharyya, the appellant Sushil Kumar Gupta was tried in the court of Assistant Sessions Judge, Tripura on the following charges "(1) That you in between the month of September, 1958 and July, 1959 at Agarwala P. section Kotwali being a servant viz. Secretary in the employment of the Tripura Central Marketing Co operative Society Ltd., and in such capacity entrusted with certain property to wit a total sum of Rs. 18,200 being the fund of the Society committed criminal breach of trust in respect of the said property and thereby committed an offence punishable under section 408 of the Indian Penal Code and within the cognizance of this Court. Secondly : that you in between the period of September, 1958 and July, 1959 at the same place being a Secretary in the employment of the Tripura Central Marketing Co operative Society Ltd., wilfully and with intent to defaud, falsified certain books and other relevant papers to wit cash book etc., which belonged to the said society, your employer and thereby committed an offence punishable under section 477 A of the Indian Penal Code and within the cognizance of this Court. " As the appellant was tried jointly along with five others who have been acquitted and as if was argued on behalf of the appellant that in view of the acquittal of his co accused the appellant 772 also should have been acquitted, the charges against them may also be reproduced : "That Sushil Kumar Gupta, Secretary of the Tripura Central Marketing Co operative Society Ltd., in between the period of September, 1958 and July, 1959 at Agartala p.s. Kotwali committed the offence of criminal breach of trust in respect of Rs. 18, 200 and that you the aforesaid persons at the same place and time abetted the said Shri. Sushil Kumar Gupta in the commission of the same offence of criminal breach of trust in respect of the said amount which was committed in consequence of your abetment and that you have thereby committed an offence punishable under section 109, I.P.C. read with section 408, I.P.C. and within my cognizance. Secondly : that Shri Sushil Kumar Gupta, Secretary of the Tripura Central Marketing Co operative Society Ltd. in between the period of September, 1958 and July, 1959 at Agartala p.s. Kotwali committed the offence of falsification of accounts and that you the aforesaid persons at the same place and time abetted the said Shri Sushil Kumar Gupta in the commission of the same offence of falsification of account which was committed in consequence of your abetment and that you have thereby committed an offence punishable u/s 109, I.P.C. read with section 477 A of the I.P.C. and within my cognizance. " The trial court acquitted all the six accused persons. An appeal against the acquittal of all of them was preferred under section 417 (3), Cr. P.C. in the court of the Judicial Commissioner, Tripura. That court allowed the appeal against section K. Gupta only and dismissed it as against the others. section K. Gupta was held guilty of the offence of criminal breach of trust under section 408, I.P.C. and also of the offence of falsification of accounts under section 477 A, I.P.C. regarding the sum of Rs. 18,200. He was sentenced under each count to undergo rigorous imprisonment for one year, the sentences to be concurrent. The convict section K. Gupta has appealed to this Court on certificate granted under article 134(1)(c) of the Constitution. 'Me order granting the certificate does not disclose on its face what exactly the difficulty of the court of the Judicial Commissioner is and precisely what question of outstanding difficulty this Court is desired to settle. On behalf of the appellant his learned advocate Shri Ramamurthy, however, addressed elaborate arguments questioning the order of the learned Judicial Commissioner allowing 773 the appeal against the appellant section K. Gupta 's acquittal. His, challenge was based on three main contentions. The fourth point that the learned Judicial Commissioner erred in law in considering exhibit P 59 to be admissible in evidence, in disagreement with the trial court, according to which it was hit by section 24, Indian Evidence Act, was not allowed to be argued in this Court because this ground was not taken in the grounds of appeal. The first contention seriously pressed on behalf of the appellant is that in view of the acquittal of his co accused who were tried along with him the court of the Judicial Commissioner was wrong in law in holding that there was falsification of accounts and embezzlement of the funds of the Tripura Central Marketing Co operative Society. This submission is unacceptable. The acquittal of the other co accused as affirmed by the learned Judicial Commissioner is not based on the finding that there was no falsification of accounts and no embezzlement of the funds of the Society. section K. Gupta, appellant, it may be pointed out was the Secretary of the Society since April 13, 1957 when the first general meeting of the Society was held and was in that capacity entrusted with its funds. He worked as such till August 10, 1960. He was accordingly responsible for the cash and maintenance of current accounts of the Society during the period in question. Turning to the Bye laws of the Society, bye law No. 41 prescribes the duties of the Secretary. According to this bye law the Secretary has inter alia : "(3) To make disbursement and to obtain vouchers and to receive payments and pass receipts, under the general or special orders of the Board of Directors on this behalf from time to time. (4) To keep all accounts and registers required by the rules. (13) To countersign cash book in token of the balance being correct and to produce the cash balance. whenever called upon to do so by the Chairman or any person authorised to do so. In the absence of the Secretary the Board of Directors may authorise the Manager to perform the duties of the Secretary. The Board of Directors may also authorise the Manager to perform any of the duties of the Secretary to facilitate, the working of the Society. Receipts passed on behalf of the Society shall be, signed by the Secretary. Share certificates and other 774 documents shall be signed by the Secretary and one member of Board of Directors jointly. " Byelaw 42 contains directions I regarding advances against proof goods and clause (1) of this byelaw provides : "(1) The Board of Directors shall, at the beginning of the session, fix the amount of advance, indicating the percentage of the market price of produce or goods pledged with the society, that may be granted to a member. Such limits may be fixed for different com modities and varied from time to time according to fluctuation in markets or otherwise. It shall also be competent for the Board of Directors to call on a borrower at any time before the due date to repay a portion of the loan or advance issued or to produce additional security for the outstanding loan or advance within a time fixed by them, if in their opinion, there is fall or likely to be a fall in the market value of the produce or goods pledged. " Under byelaw 44 loans may be granted to members in suitable cases on such terms and conditions as regards individual and maximum limits, repayment of loan,, rate of interest thereon etc., as may be fixed by the Board of Directors from time to time. According to the learned judicial Commissioner "the overall picture" emerging .from the evidence on the record, to quote his own words, it "(1) A sum of Rs. 18,200/ was said to have been disbursed in 1958 and 1959. (2) It was said to have been repaid in the last week of June, 1959 towards the end of the co operative year of 1959 and long after the maximum period of 6 months allowed by rule 42 (4) of the byelaws. (3) The same amount was again said to have been ,disbursed in a few days in the first week of July commencing with the next cooperative year (1959 60). (4) Except the 2nd and 4th respondents, the others were not members of the Co operative Society and in this regard the 1st respondent disregarded sub rule (1) ,of r. 42 of the byelaws. (5) The 1st respondent did not obtain any general or special orders of the Board of Directors to make the disbursements and violated sub rule (1) of r. 42 of Ext. P 41. 775 (6) Ext. P 56 and P 59 show that the alleged collections of the monies in June 1959 was false and that the accounts were got up. (7) The fact that a discount of Rs. 10/ was paid to cash a cheque on 29 6 1959 shows that the society had no funds on that day. (8) None of the alleged loanees was a Jute grower and no jute was deposited in the godowns of the society before the advances were made and in this regard the mandatory provisions of sub r. (2) of r. 42 were also disregarded by the 1st respondent. (9) A number of adjustments were made in the Accounts to show that the sum of Rs. 18,200/ was disbursed. (10) The three persons to whom ultimately the amounts were said to have been disbursed are interested in the 1st respondent. The 4th respondent C. C. Das Gupta is a relation of the 1st respondent and proved by P. Ws 1, 6 and 8 and as admitted by the 4th respondent himself in Ext. The 3rd respondent Sudhir Ranjan Roy is a servant of D.W. I who is a co Director of the Match Factory and friend of the 1st respondent. The 3rd respondent Haradhan Deb was appointed by the 1st respondent in the C.M.S. The 3rd respondent was also an employee of the C.T.S. of which the 1st respondent was a Director. " On the basis of these observations the appellant was held to ,have committed criminal breach of trust and to have either misappropriated or misapplied the funds of the Society dishonestly to benefit himself of his relations and friends. Counsel failed to point out any legal infirmity in the final conclusion drawn in the impugned order from the overall picture. Indeed, counsel, after a faint attempt to find fault with this conclusion felt constrained to admit that the money had been advanced against the rules of the Society and also to the persons not entitled to it, his only contention in support of the appeal being that it did not constitute a criminal offence and that in any event the Board of Directors of the Society having ratified the advances, the foundation for the criminal charge must be deemed to have disappeared. We are unable to agree. The offence of criminal breach of trust is committed when a person who is entrusted in any manner with property or With dominion over it, dishonestly misappropriates it, or converts it to his own use, or dishonestly uses it or disposes it of in violation 776 of any direction of law prescribing the mode in which the trust is to be discharged, or of any lawful contract, express or implied, made by him touching such discharge, or wilfully suffers any other person so to do. The appellant 's manner of dealing with the money entrusted to his custody clearly constitutes criminal breach of trust. Counsel was not able to point out any provision which empowers the Directors to prescribe the mode of making advances, which violates or is in breach of, or contrary to the Byelaws. If the Directors, possess no authority to give any directions contrary to the byelaws they can scarcely claim or assume power to ratify violation of the Byelaws in the matter of dealing with the trust money. Our attention was not drawn to any over riding provision conferring power on the Board of Directors to ratify use of the trust money contrary to the directions contained in the Byelaws. Exhibit P 27, the resolution of the Board of Directors dated January 10, 1960, on which reliance in support of ' the argument was placed, merely states "investments made by the Secretary uptodate are hereby approved" without pointing out the provisions under which such approval could validate breaches of the Byelaws. Incidentally it may be mentioned that the learned Judicial Commissioner also entertained some suspicion about the manner in which the meeting, in which this resolution was passed, was held. This contention of the counsel must, therefore, be repelled. In the last submission the counsel made a grievance against the joint trial of several accused persons on several items of embezzlement. According to him there was a misjoinder of charges which vitiated the trial. In our opinion, charges under section 408 and section 477 A, Indian Penal Code, could, in the circumstances of this case, be tried together and the joint trial of all the accused was proper and lawful. Our attention was not drawn to any provision of law against the legality of the joint trial. In any event no failure of justice in consequence of the joinder of charges was pointed out, with the result that the question of misjoinder of charges must be held to be of little consequence at the stage of appeal. Before closing we may point out, as has repeatedly been said by this Court, that there is normally no right of appeal to this Court in criminal matters except in cases provided :by article 134 ( 1 ) (a) and (b) of the Constitution. Clause (c) of this Article empowers the High Court to certify cases to be fit for appeal to this Court. The word "certify" is a strong word; it postulates exercise of judicial discretion by the High Court and the certificate should ordinarily show on the face of it that the discretion was invoked and properly exercised. This Court should be in a position to know that the High Court has not acted mechanically 777 but has applied its mind. A certificate under this clause is impermissible on questions of fact and when a case does not disclose a substantial question of law or principle then the certificate granted by the High Court is liable to be revoked by this Court, though such prima facie non disclosure would not by itself automatically invalidate the certificate. In the case in hand no substantial question of law or principle was made out at the bar and the certificate was clearly misconceived though it vaguely states that several questions of law are involved. The appeal fails and is dismissed. V.P.S. Appeal dismissed.

The appellant, who was the Secretary of a Cooperative Society and was responsible for the cash and maintenance, of the accounts of the Society, was charged with the offenses of criminal breach of trust and falsification of accounts under sections 408 and 477 A, I.P.C. He was tried along with 5 others who were charged with the offence of abetment of the offenses. The, trial court acquitted all of them, but the appellate court (the Court of Judicial Commissioner) convicted the appellant and acquitted the. others. The appellate Court held that the appellant had advanced money against the rules of the Society and also to various persons not entitled to it, that the appellant had thereby committed criminal breach of trust and either misappropriated or misapplied the funds of the Society dishonestly to benefit himself or his relations and friends. The 'appellate Court certified that the case was a fit one for appeal to this Court under article 134(1) (c), but, the order granting the certificate did not disclose on its face what exactly was the difficulty of the appellate Court and what question of outstanding difficulty this Court was to settle. In appeal to this Court, HELD : (1) The acquittal of the co accused was not based on the finding that there was no falsification of accounts or embezzlement. Therefore, the appellant could not contend that no offence was committed because of the acquittal of the co accused. [773 G D] (2) On the finding of the appellate court, it was not a mere civil liability of the appellant. The appellant 's manner of dealing with the money entrusted to his custody constituted criminal breach of trust. The Directors had no authority under the bye laws to give any directions contrary to the bye laws and so, could not ratify the violation of the bye laws. Any resolution ratifying the use of trust money contrary to the directions contained in the bye laws would not validate the breach of the bye laws. [775G; 776 A C] (3) There was no misjoinder of charges and no prejudice was caused to the appellant. [776 F] (4) The appellate Court should not have granted the certificate, under article 134(1)(c) in the present case. The word 'certify ' in the Article 771 postulates the exercise. of judicial discretion by the appellate Court and the certificate should ordinarily show on the face of it that the discretion was invoked and properly exercised. This Court should be in a position to know that the appellate Court has not acted mechanically but has applied its mind. A certificate under this clause is impermissible on questions of fact. When the case does not disclose a substantial question of law or principle the certificate. granted by the appellate Court is liable to be revoked by this Court, though such_ prima facie non disclosure would not by itself automatically invalidate the certificate [777 A C]

Civil Appeal No. 496 of 1974. Appeal by Special Leave from the Judgment and order dated the 2nd May, 1973 of the Punjab and Haryana High Court in R.S.A. No 1469 of 1969. O. P. Sharma for the appellant. R. N. Dikshit for Respondent No. 1. The Judgment of the Court was delivered by RAY, C.J. This appeal is by special leave from the judgment dated 2 May, 1973 of the Punjab and Haryana High Court. The appellants are venders of the land in suit. The vendors sold the land to the appellants for Rs. 43,000/ on 26 August, 1965. The transaction was by registered deed of sale. The respondents filed this suit for possession by pre emption of the land in payment of Rs. 30,000/ on allegations that the respondents were on the date of sale tenants of the land under the vendors. The respondents alleged that their right of pre emotion was superior to that of the vendees. They also alleged that the sale took place for Rs. 30,000/ only and the remaining was fictitiously mentioned in the deed of sale. The suit was dismissed on the ground that one suit on behalf of the four plaintiffs, who were tenants of different parts of the land, was not maintainable. On appeal the suit was remanded for re trial. At the trial on remand, two plaintiffs withdrew from the suit. The trial court directed the remaining two plaintiffs respondents Sohan Lal and Nathi to deposit Rs. 6,300/ and Rs. 5,670, ' respectively on or before 1 April, 1969 less 1/5th of the pre emotion amount already deposited by them. The Trial Court gave the respondent Sohan Lal a decree for possession by pre emotion in respect of Killa Nos. 17 and 18/1 of Rectangle 37. The plaintiffs respondents aggrieved by the order. filed an appeal alleging that the respondent Sohan Lal was a tenant of Killa No. 24 under the vendors and the decree should have been passed in their favor for the whole of the land and that decree should have been passed in favour of Sohan Lal in respect of Killa No. 24 of Rectangle 37. The other ground in the appeal was that the decree should have been passed in favour of the plaintiffs respondents for whole of the land. The Additional District Judge on 29 July, 1969 passed a decree for. possession by pre emotion in favour of respondent Sohan Lal on payment of Rs. 9,100 and he was directed to deposit this amount in Court on or before 20 August, 1969. The Addition District Judge passed a decree for possession by pre emption in favour of respondent Sohan Lal of Killa No. 24 of Rectangle 37. The decree in favour the respondent Nathi was maintained without change. Thereafter, the appellants preferred an appeal in the High Court alleging that the decision that plaintiff respondent Sohan Lal was also a 600 tenant of Killa No. 24 was incorrect and should be set aside and the decree of the Trial Court should be restored. The appellants also prayed that the decree in favour of the two plaintiffs respondents Sohan Lal and Nathi were liable to be set aside. The appellants contended before the High Court that respondents Sohan Lal and Nathi did not deposit the decretal amount by 1 April, 1969 as directed by the Trial Court and, therefore, the suit was liable to be dismissed under the provisions contained in order 20 Rule 14 of the Code of Civil Procedure. The other contention of the appellants before the High Court was that the plaintiff respondent Sohan Lal should not have been granted pre emption rights in respect of Killa No. 24. The High Court on 2 May, 1973 accepted the appeal of the appellants against the plaintiff: Nathi and dismissed the appeal against the plaintiff respondent Sohan Lal. The High Court said that since the lower appellate court granted Mohan Lal decree for one more Killa and directed that the amount would be Rs. 9,100/ , the respondent was to comply with the appellate decree and not the decree of the Trial Court. The appellants contended that neither Sohan Lal nor Nathi deposited the amount in accordance with the decree of the Trial Court on or before l April, 1969 and the suit should have been dismissed on that ground alone and the appeal should have been allowed. The appellants contended that the lower appellate court had no power and jurisdiction to give further time to Sohan Lal to deposit the preemption amount by an extended date. This Court in Naguba Appa vs Namdev(1) held that the directions given by the Trial Court are mandatory under the provisions contained in order 20 Rule 14 of the Code of Civil Procedure. This Court in Naguba Appa 's case (supra) said that "mere filing of an appeal does not suspend the decree of the Trial Court and unless that decree is altered in any manner by the Court of Appeal, the pre emptor is bound to comply with that direction '`. In Dattaraya s/o Keshav Tawalay vs Shaikh Mahboob Shaikh Ali & Anr.(2) this Court said that a decree in terms of order 20 Rule 14, imposes obligations on both sides and they are so conditioned that performance by one is conditional on performance by the other. To illustrate, if the defendants by obtaining the stay order from the High Court relieve themselves of the obligation to deliver possession of the properties the plaintiff decree holder must also be deemed thereby to be relieved of the necessity of depositing the money so long as the stay order continues. In the present case, the lower appellate court did not grant any stay to the plaintiffs respondents. In view of the fact that the plaintiffs respondents did not deposit the amount as directed by the Trial Court (1) A.I.R. 1954 S.C. 50. (2) ; 601 on or before 1 April, 1969, it became mandatory on the lower appellate court by reason of the ruling of this Court in Naguba Appa 's case (supra) to dismiss the suit. The observations of this Court in Naguba Appa 's case (supra) that the pre emptor is bound to comply with the directions of the Trial Judge unless that decree is altered in any manner by a Court of Appeal do not mean that where the deposit is not made in accordance with the directions of the Trial Court, the appellate court can extend the time for payment. Thereafter, the lower appellate court was in error in extending the time for payment till 2 . August, 1969. In Naguba Appa 's case the pre emption money was not deposited within the time fixed in the decree. The pre emptor made an application to the Court for making the deposit without disclosing that the time fixed by the decree had elapsed. The application was allowed The defendant, when apprised of the situation, made an application to the Court to the effect that the plaintiff 's suit stood dismissed on account of his failure in making the deposit in time. The Trial Judge held that the pre emption money not having been paid within the time fixed in the decree the suit stood dismissed. On appeal the decision was set aside. On second appeal it was restored and it was held that the suit stood dismissed under order 20, Rule 14 Civil Procedure Code. An appeal was preferred against the judgment of the High Court this Court Held that the High Court was right in holding that the pre emptor 's suit stood dismissed by reason of his default in not depositing the pre emption price within the time fixed in the Trial Court 's decree. The contention of the appellants that the lower appellate court was wrong in extending the time for payment is correct because the failure of the plaintiffs respondents to deposit the amount in terms of the Trial Court 's decree would result in pre emptor 's ' suit standing dismissed by reason of their default in not depositing the pre emption price. The contention of the appellants that the High Court was wrong in not setting aside the order of extension of time passes by the lower appellate court is correct. It is only if the plaintiffs respondents had paid the decretal amount within the time granted by the Trial Court or if the plaintiffs respondents had obtained another order from the lower appellate Court granting any order of stay that the lower appellate court might have considered the passing of appropriate order in favour of pre emptors. The High Court should have allowed the appellant s ' appeal and not made any distinction in dismissing plaintiff respondent Nathi 's suit and allowing plaintiff respondent Sohan Lal any extension of time to make the payment. Further, it appears that the plaintiff respondent Sohan Lal did not pay the amount. For these reasons the appeal is accepted. Suit of the plaintiffs respondents is dismissed. The appellants are entitled to costs. V.M.K.Appeal allowed.

The vendors sold the suit land,to the appellants (vendees) by a registered deed of sale for Rs. 43,000/ . The ' respondents filed the suit for possession by pre emption of the land in payment of Rs. 30,000/ on the allegations that the respondents were on the date of sale tenants of the land under the vendors. I They also alleged that the sale took place for Rs. 30,000/ only and the re maining amount was fictitiously mentioned in the deed of sale. The suit was ' dismissed on the ground that one suit on behalf of the four plaintiffs who were tenants of different parts of the land, was not maintainable. On appeal the suit was remanded for re trial. At the trial on remand, two plaintiffs withdrew from the suit. The trial court directed the remaining two plaintiffs respondents Sohan Lal and Nathi to deposit Rs. 6,300/_ and Rs. 5.670/ respectively on or before 1 April, 1969 less 1/5th of the pre emption amount already deposited by them. The Trial Court gave the respondent Sohan Lal a decree for possession by pre emption in respect of Killa Nos. 14/1 . 17 and 18/1 of Rectangle 37. The plaintiffs respondents, aggrieved by the order filed an appeal alleging that the decree should have been Passed for the whole of the land because the respondent Sohan Lal was also a tenant of Killa , No. 24 of Rectangle 37 under the vendors. On 29 July 1969. the Additional District Judge passed a decree for possession by pre emption in favour of respondent Sohan Lal of Killa No. 24 of Rectangle 37 on payment of Rs. 9,100/ and he was also directed to deposit this amount on or before 20 August, 1969. The decree in favour of Nathi was maintained without charge. The appellants filed an appeal before the High Court and it was contended before the High Court that respondents did not deposit the decretal amount by l April, 1969 as directed by the Trial Court and, therefore, the suit was liable to be dismissed under order 20 Rule 14 of the Code of Civil Procedure. The High Court accepted the appeal of the appellants against the plaintiff Nathi and dismissed the appeal against the plaintiff respondent Sohan Lal. The High Court said that since the lower appellate court granted Sohan Lal decree for one more Killa and directed that the amount would be Rs. 9,100/ . the respondent was to comply with the appellate decree and not the decree of the Trial Court. Allowing the appeal by special leave, ^ HELD: (1) The directions given by the Trial Court are mandatory under the provisions contained in order 20 Rule 14 of the Code of Civil Procedure. A decree in terms of order 20 Rule 14, imposes obligations on both sides and they are so conditioned that performance by one is conditional on performance bt the other. [600E F, G]. Naguba Appa vs Namdey reported in A.I.R. l 954 S.C. 50 and Dattaraya S/o Keshav Tawalay vs Shaikh Ali and Anr.[1969] 2 S.C.R. 514 relied on. (ii) It is only if the plaintiffs respondents had obtained another order from the lower appellate Court granting any order of stay that the lower appellate court might have considered the passing of appropriate order in favour of pre emptors. The High Court should have allowed the appellants ' appeal and not made any distinction in dismissing plaintiffs respondent Nathi 's suit and allowing Plaintiff respondent Sohan Lal any extension of time to make the payment. [601F G] 599

iminal Appeal No. 76 of 1958. Appeal by special leave from the judgment and order dated March 4, 1958, of the Patna High Court in Criminal Appeal No. 50 of 1958 and Death Reference No. 3 of 1958 arising out of the judgment and order dated January 18, 1958, of the Court of the 1st Additional Judicial Commissioner of Chotanagpur at Ranchi in Sessions Trial No. XC of 1957. B. R. L. Iyengar, for the appellant. 1338 R. H. Dhebar for the respondent. September 19. The Judgment of the Court was delivered by section K. DAS J. This is an appeal by special leave. The appellant is Ratan Gond, aged about 28 years. Tried on a charge under section 302, Indian Penal Code, he was convicted and sentenced to death by the learned Additional Judicial Commissioner of Ranchi in the State of Bihar. The learned Additional Judicial Commissioner submitted the record to the High Court of Patna for confirmation of the sentence, as he was required to do under the provisions of section 374 of the Code of Criminal Procedure. Ratan Gond also preferred an appeal to the High Court. The appeal and the reference under section 374, Criminal Procedure Code, were heard together by a Division Bench of the said High Court and it accepted the reference and dismissed the appeal thereby confirming the sentence of death passed upon the appellant. On May 19, 1958, the appellant prayed for and obtained special leave and then filed the present appeal in pursuance of the leave granted to him. The facts lie within a, narrow compass. The appellant was a resident of village Urte, Tola Banmunda, police station Kolebera in the district of Ranchi. One Mst. Jatri (P. W. 2), who was a widow, also lived in the same village and same Tola. She had two young daughters, one named Baisakhi and the other named Aghani. Baisakhi was about nine years old and Aghain about five years old. The subject of the present appeal is the murder of the girl Baisakhi. On a Tuesday, May 7, 1957, the two sisters, Baisakhi and Aghani, had gone out to Pluck wild berries in a hilly jungle situated at a short distance from their village, the distance being estimated variously by various witnesses from 300 yards to a little more than a mile. We may give here some idea of the location of the village and the hilly area near it. According to the evidence of Rup Ram (P. W. 1), uncle of the two girls, Tola Banmunda consists of about 40 houses. At a short distance to the north, there is a hilly tract known 1339 as Amtis Chua hill. Close to the hill, there are jungles on two sides and there is also a spring or well in between the two strips of jungles. On Tuesday, Mst. Jatri (P. W. 2) had herself gone to pluck berries known as Keond berries at another place. When she left the house in the morning, her two daughters were in the house. Jatri came back at about noon and found Aghani alone in the house. She enquired from Aghani about the elder sister Baisakhi and Aghani made certain statements to her mother as well as to other persons later that day and the next day. Aghani, however, died within a few months of the occurrence, before her statements could be recorded in a judicial proceeding. The courts below have referred to, and the High Court has relied on, the statements of Aghani. One of the points urged on behalf of the appellant is that the statements of Aghani were not admissible in evidence either under section 32 or section 33 of the Evidence Act (I of 1872). As we are of the view that this contention is correct, we are omitting all reference to the statements of Aghani in stating the facts of the case. When Baisakhi did not return to the house even in the evening Mst. Jatri went in the direction of Amtis Chua hill, but could not find Baisakhi. Next morning, information was sent to Rup Ram (P. W. 1) about the fact that Baisakhi was missing, Rup Ram having gone to village Targa for making tiles on the preceding Monday. Rup Ram came back to Banmunda on Wednesday, May 8, 1957. In the meantime certain other villagers including Dalpat Sai (P. W. 4), mukhia of the village, and Sohar (P. W. 5), chaukidar of the village, had been informed that Baisakhi was missing. Aghani took Rup Ram and these villagers to the foot of Amtis Chua hill and showed them the spring or well. This village party found the headless body of Baisakhi at a short distance from the aforesaid spring. The body was identified by Mst. Jatri and others as the dead body of Baisakhi by reason of the white saree of yellow border which Baisakhi was wearing, five red " churis " round the right hand, two red " churis " round the 170 1340 left hand, one " bera " round the left hand, one brass ring on the left finger and certain beads of a " mala " which Baisakhi had put on. When the headless dead body was discovered and identified, Dalpat Sai left some of his companions to guard the dead body and went to the house of the appellant, but did not find him there. He then sent Rup Ram and the chaukidar to the police station which was at a distance of 43 miles. He also sent some volunteers of the Gram Panchayat to look for the appellant. On Thursday, May 9, 1957, at about 10 a.m., Rup Ram and the chaukidar appear ed at the police station of Kolebera and Rup Ram gave an information, which was recorded by the Assistant Sub Inspector of Police. This information referred to the statements of Aghani and to the other facts which had been discovered by that time. On the same Thursday, the appellant was found in the house of his sister 's husband in another village called Karmapani. The appellant was caught hold of by the village volunteers and brought back to village Banmunda on Thursday. At about 1 or 2 p. m. on that day, he was questioned by Dalpat Sai (P.W.4) mukhia of the Gram Panchayat, Krishna Chandra Singh (P. W. 7), Sarpanch of the Gram Panchayat, and Praduman Singh (P. W. 13), one of the panches of the Panchayat, and it is stated that the appellant made an extra judicial confession to these persons to the effect that he had killed the child Baisakhi for greed of money, as a contractor who was building a, bridge on the Lurki river had offered Rs. 80 for a human head. The appellant was detained by the aforesaid village authorities till the Assistant Sub Inspector of Police arrived at the village on Friday, May 10, 1957. The Assistant Sub Inspector arrived at about 3 a.m. He was taken to the place where the headless dead body of Baisakhi lay. The Assistant Sub Inspector made an inquest on the dead body and seized the articles found there including 29 beads of the " mala " ' which Baisakhi was wearing and which lay scattered near the place. The Assistant Sub Inspector of Police arrested the appellant, who was already in custody of the mukhia. The house of the 1341 Weapon called " balua " was found in the north facing room of the house, between a wall and the roof. This " balua " had certain blood stains on it, but the stains having disintegrated, the origin of the blood could not be determined. It is stated that on being questioned where the head of the girl Baisakhi was, the appellant took the Assistant Sub Inspector of Police and some of the villagers to a place at a short distance of 100 yards or so from where the dead body was. At that place were discovered some strands of bloodstained hair which were seized by the Assistant SubInspector of Police. The strands of hair looked like the hair on the bead of a female person and the Chemical Examiner later reported that the strands of hair were stained with human blood and "appeared to be scalp hair of human (female) origin morphologically ". After further investigation by two different Sub Inspectors of Police, the appellant was sent up for trial. There was an enquiry by a Magistrate of the first class, who, at the conclusion of the enquiry, committed the appellant for trial by the Court of Session. The defence of the appellant was that he had been falsely implicated. He denied that he killed Baisakhi near the jungle at Amtis Chua hill. He further denied that he had made any extra judicial confession to Dalpat Sai, Krishna Chandra Singh and Praduman Singh. He denied that any blood stained weapon was found in his house by the Assistant Sub Inspector of Police and he also denied that he was absent from his village or was found in the house of his sister 's husband in village Karmapani. The learned Additional Judicial Commissioner, as also the High Court, rightly stated that the case against the appellant rested on (a) circumstantial evidence and (b) the extra judicial confession stated to have been made by the appellant. The courts below concurrently held that the extra judicial confession was voluntary and it did not appear to them to have been caused by any inducement, threat or promise having reference to the charge made against 1342 he appellant so as to attract the provisions of section 24 of the Evidence Act. They further held that the confession, though later denied by the appellant, was sufficiently corroborated by the circumstantial evidence and the confession and the circumstantial evidence read together led to only one reasonable inference ', namely, that the appellant had killed the child Baisakhi in the hope of getting some money. It is not disputed that in an appeal filed by special leave under article 136 of the Constitution it is not normally open to the appellant to raise questions of fact or to ask for interference by us with concurrent findings of fact, unless the findings are vitiated by errors of law or the conclusions reached by the courts below are so patently opposed to well established principles as to amount to a miscarriage of justice. Mr. Iyengar for the appellant has urged before us three main points. Firstly, he has submitted that the extra judicial confession said to have been made by the appellant is not admissible in evidence. Secondly, he has contended that even if admissible, there is no guarantee of its truth. Thirdly, he has submitted that even with regard to circumstantial evidence, the courts below have relied on inadmissible evidence, with particular reference to the statements of Aghani, to establish one of the circumstances, namely, that the appellant was last seen with Baisakhi before her murder. His argument is that the other circumstances established against the appellant, namely, the recovery of the blood stained " balua ", of the blood stained hair and the absence of the appellant from the village on Wednesday, do not carry the case against the appellant far enough so as to complete the chain and make them inconsistent with any hypothesis other than the guilt of the appellant. He has submitted that in considering the circumstantial evidence in this case the courts below have departed from the well established principle that the circumstances affirmatively proved against an accused person must be of such a character as to be consistent only with his guilt and inconsistent with any reasonable hypothesis of his innocence. 1343 Before we examine the aforesaid submissions, it is necessary to state that the finding of the courts below that Baisakhi was murdered some time between May 7 and May 8, 1957, and that the headless dead body which was discovered on May 8, 1957, was correctly identified as the dead body of the girl Baisakhi has not been challenged before us. The postmortem examination on the dead body was held on May 11, 1957, and the ante mortem injuries which the doctor found were (1) complete severance of the head from the neck,(2)one incised wound on the left shoulder and (3) anincised wound on the left upper arm. The doctor 's evidence makes it quite clear that the unfortunate girl was brutally done to death. The identification of the headless dead body also rests on a very sure foundation. We have already referred to the clothing, ring, beads, etc., from which the identity of the dead body was established. The murder of the girl Baisakhi having been clearly established, the courts below rightly applied their mind to a consideration of the principal question in the case, namely, if the appellant was responsible for that murder. This brings us to a consideration of the submissions made on behalf of the appellant. We may say at the very outset that we agree with learned counsel for the appellant that the statements of Aghani, who unfortunately died within a few months of the occurrence before her statements could be recorded in a judicial proceeding, were not admissible in evidence either under section 32 or section 33 of the Evidence Act. Section 33 is clearly out of the way because Aghani made no statements in a judicial proceeding or before any person authorised by law to take her evidence. The only relevant clause of section 32 which may be said to have any bearing is cl. (1) which relates to statements made by a person as to the cause of his death or as to any of the circumstances of the transaction which resulted in his death. In the case before us, the statements made by Aghani do not relate to the cause of her death or to any of the circumstances relating to her death ; on the contrary, the statements relate to the death of her sister. We are, therefore, of the opinion 1344 that the statements do not come within section 32(1) of the Evidence Act and, indeed, Mr. Dhebar appearing on behalf of the State, has conceded that section 32(1) does not apply to the statements of Aghani. Excluding the statements of Aghani, what then is the evidence against the appellant ? Firstly, we have the extra judicial confession. Then, we have the following circumstances which the courts below have held to have been clearly established against the appellant, namely, (a) recovery of the blood stained " balua " from a room of the appellant, (b) recovery of the blood stained strands of hair from a place pointed out by the appellant and (c) disappearance of the appellant from the village immediately after the murder and his arrest in village Karmapani in circumstances mentioned by Maheshwar Sai (P. W. 6). Lastly, there is another adverse circumstance which arises out of the total denial by the appellant of the recovery of the blood stained " balua " and of his arrest in village Karmapani. As to the extra judicial confession, two questions arise: is it voluntary, and, if so, is it true ? The appellant denied at a later stage that he had made a confession, but it is not necessary to consider in this case the abstract question as to whether, as against its maker, a conviction can be based on a confession which is found to be voluntary and true. It is enough to state that usually and as a matter of caution, courts require some material corroboration to such a confessional statement, corroboration which connects the accused person with the crime in question, and the real question which falls for decision in the present case is if the circumstances proved against the appellant afford sufficient corroboration to the confessional statement of the appellant, in case we hold that the confessional statement is voluntary and true. Let us first see if the confession was voluntary. Section 24 of the Evidence Act states: "A confession made by an accused person is irrelevant in a criminal proceeding, if the making of the confession appears to the Court to have been caused by any inducement, threat or promise having reference to the charge against the accused person, 1345 proceeding from a person in authority and sufficient, in the opinion of the Court, to give the accused person grounds which would appear to him reasonable for supposing that by making it he would gain any advantage or avoid any evil of a temporal nature in reference to the proceedings against him ". Mr. Iyengar has referred us to the evidence of the three witnesses, Dalpat Sai (P.W. 4), Krishna Chandra Singh (P. W. 7), and Praduman Singh (P. W. 13), Mukhia, Sarpanch and Panch respectively of the Gram Panchayat. We agree with Mr. Iyengar that having regard to the provisions of the Bihar Panchayat Raj Act (Bihar VIII of 1948) the aforesaid three persons can be said to be persons in authority within the meaning of section 24. The question, however, is are there any circumstances which tend to show that the making of the confession appears to have been caused by any inducement, threat or promise, having reference to the charge against the appellant and proceeding from any one of the aforesaid three persons and sufficient in the opinion of the court to give the appellant grounds which would appear to him to be reasonable for supposing that by making it he would gain any advantage or avoid any evil of a temporal nature in reference to the proceedings against him. The courts below have categorically answered this question in the negative. We have examined the evidence of the three witnesses mentioned above. That evidence shows that the appellant was brought to the house of Dalpat Sai (P. W. 4) at about 10 a.m. on Thursday (May 9, 1957). He was questioned for some time; Dalpat Sai (P.W. 4) said that he was questioned for about two hours. The evidence of Dalpat Sai makes it clear, however, that it was not a process of continuous questioning for two hours. Ratan was given some food and then, when he was questioned, he kept quiet for some time and then said that he had killed the girl because the contractor who was building the bridge on river Lurki had offered to pay a sum of Rs. 80 for a human head. Having examined the evidence of the three witnesses who prove the extra judicial confession, we do not come to 1346 a conclusion different from the one arrived at by the courts below. Mr. Iyengar referred us to the observations made by Cave J. (as he then was) in The Queen vs Thompson(1). That was a case in which a prisoner was tried for embezzling the money of a company. It was proved at the trial that, being taxed with the crime by the Chairman of the company, the prisoner said that he had taken the money. The Chairman stated that at the time of the confession, no threat or promise was made, but he said to the prisoner 's brother, " It will be the right thing for your brother to make a statement " and the court drew the inference that the prisoner, when he made the confession, knew that the Chairman had spoken these words to his brother. In these circumstances, the learned Judge said: " I prefer to put my judgment on the ground that it is the duty of the prosecution to prove, in case of doubt, that the prisoner 's statement was free and voluntary, and that they did not discharge themselves of this obligation ". He further added that there were always reasons to suspect those confessions which were supposed to be the offspring of penitence and remorse, and which nevertheless were repudiated by the prisoner at the trial. It is true that in the case under our consideration the appellant denied to have made the confession which he had made earlier; but we find no such circumstances as were present in Thompson 's case (1), such as the statement of the Chairman of the company to the brother of the prisoner. It is true that the appellant was brought back from village Karmapani by members of the village volunteer force. He was taken to the village authorities to whom he made a confession. The evidence does not even remotely suggest that any threat, promise or inducement was made. The only circumstance relied on by Mr. Iyengar is that it took about two to three hours from the time when the appellant was brought to the house of the mukhia up to the time when he made his confessional statement. Mr. Iyengar has relied on In re Kataru Chinna Papiah (2), where a Superintendent of Police questioned the accused person for four hours at night (1) , 18. (2) A.I.R. 1940 Mad. 136. 1347 and again for two hours in the morning. It was pointed out that this was a flagrant violation of the relevant rule in the instructions issued to police officers. All that we need say is that there was no such questioning in the present case. Another decision to which Mr. Iyengar has invited our attention is Hashmat Khan vs The Crown (1). We do not think that that decision is of any assistance to Mr. Iyengar. It was held therein that a mere possibility of there having been some inducement is not sufficient to attract section 24 of the Evidence Act; but only when it appears to the court that the confession has been made as a result of some inducement held out by a person in authority that it becomes irrelevant. That was a case in which the accused person, when questioned, was told that it would be better for him if he told the truth; it was held that this amounted to an inducement within the meaning of section 24 of the Indian Evidence Act. As to the truth of the confession, nothing has been brought to our notice which would show that the confessional statement contained any untrue or inaccurate statement. It is true that the prosecution has given no evidence to show that the contractor who was building the bridge over river Lurki, or for that matter, any contractor, had offered a sum of Rs. 80 for a human head. In the very nature of things, it is not expected that any contractor, even if he had made such an offer, will admit having done so, and we do not think that the prosecution can be asked to give evidence in support of any such offer. We recognise that in ordinary and normal circumstances nobody asks for a human head for building abridge; nor is it usual normally for a person to accept such an offer, even if it is made. We must not forget, however, that we are dealing in this case with aboriginal people who are ,still steeped in superstition. It is worthy of note that Maheshwar Sai (P. W. 6) said that when the appellant was taken in custody in village Karmapani, he did not even enquire why he was arrested; on the contrary, he offered Rs. 20 and a he goat to the witness and (1) Lah. 171 1348 implored the latter to save him. Such a statement was again of an incriminatory nature, and if the evidence of Maheshwar Sai is correct, the statement was absolutely voluntary and was not the result of any questioning at all. For these reasons, we do not think that the reference to an offer of Rs. 80 for a human head in the confessional statement of the appellant necessarily destroys its veracity. There can be no doubt that the recovery of the blood stained " balua " (even though the origin of the blood could not be determined owing to disintegration) and of the blood stained strands of female hair at the place pointed out by the appellant, are circumstances clearly proved against the appellant. These circumstances may not be sufficient by themselves to prove that the appellant was the murderer, but there is no doubt that they lend assurance to the confes sional statement of the appellant, assurance of a kind which connects the appellant with the crime in question. This is a case in which the confession and the circumstances have to be read together. There is the additional circumstance that soon after the murder the appellant disappeared from his village and when arrested in another village, his conduct was such as to show that he was suffering from a guilty mind. On the top of all this, there is the total denial by the appellant that any blood stained " balua " was recovered from his house or that he disappeared from the village after the murder. It is unfortunate that the learned Additional Judicial Commissioner did not ask the appellant to explain the recovery of the blood stained strands of female hair. That was an important circumstance against the appellant and when the learned Additional Judicial Commissioner examined the appellant under the provisions of section 342 of the Code of Criminal Procedure he should have asked the appellant to explain this circumstance. We take this opportunity of inviting the attention of the learned Additional Judicial Commissioner to this very serious omission. Another omission on the part of the learned Additional Judicial Commissioner is his failure to comply with the provisions of section 287 of the Code of 1349 Criminal Procedure. The examination of the accused recorded by or before the Committing Magistrate does not appear to have been tendered by the prosecutor in the present case; at least we do not find any such statement in the printed paper book. We are satisfied, however, that no prejudice has been caused. The Assistant Sub Inspector of Police who gave evidence of the recovery of blood stained hair from a place pointed out by the appellant was not even cross exa mined on the point. The defence of the appellant was a total denial and even if the recovery of the blood stained strands of female hair was put to the appellant, he would undoubtedly have denied such recovery as having been made at his pointing out the place. To sum up: we see no reasons to differ from the conclusion arrived at by the courts below that the confessional statement made by the appellant was voluntary and admissible; there are no reasons for thinking that it was not true. The circumstances clearly proved against the appellant, even excluding the circumstance which rested on the statements of Aghani, afford sufficient corroboration to the confession of the appellant, though denied at a later stage, and the corroboration is of such a nature as to connect the appellant with the murder of the child Baisakhi. The only reasonable inference which can be drawn from the confession read with the circumstantial evidence is that the appellant killed the child Baisakhi between May 7 and 8, 1957, in the hope of getting some money. Whether that hope was realised or not is more than we can tell. The head was never recovered, but there can be no doubt that the dead body was correctly identified to be the dead body of the child Baisakhi. As to the sentence, in view of the circumstances in which the child Baisakhi was killed, we do not think ,that we shall be justified in interfering with it in the present case. For these reasons, we hold that the appeal is without merit and must be dismissed. Appeal dismissed.

The appellant was charged with the murder of a girl Baisakhi. On information given by Aghani, younger sister of the deceased, the headless body of the deceased was re covered. The appellant absconded but was found in another village and was brought back by the village volunteer force. On interrogation by the Mukhia, Sarpanch and a panch of the Gram Panchayat the appellant made an extrajudicial confession. A blood stained cutting weapon was recovered from a room of the appellant. At his instance some strands of hair were recovered from a place at a short distance 1337 from the place where the dead body had been recovered, which were stained with human blood and appeared to be scalp hair of a human female. The appellant was convicted and sentenced to death and the High Court upheld the conviction and sentence. The Courts took into consideration the statements made by Aghani to her mother and to other persons that the deceased was last seen in the company of the appellant. Aghani, however, died before her statement could be recorded in a judicial proceeding. It was contended by the appellant that the statements of Aghani were inadmissible, that the extra judicial confession was not relevant and that the circumstantial evidence was not sufficient to establish the guilt of the appellant. Held, that the statements of Aghani were not admissible either under section 32 or section 33 Of the Evidence Act. Section 33 had no application as her statement was not made in any judicial proceeding or before any person authorised by law to record the same. The statements did not relate to the cause of her death or to any circumstances relating to her death but related to the death of her sister and did not fall under cl. 1 of section 32 which was the only clause which could have any bearing on the question. Held, further, that though having regard to the Bihar Panchayat Raj Act, the Mukhia, Sarpanch and panch of the Gram Panchayat to whom the extra judicial confession was made were persons in authority within the meaning Of section 24 Evidence Act, no threat, promise or inducement for making the confession was proved. The facts that the appellant was brought back to the Village by the village volunteer force and that it took two or three hours before he made the confession do not indicate that the confession was not voluntary. There was nothing to show that the confession contained any untrue or inaccurate statement. The circumstantial evidence may not be sufficient by itself to prove the guilt of the appellant, but it afforded sufficient corroboration to the confession and the corroboration was of such a nature as to connect the appellant with the murder.

Appeal No 621 of 1960. Appeal. by special leave from the Award dated January 15, 1960, of the Industrial Tribunal, Bombay, in Reference (I.T.) No. 94 of 1959, 712 B. Sen and I. N. Shroff, for the appellant. C. L. Dhudia and K. L. Hathi, for the respondent. April 3. The Judgment of the Court was delivered by GAJENDRAGADKAR, J. Two demands made by the respondents, the workmen of the appellant company, the Garment Cleaning Works, Bombay, were referred for industrial adjudication to the industrial tribunal under section 12(5) of the , XIV of 1947. These demands were for gratuity and provident fund respectively. The tribunal has framed a gratuity scheme and has passed an order that the appellant should draw up a scheme of provident fund on the lines of the model provident fund scheme drawn by the Government under the Employees ' Provident Funds Act, 1952 (XIX of 1952), with a rate of contribution of 6 1/4 per cent. of total wages. Both the gratuity scheme as drawn up and the directions as to the drawing up of a provident fund scheme are challenged by the appellant by its present appeal which it has brought to this Court by special leave. In regard to the direction as to the gratuity scheme the argument which has been urged before us by Mr. Sen is that the problem of starting such a scheme should have been considered on an industry cum region basis and considerations relevant to the said basis should have been taken into account. In support of this argument he has relied upon a judgment of this Court in The Bharatkhand Textile Mfg. Co. Ltd. & Ors. vs The Textile Labour Association, Ahmedabad (1). In that case the industrial court had no doubt dealt with a claim for gratuity made by the workmen on the industry cum region basis, and an attack against the validity of the said approach made by the employer in regard to the scheme was repelled by this Court. It would, however, be noticed that all that this Court decided in that case was that it was erroneous to contend that a gratuity scheme could never be based on industry cum region basis, and in support of this conclusion several considerations were set forth in the (1) [1960]3 S.C.R. 329. 713 judgment. It is clear that it is one thing to hold that the gratuity scheme can in a proper case be framed on industry cum region basis, and another thing to say that industry cum region basis is the only basis on which gratuity scheme can be framed. In fact, in a large majority of cases gratuity schemes are drafted on the basis of the units and it has never been suggested or held that such schemes are not permissible. Therefore the decision in the case of the Bharatkhand Textile Mfg. Co. Ltd.( ') does not support the proposition for which Mr. Sen contends. Mr. Sen has then criticised some of the provisions in the gratuity scheme. Clause (ii) (a) of the gratuity scheme provides that on retirement or resignation of a workman after ten years ' service ten day 's consolidated wages for each year 's service should be awarded as gratuity. Mr. Sen quarrels with this provision. He contends that no gratuity should be admissible under this clause until and unless fifteen years ' service has been put in by the employee. In support of this argument Mr. Sen has referred us to certain observations made by this Court in the case of The Express Newspapers (Private) Ltd. & Anr. vs The Union of India & Ors. In that case the provisions of section 5 (1)(a) (iii) of the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955 (45 of 1955), was struck down on the ground that its provisions violated the fundamental right guaranteed by article 19(l)(g) The conclusion of this Court was that the provision for gratuity made by the said clause to an employee who had put in three years ' service imposes an unreasonable restriction on the employer 's right to carry on business and is therefore liable to be struck down as unconstitutional. Dealing with that provision this Court incidentally observed that where the employee has been in continuous service of the employer for a period of more than fifteen years he would be entitled to gratuity on his resigning his post. Mr. Sen contends that this observation indicates that an employee who resigns his post cannot be entitled to any gratuity (1) ; (2) , 154. 90 714 unless he has put in fifteen years ' service. In our opinion, the observation on which this argument is based was not intended to lay down a rule of universal application in regard to all gratuity schemes, and so it cannot be made the basis of an attack against a gratuity scheme where instead of fifteen years ' service 10 years ' minimum service is prescribed to enable an employee to claim gratuity at the rate determined if he resigns after ten years, service. Therefore, we do not think that the provision of cl. (ii)(a) can be successfully challenged as being unreasonable. Clause (iv) is then challenged by Mr. Sen. This clause provides that if a workman is dismissed or discharged for misconduct causing financial loss to the works gratuity to the extent of the loss should not be paid to the workman concerned. Mr. Sen contends that this clause is inconsistent with the principles on which gratuity claims are generally based. Gratuity which is in the nature of retrial benefit is based on long and meritorious service, and the argument is that if the service of an employee is terminated on the ground of misconduct it would not be open to him on principle to claim gratuity because misconduct puts a blot on the character of his service and that disqualifies him from any claim of gratuity. In this connection he has referred us to the definition of 'retrenchment ' contained in section 2 (oo) of the . Retrenchment, according to the definition, means, inter alia, the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action. Mr. Sen suggests that the retrenchment benefit and gratuity are payments made to the employee for a similar purpose, and if dismissal of an employee for misconduct does not entitle him to a claim for retrenchment benefit so should gratuity be denied to him in case he is dismissed for misconduct. A similar argument is based on the rules framed under the Employees ' Provident Funds Act, 1952. Rule 71 of the Provident Funds Scheme Rules provides for certain deductions from the account of a member dismissed for Serious and willful misconduct. By analogy 715 it is urged that this rule also shows that a dismissed employee is not entitled to gratuity. We are not impressed by these arguments. On principle if gratuity is earned by an employee for long and meritorious service it is difficult to under,stand why the benefit thus earned by long and meritorious )service should not be available to the employee even though at the end of such service lie may have been found guilty of misconduct which entails his dismissal. Gratuity is not paid to the employee gratuitously or merely as a matter of boon. It is paid to him for the service rendered by him to the employer, and when it is once earned it is difficult to understand why it should necessarily be denied to him whatever may be the nature of misconduct for his dismissal. Then, as to the definition of retrenchment in the , we are not satisfied that gratuity and retrenchment compensation stand exactly on the same footing in regard to the effect of misconduct on the rights of workmen. The rule of the provident fund scheme shows not that the whole provident fund is denied to the employee even if he is dismissed but it merely authorises certain deductions to be made and then too the deductions thus made do not revert to the employer either. Therefore we do not think that it would be possible to accede to the general argument that in all cases where the service of an employee is terminated for misconduct gratuity should not be paid to him. It appears that in awards which framed gratuity schemes sometimes simple misconduct is distinguished from gross misconduct and a penalty of forfeiture of gratuity benefit is denied in the latter case but not in the former, but latterly industrial tribunals appear generally to have adopted the rule which is contained in el. (ii) (b) of the present scheme. If the misconduct for which the service of an employee is terminated has caused financial loss to the works, then before gratuity could be paid to the employee he is called upon to compensate the employer for the whole of the financial loss caused by his misconduct, and after this compensation is paid to the employer if any balance from the gratuity claimable 716 by the employee remains that is paid to him. On the whole we are not satisfied that the clause thus framed by the Industrial Tribunal in the present case needs to be revised. The last contention raised by Mr. Sen in regard to the gratuity scheme has reference to cl. (v) of the scheme. This clause provides that for calculating years of service the entire service of the workmen should be taken into account. Mr. Sen contends that though the word "continuous" has not been used either in cl. (v) or in clauses (i), (ii) and (iii) we should make it clear that the service referred to in all the said clauses referred to continuous service. This position is not disputed by Mr. Dudhia for the respon dents. We would accordingly make it clear that the service referred to in clauses (i), (ii) and (iii) refers to continuous service. That takes us to the appellant 's grievance against the direction issued by the Tribunal in regard to the framing of the provident fund scheme on the lines of the model provident fund scheme drawn by the Government in the Employees ' Provident Funds Act. Mr. Sen contends that in issuing this direction the tribunal has not properly assessed the extent of the financial obligation which the scheme would impose upon the appellant and the limited nature of its financial capacity. It appears that when the appellant produced its balance sheet and other relevant papers it claimed privilege under section 21 of the . Inevitably the Tribunal could not discuss the figures disclosed by the said books in its award though it must have examined the said figures carefully. In the result the tribunal has naturally contented itself with the general observation as to the financial position of the appellant. It has observed that the question to consider in framing the provident fund scheme is whether the employer has made good profits, whether its future is assured, whether it has capacity to build up adequate reserves. Having thus posed the question the Tribunal ha, , come to the conclusion that the appellant satisfies all these requirements. Mr. Sen contends that the 717 tribunal did not take into account the fact that the appellant has no reserve&, and that it had borrowed large loans. We do not see how that would enable the appellant now to agitate a question which is purely a question of fact. Mr. Sen realised the difficulties in his way because, since his client had claimed the privilege of section 21 the Tribunal was fully justified in not discussing the figures in its award. He, therefore, faintly suggested that we may remand the case subject to any order as to costs that we may deem fit to make and ask the Tribunal to reconsider the matter in the light of the relevant documents, and he assured us that he would not claim privilege under section 21 after remand. This request is plainly untenable. If the appellant wanted the tribunal to consider the figures and state its conclusions in the light of the said figures in its award it need not have claimed privilege under section 21 at the trial. It is now too late to suggest that the privilege be waived and that the matter be considered afresh by the tribunal or by us in the appeal. Therefore we see no reason to interfere with the direction given by the Tribunal in regard to the framing of the provident fund scheme. The result is the appeal fails and is dismissed with costs. Appeal dismissed.

The Industrial Tribunal, on a reference under section 12 Of the , framed a gratuity scheme for the appellant company. The company challenged the validity of some of the provisions of the scheme on the grounds, inter alia, (1) that the scheme was framed on the basis of the units, while it should have been done on industry cum region basis, (2) that the scheme provided for the award of gratuity on the retirement or resignation of a workmen after ten years ' service instead of fixing the period as fifteen years, and (3) that cl. (ii)(b) of the scheme which provided that if a workman was dismissed or discharged for misconduct causing financial loss to the works, gratuity to the extent of the loss should not be paid to the workman concerned, was erroneous, because, on principle, misconduct put a blot on the character/of his service and that disqualified him from any claim of gratuity. Held:(1) that industry cum region basis is not the only basis on which a gratuity scheme could be framed and one framed on the basis of the units cannot be challenged as in valid. The Bharatkhand Textile Manufacturing Co. Ltd. vs The Textile Labour Association, Ahmedabad, ; , explained. (2) that the clause in the scheme prescribing ten years ' minimum service to enable an employee to claim gratuity is valid. The Express Newspapers (P.) Ltd. vs Union of India, , explained. (3) that gratuity is not paid to an employee gratuitously or merely as a matter of boon, but is paid to him for the service rendered by him to the employer; consequently he should not be wholly deprived of the benefit thus earned by long and meritorious service even though at the end of such service he might have been found guilty of misconduct which entailed his dismissal. Accordingly, cl. (ii)(b) of the scheme is a valid provision.

ION: Criminal Appeal No. 195 of 1960. Appeal by special leave from the judgment and order dated March 11, 1960, of the Bombay High Court in Criminal Jury Reference No. 159 of 1959. G. section Pathak, section G. Patwardhan, Rajini Patel, Porus A. Metha, J. B. Dadachaji, Ravinder Narain and O. C. Mathur, for the appellant. M. C. Setalvad, Attorney General of India, C. M. Trivedi, V. H. Gumeshte, B. R. G. K. Achar and R. H. Dhebar, for the respondent. November 24. The Judgment of the Court was delivered by SUBBA RAO, J. This appeal by special leave arises out of the judgment of the Bombay High Court sentencing Nanavati, the appellant, to life imprisonment for the murder of Prem Bhagwandas Ahuja, a businessman of Bombay. 573 This appeal presents the commonplace problem of an alleged murder by an enraged husband of a paramour of his wife: but it aroused considerable interest in the public mind by reason of the publicity it received and the important constitutional point it had given rise to at the time of its admission. The appellant was charged under section 302 as well as under section 304, Part I, of the Indian Penal Code and was tried by the Sessions Judge, Greater Bombay, with the aid of special jury. The jury brought in a verdict of "not guilty" by 8: 1 under both the sections; but the Sessions Judge did not agree with the verdict of the jury, as in his view the majority verdict of the jury was such that no reasonable body of men could, having regard to the evidence, bring in such a verdict. The learned Sessions Judge submitted the case under section 307 of the Code of Criminal Procedure to the Bombay High Court after recording the grounds for his opinion. The said reference was heard by a division bench of the said High Court consisting of Shelat and Naik, JJ. The two learned Judges gave separate judgments, but agreed in holding that the accused was guilty of the offence of murder under section 302 of the Indian Penal Code and sentenced him to undergo rigorous imprisonment for life. Shelat, J., having held that there were misdirections to the jury, reviewed the entire evidence and came to the conclusion that the accused was clearly guilty of the offence of murder, alternatively, he expressed the view that the verdict of the jury was perverse, unreasonable and, in any event, contrary to the weight of evidence. Naik, J., preferred to base his conclusion on the alternative ground, namely, that no reasonable body of persons could have come to the conclusion arrived at by the jury. Both the learned Judges agreed that no case had been made out to reduce the offence from murder to culpable 574 homicide not amounting to murder. The present appeal has been preferred against the said conviction and sentence. The case of the prosecution may be stated thus: This accused, at the time of the alleged murder, was second in command of the Indian Naval Ship "Mysore". He married Sylvia in 1949 in the registry office at Portsmouth, England. They have three children by the marriage, a boy aged 9 1/2 years a girl aged 5 1/2 years and another boy aged 3 years. Since the time of marriage, the couple were living at different places having regard to the exigencies of service of Nanavati. Finally, they shifted to Bombay. In the same city the deceased Ahuja was doing business in automobiles and was residing, along with his sister, in a building called "Shreyas" till 1957 and thereafter in another building called "Jivan Jyot" in Setalvad Road. In the year 1956, Agniks, who were common friends of Nanavatis and Ahujas, introduced Ahuja and his sister to Nanavatis. Ahuja was unmarried and was about 34 years of age at the time of his death, Nanavati, as a Naval Officer, was frequently going away from Bombay in his ship, leaving his wife and children in Bombay. Gradually, friendship developed between Ahuja and Sylvia, which culminated in illicit intimacy between them. On April 27, 1959, Sylvia confessed to Nanavati of her illicit intimacy with Ahuja. Enraged at the conduct of Ahuja, Nanavati went to his ship, took from the stores of the ship a semi automatic revolver and six cartridges on a false pretext, loaded the same, went to the flat of Ahuja entered his bed room and shot him dead. Thereafter, the accused surrendered himself to the police. He was put under arrest and in due course he was committed to the Sessions for facing a charge under section 302 of the Indian Penal Code. The defence version, as disclosed in the Statement made by the accused before the Sessions Court under section 342 of the Code of Criminal Procedure and 575 his deposition in the said Court, may be briefly stated: The accused was away with his ship from April 6, 1959, to April 18, 1959. Immediately after returning to Bombay, he and his wife went to Ahmednagar for about three days in the company of his younger brother and his wife. Thereafter, they returned to Bombay and after a few days his brother and his wife left them. After they had left, the accused noticed that his wife was behaving strangely and was not responsive or affectionate to him. When questioned, she used to evade the issue. At noon on April 27, 1959, when they were sitting in the sitting room for the lunch to be served, the accused put his arm round his wife affectionately, when she seemed to go tense and unresponsive. After lunch, when he questioned her about her fidelity, she shook her head to indicate that she was unfaithful to him. He guessed that her paramour was Ahuja. As she did not even indicate clearly whether Ahuja would marry her and look after the children, he decided to settle the matter with him. Sylvia pleaded with him not go to Ahuja 's house, as he might shoot him. Thereafter, he drove his wife, two of his children and a neighbour 's child in his car to a cinema, dropped them there and promised to come and pick them up at 6 P.M. when the show ended. He then drove his car to his ship, as he wanted to get medicine for his sick dog, he represented to the authorities in the ship, that he wanted to draw a revolver and six rounds from the stores of the ship as he was going to drive alone to Ahmednagar by night, though the real purpose was to shoot himself. On receiving the revolver and six cartridges, and put it inside a brown envelope. Then he drove his car to Ahuja 's office, and not finding him there, he drove to Ahuja 's flat, rang the door bell, and, when it was opened by a servant, walked to Ahuja 's bed room, went into the bed room and shut the door behind him. He also carried with him the envelope containing 576 the revolver. The accused saw the deceased inside the bed room, called him a filthy swine and asked him whether he would marry Sylvia and look after the children. The deceased retorted, "Am I to marry every woman I sleep with ?" The accused became enraged, put the envelope containing the revolver on a cabnit nearby, and threatened to thrash the deceased. The deceased made a sudden move to grasp at the envelope, when the accused whipped out his revolver and told him to get back. A struggle ensued between the two and during that struggle two shots went off accidentally and hit Ahuja resulting in his death. After the shooting the accused went back to his car and drove it to the police station where he surrendered himself. This is broadly, omitting the details, the case of the defence. It would be convenient to dispose of at the outset the questions of law raised in this case. Mr. G. S Pathak, learned counsel for the accused, raised before us the following points: (1) Under section 307 of the Code of Criminal Procedure, the High Court should decide whether a reference made by a Sessions Judge was competent only on a perusal of the order of reference made to it and it had no jurisdiction to consider the evidence and come to a conclusion whether the reference was competent or not. (2) Under section 307(3) of the said Code, the High Court had no power to set aside the verdict of a jury on the ground that there were misdirections in the charge made by the Sessions Judge. (3) I here were no misdirections at all in the charge made by the Sessions Judge; and indeed his charge was fair to the prosecution as well to the accused. (4) The verdict of the jury was not perverse and it was such that a reasonable body of persons could arrive at it on the evidence placed before them. (5) In any view, the accused shot at the deceased under grave and sudden provocation, and therefore even if he had committed 577 an offence, it would not be murder but only culpable homicide not amounting to murder. Mr. Pathak elaborates his point under the first heading thus: Under section 307 of the Code of Criminal Procedure, the High Court deals with the reference in two stages. In the first stage, the High Court has to consider, on the basis of the referring order, whether a reasonable body of persons could not have reached the conclusion arrived at by the jury; and, if it is of the view that such a body could have come to that opinion the reference shall be rejected as incompetent. At this stage, the High Court cannot travel beyond the order of reference, but shall confine itself only to the reasons given by the Sessions Judge. If, on a consideration of the said reasons, it will of the view that no reasonable body of persons could have come to that conclusion, it will then have to consider the entire evidence to ascertain whether the verdict of the jury is unreasonable. If the High Court holds that the verdict of the jury is not unreasonable, in the case of a verdict of "not guilty", the High Court acquits the accused, and in the case where the verdict is one of "guilty" it convicts the accused. In case the High Court holds that the verdict of "not guilty", is unreasonable, it refers back the case to the Sessions Judge, who convicts the accused; thereafter the accused will have a right of appeal wherein he can attack the validity of his conviction on the ground that there were misdirections in the charge of the jury. So too, in the case of a verdict of "guilty" by the jury, the High Court, if it holds that the verdict is unreasonable, remits the matter to the Sessions Judge, who acquits the accused, and the State, in an appeal against that acquittal, may question the correctness of the said acquittal on the ground that the charge to the jury was vitiated by misdirections. In short, the argument may be put in three propositions, namely, (i) the High Court rejects the 578 reference as incompetent, if on the face of the reference the verdict of the jury does not appear to be unreasonable, (ii) if the reference is competent, the High Court can consider the evidence to come to a definite conclusion whether the verdict is unreasonable or not, and (iii) the High Court has no power under section 307 of the Code of Criminal Procedure to set aside the verdict of the jury on the ground that it is vitiated by misdirections in the charge to the jury. The question raised turns upon the construction of the relevant provisions of the Code of Criminal Procedure. The said Code contains two fascicule of sections dealing with two different situations. Under section 268 of the Code, "All trials before a Court of Session shall be either by jury, or by the Judge himself." Under section 297 thereof: "In cases tried by jury, when the case for the defence and the prosecutor 's reply, if any, are concluded, the Court shall proceed to charge the jury, summing up the evidence for the prosecution and defence, and laying down the law by which the jury are to be guided . . . ". Section 298 among other imposes a duty on a judge to decide all questions of law arising in the course of the trial, and especially all questions as to the relevancy of facts which it is proposed to be proved, and the admissibility of evidence or the propriety of questions asked by or on behalf of the parties, and to decide upon all matters of fact which it is necessary to prove in order to enable evidence of particular matter to be given. It is the duty of the jury "to decide which view of the facts is true and then to return the verdict which under such view ought, according to the directions of the Jury, to be returned. " After the charge to the jury, the jury retire to consider their verdict and, after due consideration, the foreman of the jury informs the Judge what is their verdict or what is the verdict of the majority of the jurors. 579 Where the Judge does not think it necessary to disagree with the verdict of the jurors or of the majority of them, he gives judgment accordingly. If the accused is acquitted, the Judge shall record a verdict of acquittal; if the accused is convicted, the Judge shall pass sentence on him according to law. In the case of conviction, there is a right of appeal under section 410 of the Code, and in a case of acquittal, under section 417 of the Code, to the High Court. But section 418 of the Code provides: "(1) An appeal may lie on a matter of fact as well as a matter of law except where the trial was by jury, in which case the appeal shall lie on a matter of law only. " Sub section (2) therefore provides for a case of a person sentenced to death, with which we are not now concerned. Section 423 confers certain powers on an appellate Court in the matter of disposing of an appeal, such as calling for the record, hearing of the pleaders, and passing appropriate orders therein. But sub section (2) of section 423 says: "Nothing herein contained shall authorise the Court to alter or reverse the verdict of the jury, unless it is of opinion that such verdict is erroneous owning to a misdirection by the Judge, or to a misunderstanding on the part of the jury of the law as laid down by him. " It may be noticed at this stage, as it will be relevant in considering one of the arguments raised in this case, that sub section (2) does not confer any power on an appellate court, but only saves the limitation on the jurisdiction of an appellate court imposed under section 418 of the Code. it is, therefore, clear that in an appeal against conviction or acquittal in a jury trial, the said appeal is confined only to a matter of law. The Code of Criminal Procedure also provides for a different situation. The Sessions Judge may 580 not agree with the verdict of the jurors or the majority of them; and in that event section 307 provides for a machinery to meet that situation. As the argument mainly turns upon the interpretation of the provisions of this section, it will be convenient to read the relevant clauses thereof. Section 307: (1) If in any such case the Judge disagrees with the verdict of the jurors, or of a majority of jurors, on all or any of the charges on which any accused person had been tried, and is clearly of opinion that it is necessary for the ends of justice to submit the case in respect of such accused person to the High Court, he shall submit the case accordingly, recording the grounds of his opinion, and, when the verdict is one of acquittal, stating the offence which he considers to have been committed, and in such case, if the accused is further charged under the provisions such charge as if such verdict had been one of conviction. (3) In dealing with the case so submitted the High Court may exercise any of the powers which it may exercise on an appeal, and subject thereto it shall, after considering the entire evidence and after giving due weight to the opinions of the Sessions Judge and the jury, acquit or convict such accused of any offence of which the jury could have convicted him upon the charge framed and placed before it; and, if it convicts him, may pass such sentence as might have been passed by the Court of Session. This section is a clear departure from the English law. There are good reasons for its enactment. Trial by jury outside the Presidency Towns was first introduced in the Code of Criminal Procedure of 1861, and the verdict of the jury was, 581 subject to re trial on certain events, final and conclusive. This led to miscarriage of justice through jurors returning erroneous verdicts due to ignorance and inexperience. The working of the system was reviewed in 1872, by a committee appointed for that purpose and on the basis of the report of the said Committee, section 262 was introduced in the Code of 1872. Under that section, where there was difference of view between the jurors and the judge, the Judge was empowered to refer the case to the High Court in the ends of justice, and the High Court dealt with the matter as an appeal. But in 1882 the section was amended and under the amended section the condition for reference was that the High Court should differ from the jury completely; but in the Code of 1893 the section was amended practically in terms as it now appears in the Code. The history of the legislation shows that the section was intended as a safeguard against erroneous verdicts of inexperienced furors and also indicates the clear intention of the Legislature to confer on a High Court a separate jurisdiction, which for convenience may be described as "reference jurisdiction". Section 307 of the Code of Criminal Procedure, while continuing the benefits of the jury system to persons tried by a Court of Session, also guards against any possible injustice, having regard to the conditions obtaining in India. It is, therefore clear that there is an essential difference between the scope of the jurisdiction of the High Court in disposing of an appeal against a conviction or acquittal, as the case may be, in a jury trial, and that in a case submitted by the Sessions Judge when he differs from the verdict of the jury: in the former the acceptance of the verdict of the jury by the sessions Judge is considered to be sufficient guarantee against its perversity and therefore an appeal is provided only on questions of law, whereas in the latter the absence of such agreement necessitated the conferment of a larger power on 582 the High Court in the matter of interfering with the verdict of the jury. Under section 307(1) of the Code, the obligation cast upon the Sessions Judge to submit the case to the High Court is made subject to two conditions, namely, (1) the Judge shall disagree with the verdict of the jurors, and (2) he is clearly of the opinion that it is necessary in the ends of justice to submit the case to the High Court. If the two conditions are complied with, he shall submit the case, recording the grounds of his opinion. The words "for the ends of justice" are comprehensive, and coupled with the words "is clearly of opinion", they give the Judge a discretion to enable him to exercise his power under different situations, the only criterion being his clear opinion that the reference is in the ends of justice. But the Judicial Committee, in Ramanugrah Singh vs King Emperor(1), construed the words "necessary for the ends of justice" and laid down that the words mean that the Judge shall be of the opinion that the verdict of the jury is one which no reasonable body of men could have reached on the evidence. Having regard to that interpretation, it may be held that the second condition for reference is that the Judge shall be clearly of the opinion that the verdict is one which no reasonable body of men could have reached on the evidence. It follows that if a Judge differs from the jury and is clearly of such an opinion, he shall submit the case to the High Court recording the grounds of his opinion. In that event, the said reference is clearly competent. If on the other hand, the case submitted to the High Court does not ex facie show that the said two conditions have been complied with by the Judge, it is incompetent. The question of competency of the reference does not depend upon the question whether the Judge 583 is justified in differing from the jury or forming such an opinion on the verdict of the jury. The argument that though the Sessions Judge has complied with the conditions necessary for making a references, the High Court shall reject the reference as incompetent without going in to the evidence if the reasons given do not sustain the view expressed by the Sessions Judge, is not supported by the provisions of sub section (1) of section 307 of the Code. But it is said that it is borne out of the decision of the Judicial Committee in Ramanugrah Singh 's case(1). In that case the Judicial Committee relied upon the words "ends of justice" end held that the verdict was one which no reasonable body of men could have, reached on the evidence and further laid down that the requirements of the ends of justice must be the determining factor both for the Sessions Judge in making the reference and for the High Court in disposing of it. The Judicial Committee observed: "In general, if the evidence is such that it can properly support a verdict either of guilty or not guilty, according to the view taken of it by the trial court, and if the jury take one view of the evidence and the judge thinks that they should have taken the other, the view of the jury. must prevail, since they are the judges of fact. In such a case a reference is not justified, and it is only by accepting their view that the High Court can give due weight to the opinion of the jury. If, however, the High Court considers that on the evidence no reasonable body of men could have reached the conclusion arrived at by the jury, then the reference was justified and the ends of justice require that the verdict be disregarded. " The Judicial Committee proceeded to state: "In their Lordships ' opinion had the High Court approached the reference on the right 584 lines and given due weight to the opinion of the jury they would have been bound to hold that the reference was not justified and that the ends of justice did not require any interference with the verdict of the jury." Emphasis is laid on the word "justified", and it is argued that the High Court should reject the reference as incompetent if the reasons given by the Sessions Judge in the statement of case do not support his view that it is necessary in the ends of justice to refer the case to the High Court. The Judicial Committee does not lay down any such proposition. There, the jury brought in a verdict of not "guilty" under section 302, Indian Penal Code. The Sessions Judge differed from the jury and made a reference to the High Court. The High Court accepted the reference and convicted the accused and sentenced him to transportation for life. The Judicial Committee held, on the facts of that case, that the High Court was not justified in the ends of justice to interfere with the verdict of the jury. They were not dealing with the question of competency of a reference but only with that of the justification of the Sessions Judge in making the reference, and the High Court in accepting it. It was also not considering a case of any disposal of the reference by the High Court on the basis of the reasons given in the reference, but were dealing with a case where the High Court on a consideration of the entire evidence accepted the reference and the Judicial Committee held on the evidence that there was no justification for the ends of justice to accept it. This decision, therefore, has no bearing on the competency of a reference under section 307(1) of the Code of criminal Procedure. Now, coming to sub section (3) of section 307 of the Code, it is in two parts. The first part says that the High Court may exercise any of the powers which it may exercise in an appeal. Under the 585 second part, after considering the entire evidence and after giving due weight to the opinions of the Sessions Judge and the jury, the High Court shall acquit or convict the accused. These parts are combined by the expression and subject thereto". The words "subject thereto" were added to the section by an amendment in 1896. This expression gave rise to conflict of opinion and it is conceded that it laces clarity. That may be due to the fact that piecemeal amendments have been made to the section from time to time to meet certain difficulties. But we cannot ignore the expression, but we must give it a reasonable construction consistent with the intention of the Legislature in enacting the said section. Under the second part of the section, special jurisdiction to decide a case referred to it is conferred on the High Court. It also defined the scope of its jurisdiction and its limitations The High Court can acquit or convict an accused of an offence of which the jury could have convicted him, and also pass such sentence as might have been passed by the Court of Session. But before doing so, it shall consider the entire evidence and give due weight to the opinions of the Sessions Judge and the jury. The second part does not confer on the High Court any incidental procedural powers necessary to exercise the said jurisdiction in a case submitted to it, for it is neither an appeal nor a revision. The procedural powers are conferred on the High Court under the first part. The first part enables the High Court to exercise any of the powers which it may exercise in appeal, for without such powers it cannot exercise its jurisdiction effectively. But the expression "subject to" indicates that in exercise of its jurisdiction in the manner indicated by the second part, it can call in aid only any of the powers of an appellate court, but cannot invoke a power other than that conferred on an appellate court. The limitation on the second part implied in the expression "subject", must 586 be confined to the area of the procedural powers conferred on a appellate court. If that be the construction, the question arises, how to reconcile the provisions of section 423 (2) with those of section 307 of the Code ? Under sub section (2) of section 423: "Nothing herein contained shall authorise the Court to alter or reverse the verdict of a jury, unless it is of opinion that such verdict is erroneous owing to a misdirection by the Judge, or to a misunderstanding on the part of the jury of the law as laid down by him. " It may be argued that, as an appellate court cannot alter or reverse the verdict of a jury unless such a verdict is erroneous owing to a misdirection by the Judge, or to a misunderstanding on the part of the jury of the law as laid down by him, the High Court, in exercise of its jurisdiction under section 307 of the Code, likewise could not do so except for the said reasons. Sub section (2) of section 423 of the Code does not confer any power of the High Court; it only restates the scope of the limited jurisdiction conferred on the could under section 418 of the Code, and that Could not have any application to the special jurisdiction conferred on the High Court under section 307. That apart, a perusal of the provisions of section 423 (1) indicates that there are powers conferred on an appellate court which cannot possibly be exercised by courts disposing of reference under section 307 of the Code, namely, the power to order commitment etc. Further section 423 (1) (a) and (b) speak of conviction, acquittal, finding and sentence, which are wholly inappropriate to verdict of a jury. Therefore, a reasonable construction will be that the High Court can exercise any of the powers conferred on an appellate court under section 423 or under either sections of the Code which are appropriate to the disposal of a, reference under section 307. The object is to prevent miscarriage of the justice by the jurors returning erroneous 587 or preverse verdict. The opposite construction defeats this purpose, for it equates the jurisdiction conferred under section 307 with that of an appellate court in a jury trial. That construction would enable the High Court to correct an erroneous verdict of a jury only in a case of misdirection by the Judge but not in a case affair and good charge. This result effaces the distinction between the two types of jurisdiction. Indeed, learned counsel for the appellant has taken a contrary position. He would say that the High Court under section 307 (3) could not interfere with the verdict of the jury on the ground that there were misdirections in the charge to the jury. This argument is built upon the hypothesis that under the Code of criminal Procedure there is a clear demarcation of the functions of the jury and the Judge, the jury dealing with facts and the Judge with the and therefore the High Court could set aside a verdict on the ground of misdirection only when an appeal comes to it under section 418 and could only interfere with the verdict of the jury for the ends of justice, as interpreted by the Privy Council, when the matter comes to it under 8. 307 (3). If this interpretation be accepted, we would be attributing to the Legislature an intention to introduce a circuitous method and confusion in the disposal of criminal cases. The following illustration will demonstrate the illogical result of the argument. The jury brings in a verdict of "guilty" on the basis of a charge replete with misdirections; the Judge disagrees with that verdict and states the case to the High court; the High Court holds that the said verdict is not erroneous on the basis of the charge, but is of the opinion that the verdict is erroneous because of the misdirections in the charge; even so, it shall hold that the verdict of the jury is good and reject the reference thereafter, the Judge his to accept the verdict and acquit the accused; the prosecution then will have 588 to prefer an appeal under section 417 of the Code on the ground that the verdict was induced by the misdirections in the charge. This could not have been the intention of the Legislature. Take the converse case. On similar facts, the jury brings in a verdict of guilty"; the Judge disagrees with the jury and makes a reference to the High Court; even though it finds misdirections in the charge to the jury, the High Court cannot set aside the conviction but must reject the reference; and after the conviction, the accused may prefer an appeal to the High Court. This procedure will introduce confusion in jury trials, introduce multiplicity of proceedings, and attribute ineptitude to the Legislature. What is more, this construction is not supported by the express provisions of section 307 (3) of the Code. The said sub section enables the High Court to consider the entire evidence, to give due weight to the opinions of the Sessions Judge and the jury, and to acquit or convict the accused. The key words in the sub section are "giving due weight to the opinions of the Sessions Judge and the jury". The High Court shall give weight to the verdict of the jury; but the weight to be given to a verdict depends upon many circumstances it may be one that no reasonable body of persons could come to; it may be a perverse verdict; it may be a divided verdict and may not carry the same weight as the united one does; it may be vitiated by misdirections or non directions. How can a Judge give any weight to a verdict if it is induced and vitiated by grave misdirections in the charge ? That apart, the High Court has to give due weight to the opinion of the Sessions Judge. The reasons for the opinion of the Sessions Judge are disclosed in the case submitted by him to the High Court. If the case stated by the sessions Judge disclosed that there must have been misdirections the charge, how. can the High Court ignore them in giving due weight to his 589 opinion ? What is more, the jurisdiction of the High Court is couched in very wide terms in sub section (3) of section 307 of the Code: it can acquit or convict an accused. It shall take into consideration the entire evidence in the case; it shall give due weight to the opinions of the Judge and the jury; it combines in itself the functions of the Judge and jury; and it is entitled to come to its independent opinion. The phraseology used does not admit of an expressed or implied limitation on the jurisdiction of the High Court. It appears to us that the Legislature designedly conferred a larger power on the High Court under section 307(3) of the code than that conferred under section 418 thereof, as in the former case the Sessions Judge differs from the jury while in the latter he agrees with the jury. The decisions cited at the Bar do not in any way sustain in narrow construction sought to be placed by learned counsel on section 307 of the code. In Ramanugrah Singh 's case (1), which have been referred to earlier, the Judicial Committee described the wide amplitude of the power of the High Court in the following terms: "The Court must consider the whole case and give due weight to the opinions of the Sessions Judge and jury, and than acquit or convict the accused." The Judicial Committee took care to observe: ". the test of reasonableness on the part of the jury may not be conclusive in every case. It is possible to suppose a case in which the verdict was justified on the evidence placed before the jury, but in the light of further evidence placed before the High Court the verdict is shown to be wrong. In such case the ends of justice would 590 require the verdict to be set aside though the jury had not acted unreasonably." This passage indicates that the Judicial Committee did not purport to lay down exhaustively the circumstances under which the High Court could interfere under the said sub section with the verdict of the jury. This Court in Akhlakali Hayatalli vs The State of Bombay accepted the view of the Judicial Committee on the construction of section 307 of the Code of Criminal Procedure, and applied it to the facts of that case. But the following passage of this Court indicates that it also does not consider the test of reasonableness as the only guide in interfering with the verdict of the jury: "The charge was not attacked before the High court nor before us as containing any misdirections or non directions to the jury such as to vitiate the verdict. " This passage recognizes the possibility of interference by the High Court with the verdict of the jury under the said sub section if the verdict is vitiated by misdirections or non directions. So too the decision of this court in Ratan Rai vs State of Bihar assumes that such an interference is permissible if the verdict of the jury was vitiated by misdirections. In that case, the appellants were charged under sections 435 and 436 of the Indian Penal Code and were tried by a jury, who returned a majority verdict of "guilty". The Assistant Sessions Judge disagreed with the said verdict and made a reference to the High Court. At the hearing of the reference to counsel for the appellants contended that the charge to the jury was defective, and did not place the entire evidence before the Judges. The learned Judges of the High Court considered the objections as such and nothing more, and found the appellants guilty and convicted them. This Court, observing that it was incumbent on the High 591 Court to consider the entire evidence and the charge as framed and placed before the jury and to come to its own conclusion whether the evidence was such that could properly support the verdict of guilty against the appellants, allowed the appeal and remanded the matter to the High Court for disposal in accordance with the provisions of section 307 of the Code of Criminal Procedure. This decision also assumes that a High Court could under section 307 (3) of the Code of Criminal Procedure interfere with the verdict of the Jury, if there are misdirections in the charge and holds that in such a case it is incumbent on the court to consider the entire evidence and to come to its own conclusion, after giving due weight to the opinions of the Sessions Judge, and the verdict of the jury. This Court again in Sashi Mohan Debnath vs The State of West Bengal, held that where the Sessions Judge disagreed with the verdict of the jury and was of the opinion that the case should be submitted to the High Court, he should submit the whole case and not a part of it. There, the jury returned a verdict of "guilty" in respect of some charges and "not guilty" in respect of others. But the Sessions Judge recorded his judgment of acquittal in respect of the latter charges in agreement with the jury and referred the case to the High Court only in respect of the former. This Court held that the said procedure violated sub section (2) of section 307 of the Code of Criminal Procedure and also had the effect of preventing the High Court from considering the entire evidence against the accused and exercising its jurisdiction under sub section (3) of section 307 of the said Code. Imam, J., observed that the reference in that case was incompetent and that the High Court could not proceed to exercise any of the powers conferred upon it under sub section (3) of section 307 of the Code, because the very foundation of the exercise of that power was lacking, the reference being incompetent. This 592 Court held that the reference was incompetent because the Sessions Judge contravened the express provisions of sub section (2) of section 307 of the Code, for under that sub section whenever a Judge submits a case under that section, he shall not record judgment of acquittal or of conviction on any of the charges on which such accused has been tried, but he may either remand such accused to custody or admit him to bail. As in that case the reference was made in contravention of the express provisions of sub section (2) of section 307 of the Code and therefore the use of the word 'incompetent ' may not be in appropriate. The decision of a division bench of the Patna High Court in Emperor vs Ramadhar Kurmi may usefully be referred to as it throws some light on the question whether the High Court can interfere with the verdict of the jury when it is vitiated by serious misdirections and non directions. Das, J., observed: "Where, however, there is misdirection, the principle embodied in section 537 would apply and if the verdict is erroneous owing to the misdirection, it can have no weight on a reference under section 307 as on an appeal. It is not necessary to multiply decisions. The foregoing discussion may be summarized in the form of the following propositions: (1) The competency of a reference made by a Sessions Judge depends upon the existence of two conditions, namely, (i) that he disagrees with the verdict of the jurors, and (ii) that he is clearly of the opinion that the verdict is one which no reasonable body of men could have reached on the evidence, after reaching that opinion, in the case submitted by him he shall record the grounds of his opinion. (2) If the case submitted shows that the conditions have not been complied with or that the reasons for the opinion are not recorded, the High Court may reject the reference as incompetent : the 593 High Court can also reject it if the Sessions Judge has contravened sub section (2) of section 307. (3) If the case submitted shows that the Sessions Judge has disagreed with the verdict of the jury and that he is clearly of the opinion that no reasonable body of men could have reached the conclusion arrived at by the jury, and he discloses his reasons for the opinion, sub section (3) of section 307 of the Code comes into play, and thereafter the High Court has an obligation to discharge its duty imposed thereunder. (4) Under sub section (3) of section 307 of the Code, the High Court has to consider the entire evidence and, after giving due weight to the opinions of the Sessions Judge and the jury, acquit or convict the accused. (5) The High Court may deal with the reference in two ways, namely, (i) if there are misdirections vitiating the verdict, it may, after going into the entire evidence, disregard the verdict of the jury and come to its own conclusion, and (ii) even if there are no misdirections, the High court can interfere with the verdict of the jury if it finds the verdict "perverse in the sense of being unreasonable", "manifestly wrong", or "against the wight of evidence", or, in other words, if the verdict is such that no reasonable body of men could have reached on the evidence. (6) In the disposal of the said reference, the High Court can exercise any of the procedural powers appropriate to the occasion, such as, issuing of notice, calling for records, remanding the case, ordering a retrial, etc. We therefore, reject the first contention of learned counsel for the appellant. The next question is whether the High Court was right in holding that there were misdirections in the charge to the jury. Misdirections is something which a judge in his charge tells the jury and is wrong or in a wrong manner tending to mislead them. Even an omission to mention matters which are essential to the prosecution or the defence case in order to help the jury to come to a correct 594 verdict may also in certain circumstances amount to a misdirection. But, in either case, every misdirection or non direction is not in itself sufficient to set aside a verdict, but it must be such that it has occasioned a failure of justice. In Mushtak Hussein vs The State of Bombay, this Court laid down: "Unless therefore it is established in a case that there has been a serious misdirection by the judge in charging the jury which has occasioned a failure of justice and has misled the jury in giving its verdict, the verdict of the jury cannot be set aside." This view has been restated by this Court in a recent decision, viz., Smt. Nagindra Bala Mitra vs Sunil Chandra Roy. The High Court in its judgment referred to as many as six misdirections in the charge to the jury which in its view vitiated the verdict, and it also stated that there were many others. Learned counsel for the appellant had taken each of the said alleged misdirections and attempted to demonstrate that they were either no misdirections at all, or even if they were, they did not in any way affect the correctness of the verdict. We shall now take the first and the third misdirections pointed out by Shelat, J., as they are intimately connected with each other. They are really omissions. The first omission is that throughout the entire charge there is no reference to section 105 of the Evidence Act or to the statutory presumption laid down in that section. The second omission is that the Sessions Judge failed to explain to the jury the legal ingredients of section 80 of the Indian Penal Code, and also failed to direct them that in law the said section was not applicable to the facts of the case. To appreciate the scope of the alleged 595 omissions, it is necessary to read the relevant provisions. Section 80 of the Indian Penal Code. "Nothing is an offence which is done by accident or misfortune, and without any criminal intention or knowledge in the doing of a lawful act in a lawful manner by lawful means and with proper care and caution. " Evidence Act. Section 103: "The burden of proof as to any particular fact lies on that person who wishes the Court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person. " Section 105: "When a person is accused of any offence, the burden of proving the existence of circumstances bringing the case within any of the General Exceptions in the Indian Penal Code (XLV of 1860) or within any special exception or proviso contained in any other part of the same Code, or in any law defining the offence, is upon him, and the Court shall presume the absence of such circumstances. " Section 3: "In this Act the following words and expressions are used in the following senses, unless a contrary intention appears from the context: A fact is said to be disproved when, after considering the matters before it, the Court either believes that it does not exist, or considers its non existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it does not exist. " 596 Section 4: . ."Whenever it is directed by this Act that the Court shall presume a fact, it shall regard such fact as proved unless and until it is disproved." The legal impact of the said provisions on the question of burden of proof may be stated thus: In India, as it is in England, there is a presumption of innocence in favour of the accused as a general rule, and it is the duty of the prosecution to prove the guilty of the accused; to put it in other words, the accused is presumed to be innocent until his guilt is established by the prosecution. But when an accused relies upon the General Exceptions in the Indian Penal Code or on any special exception or proviso contained in any other part of the Penal Code, or in any law defining an offence, section 105 of the Evidence Act raises a presumption against the accused and also throws a burden on him to rebut the said presumption. Under that section the Court shall presume the absence of circumstances bringing the case within any of the exceptions, that is, the Court shall regard the non existence of such circumstances as proved till they are disproved. An illustration based on the facts of the present case may bring out the meaning of the said provision. The prosecution alleges that the accused intentionally shot the deceased; but the accused pleads that, though the shots emanated from his revolver and hit the deceased, it was by accident, that is, the shots went off the revolver in the course of a struggle in the circumstances mentioned in section 80 of the Indian Penal Code and hit the deceased resulting in his death. The Court then shall presume the absence of circumstances bringing the case within the provisions of section 80 of the Indian Penal Code, that is, it shall presume that the shooting was not by accident, and that the other circumstances bringing the case within the exception did not exist; but this presumption may be rebutted by the accused by adducing evidence to 597 support his plea of accident in the circumstances mentioned therein. This presumption may also be rebutted by admissions made or circumstances elicited by the evidence led by the prosecution or by the combined effect of such circumstances and the evidence adduced by the accused. But the section does not in any way affect the burden that lies on the prosecution to prove all the ingredients of the offence with which the accused is charged: that burden never shifts. The alleged conflict between the general burden which lies on the prosecution and the special burden imposed on the accused under section 105 of the Evidence Act is more imaginary than real. Indeed, there is no conflict at all. There may arise three different situations: (1) A statute may throw the burden of proof of all or some of the ingredients of an offence on the accused: (see sections 4 and 5 of the Prevention of Corruption Act). (2) The special burden may not touch the ingredients of the offence, but only the protection given on the assumption of the proof of the said ingredients: (see sections 77,78,79,81 and 88 of the Indian Penal Code). (3) It may relate to an exception, some of the many circumstances required to attract the exception if proved affecting the proof of all or some of the ingredients of the offence: (see section 80 of the Indian Penal Code). In the first case the burden of proving the ingredients or some of the ingredients of the offence, as the case may be, lies on the accused. In the second case, the burden of bringing the case under the exception lies on the accused. In the third case, though the burden lies on the accused to bring his case within the exception, the facts proved may not discharge the said burden, but may affect the proof of the ingredients of the offence. An illustration may bring out the meaning. The prosecution has to prove that the accused shot dead the deceased intentionally and thereby committed the offence of murder within the meaning of section 300 of the Indian 598 Penal Code; the prosecution has to prove the ingredients of murder, and one of the ingredients of that offence is that the accused intentionally shot the deceased; the accused pleads that he shot at the deceased by accident without any intention or knowledge in the doing of a lawful act in a lawful manner by lawful means with proper care and caution; the accused against whom a presumption is drawn under section 105 of the Evidence Act that the shooting was not by accident in the circumstances mentioned in section 80 of the Indian Penal Code, may adduce evidence to rebut that presumption. That evidence may not be sufficient to prove all the ingredients of section 80 of the Indian Penal Code, but may prove that the shooting was by accident or inadvertence, i.e., it was done without any intention or requisite state of mind, which is the essence of the offence, within the meaning of section 300, Indian Penal Code, or at any rate may throw a reasonable doubt on the essential ingredients of the offence of murder. In that event though the accused failed to bring his case within the terms of section 80 of the Indian Penal Code, the Court may hold that the ingredients of the offence have not been established or that the prosecution has not made out the case against the accused. In this view it might be said that the general burden to prove the ingredients of the offence, unless there is a specific statute to the contrary, is always on the prosecution, but the burden to prove the circumstances coming under the exceptions lies upon the accused. The failure on the part of the accused to establish all the circumstances bringing his case under the exception does not absolve the prosecution to prove the ingredients of the offence; indeed, the evidence, though insufficient to establish the exception, may be sufficient to negative one or more of the ingredients of the offence. 599 The English decisions relied upon by Mr. Pathak, learned counsel for the accused, may not be of much help in construing the provisions of section 105 of the Indian Evidence Act. We would, therefore, prefer not to refer to them, except to one of the leading decisions on the subject, namely, Woolmington vs The Director of Public Prosecutions. The headnote in that decision gives its gist, and it read: "In a trial for murder the Crown must prove death as the result of a voluntary act of the prisoner and malice of the prisoner. When evidence of death and malice has been given, the prisoner is entitled to show by evidence or by examination of the circumstances adduced by the Crown that the act on his part which caused death was either unintentional or provoked. If the jury are either satisfied with his explanation or, upon a review of all the evidence, are left in reasonable doubt whether, even if his explanation be not accepted, the act was unintentional or provoked, the prisoner is entitled to be acquitted. " In the course of the judgment Viscount Sankey, L. C., speaking for the House, made the following observations: "But while the prosecution must prove the guilt of the prisoner, there is no such burden laid on the prisoner to prove his innocence and it is sufficient for him to raise a doubt as to his guilt; he is not bound to satisfy the jury of his innocence. Throughout the web of the English Criminal Law one golden thread is always to be seen that it is the duty of the prosecution to prove the prisoner 's guilt subject to what I have already said as to the defence of insanity and subject also to any statutory exception. If, 600 at the end of and on the whole of the case, there is a reasonable doubt, created by the evidence given by either the prosecution or the prisoner, as to whether the prisoner killed the deceased with a malicious intention, the prosecution has not made out the case and the prisoner is entitled to an acquittal. " These passages are not in conflict with the opinion expressed by us earlier. As in England so in India, the prosecution must prove the guilt of the accused, i.e., it must establish all the ingredients of the offence with which he is charged. As in England so also in India, the general burden of proof is upon the prosecution; and if, on the basis of the evidence adduced by the prosecution or by the accused, there is a reasonable doubt whether the accused committed the offence, he is entitled to the benefit of doubt. In India if an accused pleads an exemption within the meaning of section 80 of the Indian Penal Code, there is a presumption against him and the burden to rebut that presumption lies on him. In England there is no provision similar to section 80 of the Indian Penal Code, but Viscount Sankey, L. C., makes it clear that such a burden lies upon the accused if his defence is one of insanity and in a case where there is a statutory exception to the general rule of burden of proof. Such an exception we find in section 105 of the Indian Evidence Act. Reliance is placed by learned counsel for the accused on the decision of the Privy Council in Attygalle vs Emperor in support of the contention that notwithstanding section 105 of the Evidence Act, the burden of establishing the absence of accident within the meaning of section 80 of the Indian Penal Code is on the prosecution. In that case, two persons were prosecuted, one for performing an illegal operation and the other for abetting him in that crime. Under section 106 of the Ordinance 14 of 601 1895 in the Ceylon Code, which corresponds to section 106 of the Indian Evidence Act, it was enacted that when any fact was especially within the knowledge of any person, the burden of proving that fact was upon him. Relying upon that section, the Judge in his charge to the jury said: "Miss Maye that is the person upon whom the operation was alleged to have been performed was unconscious and what took place in that room that three quarters of an hour that she was under chloroform is a fact specially within the knowledge of these two accused who were there. The burden of proving that fact, the law says, is upon him, namely that no criminal operation took place but what took place was this and this speculum examination. " The Judicial Committee pointed out: "It is not the law of Ceylon that the burden is cast upon an accused person of proving that no crime has been committed. The jury might well have thought from the passage just quoted that that was in fact a burden which the accused person had to discharge. The summing up goes on to explain the presumption of innocence in favour of accused persons, but it again reiterates that the burden of proving that no criminal operation took place is on the two accused who were there." The said observations do not support the contention of learned counsel. Section 106 of Ordinance 14 of 1895 of the Ceylon Code did not cast upon the accused a burden to prove that he had not committed any crime; nor did it deal with any exception similar to that provided under section 80 of the Indian Penal Code. It has no hearing on the construction of s.105 of the Indian Evidence Act. The 602 decisions of this Court in The State of Madras vs A. Vaidyanatha Iyer (1), which deals with section 4 of the Prevention of Corruption Act, 1947, and C.S.D. Swami vs The State(2), which considers the scope of section 5(3) of the said Act, are examples of a statute throwing the burden of proving and even of establishing the absence of some of the ingredients of the offence on the accused; and this Court held that notwithstanding the general burden on the prosecution to prove the offence, the burden of proving the absence of the ingredients of the offence under certain circumstances was on the accused. Further citations are unnecessary as, in our view, the terms of s.105 of the Evidence Act are clear and unambiguous. Mr. Pathak contends that the accused did not rely upon any exception within the meaning of s.80 of the Indian Penal Code and that his plea all through has been only that the prosecution has failed to establish intentional killing on his part. Alternatively, he argues that as the entire evidence has been adduced both by the prosecution and by the accused, the burden of proof became only academic and the jury was in a position to come to one conclusion or other on the evidence irrespective of the burden of proof. Before the Sessions Judge the accused certainly relied upon section 80 of the Indian Penal Code, and the Sessions Judge dealt with the defence case in the charge to the jury. In paragraph 6 of the charge, the learned Sessions Judge stated: "Before I proceed further I have to point out another section which is section 80. You know by now that the defence of the accused is that the firing of the revolver was a matter of accident during a struggle for possession of the revolver. A struggle or a fight by itself does not exempt a person. It is the accident which exempts a person from criminal liability 603 because there may be a fight, there may be a struggle and in the fight and in the struggle the assailant may over power the victim and kill the deceased so that a struggle or a fight by itself does not exempt an assailant. It is only an accident, whether it is in struggle or a fight or otherwise which can exempt an assailant. It is only an accident, whether it is in a struggle or a fight or otherwise which can exempt a prisoner from criminal liability. I shall draw your attention to section 80 which says:. . (section 80 read). You know that there are several provisions which are to be satisfied before the benefit of this exception can be claimed by an accused person and it should be that the act itself must be an accident or misfortune, there should be no criminal intention or knowledge in the doing of that act, that act itself must be done in a lawful manner and it must be done by lawful means and further in the doing of it, you must do it with proper care and caution. In this connection, therefore, even while considering the case of accident, you will have to consider all the factors, which might emerge from the evident before you, whether it was proper care and caution to take a loaded revolver without a safety catch to the residence of the person with whom you were going to talk and it you do not get an honourable answer you was repaired to thrash him. You have also to consider this further circumstance whether it is an act with proper care and caution to keep that loaded revolver in the hand and thereafter put it aside, whether that is taking proper care and caution. This is again a question of fact and you have to determine as Judges of fact, whether the act of the accused in this case can be said to be an act which was lawfully 604 done in a lawful manner and with proper care and caution. If it is so, then and only then can you call it accident or misfortune. This is a section which you will bear in mind when you consider the evidence in this case. " In this paragraph the learned Sessions Judge mixed up the ingredients of the offence with those of the exception. He did not place before the jury the distinction in the matter of burden of proof between the ingredients of the offence and those of the exception. He did not tell the jury that where the accused relied upon the exception embodied in section 80 of the Indian Penal Code, there was a statutory presumption against him and the burden of proof was on him to rebut that presumption. What is more, he told the jury that it was for them to decide whether the act of the accused in the case could be said to be an act which was lawfully done in a lawful manner with proper care and caution. This was in effect abdicating his funtions in favour of the jury. He should have explained to them the implications of the terms "lawful act", "lawful manner", "lawful means" and "with proper care and caution" and pointed out to them the application of the said legal terminology to the facts of the case. On such a charge as in the present case, it was not possible for the jury, who were laymen, to know the exact scope of the defence and also the circumstances under which the plea under section 80 of the Indian Penal Code was made out. They would not have also known that if section 80 of the Indian Penal Code applied, there was a presumption against the accused and the burden of proof to rebut the presumption was on him. In such circumstances, we cannot predicate that the jury understood the legal implications of section 80 of the Indian Penal Code and the scope of the burden of proof under section 105 of the Evidence Act, and gave their verdict correctly. Nor can we say that the jury understood the distinction between the ingredients of the offence 605 and the circumstances that attract section 80 of the Indian Penal Code and the impact of the proof of some of the said circumstances on the proof of the ingredients of the offence. The said omissions therefore are very grave omissions which certainly vitiated the verdict of the jury. The next misdirection relates to the question of grave and sudden provocation. On this question, Shelat, J., made the following remarks: "Thus the question whether a confession of adultery by the wife of accused to him amounts to grave and sudden provocation or not was a question of law. In my view, the learned Session Judge was in error in telling the jury that the entire question was one of fact for them to decide. It was for the learned Judge to decide as a question of law whether the sudden confession by the wife of the accused amounted to grave and sudden provocation as against the deceased Ahuja which on the authorities referred to hereinabove it was not. He was therefore in error in placing this alternative case to the jury for their determination instead of deciding it himself. " The misdirection according to the learned Judge was that the Sessions Judge in his charge did not tell the jury that the sudden confession of the wife to the accused did not in law amount to sudden and grave provocation by the deceased, and instead he left the entire question to be decided by the jury. The learned judge relied upon certain English decisions and textbooks in support of his conclusion that the said question was one of law and that it was for the Judge to express his view thereon. Mr. Pathak contends that there is an essential difference between the law of England and that of India in the matter of the charge to the jury in respect of grave and sudden provocation. The House of Lords 606 in Holmes vs Director of Public Prosecution (1) laid down the law in England thus: "If there is no sufficient material, even on a view of the evidence most favourable to the accused, for a jury (which means a reasonable jury) to form the view that a reasonable person so provoked could be driven, through transport of passion and loss of self control, to the degree and method and continuance of violence which produces the death it is the duty of the judge as matter of law to direct the jury that the evidence does not support a verdict of manslaughter. If, on the other hand, the case is one in which the view might fairly be taken (a) that a reasonable person, in consequence of the provocation received, might be so rendered subject to passion or loss of control as to be led to use the violence with fatal results, and (b) that the accused was in fact acting under the stress of such provocation, then it is for the jury to determine whether on its view of the facts manslaughter or murder is the appropriate verdict." Viscount Simon brought out the distinction between the respective duties of the judge and the jury succinctly by formulating the following questions: "The distinction, therefore, is between asking 'Could the evidence support the view that the provocation was sufficient to lead a reasonable person to do what the accused did ? ' (which is for the judge to rule), and, assuming that the judge 's ruling is in affirmative, asking the jury: 'Do you consider that, on the facts as you find them from the evidence, the provocation was in fact enough to lead a reasonable person to do what the 607 accused did ? ' and, if so, 'Did the accused act under the stress of such provocation ' ?" So far as England is concerned the judgment of the House of Lords is the last word on the subject till it is statutorily changed or modified by the House of Lords. It is not, therefore, necessary to consider the opinions of learned authors on the subject cited before us to show that the said observations did not receive their approval. But Mr. Pathak contends that whatever might be the law in England, in India we are governed by the statutory provisions, and that under the explanation to Exception I to section 300 of the Indian Penal Code, the question "whether the provocation was grave and sudden enough to prevent the offence from amounting to murder is one of fact", and therefore, unlike in England, in India both the aforesaid questions fall entirely within the scope of the jury and they are for them to decide. To put it in other words, whether a reasonable person in the circumstances of a particular case committed the offence under provocation which was grave and sudden is a question of fact for the jury to decide. There is force in this argument, but it is not necessary to express our final opinion thereon, as the learned Attorney General has conceded that there was no misdirection in regard to this matter. The fourth misdirection found by the High Court is that the learned Sessions Judge told the jury that the prosecution relied on the circumstantial evidence and asked them to apply the stringent rule of burden of proof applicable to such cases, whereas in fact there was direct evidence of Puransingh in the shape of extra judicial confession. In paragraph 8 of the charge the Sessions Judge said: "In this case the prosecution relies on what is called circumstantial evidence that is 608 to say there is no witness who can say that he saw the accused actually shooting and killing deceased. There are no direct witnesses, direct witnesses as they are called, of the event in question. Prosecution relies on certain circumstances from which they ask you to deduce an inference that it must be the accused and only the accused who must have committed this crime. That is called circumstantial evidence. It is not that prosecution cannot rely on circumstantial evidence because it is not always the case or generally the case that people who go out to commit crime will also take witnesses with them. So that it may be that in some cases the prosecution may have to rely on circumstantial evidence. Now when you are dealing with circumstantial evidence you will bear in mind certain principles, namely, that the facts on which the prosecution relies must be fully established. They must be fully and firmly established. These facts must lead to one conclusion and one only namely the guilt of the accused and lastly it must exclude all reasonable hypothesis consistent with the innocence of the accused, all reasonable hypothesis consistent with the innocence of the accused should be excluded. In other words you must come to the conclusion by all the human probability, it must be the accused and the accused only who must have committed this crime. That is the standard of proof in a case resting on circumstantial evidence. " Again in paragraph 11 the learned Sessions Judge observed that the jury were dealing with circumstantial evidence and graphically stated: "It is like this, take a word, split it up into letters, the letters, may individually mean nothing but when they are combined 609 they will form a word pregnant with meaning. That is the way how you have to consider the circumstantial evidence. You have to take all the circumstances together and judge for yourself whether the prosecution have established their case," In paragraph 18 of the charge, the learned Sessions Judge dealt with the evidence of Puran singh separately and told the jury that if his evidence was believed, it was one of the best forms of evidence against the man who made the admission and that if they accepted that evidence, then the story of the defence that it was an accident would become untenable. Finally he summarized all the circumstances on which the prosecution relied in paragraph 34 and one of the circumstances mentioned was the extra judicial confession made to Puransingh. In that paragraph the learned Sessions Judge observed as follows: "I will now summarize the circumstances on which the prosecution relies in this case. Consider whether the circumstances are established beyond all reasonable doubt. In this case you are dealing with circumstantial evidence and therefore consider whether they are fully and firmly established and consider whether they lead to one conclusion and only one conclusion that it is the accused alone who must have shot the deceased and further consider that it leaves no room for any reasonable hypothesis consistent with the innocence of the accused regard being had to all the circumstances in the case and the conclusion that you have to come to should be of this nature and by all human probability it must be the accused and the accused alone who must have committed this crime". 610 Finally the learned Sessions Judge told them: "If on the other hand you think that the circumstances on which the prosecution relies are fully and firmly established, that they lead to one and the only conclusion and one only, of the guilt of the accused and that they exclude all reasonable hypothesis of the innocence of the accused then and in that case it will be your duty which you are bound by the oath to bring verdict accordingly without any fear or any favour and without regard being had to any consequence that this verdict might lead to." Mr. Pathak contends that the learned Sessions Judge dealt with the evidence in two parts, in one part he explained to the jury the well settled rule of approach to circumstantial evidence, whereas in another part he clearly and definitely pointed to the jury the great evidentially value of the extra judicial confession of guilt by the accused made to Puransingh, if that was believed by them. He therefore, argues that there was no scope for any confusion in the minds of the jurors in regard to their approach to the evidence or in regard to the evidentially value of the extra judicial confession. The argument proceeds that even if there was a misdirection, it was not such as to vitiate the verdict of the jury. It is not possible to accept this argument. We have got to look at the question from the standpoint of the possible effect of the said misdirection in the charge on the jury, who are laymen. In more than one place the learned Sessions Judge pointed out that the case depended upon circumstantial evidence and that the jury should apply the rule of circumstantial evidence settled by decisions. Though at one place he emphasized upon evidentiary value of a confession he later on included that confession also as one of the circumstances and again directed the jury to apply the rule of circumstantial evidence. It is 611 not disputed that the extra judicial confession made to Puransingh is direct piece of evidence and that the stringent rule of approach to circumstantial evidence does not apply to it. If that confession was true, it cannot be disputed that the approach of the jury to the evidence would be different from that if that was excluded. It is not possible to predicate that the jury did not accept that confession and therefore applied the rule of circumstantial evidence. It may well have been that the jury accepted it and still were guided by the rule of circumstantial evidence as pointed out by the learned Sessions Judge. In these circumstances we must hold, agreeing with the High Court, that this is a grave misdirection affecting the correctness of the verdict. The next misdirection relied upon by the High Court is the circumstance that the three letters written by Sylvia were not read to the jury by the learned Sessions Judge in his charge and that the jury were not told of their effect on the credibility of the evidence of Sylvia and Nanavati. Shelat, J., observed in regard to this circumstance thus: "It cannot be gainsaid that these letters were important documents disclosing the state of mind of Mrs. Nanavati and the deceased to a certain extent. If these letters had been read in juxtaposition of Mrs. Nanavati 's evidence they would have shown that her statement that she felt that Ahuja had asked her not to see him for a month for the purpose of backing out of the intended marriage was not correct and that they had agreed not to see each other for the purpose of giving her and also to him an opportunity to coolly think out the implications of such a marriage and then to make up her own mind on her own. The letters would also show that when the accused asked her, as he said in his 612 evidence, whether Ahuja would marry her, it was not probable that she would fence that question. On the other hand, she would, in all probability, have told him that they had already decided to marry. In my view, the omission to refer even once to these letters in the charge especially in view of Mrs. nanavati 's evidence was a nondirection amounting to misdirection." Mr. Pathak contends that these letters were read to the jury by counsel on both sides and a reference was also made to hem in the evidence of Sylivia and, therefore the jury clearly knew the contents of the letters, and that in the circumstances the non mention of the contents of the letters by the Sessions Judge was not a misdirection and even if it was it did not affect the verdict of the jury. In this context reliance is placed upon two English decisions, namely, R. vs Roberts (1) and R. vs Attfield (2). In the former case the appellant was prosecuted for the murder of a girl by shooting her with a service rifle and he pleaded accident as his defence. The Judge in his summing up, among other defects, omitted to refer to the evidence of certain witnesses; the jury returned a verdict of "guilty" on the charge of murder and it was accepted by the judge, it was contended that the omission to refer to the evidence of certain witnesses was a misdirection. Rejecting that plea, Humphreys, J., observed: "The jury had the statements before them. They had the whole of the evidence before them, and they had, just before the summing up, comments upon those matters from counsel for the defence, and from counsel for the prosecution. It is incredible that they could have forgotten them or that they could have misunderstood the matter in any 613 way, or thought, by reason of the fact that the judge did not think it necessary to refer to them, that they were not to pay attention to them. We do not think there is anything in that point at all. A judge, in summing up, is not obliged to refer to every witness in the case, unless he thinks it necessary to do so. In saying this, the court is by no means saying that it might not have been more satisfactory if the judge had referred to the evidence of the two witnesses, seeing that he did not think it necessary to refer to some of the statements made by the accused after the occurrence. No doubt it would have been more satisfactory from the point of view of the accused. All we are saying is that we are satisfied that there was no misdirection in law on the part of judge in omitting those statements, and it was within his discretion. " This passage does snot lay down as a proposition of law that however important certain documents or pieces of evidence may be from the standpoint of the accused or the prosecution, the judge need not refer to or explain them in his summing up to the jury, and, if he did not, it would not amount to misdirection under any circumstances. In that case some statements made by witnesses were not specifically brought to the notice of the jury and the Court held in the circumstances of that case that there was no misdirection. In the latter case the facts were simple and the evidence was short; the judge summed up the case directing the jury as to the law but did not deal with evidence except in regard to the appellant 's character. The jury convicted the appellant. The court held that, "although in a complicated and lengthy case it was incumbent on the court to deal with the evidence in summing up, yet where, as in the present case, the issues could be simply and clearly stated, it was 614 not fatal defect for the evidence not to be reviewed in the summing up. " This is also a decision on the facts of that case. That apart, we are not concerned with a simple case here but with a complicated one. This decision does not help us in deciding the point raised. Whether a particular omission by a judge to place before the jury certain evidence amounts to a misdirection or not falls to be decided on the facts of cash case. These letters show the exact position of Sylvia in the context of her intended marriage with Ahuja, and help to test the truthfulness or otherwise of some of the assertions made by her to Nanavati. A perusal of these letters indicates that Sylvia and Ahuja were on intimate terms, that Ahuja was willing to marry her, that they had made up their minds to marry, but agreed to keep apart for a month to consider coolly whether they really wanted to marry in view of the serious consequences involved in taking such a step. Both Nanavati and Sylvia gave evidence giving an impression that Ahuja was backing out of his promise to marry Sylvia and that was the main reason for Nanavati going to Ahuja 's flat for an explanation. If the Judge had read these letters in his charge and explained the implication of the contents thereof in relation to the evidence given by Nanavati and Sylvia, it would not have been possible to predicate whether the jury would have believed the evidence of Nanavati and Sylvia. If the marriage between them was a settled affair and if the only obstruction in the way was Nanavati, and if Nanavati had expressed his willingness to be out of the way and even to help them to marry, their evidence that Sylvia did not answer the direct question about the intentions of Ahuja to marry her, and the evidence of Nanavati that it became necessary for him to go to Ahuja 's flat to ascertain the latter 's intentions might not have been believed 615 by the jury. It is no answer to say that the letters were read to the jury at different stages of the trial or that they might have read the letters themselves for in a jury trial, especially where innumerable documents are filed, it is difficult for a lay jury, unless properly directed, to realise the relative importance of specified documents in the context of different aspects of a case. That is why the Code of Criminal Procedure, under section 297 thereof, imposes a duty on the Sessions Judge to charge the jury after the entire evidence is given, and after counsel appearing for the accused and counsel appearing for the prosecution have addressed them. The object of the charge to the jury by the Judge is clearly to enable him to explain the law and also to place before them the facts and circumstances of the case both for and against the prosecution in order to help them in arriving at a right decision. The fact that the letters were read to the jury by prosecution or by the counsel for the defence is not of much relevance, for they would place the evidence before the jury from different angles to induce them to accept their respective versions. That fact in itself cannot absolve the Judge from his clear duty to put the contents of the letters before the jury from the correct perspective. We are in agreement with the High Court that this was a clear misdirection which might have affected the verdict of the jury. The next defect pointed out by the High Court is that the Sessions Judge allowed the counsel for the accused to elicit from the police officer, Phansalkar, what Puransingh is alleged to have stated to him orally, in order to contradict the evidence of Puransingh in the court, and the Judge also dealt with the evidence so elicited in paragraph 18 of his charge to the jury. This contention cannot be fully appreciated unless some relevant facts are stated. Puransingh was examined for the prosecution as P. W. 12. he was a 616 watchman of 'Jivan Jyot." He deposed that when the accused was leaving the compound of the said building, he asked him why he had killed Ahuja, and the accused told him that he had a quarrel with Ahuja as the latter had "connections" with his wife and therefore he killed him. At about 5 5 P. M. on April 27, 1959, this witness reported this incident to Gamdevi Police Station. On that day Phansalkar (P. W. 13) was the Station House Duty Officer at that station from 2 to 8 P.M. On the basis of the statement of Puransingh, Phansalkar went in a jeep with Puransingh to the place of the alleged offence. Puransingh said in his evidence that he told Phansalkar in the jeep what the accused had told him when he was leaving the compound of "Jivan Jyot." After reaching the place of the alleged offence, Phansalkar learnt from a doctor that Ahuja was dead and he also made enquiries from Miss Mammie, the sister of the deceased. He did not record the statement made by Puransingh. But latter on between 10 and 10 30 P. M. on the same day, Phansalkar made a statement to Inspector Mokashi what Puransingh had told him and that statement was recorded by Mokashi. In the statement taken by Mokashi it was not recorded that Puransingh told Phansalkar that the accused told him why he had killed Ahuja. When Phansalkar was in the witness box to a question put to him in cross examination he answered that Puransingh did not tell him that he had asked Nanavati why he killed Ahuja and that the accused replied that he had a quarrel with the deceased as the latter had "connections" with his wife and that he had killed him. The learned Sessions Judge not only allowed the evidence to go in but also, in paragraph 18 of his charge to the jury, referred to that statement. After giving the summary of the evidence given by Puransingh, the learned Sessions Judge proceeded to state in his charge to the jury: 617 "Now the conversation between him and Phansalkar (Sub Inspector) was brought on record in which what the chowkidar told Sub Inspector Phansalkar was, the servants of the flat of Miss Ahuja had informed him that a Naval Officer was going away in the car. He and the servants had tried to stop him but the said officer drove away in the car saying that he was going to the Police Station and to Sub Inspector Phansalkar he did not state about the admission made by Mr. Nanavati to him that he killed the deceased as the deceased had connections with his wife. The chowkidar said that he had told this also to sub Inspector Phansalkar. Sub Inspector Phansalkar said that Puransingh had not made this statement to him. You will remember that this chowkidar went to the police station at Gamdevi to give information about this crime and while coming back he was with Sub Inspector Phansalkar and Sub Inspector Phansalkar in his own statement to Mr. Mokashi has referred to the conversation which he had between him and this witness Puransingh and that had been brought on record as a contradiction." The learned Sessions Judge then proceeded to state other circumstances and observed, "Consider whether you will accept the evidence of Puransingh or not. " It is manifest from the summing up that the learned Sessions Judge not only read to the jury the evidence of Phansalkar wherein he stated that Puransingh did not tell him that the accused told him why he killed Ahuja but also did not tell the jury that the evidence of Phansalkar was not admissible to contradict the evidence of Puransingh. It is not possible to predicate what was the effect of the alleged contradiction on the mind of the jury and whether they had not rejected the evidence of Puransingh 618 because of that contradiction. If the said evidence was not admissible, the placing of that evidence before the jury was certainly a grave misdirection which must have affected their verdict. The question is whether such evidence is legally admissible. The alleged omission was brought on record in the cross examination of Phansalkar, and, after having brought it in, it was sought to be used to contradict the evidence of Puransingh. Learned Attorney General contends that the statement made by Phansalkar to Inspector Mokashi could be used only to contradict the evidence of Phansalkar and not that of Puransingh under section 162 of the Code of Criminal Procedure; and the statement made by Puransingh to Phansalkar, it not having been recorded, could not be used at all to contradict the evidence of Puransingh under the said section. He further argues that the alleged omission not being a contradiction, it could in no event be used to contradict Puransingh. Learned counsel for the accused, on the other hand, contends that the alleged statement was made to a police officer before the investigation commenced and, therefore, it was not hit by section 162 of the Code of Criminal Procedure, and it could be used to contradict the evidence of Puransingh. Section 162 of the Code of Criminal Procedure reads: "(1) No statement made by any person to a Police officer in the course of an investigation under this Chapter shall, if reduced into writing be signed by the person making it; nor shall any such statement or any record thereof, whether in a police diary or otherwise, or any part of such statement or record, be used for any purpose, save as hereinafter provided, at any inquiry or trial in respect of any offence under investigation at the time when such statement was made: 619 "Provided that when any witness is called for the prosecution in such inquiry or trial whose statement has been reduced into writing as aforesaid, any part of his statement, if duly proved, may be used by the accused, and with the permission of the Court, by the prosecution, to contradict such witness in the manner provided by section 145 of the (1 of 1872), and when any part of such statement is so used, any part thereof may also be used in the re examination of such witness, but for the purpose only of explaining any matter referred to in his cross examination." The preliminary condition for the application of section 162 of the Code is that the statement should have been made to a police officer in the course of an investigation under Chapter XIV of the Code. If it was not made in the course of such investigation, the admissibility of such statement would not be governed by section 162 of the Code. The question, therefore, is whether Puransingh made the statement to Phansalkar in the course of investigation. Section 154 of the Code says that every information relating to the commission of cognizable offence if given orally to an officer in charge of a police station shall be reduced to writing by him or under his direction; and section 156(1) is to the effect that any officer in charge of a police station may, without the order of a Magistrate, investigate any cognizable case which a court having jurisdiction over the local area within the limits of such station would have power to inquire into or try under the provisions of Chapter XIV relating to the place of inquiry or trial. The evidence in the case clearly establishes that Phansalkar, being the Station House Duty officer at Gamdevi Police station on April 27, 1959, from 2 to 8 P. M. was an officer in charge of the 620 Police station within the meaning of the said sections. Puransingh in his evidence says that he went to Gamdevi Police station and gave the information of the shooting incident to the Gamdevi Police. Phansalkar in his evidence says that on the basis of the information he went along with Puransingh to the place of the alleged offence. His evidence also discloses that he had questioned Puransingh, the doctor and also Miss Mammie in regard to the said incident. On this uncontradicted evidence there cannot be any doubt that the investigation of the offence had commenced and Puransingh made the statement to the police officer in the course of the said investigation. But it is said that, as the information given by Puransingh was not recorded by Police Officer Phansalkar as he should do under section 154 of the Code of Criminal Procedure, no investigation in law could have commenced with the meaning of section 156 of the Code. The question whether investigation had commenced or not is a question of fact and it does not depend upon any irregularity committed in the matter of recording the first information report by the concerned police officer. If so, section 162 of the Code is immediately attracted. Under section 162(1) of the Code, no statement made by any person to Police officer in the course of an investigation can be used for any purpose at any inquiry or trial in respect of any offence under investigation at the time when such statement made. But the proviso lifts the ban and says that when any witness is called for the prosecution in such inquiry or trial whose statement has been reduced into writing, any part of his statement, if duly proved, may be used by the accused to contradict such witness. The proviso cannot be invoked to bring in the statement made by Phansalkar to Inspector Mokashi in the cross examination of Phansalkar, for the statement made by him was not used to contradict the evidence of Phansalkar. The proviso cannot obviously apply to the oral 621 statement made by Puransingh to Phansalkar, for the said statement of Puransingh has not been reduced into writing. The faint argument of learned counsel for the accused that the statement of Phansalkar recorded by Inspector Mokashi can be treated as a recorded statement of Puransingh himself is to be stated only to be rejected, for it is impossible to treat the recorded statement of Phansalkar as the recorded statement of Puransingh by a police officer. If so, the question whether the alleged omission of what the accused told Puransingh in Puransingh 's oral statement to Phansalkar could be used to contradict Puransingh, in view of the decision of this Court in Tahsildar Singh 's case(1), does not arise for consideration. We are, therefore, clearly of the opinion that not only the learned Sessions Judge acted illegally in admitting the alleged omission in evidence to contradict the evidence of Puransingh, but also clearly misdirected himself in placing the said evidence before the jury for their consideration. In addition to the misdirections pointed out by the High Court, the learned Attorney General relied upon another alleged misdirection by the learned Sessions Judge in his charge. In paragraph 28 of the charge, the learned Sessions Judge stated thus: "No one challenges the marksmanship of the accused but Commodore Nanda had come to tell you that he is a good shot and Mr. Kandalawala said that here was a man and good marksman, would have shot him, riddled him with bullets perpendicularly and not that way and he further said that as it is not done in this case it shows that the accused is a good marksman and a good shot and he would not have done this thing, this is the argument." The learned Attorney General points out that the learned Sessions Judge was wrong in saying that 622 no one challenged the marksmanship of the accused, for Commodore Nanda was examined at length on the competency of the accused as a marksman. Though this is a misdirection, we do not think that the said passage, having regard to the other circumstances of the case, could have in any way affected the verdict of the jury. It is, therefore, clear that there were grave misdirections in this case, affecting the verdict of the jury, and the High Court was certainly within its rights to consider the evidence and come to its own conclusion thereon. The learned Attorney General contends that if he was right in his contention that the High Court could consider the evidence afresh and come to its own conclusion, in view of the said misdirection, this Court should not, in exercise of its discretionary jurisdiction under article 136 of the Constitutions interfere with the findings of the High Court. There is force in this argument. But, as we have heard counsel at great length, we propose to discuss the evidence. We shall now proceed to consider the evidence in the case. The evidence can be divided into three parts, namely, (i) evidence relating to the conduct of the accused before the shooting incident, (ii) evidence in regard to the conduct of the accused after the incident, and (iii) evidence in regard to the actual shooting in the bed room of Ahuja. We may start with the evidence of the accused wherein he gives the circumstances under which he came to know of the illicit intimacy of his wife Sylvia with the deceased Ahuja, and the reasons for which he went to the flat of Ahuja in the evening of April 27, 1959. After his brother and his brother 's wife, who stayed with him for a few days, had left, he found his wife behaving strangely and without affection towards him. Though on that ground he was unhappy and worried, he did not 623 suspect of her unfaithfulness to him. On the morning of April 27, 1959, he and his wife took out their sick dog to the Parel Animal Hospital. On their way back, they stopped at the Metro Cinema and his wife bought some tickets for the 3 30 show. After coming home, they were sitting in the room for the lunch to be served when he put his arm around his wife affectionately and she seemed to go tense and was very unresponsive. After lunch, when his wife was reading in the sitting room, he told her "Look, we must get these things straight" or something like that, and "Do you still love me?" As she did not answer, he asked her "Are you in love with some one else?", but she gave no answer. At that time he remembered that she had not been to a party given by his brother when he was away on the sea and when asked why she did not go, she told him that she had a previous dinner engagement with Miss Ahuja. On the basis of this incident, he asked her "Is it Ahuja ?" and she said "Yes" When he asked her "Have you been faithful to me ?", she shook her head to indicate "No." Sylvi in her evidence, as D. W. 10, broadly supported this version. It appears to us that this is clearly a made up conversation and an unnatural one too. Is it likely that Nanavati, who says in his evidence that prior to April 27, 1959, he did not think that his wife was unfaithful to him, would have suddenly thought that she had a lover on the basis of a trivial circumstance of her being unresponsive when he put his arm around her affectionately ? Her coldness towards him might have been due to many reasons. Unless he had a suspicion earlier or was informed by somebody that she was unfaithful to him, this conduct of Nanavati in suspecting his wife on the basis of the said circumstance does not appear to be the natural reaction of a husband. The recollection of her preference to attend the dinner given by Miss Mammie to that of his brother, in the absence 624 of an earlier suspicion or information, could not have flashed on his mind the image of Ahuja as a possible lover of his wife. There was nothing extraordinary in his wife keeping a previous engagement with Miss Mammie and particularly when she could rely upon her close relations not to misunderstand her. The circumstances under which the confession of unfaithfulness is alleged to have been made do not appear to be natural. This inference is also reinforced by the fact that soon after the confession, which is alleged to have upset him so much, he is said to have driven his wife and children to the cinema. If the confession of illicit intimacy between Sylvia and Ahuja was made so suddenly at lunch time, even if she had purchased the tickets, it is not likely that he would have taken her and the children to the cinema. Nanavati then proceeds to say in his evidence : on his wife admitting her illicit intimacy with Ahuja, he was absolutely stunned; he then got up and said that he must go and settle the matter with the swine; he asked her what were the intentions of Ahuja and whether Ahuja was prepared to marry her and look after the children; he wanted an explanation from Ahuja for his caddish conduct. In the cross examination he further elaborated on his intentions thus : He thought of having the matters settled with Ahuja; he would find out from him whether he would take an honourable way out of the situation; and he would thrash him if he refused to do so. The honourable course which he expected of the deceased was to marry his wife and look after the children. He made it clear further that when he went to see Ahuja the main thing in his mind was to find out what Ahuja 's intentions were towards his wife and children and to find out the explanation for his conduct. Sylvia in her evidence says that when she confessed her unfaithfulness to Nanavati the latter suddenly got up rather excitedly and said that he wanted to go 625 to Ahuja 's flat and square up the things. Briefly stated, Nanavati, according to him, went to Ahuja 's flat to ask for an explanation for seducing his wife and to find out whether he would marry Sylvia and take care of the children. Is it likely that a person, situated as anavati was, would have reacted in the manner stated by him? It is true that different persons react, under similar circumstance, differently. A husband to whom his wife confessed of infidelity may kill his wife, another may kill his wife as well as her paramour, the third, who is more sentimental. may commit suicide, and the more sophisticated one may give divorce to her and marry another. But it is most improbable, even impossible, that a husband who has been deceived by his wife would voluntarily go to the house of his wife 's paramour to ascertain his intentions, and, what is more, to ask him to take charge of his children. What was the explanation Nanavati wanted to get from Ahuja ? His wife confessed that she had illicit intimacy with Ahuja. She is not a young girl, but a woman with three children. There was no question of Ahuja seducing an innocent girl, but both Ahuja and Sylvia must have been willing parties to the illicit intimacy between them. That apart, it is clear from the evidence that Ahuja and Sylvia had decided to marry and, therefore, no further elucidation of the intention of Ahuja by Nanavati was necessary at all. It is true that Nanavati says in his evidence that when he asked her whether Ahuja was prepared to marry her and look after the children, she did not give any proper reply; and Sylvia also in her evidence says that when her husband asked her whether Ahuja was willing to marry her and look after the children she avoided answering that question as she was too ashamed to admit that Ahuja was trying to back out from the promise to marry her. That this version is not true is amply borne out by the letters written by Sylvia to 626 Ahuja. The first letter written by Sylvia is dated May 24, 1958, but that was sent to him only on March 19, 1959, along with another letter. In that letter dated May 24, 1958, she stated: "Last night when you spoke about your need to marry and about the various girls you may marry, something inside me snapped and I know that I could not bear the thought of your loving or being close to someone else." Reliance is placed upon these words by learned counsel for the accused in support of his contention that Ahuja intended to marry another girl. But this letter is of May 1958 and by that time it does not appear that there was any arrangement between Sylvia and Ahuja to marry. It may well have been that Ahuja was telling Sylvia about his intentions to marry another girl to make her jealous and to fall in for him. But as days passed by, the relationship between them had become very intimate and they began to love each other. In the letter dated March 19, 1959, she said : "Take a chance on our happiness, my love. I will do my best to make you happy; I love you, I want you so much that everything is bound to work out well. " The last sentence indicates that they had planned to marry. Whatever ambiguity there may be in these words, the letter dated April 17, 1959, written ten days prior to the shooting incident, dispels it; therein she writes "In any case nothing is going to stop my coming to you. My decision is made and I do not change my mind. I am taking this month so that we may afterwards say we gave ourselves every chance and we know what we are doing. I am torturing myself in every possible way as you asked, so that, there will be no surprise afterwards". 627 This letter clearly demonstrates that she agreed not to see Ahuja for a month, not because that Ahuja refused to marry her, but because it was settled that they should marry, and that in view of the far reaching effects of the separation from her husband on her future life and that of her children, the lovers wanted to live separately to judge for themselves whether they really loved each other so much as to marry. In the cross examination she tried to wriggle out of these letters and sought to explain them away; but the clear phraseology of the last letter speaks for itself, and her oral evidence, contrary to the contents of the letters, must be rejected. We have no doubt that her evidence, not only in regard to the question of marriage but also in regard to other matters, indicates that having lost her lover, out of necessity or out of deep penitence for her past misbehavior, she is out to help he husband in his defence. This correspondence belies the entire story that Sylvia did not reply to Nanavati when the latter asked her whether Ahuja was willing to marry her and that was the reason why Nanavati wanted to visit Ahuja to ask him about him intentions. We cannot visualize Nanavati as a romantic lover determined to immolate himself to give opportunity to his unfaithful wife to start a new life of happiness and love with her paramour after convincing him that the only honourable course open to him was to marry her and take over his children. Nanavati was not ignorant of the ways of life or so gullible as to expect any chivalry or honour in a man like Ahuja. He is an experienced Naval Officer and not a sentimental hero of a novel. The reason therefore for Nanavati going to Ahuja 's flat must be something other than asking him for an explanation and to ascertain his intention about marrying his wife and looking after the children. 628 Then, according to Nanavati, he drove his wife and children to cinema, and promising them to come and pick them up at the end of the show at about 6 p. m., he drove straight to his ship. He would say that he went to his ship to get medicine for his seek dog. Though ordinarily this statement would be insignificant, in the context of the conduct of Nanavati, it acquires significance. In the beginning of his evidence, he says that on the morning of the day of the incident he and his wife took out their sick dog to the Parel Animal Hospital. It is not his evidence that after going to the hospital he want to his ship before returning home. It is not even suggested that in the ship there was a dispensary catering medicine for animals. This statement, therefore, is not true and he did not go to the ship for getting medicine for his dog but for some other purpose, and that purpose is clear from his subsequent evidence. He met Captain Kolhi and asked for his permission to draw a revolver and six rounds because he was going to drive to Ahmednagar by night. Captain Kolhi gave him the revolver and six rounds, he immediately loaded the revolver with all the six rounds and put the revolver inside an envelope which was lying in his cabin. It is not the case of the accused that he really wanted to go to Ahmednagar and he wanted the revolver for his safety. Then why did he take the revolver? According to him he wanted to shoot himself after driving far away from his children. But he did not shoot himself either before or after Ahuja was shot dead. The taking of the revolver on false pretext and loading it with six cartridges indicate the intention on his part to shoot somebody with it. Then the accused proceeded to state that he put the envelope containing the revolver in his car and found himself driving to Ahuja 's office. At Ahuja 's office he went in keeping the revolver in the car, and asked Talaja, the Sales Manager of 629 Universal Motors of which Ahuja was the proprietor whether Ahuja was inside. He was told that Ahuja was not there. Before leaving Ahuja 's office, the accused looked for Ahuja in the Show Room, but Ahuja was not there. In the cross examination no question was put to Nanavati in regard to his statement that he kept the revolver in the car when he entered Ahuja 's office. On the basis of this statement, it is contended that if Nanavati had intended to shoot Ahuja he would have taken the revolver inside Ahuja 's office. From this circumstance it is not possible to say that Nanavati 's intention was not to shoot Ahuja. Even if his statement were true, it might well have been that he would have gone to Ahuja 's office not to shoot him there but to ascertain whether he had left the office for his flat. Whatever it may be, from Ahuja 's office he straightway drove to the flat of Ahuja. His conduct at the flat is particularly significant. His version is that he parked his car in the house compound near the steps, went up the steps, but remembered that his wife had told him that Ahuja might shoot him and so he went back to his car, took the envelope containing the revolver, and went up to the flat. He rang the doorbell; when a servant opened the door, he asked him whether Ahuja was in. Having ascertained that Ahuja was in the house, he walked to his bedroom, opened the door and went in shutting the door behind him. This conduct is only consistent with his intention to shoot Ahuja. A person, who wants to seek an interview with another in order to get an explanation for his conduct or to ascertain his intentions in regard to his wife and children, would go and sit in the drawing room and ask the servant to inform his master that he had come to see him. He would not have gone straight into the bed room of another with a loaded revolver in hand and closed the door behind. This was the conduct of an enraged man who had gone to wreak vengeance on a person who did him a 630 grievous wrong. But it is said that he had taken the loaded revolver with him as his wife had told him that Ahuja might shoot him. Earlier in his cross examination he said that when he told her that he must go and settle the matter with the "swine" she put her hand upon his arm and said, No, No, you must not go there, don 't go there, he may shoot you. " Sylvia in her evidence corroborates his evidence in this respect: But Sylvia has been cross examined and she said that she knew that Ahuja had a gun and she had seen it in Ashoka Hotel in New Delhi and that she had not seen any revolver at the residence of Ahuja at any time. It is also in evidence that Ahuja had no licence for revolver and no revolver of his was found in his bed room. In the circumstances, we must say that Sylvia was only attempting to help Nanavati in his defence. We think that the evidence of Nanavati supported by that of Sylvia was a collusive attempt on their part to explain away the otherwise serious implication of Nanavati carrying the loaded revolver into the bed room of Ahuja. That part of the version of the accused in regard to the manner of his entry into the bed room of Ahuja, was also supported by the evidence of Anjani (P.W. 8), the bearer, and Deepak, the Cook. Anjani opened the door of the flat to Nanavati at about 4 20 p. m. He served tea to his master at about 4 15 P. M. Ahuja then telephoned to ascertain the correct time and then went to his bed room. About five minutes thereafter this witness went to the bed room of his master to bring back the tea tray from there, and at that time his master went into the bath room for his bath. Thereafter, Anjani went to the kitchen and was preparing tea when he heard the door bell. He then opened the door to Nanavati. This evidence shows that at about 4 20 P.M. Ahuja was taking his bath in the bath room and immediately thereafter Nanavati entered the bed room. Deepak, the cook of Ahuja, also heard the ringing of the 631 door bell. He saw the accused opening the door of the bed room with a brown envelope in his hand and calling the accused by his name "Prem"; he also saw his matter having a towel wrapped around his waist and combing his hair standing before the dressing table, when the accused entered the room and closed the door behind him. These two witnesses are natural witnesses and they have been examined by the police on the same day and nothing has been elicited against them to discredit their evidence. The small discrepancies in their evidence do not in any way affect their credibility. A few seconds thereafter, Mammie, the sister of the deceased, heard the crack of the window pane. The time that elapsed between Nanavati entering the bed room of Ahuja and her hearing the noise was about 15 to 20 seconds. She describes the time that elapsed between the two events as the time taken by her to take up her saree from the door of her dressing room and her coming to the bed room door. Nanavati in his evidence says that he was in the bed room of Ahuja for about 30 to 60 seconds. Whether it was 20 seconds, as Miss Mammie says, or 30 to 60 seconds, as Nanavati deposes, the entire incident of shooting took place in a few seconds. Immediately after the sounds were heard, Anjani and Miss Mammie entered the bed room and saw the accused. The evidence discussed so far discloses clearly that Sylvia confessed to Nanavati of her illicit intimacy with Ahuja; that Nanavati went to his ship at about 3.30 P.M. and took a revolver and six rounds on a false pretext and loaded the revolver with six rounds; that thereafter he went to the office of Ahuja to ascertain his whereabouts, but was told that Ahuja had left for his house; that the accused then went to the flat of the deceased at about 4 20 P.M.; that he entered the flat and then the bed room unceremoniously with the loaded revolver, closed the door behind him and a few 632 seconds thereafter sounds were heard by Miss Mammie, the sister of the deceased, and Anjani, servant; that when Miss Mammie and Anjani entered the bed room, they saw the accused with the revolver in his hand and found Ahuja lying on the floor of the bath room. This conduct of the accused to say the least, is very damaging for the defence and indeed in itself ordinarily sufficient to implicate him in the murder of Ahuja. Now we shall scrutinize the evidence to ascertain the conduct of the accused from the time he was found in the bed room of Ahuja till he surrendered himself to the police. Immediately after the shooting, Anjani and Miss Mammie went into the bed room of the deceased. Anjani says in his evidence that he saw the accused facing the direction of his master who was lying in the bath room; that at that time the accused was having "pistol" in his hand; that when he opened the door, the accused turned his face towards this witness and saying that nobody should come in his way or else he would shoot at them, he brought his "pistol" near the chest of the witness; and that in the meantime Miss Mammie came there, and said that the accused had killed her brother. Miss Mammie in her evidence says that on hearing the sounds, she went into the bed room of her brother, and there she saw the accused nearer to the radiogram than to the door with a gun in his hand; that she asked the accused "what is this?" but she did not hear the accused saying anything. It is pointed out that there are material contradictions between what was stated by Miss Mammie and what was stated by Anjani. We do not see any material contradictions. Miss Mammie might not have heard what the accused said either because she came there after the aforesaid words were uttered or because in her anxiety and worry she did not hear the words. The different versions 633 given by the two witness in regard to what Miss Mammie said to the accused is not of any importance as the import of what both of them said is practically the same. Anjani opened he door to admit Nanavati into the flat and when he heard the noise he must have entered the room. Nanavati himself admitted that he saw a servant in the room, though he did not know him by name; he also saw Miss Mammie in the room. These small discrepancies, therefore, do not really affect their credibility. In effect any substance both saw Nanavati with a fire arm in his hand though one said pistol and the other gun going away from the room without explaining to Miss Mammie his conduct and even threatening Anjani. This could only be the conduct of a person who had committed a deliberate murder and not of one who had shot the deceased by accident. If the accused had shot the diseased by accident, he would have been in a depressed and apologetic mood and would have tried to explain his conduct to Miss Mammie or would have phoned for a doctor or asked her to send for one or at any rate he would not have been in a belligerent mood and threatened Anjani with his revolver. Learned counsel for the accused argues that in the circumstances in which the accused was placed soon after the accidental shooting he could not have convinced Miss Mammie with any amount of explanation and therefore there was no point in seeking to explain his conduct to her. But whether Miss Mammie would have been convinced by his explanation or not, if Nanavati had shot the deceased by accident, he would certainly have told her particularly when he knew her before and when she happened to be the sister of the man shot at. Assuming that the suddenness of the accidental shooting had so benumbed his senses that he failed to explain the circumstances of the shooting to her, the same cannot be said when he met others at the gate. After the accused had come out of the flat of Ahuja, 634 he got into his car and took a turn in the compound. He was stopped near the gate by Puransingh, P.W. 12, the watchman of the building. As Anjani had told him that the accused had killed Ahuja the watchman asked him why he had killed his master. The accused told him that he had a quarrel with Ahuja as the latter had "connections" with his wife and therefore he killed him. The watchman told the accused that he should not go away from the place before the police arrived, but the accused told him that he was going to the police and that if he wanted he could also come with him in the car. At that time Anjani was standing in front of the car and Deepak was a few feet away. Nanavati says in his evidence that it was not true that he told Puransingh that he had killed the deceased as the latter had "connection" with his wife and that the whole idea was quite absurd. Puransingh is not shaken in his cross examination. He is an independent witness; though he is a watchman of Jivan Jyot, he was not an employee of the deceased. After the accused left the place, this witness, at the instance of Miss Mammie, went to Gamdevi Police Station and reported the incident to the police officer Phansalkar, who was in charge of the police station at that time, at about 5 5 P.M. and came along with the said police officer in the jeep to Jivan Jyot at about 7 P.M. he went along with the police officer to the police station where his statement was recorded by Inspector Mokashi late in the night. It is suggested that this witness had conspired with Deepak and Anjani and that he was giving false evidence. We do not see any force in this contention. His statement was regarded on the night of the incident itself. It is impossible to conceive that Miss Mammie, who must have had a shock, would have been in a position to coach him up to give a false statement. Indeed, her evidence discloses that she was drugged to sleep that night. Can it be said that these two illiterate 635 witnesses, Anjani and Deepak, would have persuaded him to make a false statement that night. Though both of them were present when Puransingh questioned the accused, they deposed that they were at a distance and therefore they did not hear what the accused told Puransingh. If they had all colluded together and were prepared to speak to a false case, they could have easily supported Puransingh by stating that they also heard what the accused told Puransingh. We also do not think that the two witnesses are so intelligent as to visualize the possible defence and before hand coached Puransingh to make a false statement on the very night of the incident. Nor do we find any inherent improbability in his evidence if really Nanavati had committed the murder. Having shot Ahuja he was going to surrender himself to the police; he knew that he had committed a crime; he was not a hardened criminal and must have had a moral conviction that he was justified in doing what he did. It was quite natural, therefore, for him to confess his guilt and justify his act to the watchman who stopped him and asked him to wait there till the police came. In the mood in which Nanavati was soon after the shooting, artificial standards of status or position would not have weighed in his mind if he was going to confess and surrender to the police. We have gone through the evidence of Puransingh and we do not see any justification to reject his evidence. Leaving Jivan Jyot the accused drove his car and came to Raj Bhavan Gate. There he met a police constable and asked him for the location of the nearest police station. The direction given by the police constable were not clear and, therefore, the accused requested him to go along with him to the police station, but the constable told him that as he was on duty, he could not follow him. This 636 is a small incident in itself, but it only shows that the accused was anxious to surrender himself to the police. This would not have been the conduct of the accused, if he had shot another by accident, for in that event he would have approached a lawyer or a friend for advice before reporting the incident to the police. As the police constable was not able to give him clear directions in regard to the location of the nearest police station, the accused went to the house of Commander Samuel, the Naval Provost Marshal. What happened between the accused the Samuel is stated by Samuel in his evidence as P.W. 10. According to his evidence, on April 27, 1959, at about 4.45 P.M., he was standing at the window of his study in his flat on the ground floor at New Queen 's Road. His window opens out on the road near the band stand. The accused came up to the window and he was in a dazed condition. The witness asked him what had happened, and the accused told him "I do not quite know what happened, but I think I have shot a man. " The witness asked him how it happened, and the accused told him that the man had seduced his wife and he would not stand it. When the witness asked him to come inside and explain everything calmly, the accused said "No, thank you, I must go", "please tell me where I should go and report". Though he asked him again to come in, the accused did not go inside and, therefore, this witness instructed him to go to the C.I.D. Office and report to the Deputy Commissioner Lobo. The accused asked him to phone to Lobo and he telephoned to Lobo and told him that an officer by name Commander Nanavati was involved in an affair and that he was on the way to report to him. Nanavati in his evidence practically corroborates the evidence of Samuel. Nanavati 's version in regard to this incident is as follows: "I told him that something terrible had happened, that I did not know quite what 637 had happened but I thought I had shot a man. He asked me where this had happened. I told him at Nepean Sea Road. He asked me Why I had been there. I told him I went there because a fellow there had seduced my wife and I would not stand for it. He asked me many times to go inside his room. But I was not willing to do so, I was anxious to go to the police station. I told Commander Samuel that there had been a fight over a revolver. Commander Samuel asked to report to Deputy Commissioner Lobo. " The difference between the two versions lies in the fact that while Nanavati said that he told Samuel that something terrible had happened, Samuel did not say that; while Nanavati said that he told Samuel that there had been a fight over a revolver, Samuel did not say that. But substantially both of them say that though Samuel asked Nanavati more than once to get inside the house and explain to him everything calmly, Nanavati did not do so; both of them also deposed that the accused told Samuel, "I do not quite know what happened but I think I have shot a man. " It may be mentioned that Samuel is a Provost Marshal of the Indian navy, and he and the accused are of the same rank though the accused is senior to Samuel as Commander. As Provost Marshal, Samuel discharges police duties in the navy. Is it probable that if the deceased was shot by accident, the accused would not have stated that fact to this witness? Is it likely that he would not have stepped into his house, particularly when he requested him more than once to come in and explain to him how the accident had taken place ? Would he not have taken his advice as a colleague before he proceeded to the police station to surrender himself ? The only explanation for this unusual conduct on the part of the accused is that, having committed the murder, he wanted to surrender himself to 638 the police and to make a clean breast of everything. What is more, when he was asked directly that had happened he told him "I do not quite know what happened but I think I have shot a man". When he was further asked how it happened, that is, how he shot the man he said that the man had seduced his wife and that he would not stand for it. In the context, two answers read along with the questions put to him by Samuel only mean that, as the deceased had seduced his wife, the accused shot him as he would not stand for it. If really the accused shot the deceased by accident, why did he not say that fact to his colleague, particularly when it would not only be his defence, if prosecuted, but it would put a different complexion to his act in the eyes of his colleague. But strong reliance is Placed on what this Witness stated in the cross examination viz., "I heard the word fight from the accused", "I heard some other words from the accused but I could not make out a sense out of these words". Learned counsel for the accused contends that this statement shows that the accused mentioned to Samuel that the shooting of tho deceased was in a fight. It is not possible to build upon such slender foundation that the accused explained to Samuel that he shot the deceased by accident in a struggle. The statement in the cross examination appears to us to be an attempt on the part of this witness to help his colleague by saying something which may fit in the scheme of his defence, though at the same time he is not willing to lie deliberately in the witness box, for he clearly says that he could not make out the sense of the words spoken along with the word "fight". This vague statement of this witness, without particulars, cannot detract from the clear evidence given by him in the examination in chief. What Nanavati said to the question put by the Sessions Judge under section 342 of the Code of Criminal Procedure supports Samuel 's version. The 639 following question was put to him by the learned Sessions Judge : Q. It is alleged against you that thereafter as aforesaid you went to Commander Samuel at about 4 45 P.M. and told him that, something terrible had happened and that you did not quite know but you thought that you shot a man as he had seduced your wife which you could not stand and that on the advice of Commander Samuel you then went to Deputy Commissioner Lobo at the Head Crime Investigation Department office. Do you wish to say anything about this? A. This is correct. Here Nanavati admits that he told Commander Samuel that he shot the man as he had seduced his wife. Learned counsel for the accused contends that the question framed was rather involved and, therefore, Nanavati might not have understood its implication. But it appears from the statement that, after the question were answered, Nanavati read his answers and admitted that they were correctly recorded. The answer is also consistent with what Samuel said in his evidence as to what Nanavati told him. This corroborates the evidence of Samuel that Nanavati told him that, as the man had seduced his wife, he thought that he had shot him. Anyhow, the accused did not tell the Court that he told Samuel that he shot the deceased in a fight. Then the accused, leaving Samuel, went to the office of the Deputy Commissioner Lobo. There, he made a statement to Lobo. At that time, Superintendent Korde and Inspector Mokashi were also present. On the information given by him, Lobo directed Inspector Mokashi to take the accused into custody and to take charges of the articles and to investigate the case. 640 Lobo says in his evidence that he received a telephone call from Commander Samuel to the effect that he had directed Commander Nanavati to surrender himself to him as he had stated that J he had shot a, man. This evidence obviously cannot be used to corroborate what Nanavati told Samuel, but it would only be a corroboration of the evidence of Samuel that he telephoned to Lobo to that effect. It is not denied that the accused set up the defence of accident for the first time in the Sessions Court. This conduct of the accused from the time of the shooting of Ahuja to the moment he surrendered himself to the police is inconsistent with the defence that the deceased was shot by accident. Though tho accused had many opportunities to explain himself, he did not do so; and he exhibited the attitude of a man who wreaked out his vengeance in the manner planned by him and was only anxious to make a clean breast of everything to the police. Now we will consider what had happened in the bed room and bath room of the deceased. But before considering the evidence on this question, we shall try to describe the scene of the incident and other relevant particulars regarding the things found therein. The building "Jivan Jyot" is situate in Setalvad Road, Bombay. Ahuja was staying on the first floor of that building. As one goes up the stairs, there is a door leading into the hall; as one enters the hall and walks a few feet towards the north he reaches a door leading into bed room of Ahuja. In the bed room, abutting the southern wall there is a radiogram; just after the radiogram there is a door on the southern wall leading to the bath room, on the eastern side of the door abutting the wall there is a cupboard with a mirror thereon; in the bath room, which is of the dimensions 9 feet x 6 feet, there is a commode in the front along the 641 wall, above the commode there is a window with glass panes overlooking the chowk, on the east of the commode there is a bath tub, on the western side of the bathroom there is a door leading into the hall; on the southern side of the said door there is a wash basin adjacent to the wall. After the incident the corpse of Ahuja was found in the bath room; the head of the deceased was towards the bed room and his legs were towards the commode. He was lying with his head on his right hand. This is the evidence of Miss Mammie, and she has not been cross examined on it. It is also not contradicted by any witness. The top glass pane of the window in the bath room was broken. Pieces of glass were found on the floor of the bath room between the commode and the wash basin. Between the bath tub and the commode a pair of spectacles was lying on the floor and there were also two spent bullets. One chappal was found between the commode and the wash basin, and the other was found in the bedroom. A towel was found wrapped around the waist of the deceased. The floor of the bath room was blood stained. There was white handkerchief and bath towel, which was blood stained lying on the floor. The western wall was found to be blood stained and drops of blood were trickling down. The handle of the door leading to the bath room from the bed room and a portion of the door adjacent to the handle were bloodstained from the inner side. The blood on the wall was little a over three feet from the floor. On the floor of the bed room there was an empty brown envelope with the words "Lt. Commander K. M. Nanavati" written on it. There was no mark showing that the bullets had hit any surface. (See the evidence of Rashmikant, P.W. 16) On the dead body the following injuries were found : (1) A punctured wound 1/4" X 1/4" X chest cavity deep just below and inside the inner 642 end of the right collar bone with an abrasion collar on the right side of the wound. (2) A lacerated punctured wound in the web between the ring finger and the little finger of the left hand 1/4" X 1/4" communicating with a punctured wound 1/4 X 1/4" on the palmer aspect of the left hand at knuckle level between the left little and the ring finger. Both the wounds were communicating. (3) A lacerated ellipsoid wound oblique in the left parietal region with dimensions 1 1/3" X 1/4" X skull deep. (4) A lacerated abrasion with carbonaceous tatooing 1/4" X 1/6" at the distal end of the proximal interphalangeal joint of the left index finger dorsal aspect. That means at the first joint of the crease of the index finger on its dorsal aspect, i.e., back aspect. (5) A lacerated abrasion with carbonaceous tatooing 1/4" X 1/6" at the joint level of the left middle finger dorsal aspect. (6) Vertical abrasion inside the right shoulder blade 3" X 1" just outside the spine. On internal examination the following wounds were found by Dr. Jhala, who performed the autopsy on the dead body. Under the first injury there was: "A small ellipsoid wound oblique in the front of the piece of the breast bone (Sternum) upper portion right side centre with dimensions 1/4" x 1/3" and at the back of the bone there was a lacerated wound accompanied by irregular chip fracture corresponding to external injury No. 1, i, e., the punctured wound chest cavity deep. Same wound continued in the contusion in area 3" x 1 1/4" in the right lung upper lobe front border middle portion front and back. Extensive clots were seen 643 in the middle compartment upper and front part surrounding the laceration impregnated pieces of fractured bone. There was extensive echymosis and contusion around the root of the right lung in the diameter of 2" involving also the inner surface of the upper lobe. There were extensive clots of blood around the aorta. The left lung was markedly pale and showed a through and through wound in the lower lobe beginning at the inner surface just above the root opening out in the lacerated ground in the back region outer aspect at the level between 6th and 7th ribs left side not injuring the rib and injuring the space between the 6th and 7th rib left side 2" outside the junction of the spine obliquely downward and outward. Bullet was recovered from tissues behind the left shoulder blade. The wound was lacerated in the whole tract and was Surrounded by contusion of softer tissues. " The doctor says that the bullet, after entering "the inner end, went backward, downward and then to the left" and therefore he described the ground an ellipsoid and oblique". Ho also points out that the abrasion collar was missing on the left side. Corresponding to the external injury No. 3, the doctor found on internal examination that the skull showed a haematoma under the scalp, i.e., on the left parietal region ; the dimension was 2" X 2". The skull cap showed a gutter fracture of the outer table and a fracture of the inner table. The brain showed sub arachnoid haemorrhage over the left parieto occipital region accompanying the fracture of the vault of the skull. A description of the revolver with which Ahuja was shot and the manner of its working would be necessary to appreciate the relevant evidence in that regard. Bhanagay, the Government 644 Criminologist, who was examined as P.W. 4, describes the revolver and the manner of its working. The revolver is a semi automatic one and it is six chambered. To load the revolver one has to release the chamber; when the chamber is released, it comes out on the left side. Six cartridges can be inserted in the holes of tho chamber and then the chamber is pressed to the revolver. After the revolver is thus loaded, for the purpose of firing one has to pull the trigger of the revolver; when the trigger is pulled the cartridge gets cocked and the revolver being semi automatic the hammer strikes the percussion cap of the cartridge and the cartridge explodes and the bullet goes off. For firing the second shot, the trigger has to be pulled again and the same process will have to be repeated each time it is fired. As it is not an automatic revolver, each time it is fired, the trigger has to be pulled and released. If the trigger is pulled but not released, the second round will not come in its position of firing. Pulling of the trigger has a double action one is the rotating of the chamber and cocking, and the other, releasing of the hammer. Because of this double action, the pull must be fairly strong. A pressure of about 20 pounds is required for pulling the trigger. There is controversy on the question of pressure, and we shall deal with this at the appropriate place. Of the three bullets fired from the said revolver, two bullets were found in the bath room, and the third was extracted from the back of the left shoulder blade. F 2 and F 2a are the bullets found in the bath room. These two bullets are flattened and the copper jacket of one of the bullets, exhibit F 2a, has been turn off. The third bullet is marked as EX. With this background let US now consider the evidence to ascertain whether the shooting was intentional, as the prosecution avers, or only 645 accidental, as the defence suggests. Excepting Nanavati, the accused, and Ahuja, the deceased, no other person was present in the letter 's bed room when the shooting took place. Hence the only person who can speak to the said incident is the accused Nanavati. The version of Nanavati, as given in his evidence may be stated thus: He walked into Ahuja 's bed room, shutting the door behind him. Ahuja was standing in front of the dressing table. The accused walked towards Ahuja and said, "You are a filthy swine", and asked him, "Are you going to marry Sylvia and look after the kids?" Ahuja became enraged and said in a nasty manner, "Do I have to marry every woman that I sleep with ?" Then the deceased said, "Get the hell out of here, otherwise, I will have you thrown out." The accused became angry, but the packet containing the revolver down on a cabinet which was near him and told him, "By God I am going to thrash you for this." The accused had his hands up to fight the deceased, but the latter made a sudden grab towards the packet containing the revolver. The accused grappled the revolver himself and prevented the deceases from getting it. He then whipped out the revolver and told the deceased to get back. The deceased was very close to him and suddenly caught with his right hand the right hand of the accused at the wrist and tried to twist it and take the revolver off it. The accused "banged" the deceased towards the door of the bath room, but Ahuja would not let go of his grip and tried to kick the accused with his knee in the groin. The accused pushed Ahuja again into the bath room, trying at the same time desperately to free his hand from the grip of the accused by jerking it around. The deceased had a very strong grip and he did not let go the grip. During the struggle, the accused thought that two shots went off: one went first and within a few seconds another. At the first shot the deceased just kept 646 hanging on to the hand of the accused, but suddenly he let go his hand and slumped down. When the deceased slumped down, the accused immediately came out of the bath room and walked down to report to the police. By this description the accused seeks to raise the image that he and the deceased were face to face struggling for the possession of the revolver, the accused trying to keep it and the deceased trying to snatch it, the deceased catching hold of the wrist of the right hand of the accused and twisting it, and the accused desperately trying to free his hand from his grip; and in the struggle two shots went off accidentally he does not know about the third shot and hit the deceased and caused his death. But in the cross examination he gave negative answers to most of the relevant questions put to him to test the truthfulness of his version. The following answers illustrate his helpful attitude in the court: (1) I do not remember whether the deceased had the towel on him till I left the place. (2) I had no idea where the shots went because we were shuffling during the struggle in the tiny bath room. (3) I have no impression from where and how the shots were fired. (4) I do not know anything about the rebound of shots or how the shots went off. (5) I do not even know whether the spectacles of the deceased fell off. (6) I do not know whether I heard the third shot. My impression is that I heard two shots. (7) I do not remember the details of the struggle. (8) I do not give any thought whether the shooting was an accident or not, because 647 I wished to go to the police and report to the police. (9) I gave no thought to this matter. I thought that something serious had happened. (10) I cannot say how close we were to each other, we might be very close and we might be at arm 's length during the struggle. (11) I cannot say how the deceased bad his grip on my wrist. (12) I do not remember feeling any blows from the deceased by his free hand during the struggle; but be may have hit me. He gives only a vague outline of the alleged struggle between him and the deceased. Broadly looked at, the version given by the accused appears to be highly improbable. Admittedly he bad entered the bedroom of the deceased unceremoniously with a fully loaded revolver; within half a minute he came out of the room leaving Ahuja dead with bullet wounds. The story of his keeping the revolver on the cabinet is very unnatural. Even if he had kept it there, how did Ahuja come to know that it was a revolver for admittedly it was put in an envelope. Assuming that Ahuja had suspected that it might be a revolver, how could he have caught the wrist of Nanavati who had by that time the revolver in his hand with his finger on the trigger? Even if he was able to do so, how did Nanavati accidental pull the trigger three times and release it three times when already Ahuja was holding his wrist and when he was jerking his hand to release it from the grip of Ahuja ? It also appears to be rather curious that both the combatants did not use their left hands in the struggle. If, as he has said, there was a struggle between them and he pushed Ahuja into the bath room, how was it that the towel wrapped around the waist of Ahuja was intact ? So too, if there was a struggle, why there was no bruise on the body of the accused ? Though Nanavati says that 648 there were some "roughings" on his wrist, he had not mentioned that fact till he gave his evidence in the court, nor is there any evidence to indicate such "roughings". It is not suggested that the Clothes worn by the accused were torn or even soiled. Though there was blood up to three feet on the wall of the bath room, there was not a drop of blood on the clothes of the accused. Another improbability in the version of the accused is, while he says that in the struggle two shots went off, we find three spent bullets two of them were found in the bathroom and the other in the body of the deceased. What is more, how could Ahuja have continued to struggle after he had received either the chest injury or the head injury, for both of them were serious ones. After the deceased received either the first or the third injury there was no possibility of further struggling or pulling of the trigger by reflex action. Dr. Jhala says that the injury on the head of the victim was such that the victim could not have been able to keep standing and would have dropped unconscious immediately and that injury No. 1 was also so serious that he could not stand for more than one or two minutes. Even Dr. Baliga admits that the deceased would have slumped down after the infliction of injury No. 1 or injury No. 3 and that either of them individually would be sufficient to cause the victim to slump down. It is, therefore, impossible that after either of the said two injuries was inflicted, the deceased could have still kept on struggling with the accused. Indeed, Nanavati says in his evidence that at the first shot the deceased just kept on hanging to his hand, but suddenly he let go his grip and slumped down. The only circumstance that could be relied upon to indicate a struggle is that one of the chappals of the deceased was found in the bed room while the other was in the bath room. But that is consistent with both intentional and accidental shooting, for in his anxiety to escape from, the line of 649 firing the deceased might have in hurry left his one chappal in the bed room and fled with the other to the bath room. The situation of the spectacles near the commode is more consistent with intentional shooting than with accidental shootings, for if there had been a struggle it was more likely that the spectacles would have fallen off and broken instead of their being intact by the side of the dead body. The condition of the bed room as well as of the bath room, as described by Rashmikant, the police officer who made the inquiry, does not show any indication of struggle or fight in that place. The version of the accused, therefore, is brimming with improbabilities and is not such that any court can reasonably accept it. It is said that if the accused went to the bedroom of Ahuja to shoot him he would not have addressed him by his first names "Prem" as deposed by Deepak. But Nanavati says in his evidence that he would be the last person to address the deceased as Prem. This must have been an embellishment on the part of Deepak. Assuming he said it, it does not indicate and sentiment of affection or goodwill towards the deceased admittedly he had none towards him but only an involuntary and habitual expression. It is argued that Nanavati is a good shot Nanda, D.W. 6, a Commodore in the Indian Navy, certifies that he is a good shot in regard to both moving and stationary targets and therefore if he had intended to shoot Ahuja, he would have shot him perpendiculary hitting the chest and not in a haphazard way as the injuries indicate. Assuming that accused is a good shot, this argument ignores that he was not shooting at an inanimate target for practice but was shooting to commit murder; and it also ignores the desperate attempts the deceased must have made to escape. The first shot might have been fired and aimed at the chest as 650 soon as the accused entered the room, and the other two presumably when the deceased was trying to escape to or through the bathroom. Now on the question whether three shots would have gone off the revolver accidentally, there is the evidence of Bhanagay, P.W. 4, who is a Government Criminologist. The Deputy Commissioner of Police, Bombay, through Inspector Rangnekar sent to him the revolver, three empty cartridge cases, three bullets and three live rounds for his inspection. He has examined the revolver and the bullets which are marked as Exs. F 2, F 2a and F 3. He is of the opinion that the said three empties were fired from the said revolver. He speaks to the fact that for pulling the trigger a pressure of 28 pounds is required and that for each shot the trigger has to be pulled and for another shot to be fired it must be released and pulled again. He also says that the charring around the wound could occur with the weapon of the type we are now concerned within about 2 to 3 inches of the muzzle of the weapon and the blackening around the wound described as carbonaceous tattooing could be caused from such a revolver up to about 6 to 8 inches from the muzzle. In the cross examination he says that the flattening of the two damaged bullets, Exs. F 2 and F 2a, could have been caused by their hitting a flat hard surface, and that the tearing of the copper jacket of one of the bullets could have been caused by a heavy impact, such as hitting against a hard surface; it may have also been caused, according to him, by a human bone of sufficient strength provided the bullet hits the bone tangently and passes of without obstruction. These answers, if accepted we do not see any reason why we should not accept them prove that the bullets, Exs. F 2 and F 2a, could have been damaged by their coming into contact with some hard substance such as a bone He says in the cross examination that one 'struggling ' will not cause three automatic firings and tha 651 even if the struggle continues he would not expect three rounds to go off, but he qualifies his statement by adding that this may happen if the person holding the revolver "co operates so far as the reflex of his finger is concerned", to pull the trigger. He further elaborates the same idea by saying that a certain kind of reflex co operation is required for pulling the trigger and that this reflex pull could be either conscious or unconscious. This answer is strongly relied upon by learned counsel for the accused in support of his contention of accidental firing. He argues that by unconscious reflex pull of the trigger three times by the accuses three shots could have gone off the revolver. But the possibility of three rounds going off by three separate reflexes of the finger of the person holding the trigger is only a theoretical possibility, and that too only on the assumption of a fairly long struggle. Such unconscious reflex pull of the finger by the accused three times within a space of a few seconds during the struggle as described by the accused is highly improbable, if not impossible. We shall consider the evidence of this witness on the question of ricocheting of bullets when we deal with individual injuries found on the body of the deceased. This witness is not a doctor but has received training Forensic Ballistic Identification of Fire Arms) amongst other things in London and possesses certificates of competency from his tutors in London duly endorsed by the covering letter from the Education Department, high commissioner 's office, and he is a Government Criminologist and has been doing this work for the last 22 years; he says that he has also gained experience by conducting experiments by firing on mutton legs. He stood the test of cross examination exceedingly well and there is no reason to reject his evidence. He makes the following points: (1) Three used bullets, Ers. F 2, F 2a and F 3, were shot from the revolver exhibit B. (2) The revolver can be fired only by 652 Pulling the trigger; and for shooting thrice, a person Shooting will have to give a deep pull to the trigger thrice and release it thrice. (3) A pressure of 28 pounds is required to pull the trigger. (4) one "struggling" will not cause three automatic firings. (5) If the struggle continues and if the person who pulls the trigger co operates by pulling the trigger three times, three shots may go off. (6) The bullet may be damaged by hitting a hard surface or a bone. As we have pointed out the fifth point is only a theoretical possibility based upon two hypothesis, namely, (i) the struggle continues for a considerable time, and (ii) the person holding the trigger Go operates by pulling it thrice by reflex action. This evidence, therefore, establishes that the bullets went off the revolver brought by the accused indeed this is not disputed and that in the course of the struggle of a few seconds as described by the accused, it is not possible that the trigger could have been accidentally pulled three times in quick succession so as to discharge three bullets. As regards the pressure required to pull the trigger of exhibit B, Trilok singh who is the Matter Armorer in the Army, deposing as D.W. 11, does not accept the figure given by the Bhanagay and he would put it at 11 to 14 pounds. we does not know the science of ballistics and he is only a mechanic who repairs the arms. He has not examined the revolver in question. He admits that a double action revolver requires more pressure on the trigger than single action one. While major Burrard in his book on Identification of Fires and Forensic Ballistics says that the normal trigger pull in double action revolvers is about 20 pounds, this witness reduces it to 11 to 14 pounds; while Major Brrard says in his book that in all competitions no test other than a dead weight is accepted, this witness does not agree with him. His opinion is based on the experiments performed 653 with spring balance. We would prefer to accept the opinion of Bhanagay to that of this witness. But, on the basis of the opinion of Major Burrard, we shall assume for the purpose of this case that about 20 pounds of pressure would be required`to pull the trigger of the revolver exhibit B. Before considering the injuries in detail, it may be convenient to ascertain from the relevant text books some of the indications that will be found in the case of injuries caused by shooting. The following passage from authoritative text books may be consulted: Snyder 's Homicide Investigation, P. 117: "Beyond the distance of about 18 inches or 24 at the most evidence of smudging and tattooing are seldom present." Merkeley on Investigation of Death, P. 82: "At a distance of approximately over 18" the powder grains are no longer carried forward and therefore the only effect produced on the skin surface is that of the bullet." Legal Medicine Pathology and Toxicology by Gonzales, 2nd Fdn., 1956: "The powder grains may travel 18 to 24 inches or more depending on the length of barrel, calibre and type of weapon and the type of ammunition. " Smith and Glaister, 1939 Edn., P. 17: "In general with all types of smokeless powder some traces of blackening are to be been but it is not always possible to recognize unburnt grains of powder even at ranges of one and a half feet. " Glaister in his book on Medical Jurisprudence and Toxicology, 1957 Edn. J makes a statement that at 8 range of about 12 inches and over as a rule there will not be marks of carbonaceous tattooing or 654 powder marks. But the same author in an earlier book from which we have already quoted puts it at 18 inches. In the book "Recent Advances in Forensic Medicine" 2nd Edn., p. 11, it is stated: "At range beyond 2 to 3 feet little or no trace of the powder can be observed." Dr. Taylor 's book, Vol. 1, 11th edn., p. 373, contains the following statement: "In revolver and automatic pistol wounds nothing but the grace ring is likely to be found beyond about two feet. " Bhanagay, P.W. 4, says that charring around the wound could occur with the weapon of the type exhibit B within about 2 to 3 inches from the muzzle of the weapon, and the blackening round about the wound could be caused from such a weapon up to about 6 to 8 inches from the muzzle. Dr. Jhala, P.W. 18, ways that carbonaceous tattooing would not appear if the body was beyond 18 inches from the mouth of the muzzle. Dr. Baliga, D.W. 2, accepts the correctness of the statement formed in Glaister 's book, namely, when the range reaches about 6 inches there is usually an absence of burning although there will probably be some evidence of bruising and of powder mark, at a range of about 12 inches and over the skin around the wound does not as a rule show evidence of powder marks. " In the cross examinations witness says that he does not see any conflict in the authorities cited, and tries to reconcile the various authorities by stating that all the authorities show that there would not be powder marks beyond the range of 12 to 18 inches. He also ways that in the matter of tattooing, there is no difference between that caused by smokeless powder used in the cartridge in question, and black powder used in other bullets, though in the case of the former there may be greater difficulty to find 655 out whether tho marks are present are not in a, wound. Having regard to the aforesaid impressive array of authorities on Medical Jurisprudence, we hold, agreeing with Dr. Jhala, that carbonaceous tattooing would not be found beyond range of 18 inches from the mouth of the muzzle of the weapon. We also hold that charring around the wound would occur when it is caused by a revoler like exhibit within about 2 or 3 inches from the muzzle of the revolver. The presence and nature of the abrasion collar around the injury indicates the direction and also the velocity of the bullet. Abrasion collar is formed by the gyration of the bullet caused by the rifling of the barrel. If a bullet hits the body perpendicularly, the wound would be circular and the abrasion collar would be all around. But if the hit is not perpendicular, the abrasion collar will not be around the entire wound(See the evidence of Dr. Jhala and Dr. Baliga). As regards the injuries found on the dead body, two doctors were examined, Dr. Jhala, P. W. 18, on the side of the prosecution, and Dr. Baliga, D. W. 2, on the side of the defence. Dr. Jhala is the Polio Surgeon, Bombay, for the last three years. Prior to that he was a Police Surgeon in Ahmedabad for six years. Ee is M. R. C. P. (Edin.), D.T. M. and H. (Lond.). He conducted the postmortem on the dead body of Ahuja and examined both external and internal injuries on the body. He is therefore, competent to speak with authority on the wounds found on the dead body not only by his qualifications and experience but also by reason of having performed the autopsy on the dead body. Dr. Baliga is an F. R. C. section (England) and has been practising as a medical surgeon since 1933. His qualifications and antecedents show that he is not only on experience surgeon but abo has been taking 656 interest in extra surgical activities, social, political and educational. He says that he has studied medical literature regarding bullet injuries and that he is familiar with medico legal aspect of wound including bullet wounds. He was a Causality J. Medical officer in the K. E. M. Hospital in 1928. The had seen bullet injuries both as Causality Medical officer and later on as a surgeon. In the cross examination he says: "I have never fired a revolver, nor any other fire arm. I have not given evidence in a single case of bullet injuries prior to this occasion though I have treated and I am familiar with bullet injuries. The last that I gave evidence in Medico legal case in a murder case was in 1949 or 1950 or there about. Prior to that I must have given evidence in a medical legal case in about 1939. I cannot off hand tell how many cases of bullet injuries I have treated till now, must have been over a dozen. I have not treated any bullet injuries case for the last 7 or 8 years. It was over 8 or 9 years ago that I have treated bullet injuries on the chest and the head. Out of all these 12 bullet injuries cases which I have treated up to now there might be 4 or 5 which were bullet injuries on the head. Out of these 4 or 5 cases probably there were three cases in which there were injuries both on the chest as well as on the head. . I must have performed about half a dozen postmortems in all my career. " He further says that he was consulted about a week before he gave evidence by Mr. Khandalawala and Mr. Rajani Patel on behalf of the accused and was shown the post mortem report of the injuries; that he did not have before him either the bullets or the skull; that he gave his opinion in about 20 minutes on the basis of the post mortem 657 report of the injuries that the said injuries could have been caused in n struggle between the accused and the deceased. This witness has come to the Court to support his opinion based on scanty material. We are not required in this case to decide upon the cooperative qualification or merits of these two doctors of their relative competency as surgeons, but we must have that so far as the wounds on the legal body of the deceased are concerned, Dr. Jhala, who has made the post mortem examination, is in a better position to help us to ascertain whether shooting was by accident, or by intention than Dr. Baliga, who gave his opinion on the basis of the post mortem report. Now we shall take injury No.1. This injury is a punctured one of dimensions 1/4" x 1/4" chest cavity deep just below and inside the inner end of the right collar bone with an abrasion collar on the right side of tho wound. The internal examination showed that the bullet, after causing the punctured wound in the chest just below the inner end of the right collar bone, struck the sternum and after striking it, it slightly deflected in it course and came behind the shoulder bone. In the course of its journey the bullet entered the chest, impacted the soft tissues of the lung tho aorta and tho left lung, and ultimately damaged the left lung and got lodged behind the seapula. Dr. Jhala describes the wound as ellipsoid and oblique and says that the abrasion collar is missing on the left side. On tho injury there is neither charring nor carbonaceous tattooing. The prosecution version is that this wound was caused by intentional shooting, while the defence suggestion is that it was caused when accused and deceased were struggling for the possession of the revolver. Jhala, after describing injury No. 1, says that it could not has been received by the victim during a struggle in which both the victim and the assailant were us each othor 's grip. Ho gives reasons 658 for his opinion, namely, as there was no carbonaceous tattooing on the injury, it must have been f caused by the revolver being fired from a distance ra of over 18 inches from the tip of the mouth of the muzzle. We have earlier noticed that, on the basis of the authoritative text books and the evidence, there would not be carbonaceous tattooing if the target was beyond 18 inches from the mouth of the muzzle. It is suggested to him in the cross examination that the absence of tattooing may be due to the fact that the bullet might have first hit the fingers of the left palm causing all or any of injuries Nos. 2, 4 and 5, presumably when the deceased placed his left palm against the line of the bullet causing carbonaceous tattooing on the said fingers and thereafter hitting the chest. Dr. Jhala does not admit the possibility of the suggestion. He rules out this possibility because if the bullet first had an impact on the fingers, it would get deflected, lose its direction and would not be able to cause later injury No. 1 with abrasion collar. He further explains that an impact with a solid substance like bones of fingers will make the bullet lose its gyratory movement and thereafter it could not cause any abrasion collar to the wound. He adds, "assuming that the bullet first hit and caused the injury to the web between the little finger and the ring finger, and further assuming that it had not lost its gyrating action, it would not have caused the injury No. 1, i e, on the chest which is accompanied by internal damage and the depth to which it had gone." Now let us see what Dr. Baliga, D. W. 2 says about injury No. 1. The opinion expressed by Dr. Jhala is put to this witness, namely, that injury No. 1 on the chest could not have been caused during the course of a struggle when the victim and the assailant were in each other 's grip, and this witness does not agree with that opinion. He further ways that it is possible that even 659 if the bullet first caused injury in the web, that is injury No. 2, and thereafter caused injury No. 1 in the chest, there would be an abrasion collar such as seen in injury No. 1. Excepting this of this suggestion possibility, he has not controverted the reasons given by Dr. Jhala why inch an abrasion collar could not be caused if the bullet had hit the finger before hitting the chest. We will presently show in considering injuries Nos. 2, 4 and 5 that the said injuries were due to the hit by one bullet. If that be so, a bullet, which had caused the said three injuries and then took a turn through the little and the ring finger, could not have retained sufficient velocity to cause the abrasion collar in the chest. Nor has Dr. Baliga controverted the reasons given by Dr Jhala that even if after causing the injury in the web the bullet could cause injury No. ], it could not have caused the internal damage discovered in the post mortem examination. We have no hesitation, therefore, to accept the well reasoned view of Dr. Jhala in preference to the possibility envisaged by Dr. Baliga and hold that injury No. 1 could not have been caused when the accused and the deceased were in close trip, but only by a shot fired from a distance beyond 18 inches from the mouth of the muzzle. The third injury is a lacerated ellipsoid wound oblique in the left parietal region with dimensions and skull deep. Dr. Jhala in his evidence says that the skull had a gutter fracture of the outer table and a fracture of the inner table and the brain showed subarachnoid haemorrhage over the left parieto oocipital region accompanying the fracture of the vault of the skull. The injury was effect ed in a "glancing way", that is, at a tangent, and the injury went upward and to the front. He is of the opinion that the said injury to the head must have been caused by firing of a bullet from a 660 distance of over 18 inches from the mouth of the muzzle and must have been caused with the back of the head of the victim towards the assailant. When it was suggested to him that the said wound could have been caused by a ricocheted bullet, he answered that though a ricocheted bullet coming from the same line of direction could have caused the said injury, it could not have caused the intracranial haemorrhage and also could not have cause the fracture of tho inner table of the skull. He is definite that injury No. 3 could not have been inflicted from "front to back" as the slope of the gutter fracture was from the back to the front in the direction of the "grazing" of the bullet. He gives a further reasons on that as a rule the fracture wound be broader in the skull where the bullet has the first impact and narrower where it emerges out, whishes the case in respect of injury No 3. He also relies upon the depth of the fracture it the two points and its slope to indicate the direction in which the bullet grazed. He further says that it is common knowledge that the fracture of both the tables accompanied by haemorrhage in the skull requires great force and a ricocheted bullet cannot cause such an injury. He opinion that, though a ricocheted bullet emanating from a powerful fire arm from a close range can cause injury to a heavy bone, it cannot be caused by revolver of the type exhibit B. Another suggestion made to him is that the bullet might have hit the glass pane of the window in the bathroom first and then ricocheting causing the injury on the head. Dr. Jhala in his evidence says that if the bullet had hit glass pane ,first ,it would have caused a hole and fallen on the other side of the window, for ricocheting is not possible in the case of a bullet directly hitting the glass. But on the other hand, if the bullet first hit a hard substances and then the glass pane, it would act like a pebble and crack the glass and would 661 not go to the other side. In the present case, the bullet must have hit the skull first and then the glass pane after having lost its velocity, and fallen down like a pebble inside the bath room itself. If, as the defence suggests, the bullet had directly hit the glass pane, it would have passed through it to the other side, in which case four bullets must have been fired from the revolver exhibit B, which is nobody 's case. The evidence, of Dr. Jhala is corroborated by the evidence of the ballistics expert Bhanagay, P.W. 4, when he says that if a bullet hits a hard substance and gets flattened and damaged like the bullets Exs. F 2 and F 2a, it may not enter the body and that even if it enters the body, the penetration will be shallow and the injury caused thereby will be much less as compared to the injury caused by a direct hit of the bullet. Dr. Baliga, on the other hand, says that injury No. 3 could be caused both ways, that is, from "front backward" as well as from "back forward". He also contradicts Dr. Jhala and says "back that in the type of the gutter fracture caused in the present case the wound is likely to be narrower at the entry than at the exit. He further says that assuming that the gutter fracture wound was caused by a ricocheted bullet and assuming further that there was enough force left after rebound, a ricocheted bullet could cause a fracture of even the inner table and give rise to intra cranial haemorrhage. He asserts that a bullet that can cause a gutter fracture of the outer table is capable of fracturing the inner table also. In short, he contradicts every statement of Dr. Jhala; to quote his own words, "I do not agree that injury No. 3, i.e., the gutter fracture, cannot be inflicted from front to back for the reason that the slope of the gutter fracture was behind forward direction of the grazing of the bullet; I also do not agree with the proposition that if it would have been from the front then the slope of the gutter wound would have been from the front backward; 662 I have not heard of such a rule and that at the near end of the impact of a bullet the gutter fracture is deeper than where it flies off; I do not agree that the depth of the fracture at two points is more important factor in arriving at the conclusion of the point of impact of the bullet. " He also contradicts the opinion of Dr. Jhala that injury No. 3 could not be caused in a struggle between the victim and the assailant. Dr. Baliga has been cross examined at great length. It is elicited from him that he is not a ballistics expert and that his experience in the matter of direction of bullet injuries is comparatively less than his experience in other fields. His opinion that the gutter fracture injury could be and was more likely to be caused from an injury glancing front backwards is based upon a comparison of the photograph of the skull shown to him with the figure 15 in the book "Recent Advances in Forensic Medicine " by Smith and Glaister, p. 21. The said figure is marked as exhibit Z in the case. The witness says that the figure shows that the narrower part of the gutter is on the rear and the wider part is in front. In the cross examination he further says that the widest part of the gutter in figure exhibit Z is neither at the front and nor at the rear end, but the rear end is pointed and tailed. It is put to this witness that figure exhibit Z does not support his evidence and that he deliberately refused to see at it correctly, but he denies it. The learned Judges of the High Court, after seeing the photograph exhibit Z with a magnifying glass, expressed the view that what Dr. Baliga called the pointed and tailed part of the gutter was a crack in the skull and not a part of the gutter. This observation has not been shown to us to be wrong. When asked on what scientific principle he would support his opinion, Dr. Baliga could not give any such principle, but only said that it was likely he puts emphasis on the word "likely" that the striking end was likely to be 663 narrower and little broader at the far end. He agrees that when a conical bullet hits a hard bone it means that the hard bone is protruding in the path of the projectile and also agrees that after the initial impact the bullet adjusts itself in the new direction of flight and that the damage caused at the initial point of the impact would be more than at any subsequent point. Having agreed so far, he would not agree on the admitted hypothesis that at the initial point of contract the wound should be wider than at the exit. But he admits that he has no authority to support his submission. Finally, he admits that generally the breadth and the depth of the gutter wound would indicate the extensive nature of the damage. On this aspect of the case, therefore, the witness has broken down and his assertion is not based on any principle or on sufficient data. The next statement he makes is that he does not agree that the fracture of the inner table shows that the initial impact was from behind; but he admits that the fracture of the inner table is exactly below the backside of the gutter, though he adds that there is a more extensive crack in front of the anterior end of the gutter. He admits that in the case of a gutter on the skull the bone material which dissociates from the rest of the skull is carried in the direction in which the bullet flies but says that he was not furnished with any information in that regard when he gave his opinion. Coming to the question of the ricocheting, he says that a ricocheting bullet can produce depressed fracture of the skull. But when asked whether in his experience he has come across any bullet hitting a hard object like a wall and rebounding and causing a fracture of a hard bone or whether he has any text book to support his statement, he says that he cannot quote any instance nor 664 an authority. But he says that it is so mentioned in several books. Then he gives curious definitions of the expressions "likely to cause death", "necessarily fatal " etc. He would go to the extent of saying that in the case of injury No. 3, the chance of recovery is up to 80 per cent. ; but finally he modifies that statement by saying that he made the statement on the assumption that the haemorrhage in the subarachnoid region is localised, but if the haemorrhage is extensive his answer does not hold good. Though he asserts that at a range of about 12 inches the wound does not show as a rule evidence of powder mark, he admits that he has no practical experience that beyond a distance of 12 inches no powder mark can be discovered as a rule. Though text books and authorities are cited to the contrary, he still sticks to his opinion; but finally he admits that he is not a ballistics expert and has no experience in that line. When he is asked if after injury No. 3, the victim could have continued the struggle, he says that he could have, though he adds that it was unlikely after the victim had received both injuries Nos. 1 and 3. He admits that the said injury can be caused both ways, that is, by a bullet hitting either on the front of the head or at the back of the head. But his reasons for saying that the bullet might have hit the victim on the front of the head are neither supported by principle nor by the nature of the gutter wound found in the skull. exhibit Z relied upon by him does not support him. His theory of a ricocheted bullet hitting the skull is highly imaginary and cannot be sustained on the material available to us: firstly, there is no mark found in the bath room wall or elsewhere indicating that the bullet struck a hard substance before ricocheting and hitting the skull, and secondly, it does not appear to be likely that such a ricocheted bullet ejected from exhibit B could have caused such an extensive injury to the head of the deceased as found in this case. 665 Mr. Pathak finally argues that the bullet exhibit F 2a has a "process", i.e., a projection which exactly fits in the denture found in the skull and, therefore, the projection could have been caused only by the bullet coming into contact with some hard substance before it hit the head of the deceased. This suggestion was not made to any of the experts. It is not possible for us to speculate as to the manner in which the said projection was caused. We, therefore, accept, the evidence of the ballistics expert, P. W. 4, and that of Dr. Jhala, P. W. 18, in preference to that of Dr. Baliga. Now coming to injuries Nos 2, 4 and 5, injury No. 4 is found on the first joint of the crease of the index finger on the back side of the left palm and injury No. 5 at the joint level of the left middle finger dorsal aspect, and injury No. 2 is a punctured wound in the web between the ring finger and the little finger of the left hand communicating with a punctured wound on the palmer aspect of the left knukle level between the left little and the ring finger. Dr. Jhala says that all the said injuries are on the back of the left palm and all have corbonaceous tattooing and that the injuries should have been caused when his left hand was between 6 and 18 inches from the muzzle of the revolver. He further says that all the three injuries could have been caused by one bullet, for, as the postmortem discloses, the three injuries are in a straight line and therefore it can clearly be inferred that they were caused by one bullet which passed through the wound on the palmar aspect. His theory is that one bullet, after causing injuries Nos. 4 and 5 passed between the little and ring finger and caused the punctured wound on the palmar aspect of the left hand. He is also definitely of the view that these wounds could not have been received by the victim during a struggle in which both of them were in each other 's grip. It 666 is not disputed that injury No. 1 and injury No. 3 should have been caused by different bullets. If injuries Nos. 2, 4 and 5 were caused by different bullets, there should have been more than three bullets fired, which is not the case of either the prosecution or the defence. In the circumstances, the said wounds must have been caused only by one bullet, and there is noting improbable in a bullet touching three fingers on the back of the palm and taking a turn and passing through the web between the little and ring finger. Dr. Baliga contradicts Dr. Jhala even in regard to these wounds. He says that these injuries, along with the others, indicate the probability of a struggle between the victim and the assailant over the weapon; but he does not give any reasons for his opinion. He asserts that one single bullet cannot cause injuries Nos. 2, 4 and 5 on the left hand fingers, as it is a circuitous course for a bullet to take and it cannot do so without meeting with some severe resistance. He suggests that a bullet which had grazed and caused injuries Nos. 4 and 5 could then have inflicted injury No. 3 without causing carbonaceous tattooing on the head injury. We have already pointed out that the head injury was caused from the back, and we do not see any scope for one bullet hitting the fingers and thereafter causing the head injury. If the two theories, namely, that either injury No. 1 or injury No. 3 could have been caused by the same bullets that might have caused injury No. 2 and injuries Nos. 4 and 5 were to be rejected, for the aforesaid reasons, Dr. Baliga 's view that injuries Nos. 2,4 and 5 must have been caused by different bullets should also be rejected, for to accept it, we would require more than three bullets emanating from the revolver, whereas it is the common case that more than three bullets were not fired from the revolver. That apart in the cross examination this witness accepts 667 that the injury on the first phalangeal joint of the index finger and the injury in the knuckle of the middle finger and the injury in the web between the little and the ring finger, but not taking into account the injury on the palmar aspect would be in a straight line. The witness admits that there can be a deflection even against a soft tissue, but adds that the soft tissue being not of much thickness between the said two fingers, the amount of deflection is negligible. But he concludes by saying that he is not saying this as an expert in ballistics. If so, the bullet could have deflected after striking the web between the little and the ring finger. We, therefore, accept the evidence of Dr. Jhala that one bullet must have caused these three injuries. Strong reliance is placed upon the nature of injury No. 6 found on the back of the deceased viz, a vertical abrasion in the right shoulder blade of dimensions 3"x1" just outside the spine, and it is said that the injury must have been caused when the accused pushed the deceased towards the door of the bath room. Nanavati in his evidence says that he "banged" him towards the door of the bath room, and after some struggle he again pushed the deceased into the bath room. It is suggested that when the accused "banged" the deceased towards the door of the bath room or when he pushed him again into the bath room, this injury might have been caused by his back having come into contact with the frame of the door. It is suggested to Dr. Jhala that injury No. 6 could be caused by the man 's back brushing against a hard substance like the edge of the door, and he admits that it could be so. But the suggestion of the prosecution case is that the injury must have been caused when Ahuja fell down in the bath room in front of the commode and, when falling, his back may have caught the edge of the commode or the bath tub or the edge of the door of the bath room 668 which opens inside the bath room to the left of the bath tub. Shelat, J., says in his judgment: "If the abrasion was caused when the deceased was said to have been banged against the bath room door or its frame, it would seem that the injury would be more likely to be caused, as the deceased would be in a standing position, on the shoulder blade and not inside the right shoulder. It is thus more probable that the injury was caused when the deceased 's back came into contact either with the edge of the door or the edge of the bathtub or the commode when he slumped. " It is not possible to say definitely how this injury was caused, but it could have been caused when the deceased fell down in the bath room. The injuries found on the dead body of Ahuja are certainly consistent with the accused intentionally shooting him after entering the bed room of the deceased; but injuries Nos. 1 and 3 are wholly inconsistent with the accused accidentally shooting him in the course of their struggle for the revolver. From the consideration of the entire evidence the following facts emerge: The deceased seduced the wife of the accused. She had confessed to him of her illicit intimacy with the deceased. It was natural that the accused was enraged at the conduct of the deceased and had, therefore, sufficient motive to do away with the deceased. He deliberately secured the revolver on a false pretext from the ship, drove to the flat of Ahuja, entered his bed room unceremoniously with a loaded revolver in hand and in about a few seconds thereafter came out with the revolver in his hand. The deceased was found dead in his bath room with bullet injuries on his body. It is not disputed that the bullets that caused injuries to Ahuja emanated from the revolver that was in the hand of the accused. After the shooting, till his 669 trial in the Sessions Court, he did not tell anybody that he shot the deceased by accident. Indeed, he confessed his guilt to the Chowkidar Puransingh and practically admitted the same to his colleague Samuel. His description of the struggle in the bath room is highly artificial and is devoid of all necessary particulars. The injuries found on the body of the deceased are consistent with the intentional shooting and the main injuries are wholly inconsistent with accidental shooting when the victim and the assailant were in close grips. The other circumstances brought out in the evidence also establish that there could not have been any fight or struggle between the accused and the deceased. We, therefore, unhesitatingly hold. agreeing with the High Court, that the prosecution has proved beyond any reasonable doubt that the accused has intentionally shot the deceased and killed him. In this view it is not necessary to consider the question whether the accused had discharged the burden laid on him under section 80 of the Indian Penal Code, especially as learned counsel appearing for the accused here and in the High Court did not rely upon the defence based upon that section. That apart, we agree with the High Court that, on the evidence adduced in this case, no reasonable body of persons could have come to the conclusion which the jury reached in this case. For that reason also the verdict of the jury cannot stand. Even so, it is contended by Mr. Pathak that the accused shot the deceased while deprived of the power of self control by sudden and grave provocation and, therefore, the offence would fall under Exception 1 to section 300 of the Indian Penal Code. The said Exception reads: "Culpable homicide is not murder if the offender, whilst deprived of the power of 670 self control by grave and sudden provocation, causes the death of the person who gave the provocation or causes the death of any other person by mistake or accident". Homicide is the killing of a human being by another. Under this exception, culpable homicide is not murder if the following conditions are complied with : (1) The deceased must have given provocation to the accused. (2) The provocation must be grave. (3) The provocation must be sudden. (4) The offender, by reason of the said provocation, shall have been deprived of his power of self control. (5) He should have killed the deceased during the continuance of the deprivation of the power of self control. (6) The offender must have caused the death of the person who gave the provocation or that of any other person by mistake or accident. The first question raised is whether Ahuja gave provocation to Nanawati within the meaning of the exception and whether the provocation, if given by him, was grave and sudden. Learned Attorney General argues, that though a confession of adultery by a wife may in certain circumstances be provocation by the paramour himself, under different circumstances it has to be considered from the standpoint of the person who conveys it rather than from the standpoint of the person who gives it. He further contends that even if the provocation was deemed to have been given by Ahuja, and though the said provocation might have been grave, it could not be sudden, for the provocation given by Ahuja was only in the past. On the other hand, Mr. Pathak contends that the act of Ahuja, namely, the seduction of Sylvia, gave provocation though the fact of seduction was communicated to the accused by Sylvia and that for the ascertainment of the suddenness 671 of the provocation it is not the mind of the person who provokes that matters but that of the person provoked that is decisive. It is not necessary to express our opinion on the said question, for we are satisfied that, for other reasons, the case is not covered by Exception 1 to section 300 of the Indian Penal Code. The question that the Court has to consider is whether a reasonable person placed in the same position as the accused was, would have reacted to the confession of adultery by his wife in the manner in which the accused did. In Mancini vs Director of Public Prosecutions (1), Viscount Simon, L. C., states the scope of the doctrine of provocation thus: "It is not all provocation that will reduce the crime of murder to manslaughter. Provocation, to have that result, must be such as temporarily deprives the person provoked of the power of self control as the result of which he commits the unlawful act which causes death. . The test to be applied is that of the effect of the provocation on a reasonable man, as was laid down by the Court of Criminal Appeal in Rex vs Lesbini, so that an unusually excitable or pugnacious individual is not entitled to rely on provocation which would not have led an ordinary person to act as he did. In applying the text, it is of particular importance to (a) consider whether a sufficient interval has elapsed since the provocation to allow a reasonable man time to cool, and (b) to take into account the instrument with which the homicide was effected, for to retort, in the heat of passion induced by provocation, by a simple blow, is a very different thing from making use of a deadly instrument like a concealed dagger. In short, 672 the mode of resentment must bear a reasonable relationship to the provocation if the offence is to be reduced to manslaughter." Viscount Simon again in Holmes vs Director of Public Prosecutions elaborates further on this theme. There, the appellant had entertained some suspicions of his wife 's conduct with regard to other men in the village. On a Saturday night there was a quarrel between them when she said, "Well, if it will ease your mind, I have been untrue to you", and she went on, "I know I have done wrong, but I have no proof that you haven 't at Mrs. X. 's". With this appellant lost his temper and picked up the hammerhead and struck her with the same on the side of the head. As he did not like to see her lie there and suffer, he just put both hands round her neck until she stopped breathing. The question arose in that case whether there was such provocation as to reduce the offence of murder to manslaughter. Viscount Simon, after referring to Mancini 's case(2), proceeded to state thus : "The whole doctrine relating to provocation depends on the fact that it causes, or may cause, a sudden and temporary loss of self control, whereby malice, which is the formation of an intention to kill or to inflict grievous bodily harm, is negatived. Consequently, where the provocation inspires an actual intention to kill (such as Holmes admitted in the present case), or to inflict grievous bodily harm, the doctrine that provocation may reduce murder to manslaughter seldom applies. " Goddard, C. J., Duffy 's case defines provocation thus "Provocation is some act, or series of acts, done by the dead man to the accused 673 which would cause in any reasonable person, and actually causes in the accused, a sudden and temporary loss of self control, rendering the accused so subject to passion as to make him or her for the moment not master of his mind. . What matters is whether this girl (the accused) had the time to say : `Whatever I have suffered, whatever I have endured, I know that Thou shall not kill. ' That is what matters. Similarly,. . .circumstances which induce a desire for revenge, or a sudden passion of anger, are not enough. Indeed, circumstances which induce a desire for revenge are inconsistent with provocation, since the conscious formulation of a desire for revenge means that the person has had time to think, to reflect, and that would negative a sudden temporary loss of self control which is of the essence of provocation. Provocation being,,. . .as I have defined it, there are two things, in considering it, to which the law attaches great importance. The first of them is, whether there was what is sometimes called time for cooling, that is, for passion to cool and for reason to regain dominion over the mind. . . Secondly in considering whether provocation has or has not been made out, you must consider the retaliation in provocation that is to say, whether the mode of resentment bears some proper and reasonable relationship to the sort of provocation that has been given." A passage from the address of Baron Parke to the jury in R. vs Thomas (1) extracted in Russell on Crime, 11th ed., Vol. I at p. 593, may usefully be quoted : 674 "But the law requires two things : first that there should be that provocation; and secondly, that the fatal blow should be clearly traced to the influence of passion arising from that provocation." The passages extracted above lay down the following principles: (1) Except in circumstances of most extreme and exceptional character, a mere confession of adultery is not enough to reduce the offence of murder to manslaughter. (2) The act of provocation which reduced the offence of murder to manslaughter must be such as to cause a sudden and temporary loss of self control; and it must be distinguished from a provocation which inspires an actual intention to kill. (3) The act should have been done during the continuance of that state of mind, that is, before there was time for passion to cool and for reason to regain dominion over the mind. (4) The fatal blow should be clearly traced to the influence of passion arising from the provocation. On the other hand, in India, the first principle has never been followed. That principle has had its origin in the English doctrine that mere words and gestures would not be in point of law sufficient to reduce murder to manslaughter. But the authors of the Indian Penal Code did not accept the distinction. They observed : "It is an indisputable fact, that gross insults by word or gesture have as great tendency to move many persons to violent passion as dangerous or painful bodily in juries ; nor does it appear to us that passion excited by insult is entitled to less indulgence than passion excited by pain. On the contrary, the circumstance that a man resents an insult more than a wound is anything but 675 a proof that he is a man of peculiarly bad heart." Indian courts have not maintained the distinction between words and acts in the application of the doctrine of provocation in a given case. The Indian law on the subject may be considered from two aspects, namely, (1) whether words or gestures unaccompanied by acts can amount to provocation and (2) what is the effect of the time lag between the act of provocation and the commission of the offence. In Empress vs Khogayi, a division bench of the Madras High Court held, in the circumstances of that case, that abusive language used would be a provocation sufficient to deprive the accused of self control. The learned Judges observed : "What is required is that it should be of a character to deprive the offender of his self control. In determining whether it was so, it is admissible to take into account the condition of mind in which the offender was at the time of the provocation. In the present case the abusive language used was of the foulest kind and was addressed to man already enraged by the conduct of deceased 's son. " It will be seen in this case that abusive language of the foulest kind was held to be sufficient in the case of man who was already enraged by the conduct of deceased 's son. The same learned Judge in a later decision in Boya Munigadu vs The Queen upheld plea of grave and sudden provocation in the following circumstances: The accused saw the deceased when she had cohabitation with his bitter enemy; that night he had no meals; next morning he went to the ryots to get his wages from them, and at that time he saw his wife eating food along with her paramour; he killed the paramour with a bill hook. The learned 676 Judges held that the accused had sufficient provocation to bring the case within the first exception to section 300 of the Indian Penal Code. The learned Judges observed : ". . If having witnessed the act of adultery, he connected this subsequent conduct as he could not fail to connect it, with that act, it would be conduct of a character highly exasperating to him, implying as it must, that all concealment of their criminal relations and all regard for his feelings were abandoned and that they purposed continuing their course of misconduct in his house. This, we think, amounted to provocation, grave enough and sudden enough to deprive him of his self control, and reduced the offence from murder to culpable homicide not amounting to murder. " The case illustrates that the state of mind of the accused, having regard to the earlier conduct of the deceased, may be taken into consideration in considering whether the subsequent act would be a sufficient provocation to bring the case within the exception. Another division bench of the Madras High Court in In re Murugian held that, where the deceased not only committed adultery but later on swore openly in the face of the husband that she would persist in such adultery and also abused the husband for remonstrating against such conduct, the case was covered by the first exception to section 300 of the Indian Penal Code. The judgement of the Andhra Pradesh High Court in In re C. Narayan adopted the same reasoning in a case where the accused, a young man, who had a lurking suspicion of the conduct of his wife, who newly joined him, was confronted with the confession of illicit intimacy with, and consequent pregnancy by another, strangled his wife to death, and 677 held that the case was covered by Exception 1 to section 300 of the Indian Penal Code. These two decisions indicate that the mental state created by an earlier act may be taken into consideration in ascertaining whether a subsequent act was sufficient to make the assailant to lose his self control. Where the deceased led an immoral life and her husband, the accused, upbraided her and the deceased instead of being repentant said that she would again do such acts, and the accused, being enraged struck her and, when she struggled and beat him, killed her, the Court held the immediate provocation coming on top of all that had gone before was sufficient to bring the case within the first exception to section 300 of the Indian Penal Code. So too, where a woman was leading a notoriously immoral life, and on the previous night mysteriously disappeared from the bedside of her husband and the husband protested against her conduct, she vulgarly abused him, whereupon the husband lost his self control, picked up a rough stick, which happened to be close by and struck her resulting in her death, the Lahore High Court, in Jan Muhammad vs Emperor, held that the case was governed by the said exception. The following observations of the court were relied upon in the present case : "In the present case my view is that, in judging the conduct of the accused, one must not confine himself to the actual moment when the blow, which ultimately proved to be fatal was struck, that is to say, one must not take into consideration only the event which took place immediately before the fatal blow was struck. We must take into consideration the previous conduct of the woman. . . . . . . . . . . . . As stated above, the whole unfortunate affair 678 should be looked at as one prolonged agony on the part of the husband which must have been preying upon his mind and led to the assault upon the woman, resulting in her death." A division bench of the Allahabad High Court in Emperor vs Balku invoked the exception in a case where the accused and the deceased, who was his wife 's sister 's husband, were sleeping on the same cot, and in the night the accused saw the deceased getting up from the cot, and going to another room and having sexual intercourse with his (accused 's) wife, and the accused allowed the deceased to return to the cot, but after the deceased fell asleep, he stabbed him to death. The learned Judges held : "When Budhu (the deceased) came into intimate contact with the accused by lying beside him on the charpai this must have worked further on the mind of the accused and he must have reflected that `this man now lying beside me had been dishonouring me a few minutes ago '. Under these circumstances we think that the provocation would be both grave and sudden. " The Allahabad High Court in a recent decision, viz., Babu Lal vs State applied the exception to a case where the husband who saw his wife in a compromising position with the deceased killed the latter subsequently when the deceased came, in his absence, to his house in another village to which he had moved. The learned Judges observed : "The appellant when he came to reside in the Government House Orchard felt that he had removed his wife from the influence of the deceased and there was no more any contact between them. He had lulled himself into a false security. This belief was shattered 679 when he found the deceased at his hut when he was absent. This could certainly give him a mental jolt and as this knowledge will come all of a sudden it should be deemed to have given him a grave and sudden provocation. The fact that he had suspected this illicit intimacy on an earlier occasion also will not alter the nature of the provocation and make it any the less sudden. " All the said four decisions dealt with a case of a husband killing his wife when his peace of mind had already been disturbed by an earlier discovery of the wife 's infidelity and the subsequent act of her operated as a grave and sudden provocation on his disturbed mind. Is there any standard of a reasonable man for the application of the doctrine of "grave and sudden" provocation ? No abstract standard of reasonableness can be laid down. What a reasonable man will do in certain circumstances depends upon the customs, manners, way of life, traditional values etc. ; in short, the cultural, social and emotional background of the society to which an accused belongs. In our vast country there are social groups ranging from the lowest to the highest state of civilization. It is neither possible nor desirable to lay down any standard with precision : it is for the court to decide in each case, having regard to the relevant circumstances. It is not necessary in this case to ascertain whether a reasonable man placed in the position of the accused would have lost his self control momentarily or even temporarily when his wife confessed to him of her illicit intimacy with another, for we are satisfied on the evidence that the accused regained his self control and killed Ahuja deliberately. The Indian law, relevant to the present enquiry, may be stated thus : (1) The test of "grave 680 and sudden" provocation is whether a reasonable man, belonging to the same class of society as the accused, placed in the situation in which the accused was placed would be so provoked as to lose his self control. (2) In India, words and gestures may also, under certain circumstances, cause grave and sudden provocation to an accused so as to bring his act within the first Exception to section 300 of the Indian Penal Code. (3) The mental background created by the previous act of the victim may be taken into consideration in ascertaining whether the subsequent act caused grave and sudden provocation for committing the offence. (4) The fatal blow should be clearly traced to the influence of passion arising from that provocation and not after the passion had cooled down by lapse of time, or otherwise giving room and scope for premeditation and calculation. Bearing these principles in mind, let us look at the facts of this case. When Sylvia confessed to her husband that she had illicit intimacy with Ahuja, the latter was not present. We will assume that he had momentarily lost his self control. But if his version is true for the purpose of this argument we shall accept that what he has said is true it shows that he was only thinking of the future of his wife and children and also of asking for an explanation from Ahuja for his conduct. This attitude of the accused clearly indicates that he had not only regained his self control, but on the other hand, was planning for the future. Then he drove his wife and children to a cinema, left them there, went to his ship, took a revolver on a false pretext, loaded it with six rounds, did some official business there, and drove his car to the office of Ahuja and then to his flat, went straight to the bed room of Ahuja and shot him dead. Between 1 30 P.M., when he left his house, and 4 20 P.M., when the murder took place, three hours had elapsed, and therefore there was sufficient time for him to 681 regain his self control, even if he had not regained it earlier. On the other hand, his conduct clearly shows that the murder was a deliberate and calculated one. Even if any conversation took place between the accused and the deceased in the manner described by the accused though we do not believe that it does not affect the question, for the accused entered the bed room of the deceased to shoot him. The mere fact that before the shooting the accused abused the deceased and the abuse provoked an equally abusive reply could not conceivably be a provocation for the murder. We, therefore, hold that the facts of the case do not attract the provisions of Exception 1 to section 300 of the Indian Penal Code. In the result, conviction of the accused under section 302 of the Indian Penal Code and sentence of imprisonment for life passed on him by the High Court are correct, and there are absolutely no grounds for interference. The appeal stands dismissed. Appeal dismissed.

Appellant Nanavati, a Naval Officer, was put up on trial under sections 302 and 304 Part I of the Indian Penal Code for the alleged murder of his wife 's paramour. The prosecution case in substance was that on the day of occurrence his wife Sylvia confessed to him of her illicit intimacy with Ahuja and the accused went to his ship, took from its stores a revolver and cartridges on a false pretext, loaded the same, went to Ahuja 's flat, entered his bed room and shot him dead. The defence, inter alia, was that as his wife did not tell him if Ahuja would marry her and take charge of their children, he decided to go and settle the matter with him. He drove his wife and children to a cinema where he dropped them promising to pick them up when the show ended at 6 p.m., drove to the ship and took the revolver and the cartridges on a false pretext intending to shoot himself. Then he drove 568 his car to Ahuja 's office and not finding him there, drove to his flat. After an altercation a struggle ensued between the two and in course of that struggle two shots went off accidentally and hit Ahuja. Evidence, oral and documentary, was adduced in the case including three letters written by Sylvia to Ahuja. Evidence was also given of an extra judicial confession made by the accused to prosecution witness 12 who deposed that the accused when leaving the place of occurrence told him that he had a quarrel with Ahuja as the latter had 'connections ' with his wife and therefore he killed him. This witness also deposed that he told P. W. 13, Duty Officer at the Police Station, what the accused had told him. This statement was not recorded by P. W. 13 and was denied by him in his cross examination. In his statement to the investigation officer it was also not recorded. The jury returned a verdict of 'not guilty ' on both the charges by a majority of 8: 1. The Sessions Judge disagreed with that verdict, as in his view, no reasonable body of men could bring that verdict on the evidence and referred the matter to the High Court under section 307 of the Code of Criminal Procedure. The two Judges of the Division Bench who heard the matter agreed in holding that the appellant was guilty under section 302 of the Indian Penal Code and sentenced him to undergo rigorous imprisonment for life. One of them held that there were misdirections in the Sessions Judge 's charge to the jury and on a review of the evidence came to the conclusion that the accused was guilty of murder and the verdict of the jury was perverse. The other Judge based his conclusion on the ground that no reasonable body of persons could come to the conclusion that jury had arrived at. On appeal to this Court by special leave it was contended on behalf of the appellant that under section 307 of the Code of Criminal Procedure it was incumbent on the High Court to decide the competency of the reference on a perusal of the order of reference itself since it had no jurisdiction to go into the evidence for that purpose, that the High Court was not empowered by section 307(3) of the Code to set aside the verdict of the jury on the ground that there were misdirections in the charge, that there were no misdirections in the charge nor was the verdict perverse and that since there was grave and sudden provocation the offence committed if any, was not murder but culpable homicide not amounting to murder. ^ Held, that the connections were without substance and the appeal must fail. Judged by its historical background and properly construed, section 307 of the Code of Criminal Procedure was meant to confer wider powers of interference on the High Court than 569 in an appeal to safeguard against an erroneous verdict of the jury. This special jurisdiction conferred on the High Court by section 307 of the Code is essentially different from its appellate jurisdiction under sections 410 and 417 of the code, section 423(2) conferring no powers but only saving the limitation under section 418(1), namely, that an appeal against an order of conviction or an acquittal in a jury trial must be confined to matters of law. The words "for the ends of justice" in section 307(1) of the Code, which indicate that the Judge disagreeing with the verdict, must be of the opinion that the verdict was one which no reasonable body of men could reach on the evidence, coupled with the words 'clearly of the opinion ' gave the Judge a wide and comprehensive discretion to suit different situations. Where. therefore, the Judge disagreed with the verdict and recorded the grounds of his opinion, the reference was competent, irrespective of the question whether the Judge was right in so differing from the jury or forming such an opinion as to the verdict. There is nothing in section 307(1) of the Code that lends support to the contention that though the Judge had complied with the necessary conditions, the High Court should reject the reference without going into the evidence if the reasons given in the order of reference did not sustain the view expressed by the Judge. Section 307(3) of the Code by empowering the High Court either to acquit or convict the accused after considering the entire evidence, giving due weight to the opinions of the Sessions Judge and the jury, virtually conferred the functions both of the jury and the Judge on it. Where, therefore, misdirections vitiated the verdict of the jury, the High Court had as much the power to go into the entire evidence in disregard of the verdict of the jury as it had when there were no misdirections and interfere with it if it was such as no reasonable body of persons could have returned on the evidence. In disposing of the reference, the High Court could exercise any of the procedural powers conferred on it by section 423 or any other sections of the Code. Ramanugarh Singh vs King Emperor, (1946) L.R. 73 I. A. 174, Akhlakali Hayatalli vs State of Bombay, ; , Ratan Rai vs State of Bihar, , Sashi Mohan Debnath vs State of West Bengal , and Emperor vs Ramdhar Kurmi, A. I. R. 1948 Pat. 79, referred to. A misdirection is something which the judge in his charge tells the jury and is wrong or in a wrong manner 570 tending to mislead them. Even an omission to mention matters which are essential to the prosecution or the defence case in order to help the jury to come to a correct verdict may also in certain circumstances amount to a misdirection. But in either case, every misdirection or non direction is not in itself sufficient to set aside a verdict unless it can be said to have occasioned a failure of justice. Mustak Hussein vs State of Bombay [1953] section C. R. 809 and Smt. Nagindra Bala Mitra vs Sunil Chandra Roy, ; , referred to. There is no conflict between the general burden that lies on the prosecution in a criminal case and the special burden imposed on the accused under section 105 of the Evidence Act where he pleads any of the General Exceptions mentioned in the Indian Penal Code. The presumption of innocence in the favour of the accused continues all through and the burden that lies on the prosecution to prove his guilt, except where the statute provides otherwise, never shifts. Even if the accused fails to prove the Exception the prosecution has to discharge its own burden and the evidence adduced, although insufficient to establish the Exception, may be sufficient to negative one or more of the ingredients of the offence. Woolmington vs Director of Public Prosecutions, L. R. ; , considered. Attygalle vs Emperor, A. I. R. 1936 P. C. 169, distinguished. State of Madras vs A. Vaidyanatha Iyer, ; and C. section D. Swamy vs State, ; , referred to. Consequently, where, as in the instant case, the accused relied on the Exception embodied in section 80 of the Indian Penal Code and the Sessions Judge omitted to point out to the jury the distinction between the burden that lay on the prosecution and that on the accused and explain the implications of the terms 'lawful act ', lawful manner ', 'unlawful means ' and 'with proper care and caution ' occurring in that section and point out their application to the facts of the case these were serious misdirections that vitiated the verdict of the jury. Extra judicial confession made by the accused is a direct piece of evidence and the stringent rule of approach to circumstantial evidence has no application to it. Since in the instant case, the Sessions Judge in summarising the circumstances mixed up the confession with the circumstances while directing the jury to apply the rule of circumstantial evidence and 571 it might well be that the jury applied that rule to it, his charge was vitiated by the grave misdirection that must effect that correctness of the jury 's verdict. The question whether the omission to place certain evidence before the jury amounts to a misdirection has to be decided on the facts of each case. Under section 297 of the Code of Criminal Procedure it is the duty of the Sessions Judge after the evidence is closed and the counsel for the accused and the prosecution have addressed the jury, to sum up the evidence from the correct perspective. The omission of the Judge in instant case, therefore, to place the contents of the letters written by the wife to her paramour which in effect negatived the case made by the husband and the wife in their deposition was a clear misdirection. Although the letters were read to jury by the counsel for the parties, that did not absolve the judge from his clear duty in the matter. R. V. Roberts, and R. vs Affield, , held inapplicable. The commencement of investigation under section 156 (1) of the Code of Criminal Procedure in a particular case, which is a question of fact, has to be decided on the facts of the case, irrespective of any irregularity committed by the Police Officer in recording the first information report under section 154 of the Code. Where investigation had in fact commenced, as in the instant case, section 162 of the Code was immediately attracted. But the proviso to that section did not permit the eliciting from a prosecution witness in course of his cross examination of any statement that he might have made to the investigation officer where such statement was not used to contradict his evidence. The proviso also had no application to a oral statement made during investigation and not reduced to writing. In the instant case, therefore, there could be no doubt that the Sessions Judge acted illegally in admitting the evidence of P. W. 13 to contradict P. W. 12 in regard to the confession of the accused and clearly misdirected himself in placing the said evidence before the jury. Exception 1 to section 300 of the Indian Penal Code could have no application to the case. The test of "grave and sudden" provocation under the Exception must be whether a reasonable person belonging to the same class of society as the accused, placed in a similar situation, would be so provoked as to lose his self control. In India, unlike in England, words and gestures may, under certain circumstances cause grave and sudden provocation so as to attract that Exception. The mental background created by any previous act of the victim can 572 also be taken into consideration in judging whether the subsequent act could cause grave and sudden provocation, but the fatal blow should be clearly traced to the influence of the passion arising from that provocation and not after the passion had cooled down by lapse of time or otherwise, giving room and scope for premeditation and calculation. Mancini vs Director of Public Prosecutions, L.R. (1942) A.C. I, Holmes vs Director of Public Prosecutions, L. R. Duffy 's case, [1949]1 All. E. R. 932 and R. vs Thomas, ; , considered. Empress vs Khogayi, Mad. 122, Boya Munigadu vs The Queen, Mad. 33, In re Murugian I. L. R. , In re C. Narayan, A.I.R. 1958 A. P. 235, Jan Muhammad vs Emperor, I. L. R. , Emperor vs Balku, I. L. R. (1938) All 789 and Babu Lal vs State A. I. R. 1960 All. 223, referred to. Semble: Whether a reasonable person in the circumstances of a particular case committed the offence under grave and sudden provocation is a question of fact for the jury to decide. Holmes vs Director of Public Prosecution, L. R. , considered.

Criminal Appeal No. 59 of 1959. Appeal from the judgment and order dated the January 8, 1959, of the Calcutta High Court in Criminal Misc. Case No. 126 of 1958. AND PETITION No. 51 OF 1959. Petition under Article 32 of the Constitution of India for the enforcement of Fundamental Rights. Veda Vyasa, section K. Kapur and Ganpat Rai, for the appellant and petitioner. B. Sen and P. K. Bose, for the respondents. May 20. The Judgment of the Court was delivered by SINHA J. This appeal, on a certificate of fitness granted by the Calcutta High Court, is directed against the order of that Court, dated January, 8, 1959, in Criminal Miscellaneous Case No. 126 of 1958, refusing to issue a writ in the nature of habeas corpus in respect of one Ram Prasad Das (who will hereinafter be referred to as 'the petitioner '). This Court, by an order 413 dated April 20, 1959, directed that the application of the petitioner under article 32 of the Constitution, for a similar writ in respect of the same person, be posted for hearing immediately after the aforesaid criminal appeal, and that it shall not be necessary that the petitioner be produced before this Court at the time of the hearing of the writ petition. Hence, both the matters, relating as they do, to the same subject matter, have been heard together and will be disposed of by this judgment. It appears that Naresh Chandra Ganguli, an advocate, practising in the Calcutta High Court, made an application under sections 491 and 561A of the Code of Criminal Procedure, as a friend, on behalf on the petitioner, in detention in the Dum Dum Central Jail in 24 Parganas, under the orders of the Government of West Bengal. The application was made to the Calcutta High Court on the following allegations: The peti tioner is the Secretary of the West Bengal Committee of the Bharatiya Jana Sangha, one of the four big political parties, as recognized by the Election Commission of India. On or about October 7, 1958, towards evening, when the petitioner was coming out of the Basanta Cabin, a tea stall, at the crossing of the College Street and Surya Sen Street, after having addressed a meeting at the College Square, he was stopped on the street by the police and was taken to the office of the Special Branch (Police) on Lord Sinha Road. From there, he was sent to the Dum Dum Central Jail, where he was served with an order. being Order No. 83 dated October 7, 1958, purporting to have been made by the Commissioner of Police, Calcutta, under the provisions of the Preventive Detention Act (No. IV, of 1950) (hereinafter referred to as 'the Act '). The order is in these terms: " ORDER Dated 7 10 58. No. 83. Whereas I am satisfied with respect to the person known as Sri Ram Prasad ] )as, son of late Bepin Behari Das of Village P S P Dist. and of 6, Murlidhar Sen Lane, Calcutta that with a view to preventing him from acting in a manner prejudicial 414 to the maintenance of Public Order it is necessary so to do. Now therefore in exercise of the Powers conferred by Section 3(2) of the (IV of 1950) 1 made this order directing that the said Sri Ram Prasad Das be detained. Given under my hand and seal of office. Sd/ Illegible, Commissioner of Police, Calcutta. " On or about October 8, 1958, the petitioner was served, in the Dum Dum Central Jail, with a further order, being Order No. 85 dated October 8, 1958, which is as follows: " Government of West Bengal. Office of the Commissioner of Police, Calcutta. Dated 8 10 58. No. 85. Grounds for detention under clause (ii) of clause (a) of Sub section (1) of Section 3 of the (Act IV of 1950). To Sri Rain Prasad Das S/O Bepin Behari Das, of 6, Muralidhar Sen Lane, Calcutta. You are being detained in pursuance of a detention order made in exercise of power conferred by Section 3(2) (c) of the P.D. Act 1950 (Act IV of 1950) on the ground that you are acting in a manner prejudicial to the maintenance of public order, as evidenced by the particulars given below: 1.That on 13 9 58 you attended a meeting of Eastern Indian Refugee Council held at the Refugee office at ' 6 Murlidhar Sen Lane and vilified Prime Minister of India for his allegedly turning a deaf ear to the untold miseries of the refugees and while referring to the recent agreement between the Prime Ministers of India and Pakistan you vented feelings of violence against the Prime Minister of India by emphasising that in order to save the refugees and the territories of the Indian Union, Sri Nehru should be murdered, if necessary and so the need of another Nathuram Godse was felt now. 415 2. That in course of discussion with members of your party on 17 9 58 at 6, Murlidhar Sen Lane, you stated that the Indian Prime Minister had made a Present of certain Indian enclaves to Pakistan in pursuance of the policy of appeasement which has been initiated by the Late Mahatma Gandhi and called upon the members to build uP strong movement against the implementation of Nehru Noon Pact. You also tried to. rouse passions by alleging that the Indian Prime Minister had no sympathy for West Bengal. That on 26 9 58 you attended another meeting of the South Durtolla Branch of the Jana Sangha at Jatin Mitter Park, where you denounced the aforesaid agreement between the two Prime Ministers and stressed the need of forming a militia with the youths of the country for the safety of the people living in border areas and urged all to enrol themselves for the said purpose. That you intend to proceed to Delhi on 9 10 58 and that you are likely to instigate plans which may adversely affect the personal security of the Prime Minister of India. Your action above is bound to result in the maintenance of public order being prejudicially affected. You are hereby informed that you may make a representation to the State Government against the detention order and that such representation should be addressed to the Assistant Secy. Home (Special) Department, Government of West Bengal, and forwarded through the Supt. of the Jail in which you are detained as early as possible. You are also informed that u/s 10 of the P.D. Act 1950 (IV of 1950) the Advisory Board shall, if you desire to be heard hear you in person and that if you desire to be so heard by the Advisory Board you should intimate such desire in your representation to the State Government. Sd/ Illegible, Commissioner of Police, Calcutta," 416 On or about October 11, 1958, the petitioner was served with another order which is in these terms: " Government of West Bengal. Home Department, Special Section. Order Calcutta, 11 10 58. No. 1882 H. section In exercise of the power conferred by Section 3(2) of the Preventive Detention Act, 1950 (IV of 1950), the Governor is pleased to approve order No. 83 dated the 7 10 58 made under Section 3(2) of the said Act by the Commissioner of Police, Calcutta directing that Sri Ram Prasad Das son of Late Bepin Behari Das of 6, Murlidhar Sen Lane, Calcutta be detained. By order of the Governor. Sd/ Illegible, Dy. Secty. to the Govt. of West Bengal. " The petitioner made a representation in writing against the order of detention aforesaid, denying and refuting the grounds of his detention, set out above. He particularly denied the allegation contained in ground No. 1 aforesaid, as totally false, and stated that there was no meeting, as alleged, on September 13, 1958, and that he had not made any speech attributed to him in the said ground. He also denied that he had advocated in any meeting for the formation of a militia, as alleged. But he claimed that he had a right to express his views about the policy of the Government or the Prime Minister, relating to Pakistan and/ or about Nehru Noon Pact or similar other Agreements. He denied that he indulged in any violent speeches, or that he tried to rouse passions. His further contention was that the ground No. 4 was extremely vague in the absence of any particulars about how, where and when and in what manner, he was likely to instigate any plan which was to adversely affect the personal security of the Prime Minister of India, and the nature or particulars of any such contemplated plan. In his application to the High Court, the petitioner also submitted that the grounds supplied to him, had 417 no rational connection with the objects mentioned in section 3 of the Act, and that, therefore, he was deprived of his right to make an effective representation. He also alleged that he was a member of a political party opposed to the party in power, and held definitely pronounced views about the failure of the Government to tackle the problem of refugees, as also about the relationship between the Government and the State of Pakistan. He also claimed to be a leader of the refugees, and as such, had been relentlessly criticising the policies of the present Government. He further asserted that the order of detention passed against him, was a clear case of political victimisation. He alleged further that the order of detention, on the face of it, was malafide, and was a clear infringement of his fundamental right to freedom of speech and association, guaranteed by the Constitution. On November 28, 1958, the petitioner was brought to the Writers ' Buildings in Calcutta, and placed before the Advisory Board as constituted under the Act. The petitioner was heard in person by the Advisory Board on that date, and on the next day, that is, November 29, 1958, after the hearing by the Advisory Board, another order, being order No. 1967 H. section, dated November 29, 1958, made by the Governor of West Bengal, was issued, confirming the aforesaid order of detention No. 83 dated October 7, 1958, set out above, and continuing the petitioner 's detention till the expiration of 12 months from the date of detention. On those allegations, the petitioner submitted to the High Court that the orders aforesaid, relating to his detention in the Dum Dum Central Jail, were" ' illegal, invalid, ultra vires, void and inoperative." An affidavit in opposition, on behalf of the State of West Bengal and other opposite parties, was sworn to by the Commissioner of Police, Calcutta opposite party No. 3 in the case In the aforesaid affidavit, the deponent averrred that he was satisfied on the records and materials placed before him that the petitioner was a person likely to act in a manner prejudicial to the maintenance of public order, and that with a view to preventing him from doing so, it 418 was necessary to make the order of detention on the grounds mentioned in the Order No. 85 dated October 8, 1958 (set out above). He also averred that the orders of detention aforesaid, together with the grounds and all other relevant particulars, were reported by him to the Government of West Bengal, which, after duly considering the same, duly approved of the orders of detention. It was also stated in the affidavit that the petitioner personally appeared before the Advisory Board on November 28, 1958, and the Advisory Board, upon a consideration of the records and materials placed before it, and the representation made by the petitioner, and after hearing the petitioner in person, reported to the Government ' of West Bengal that in the opinion of the Advisory Board, there was sufficient cause for the detention of the petitioner. The Commissioner of Police further stated in the affidavit that he had duly passed and signed the orders of detention after considering the records and materials in respect of the petitioner, in exercise of the powers conferred under the Act, bona fide and without any malice whatsoever, on being satisfied about the necessity of the said orders of detention. He also stated that he denied all statements of facts to the contrary, contained in the affidavit in support of the petition, and he undertook to produce the original records in the Court at the hearing. Allegations of victimisation on political grounds, and that the order of detention was mala fide and in infringement of the fundamental rights of the petitioner, were specifically denied. The matter was heard by a Division Bench of the Calcutta High Court (Guha Roy and H. K. Sen, JJ.), which, by its order dated January 8, 1958, discharged the Rule. In the course of its judgment, the High Court made the following observations: On a reading of the order however, it is quite clear to us that paragraphs 1, 2, 3 and 4 do not state the grounds of the order. There is only one ground of the order and that is that the petitioner was acting in a manner prejudicial to the maintenance of public order and the remaining paragraphs of the order make it quite clear that what are stated 419 in paragraphs 1, 2, 3 and 4 constitute different pieces of evidence by which the authority making the order came to the conclusion that the petitioner was acting in a manner prejudicial to the maintenance of public order and therefore should be detained under the Act. " Hence, the High Court, on a construction of section 3 of the Act, came to the conclusion that the grounds of detention in respect of the petitioner, were not vague, and that the statement in para. 4 of the detention order No. 85 dated October 8, 1958, quoted above, was not a ground but only a piece of evidence out of several such pieces of evidence on which the ground of detention was based. It was further pointed out that para. 4 aforesaid, was not by itself a ground of the order, but merely an inference of fact which had some bearing on the ground of the order. The High Court also pointed out that there was no ambiguity in the recitals, including these in para. 4 aforesaid. In that view of the matter, the order of detention of the petitioner was upheld, and the Court further held that the question whether the whole ' order was bad on the ground that one of the grounds was too vague, did not arise in the case. The petitioner moved the Calcutta High Court for a certificate that the case was a fit one for appeal to this Court. The Chief Justice of the High Court, delivering the order of the Division Bench of that Court, granting the necessary certificate, observed that the view of the High Court that para. 4 aforesaid, was not a ground of detention but only one of the items of evidence in support of the ground, raised a serious question to be determined by this Court, particularly because a view contrary to the one taken by the High Court in the instant case, appeared to have been taken by this Court and by the Calcutta High Court itself in a number of decisions. That is how this appeal has come to this Court. Besides preferring the aforesaid appeal, the petitioner moved this Court under article 32 of the Constitution, praying for a writ in the nature of habeas corpus, and a Constitution Bench, by its order dated April 20, 1959, directed that this appeal be posted for 420 hearing by a Constitution Bench, on May 11, 1959, on a cyclostyled paper book, and that the filing of the petition of appeal and the statements of cases be dispensed with. The Court further ordered that the application under article 32 of the Constitution, be posted for hearing immediately after the criminal appeal. That is how both the matters have been placed one after the other for hearing before us. The order under appeal takes the view that the various grounds of detention, are stated in section 3 (1)(a) (i) (ii) (iii) and (b) of the Act, and that there can be no grounds apart from those. The High Court then, on a reading of the Order No. 85, set out above, has held that paragraphs 1, 2, 3 and 4 are not the grounds of detention, as contemplated by section 3 of the Act, but that they only constitute different pieces of evidence by which the authority making the order came to the conclusion that the petitioner was acting in a manner prejudicial to the maintenance of public order, which was the only ground on which the order of detention in question was founded. The High Court was right in its literal construction of the order impugned in this case, which proceeds to recite the four numbered paragraphs, preceded by the introductory clause " as evidenced by the particulars given below. " But the case of The State of Bombay vs Atma Ram Sridhar Vaidya (1), has laid it down that cl (5) of article 22 of the Constitution, confers two distinct though interrelated rights on the petitioner, namely, (1) the right to be informed of the grounds on which the order of detention has been made, and (2) the right to be enabled, at the earliest opportunity, to make a representation against the order. This Court further pointed out in that case, that the grounds which have a rational connection with the objects mentioned in section 3, have to be supplied. As soon as that is done, the first condition of a valid detention is complied with. The second condition of such a detention is fulfilled only after the detenu has been supplied with such information as will enable him to make a representation. If the information supplied in order to enable a detenu (1) ; 421 to make a representation, does not contain sufficient particulars, the detenu is entitled to ask for further particulars which will enable him to make a representation. Therefore, if there is an infringement of either of the two rights, and any one of the two conditions precedent to a valid detention, as aforesaid, has not been fulfilled, the detenu has a right to approach this Court for a writ in the nature of habeas corpus. In other words, the grounds for making an order of detention, which have to be communicated to the detenu as soon as practicable, are conclusions of facts, and are not a complete recital of all the relevant facts. Therefore, the grounds, that is to say, those conclusions of facts, must be in existence when the order of detention is made, and those conclusions of facts have to be communicated to the detenu as soon as may be. This Court, and naturally, the High Courts, have treated the recitals in the orders of detention, with particular reference to the several clauses and sub clauses of section 3 (1) (a) and (b) of the Act, as stating the object to be achieved in making the order of detention. The order of detention may also contain recitals of facts upon which it is based. If the order of detention also contains the recitals of facts upon which it is founded, no further question arises, but if it does not contain the recitals of facts which form the basis of the conclusions of fact, justifying the order of detention, then, as soon as may be (now, under section 7, within a maximum period of five days from the date of detention), the person detained has to be informed of those facts which are the basic facts or the reasons on which the order of detention has been made. Section 3 of the Act requires the authority making an order of detention, to state the fact of its satisfaction that it is necessary to make the order of detention of a particular person, with a view to preventing him from acting in a manner prejudicial to one or more of the objects contained in clauses and sub clauses of section 3 (1) (a) and (b) of the Act. Section 7 requires that the person detained should be communicated the grounds on which the order of detention has been made, so a, , to afford him the earliest opportunity to make a 422 representation against the order, to the appropriate Government. The statement of facts contemplated by section 7, would, thus, constitute the grounds, and not the matters contained in one or more of the clauses and sub clauses under section 3 (1) (a) and (b) of the Act. Section 3 also requires that when an order of detention has been made, the State Government concerned has to be apprised of the order of detention as also of the grounds on which the order of detention has been made, together with such other particulars as have a bearing on the order and the grounds. And finally,, after the order has been approved by the State Government, that Government, in its turn, has to report to the Central Government the fact of the detention, together with the grounds on which the order of detention had been made; and such other particulars as, in the opinion of the State Government, have a bearing on the necessity for the order. Thus, on a consideration of the provisions of sections 3 and 7 of the Act, it may be observed that the detenu has to be served with a copy of the order passed by the authority contemplated by sub section (2) of section 3, containing, firstly, recitals in terms of one or more of the subclauses of cl. (a) and (b) of section 3(1), which we may call the 'Preamble ', and secondly, the grounds contemplated by section 7, namely, the conclusions of fact which have led to the passing of the order of detention, informing the detenu as to why he was being detained. lf the grounds do not contain all the particulars necessary for enabling the detenu to make his representation against the order of his detention, he may ask for further particulars of the facts, and the authority which passed the order of detention is expected to furnish all that information, subject, of course, to the provisions of sub section (2) of section 7 ; that is to say, the person detained shall not be entitled to the disclosure of such facts as the authority making the order, considers against public interest to disclose. Thus, the order of detention to be served upon the person detained would usually consist of the first two parts, namely, the preamble and the grounds, but it may also consist of the third part, namely, the 423 particulars, if and when they are required or found to be necessary. But it has to be noted that the particular,, referred to in sub sections (3) and (4) of section 3, would not be identical with the particulars which we have called the third part of the order. The State Government, as also the Central Government, would, naturally, be placed in possession of all the relevant facts and particulars on which the order of detention has been passed. But those particulars may contain such details of facts as may not be communicated, in public interest, to the person detained. From what has been said above, it is clear that the High Court was in error in so far as it treated what we have called the preamble ' as the grounds of detention contemplated by section 7 of the Act. But this error, as will presently appear, has not affected the legality, propriety or correctness of the order passed by the High Court in the habeas corpus proceedings before it. The High Court, as already indicated, after making those observations which we have held to be erroneous, proceeded further to say that there was no ambiguity in the recitals of facts, as the High Court characterised them and which we have called the grounds. The contention raised before the High Court has been repeated before us, that the grounds contained in para. 4, are vague and indefinite, not enabling the person detained to make his representation. It will appear from the paragraph aforesaid that the petitioner intended to proceed to Delhi on October 9,1958, with a view to instigating plans against the personal security of the Prime Minister. It is clear that the place, date and purpose of the planned nefarious activity, have all been stated as clearly as could be expected. But it was argued that it was also necessary to state the details of the plan to be hatched in Delhi. There are several answers to this contention. Paragraph 4 has reference to something which was apprehended but lay in the womb of the future. From the nature of the fact that it was not an event which had already happened but what was apprehended to be in the contemplation of the detenu and his associates, if any, no further details of the plan could possibly be 424 disclosed. As was observed in the decision of this Court in The State of Bombay vs Atma Ram Sridhar Vaidya (1) (at pp. 184 and 185), vagueness is a relative term. Its meaning must vary with the facts and circumstances of each case. What may be said to be vague in one case, may not be so in another, and it could not be asserted as a general rule that a ground is necessarily vague if the only answer of the detained person can be to deny it. If the statement of facts is capable of being clearly understood and is sufficiently definite to enable the detained person to make his representation, it cannot be said that it is vague. Further, it cannot be denied that particulars of what has taken place, can be more definitely stated than those of events which are yet in the offing. In the very nature of things, the main object of the Act is to prevent persons from doing something which comes within the purview of any one of the sub clauses of cl. (a) of section 3(1) of the Act. It was next contended that some of the grounds at least are irrelevant. This was not said of the first paragraph of the grounds, set out above. It was said of paragraphs 2, 3 and 4 that they are irrelevant to the main object of the order of detention, namely, the "maintenance of public order". In our opinion, there is no substance in this contention either. All the statements in the four paragraphs of the grounds, which have to be read together as being parts of a connected whole, calling upon persons to " build up strong movement against the implementation of Nehru Noon Pact", and to "rouse passions by alleging that the Indian Prime Minister had no sympathy for West Bengal", cannot be said to be wholly unconnected with the maintenance of public order. Similarly, denouncing the agreement between the two Prime Ministers and stressing the need of forming a militia with the youths of the country, cannot be said to have no repercussions on the maintenance of public order. And lastly, any instigation against the personal safety of the Prime Minister of India cannot but have a deleterious effect on the maintenance of public order, (1) ; 425 It was sought to be argued that any weak link in the chain of facts and circumstances, said to have been the basis of the order of detention, would affect the legality of the whole order. This argument postulates that there are many grounds which are either vague or irrelevant. In this connection, particular reliance was placed on the observations of this Court in Dwarka Dass Bhatia vs The State of Jammu and Kashmir (1), to the effect that if some of the reasons on which the order of detention had been based, are found to be non existent or irrelevant, the Court ought to quash the order, because it is not in a position to know which of the reasons or the grounds, had operated on the mind of the authorities concerned, when they decided the pass the impugned order. As already pointed out, no such situation arises in this case, because, in our opinion, none of the grounds is either vague or irrelevant. It may also be pointed out that the ground of irrelevance wag not urged before the High Court, but even so, we allowed the petitioner 's counsel to urge that ground before us, and having heard him on that aspect of the matter, we have no doubt that there is no justification for the contention that any of the matters taken into consideration by the authorities concerned in the matter of the detention of the petitioner, was irrelevant. For the reasons given above, it must be held that there is no merit in this appeal or in the application under article 32 of the Constitution. They are, accordingly, dismissed. Appeal and application dismissed.

The appellant was detained under section 3(1)(a)(ii) of the Pre ventive Detention Act, 1950. The copy of the grounds of the order of detention served on him stated that he was detained as he had been acting in a way prejudicial to the maintenance of public order as evidenced by the particulars stated in its four paragraphs. Paragraph 1 stated, inter alia, that the appellant had, in a meeting of the refugees vilified the Prime Minister of India for his unsympathetic attitude towards the sufferings of the refugees and gave expression to violent feelings regarding his person while referring to the recent Nehru Noon Pact; paragraph 2 stated that he called upon the members of his party to build up a strong movement against the implementation of the pact and tried to rouse passion by alleging the Prime Minister had no sympathy for West Bengal; paragraph 3 stated that at another meeting he denounced the pact and stressed the need of forming a militia with the youths of the country for the safety of the people living in border areas and paragraph 4, that he intended to proceed to Delhi on the date mentioned, and was likely to instigate plans endangering the personal safety of the Prime Minister. The High Court, on an application under sections 491 and 561A of the Code of Criminal Procedure for the issue of a writ of habeas corpus, while upholding the order of detention, held that the said paragraphs were really not the grounds of detention but merely pieces of evidence on which the only ground of detention, namely, acting in a manner prejudicial to the maintenance of public order, was based, that paragraph 4 was merely an inference of fact having a bearing on the ground of detention. It was contended, inter alia, on appeal that paragraph 4 was extremely vague and devoid of particulars, and that the allegations made had no rational connection with the objects mentioned in section 3 of the Act and so he was deprived of his right to make an effective representation. All this was, however, denied on behalf of the State. Held, that the High Court had overlooked the difference between the objects of detention specified in cls. (a) and (b) of section 3(1) of the Act and the statement of facts which constitute the grounds envisaged by section 7 of the Act. 412 Sections 3 and 7 of the , read together, contemplate that the copy of the order passed by the detaining authority under section 3(2) Of the Act to be served on the detenu should contain, (1) a preamble reciting in terms one or more of the sub clauses of cls. (a) and (b) of section 3(1) as its object or objects, (2) the grounds contemplated by section 7, namely, the conclusions of fact, which led to the passing of the order of detention, informing the detenu as to why he was detained, and (3) particulars, if and where necessary, but not those referred to in sub sections (3) and (4) Of section 3 of the Act. In the instant case, however, the error of confusion made by the High Court could not invalidate its order since the grounds of detention, characterised by the High Court as recitals of fact, read together, were in no way ambiguous, indefinite or irrelevant to the object of the detention, namely, the maintenance of public order and did not deprive the detenu of his right of representation. The State of Bombay vs Atma Ram Sridhay Vaidya [1951] S.C.R. 167, considered. Dwarka Das Bhatia vs The State of Jammu Kashmir. ; , held inapplicable.

ION: Civil Appeal No. 860 of 1978. From the Judgment and Order dated 28 2 1978 of the Monopolies and Restrictive Trade Practices Commission in R.T.P. Enquiry No. 91 of 1975. Ashok H. Desai, B.H. Wani, Ravinder Narain, Talat Ansari, A.N. Haksar and Shri Narain for the Appellant. Soli J. Sorabjee, Addl. Genl., R.B. Datar and Girish Chandra for Respondent No. 2. The judgment of the Court was delivered by BHAGWATI, J. This appeal under section 55 of the (hereinafter referred to as the Act) raises interesting questions of law relating to the interpretation and application of certain provisions of the Act. The facts giving rise to the appeal are for the most part undisputed and they may be briefly stated as follows: The appellant is a public limited company engaged in manufacture and sale of jeep motor vehicles and their Spare parts and accessories. Since 1947 the appellant was marketing and distri 1046 buting jeep motor vehicles and it had set up a large and complex net work of dealers, who were described as distributors, for marketing and after sale service of such vehicles. In or about 1956 the appellant started manufacturing its own jeep motor vehicles and since then it has been manufacturing such vehicles and distributing and marketing the same through its net work of distributors. The appellant has appointed these distributors for marketing and sale of jeep motor vehicles on certain terms and conditions contained in a standard distributorship agreement. The material clauses of this agreement read as follows: "Section (3): TERRITORY OF DISTRIBUTOR: ` The Company grants to Distributor the non exclusive privilege (except as hereinafter provided) of selling at re tail and the right (except hereinafter provided) to appoint in writing by forms of agreements approved by the Company, Dealers to sell at retail the products enumerated in Section 2 of this agreement, within the following territory and also demarcated in the map attached hereto and which forms a part of this agreement. Distributor accepts the above retail setting privileges and agrees to develop with diligence the sales of sale products in said territory in accordance with this agreement and undertakes to achieve the quantum of sales in the territory as may be fixed by the Company from time to time. Section (4): LIMITATIONS ON TERRITORIAL RIGHTS: (i) Distributor agrees not to solicit outside of the territory described in Section 3 the purchase of any products. * * * * Section (6): PRICE AND PAYMENT : Distributor will pay for products the Company 's established Distributor net prices in effect on date on despatch. Price lists will be furnished to Distributor by the Company, but the Company reserves the right to change prices at any time without notice. * * * * Section (11): PRICE CHANGES : If the Company reduces its published suggested retail list price, for any current model of 'Jeep ' motor vehicles, the company will 1047 make an allowance to Distributor as hereinafter provided. The allowance shall be made in respect of new and unused 'Jeep ' Motor Vehicles of the then current model in respect of which the price change has been made which `have been purchased by Distributor from the Company within a period of 30 (thirty) days prior to the effective date of such decrease in suggested list price, and which distributor shall have in his unsold stock on such effective date. The allowance shall be equal to the difference between the net amount paid to the Company for such 'Jeep ' Motor Vehicle (less all allowance thereto granted), and the net amount which would have been paid had such 'Jeep ' motor vehicles been purchased at the reduced price. No allowance, how ever, shall be made unless there is a reduction in the RETAIL list price and increases in discounts, bonuses and the like shall in no event be considered as a reduction in price. * * * * Section (17): CARE OF OWNER AND CUSTOMER RELATIONS : Distributor agrees * * * * (a) To refrain from selling or offering for sale any competing product. The Company shall be the sole judge as to whether a product is competing or not" The appellant by its letter dated 27th January, 1971 submitted to the Registrar of Restrictive Trade Agreement (hereinafter referred to as the Registrar) certified copies of agreements entered into by the appellant with the Distributors for registration, since in the opinion of the appellant, they were registrable under the provisions of Ch. V of the Act. The appellant also submitted to the Registrar along with its letter dated 19th May, 1972 four copies of the standard distributorship agreement for registration in terms of cl. (ii) of Rule 12 of the Monopolies Restrictive Trade Practices Rules, 1970 (hereinafter referred to as the Rules) and the standard distributorship agreement was registered by the Registrar under section 35 of the Act. On 17th December, 1975 the Registrar made an application to 11 the Monopolies and Restrictive Trade Practices Commission (hereinafter referred to as the Commission) under section 10(a) (iii) of 1048 the Act pointing out to the Commission that the standard distributorship agreement entered into by the appellant with the distributors was filed by the appellant for registration in the office of the Registrar and the same had been duly registered under section 35 of the Act. The Registrar drew the attention of the Commission to clauses (3), (4), (5), (6), (11), (13), (14), (17) and (20) of the standard distributorship agreement and claimed that the provisions contained in these clauses related "to restrictive trade practices relating to imposing restrictions on persons and classes of persons to whom goods are sold and from whom goods are bought tie up sales/full line forcing; exclusive dealing; granting or allowing concessions; discounts, over riding commission, etc. in connection with or by reason of dealings; resale price maintenance; and allocation of area/market for disposal of products covered under the agreement, respectively attracting clauses (a), (b), (c), (e), (f) and (g) of section 33(1) and/or section 2(o) of the Act" and that these restrictive trade practices had and might have the effect of preventing, distorting and restricting competition and tended to bring about monopolisation of prices and conditions of delivery and to affect the flow of supplies in the market relating to goods covered under the standard distributorship agreement in such manner as to impose on the consumers unjustified costs and restrictions and the same were prejudicial to public interest. The Registrar prayed on the basis of these allegations that the Commission be pleased to inquire into the restrictive trade practices indulged in by the appellant, under section 37 of the Act and pass such orders as it might deem fit and proper. The Commission, on receipt of this application, decided, in exercise of the powers conferred upon it under sections 10(a) and 37 of the Act, to hold inquiry into the restrictive trade practices complained of by the Registrar and issued notice dated 2nd January, 1976 under Regulation 53 of the Monopolies and Restrictive Trade Practices Commission Regulations, 1974 (hereinafter referred to as the Regulations) to the appellant that if the appellant wished to be heard in the proceedings before the Commission, it should comply with the requirements of Regulations 65 and 67 failing which the Commission would proceed with the inquiry in the absence of respondent. The appellant, by its letter dated 3rd February, 1976, acknowledged receipt of the notice and intimated to the Commission that it did not wish to be heard in the proceedings before the Commission but put forward its submissions in regard to the restrictive trade practices alleged by the Registrar in his application. The appellant pointed out that the clauses of the standard distributionship agreement complained of by the Registrar did not constitute restrictive trade practices for the reasons explained in the letter 1049 and requested the Deputy Secretary to place their submissions before the Commission at the enquiry to be held by it. The letter was purported to be submitted in terms of Regulations 36(3), but the reference to this Regulation was obviously under some misapprehension because this Regulation occurred in Chapter V which provided the procedure for reference under Chapter III and IV and it had no application in case of an inquiry under section 37 of the Act. The Joint Secretary (Legal) of the Commission pointed out to the appellant by his letter dated 11th February, 1976 that if the appellant wished to be heard in the proceedings, the appellant should comply with the requirements of Regulations 65 and 67 and it is only if the appellant did so, that it could file a reply in answer to the application of the Registrar and moreover, the reply had to be properly drawn and duly verified and declared as provided in those Regulations. The Joint Secretary. (Legal) made it clear that in view of this legal position obtaining under Regulations 65 and 67, it was not possible to take note of contents of the letter addressed by the appellant setting out the explanation for the various clauses impugned in the application of the Registrar. Though this position, in law was specifically pointed out by the Joint Secretary (Legal) on behalf of the Commission, the appellant did not comply with the procedure set out in Regulations 65 and 67 with the result that the Commission decided to proceed exparte against the appellant. The Registrar filed an affidavit of the Assistant Registrar dated 10th May, 1976 in support of the allegations contained in the application but this affidavit surprisingly did not contain any further or other material than that set out in the application. No other evidence, oral or documentary, was produced by the Registrar and the Commission proceeded to decide the issues arising in the enquiry on the basis of the application supported by the affidavit of the Assistant Registrar. The Commission, after going through the application and the affidavit of the Assistant Registrar and hearing the Registrar, made an order dated 14th May, 1976, the operative part of which was in the following terms: "(1) The Respondent is hereby restrained and prohibited by any agreement with any distributor to restrict by any method the persons or classes or persons to whom the goods are sold whether such person be retail purchaser or a dealer. (2) The Respondent is hereby restrained and prohibited from restricting in any manner, any purchaser whether a dealer or otherwise in the course of its trade from acquir 1050 ing or otherwise dealing in any goods other than those of the Respondent or the goods of any other person. (3) The Respondent is hereby restrained and prohibited from selling any goods to any distributor, dealer or other wise on the condition that the prices to be charged on resale by the purchaser shall be the prices stipulated by the respondent unless it is clearly stated that prices lower than those prices may be charged. The Respondent is hereby directed that in all future price lists it must state on the cover or on the front page that the prices if any indicated therein as resale prices are maximum prices and that the prices lower than those price may be charged. (4) The Respondent is hereby restrained and prohibited from allocating any area or market to any distributor or dealer for the disposal of the Respondent 's goods. (5) The Respondent is hereby restrained and prohibited from preventing any distributor from appointing any dealer of its own choice on such terms and conditions as may be mutually agreed upon between distributors and dealers in cases where the Respondent does not undertake any obligation, liability or responsibility in respect of the dealers. (6) The clauses in the agreements relating to the above restrictive trade practices are hereby declared to be void. The practices arising therefore, shall be discontinued and shall not be repeated. (7) The Respondent shall within 3 months from the date of service of this order on it make and file an affidavit before the Commission setting out the manner in which this order has been given effect to. A copy of the said affidavit shall simultaneously be furnished to the Registrar. (8) There will be no order as to costs." Since the appellant was required to file an affidavit of compliance within three months as directed by cl. (7) of the Order, the appellant filed an affidavit dated 10th September, 1976 stating that the appellant had fully implemented in practice the directions contained in Paragraphs (1) and (5) of the Order and refrained from enforcing against the distributors any of the clauses which had been declared void by the Commission. The appellant also pointed out that a draft of a 1051 new distributorship agreement was being finalised by the appellant with a view to giving effect to the "restrictions and prohibitions" contained in the Order. The Registrar filed an affidavit of the Deputy Registrar dated 27th September, 1976 seeking particulars from the appellant showing how the appellant had implemented the directions contained in the Order. The appellant by its reply dated 11th November, 1976 pointed out that since the date of receipt of the Order, the appellant had not given effect to the trade practices covered by paragraphs (1) to (5) of the Order nor required any of the distributors to abide by the clauses of the standard distributorship agreement relating to those trade practices and on the contrary, intimated to the distributors that the old distributorship agreement would have to be substituted by a new revised agreement. The appellant submitted that since the clauses of the standard distributorship agreement declared void by the Commission were not enforceable in law by the appellant, it did not make any difference whether or not they were deleted from the existing distributorship agreement and in view of the fact that a new revised agreement was being prepared which would comply with the directions contained in the Order, it was not necessary, to effect any amendments in the existing distributorship agreement. It seems that there was a hearing before the Commission on this issue as regards compliance with the directions contained in the Order and the draft of the revised distributorship agreement prepared by the appellant was considered and pursuant to the suggestion made by the Commission, the appellant agreed to amend two clauses in the draft and the Commission by its Order dated 7th December, 1976 directed that the revised distributorship agreement should be filed by the appellant by 31st March, 1977. Now, it appears that subsequent to the Order of the Commission dated 7th December, 1976 an important decision was given by this Court in Tata Engineering & Locomotive Co. Ltd., Bombay vs The Registrar of the Restrictive Trade Agreement, New Delhi( ') relating to the interpretation of some of the relevant provisions of the Act bearing on restrictive trade practices. This decision was given in all appeal preferred by Tata Engineering Locomotive Co. Ltd. (herein after referred to as the Telco against an order made by the Commission in an enquiry under section 37 and it reversed the view taken by the Commission in several important respects. Though this decision was given on 21st January, 1977, it was not fully reported until March 1977 and on reading it, the appellant felt that the order of the Commission dated 14th May, 1976 required reconsideration, as it was 1052 contrary to the law laid down in this decision. The appellant accordingly made an application to the Commission on 31st March. 1977 where, besides asking for extension of time for filing a copy of the revised distributorship agreement on the ground that the dealers were spread out all over India and it would take considerable time for execution of the revised distributorship agreement by them, the appellant pointed out that it had not contested the enquiry proceedings under section 37 in the first instance because the decision given by the Commission in the Telco case was directly applicable, but since that decision of the Commission was reversed by this Court in appeal, the appellant was advised to move a suitable application for amendment and/or modification of the Order dated 14th May, 1976 and that was also an additional reason why the time for filing the revised distributorship agreement should be extended, so that the revised distributorship agreement could be in accordance with the directions, if any. which might be given by the Commission on the proposed application. The Commission acceded to the request contained in this application and extended the time for filing the revised distributorship agreement upto 4th June, 1977. The appellant thereafter made an application dated 30th May, 1977 under section 13(2) of the Act read with Regulation 85 for revocation, amendment or modification of the Order of the Commission dated 14th May, 1976. The appellant set out in this application various facts and features relating to its trade of manufacture and sale of Jeep motor vehicles and their spare parts and accessories and enumerated a number of grounds on which the order of the Commission dated 14th May, 1976 deserved to be revised, revoked, amended or otherwise modified. The application was opposed by the Registrar by filing a reply dated. 17th August, 1977. The parties were thereafter heard by the Commission on 26th August, 1977 and pursuant to the directions given by the Commission. affidavits of documents were filed and evidence was recorded on both sides. It appears that in the course of the evidence the appellant came to know that in November 1977 Hindustan Motors Ltd. had introduced in the 6 market diesel trekker which was clearly a competing vehicle and the appellant thereupon applied to the Commission on 30th January. 1978 for amendment of the application by adding a plea that the fact that since November 1977 Hindustan Motor Ltd. had started manufacturing and selling diesel trekker which was a highly competitive product was another material change in the relevant circumstances which justified the revocation, amendment or modification of the Order dated 14th May, 1976. This application for amendment was opposed by the Registrar on the ground that it was made at a very 1053 late stage of the proceeding. The Commission did not pass any order on this application for amendment and kept it pending and proceeded to dispose of the main application by an Order dated 28th February, 1978 by which it rejected the main application with costs and added a short order On the same day stating that in view of the order on the main application, there would be no order on the application for amendment. The appellant thereupon preferred the present appeal in this Court under section 55 challenging the validity of the order made by the Commission rejecting the application of the appellant. Before we set out the rival contentions of the parties in the appeal, it would be convenient at this state to refer to the relevant provisions of the Act and the Regulations. Section 2 is the definition section and clause (u) of this section defines 'trade practice ' to mean "any practice relating to the carrying on of any trade, and includes (i) anything done by any person which controls or affects the price charged by, or the method of trading of, any trader or any class of traders (ii) a single or isolated action of any person in relation to any trade". 'Restrictive trade practice ' is defiled in section 2, clause (o) to mean "a grade practice which has, or may have, the effect of preventing distorting or restricting, competition in any manner and in particular, (i) which tends to obstruct the flow of capital or resources into the stream of production, or (ii) which tends to bring about manipulation of prices, or conditions of delivery or to affect the flow of supplies in. the market relating to goods or services in such manner as to impose on the consumers unjustified costs or restrictions. " Section 5, subsection (1) provides for the establishment of the Commission which is to consist of a Chairman and not less than two and not more than eight other members to be appointed by the Central Government and sub section (2) of section 5 lays down that the Chairman shall be a person who is or has been or is qualified to be a judge of the Supreme Court or of a High Court. It is obvious from these two sub sections of section 5 that the Legislature clearly contemplated that the Commission must have a Chairman who would provide the judicial element and there must be at least two other members who would provide expertise in subjects like economics, law, commerce. accountancy, industry, public affairs or administration. so that there could be a really high powered expert commission competent and adequate to deal with the various problems which come before it. It, however, appears that the Central Government paid scant regard to this` legislative requirement and though the office of Chairman fell vacant as far back as 9th August, 1976, it failed to make appointment of Chairman until 1054 24th February, 1978. Of the two other members of the Commission one had already resigned earlier and his vacancy was also not filled with the result that the Commission continued with only one member for a period of about 18 months. This was a most unfortunate state of affairs, for it betrayed total lack of concern for the proper constitution and functioning of the Commission and complete neglect of its statutory obligation by the Central Government. We fail to see any reason why the Central Government could not make the necessary appointments and properly constitute the Commission in accordance with the requirements of the Act. It is difficult to believe that legal and judicial talent in the country had become so impoverished that the Central Government could not find a suitable person to fill the vacancy of Chairman for a year and a half. Moreover it must be remembered that the appointments, after all, have to be made from whatever legal and judicial talent is available and the situation is not going to improve by waiting for a year or two: a new star is not going to appear in the legal firmament within such a short time and the appointments cannot be held up indefinitely. Indeed, it is highly undesirable that important quasi judicial or administrative posts should remain vacant for long periods of time, because apart from impairing the efficiency of the functioning of the statutory authority of the administration. inexplicable delay may shake the confidence of the public in the integrity of the appointments when made. Turning back to the provisions of the Act, we find that section 10(a) (iii) empowers the Commission to inquire into any restrictive trade practice upon an application made to it by the Registrar. The powers of the Commission while holding an enquiry under the Act are enumerated in section 12 and section 13, sub section (2) provides that "any order made by the Commission may be amended or revoked at any time in the manner in which it was made". Then follow sections 14 to 19 which deal inter alia with the procedure to be followed by the Commission. We are not concerned with Sections 20 to 32 which occur in Chapters III and IV because they deal with topics other than restrictive trade practices. Chapter V relates to registration of agreements relating to restrictive trade practices and it consists of sections 33 to 36 of which only sections 33 and 35 are material. Sub section (1) of section 33 provides that any agreement relating to a restrictive trade practice falling within one or more of the categories specified there shall be subject to registration in accordance with the provisions of Ch. V and proceeds to enumerate the categories of restrictive trade practices covered by that provision and section 35 lays down the time within which an agreement falling within section 33, sub section (1) shall be registered and the procedure to be followed for effectuating such registration. Sections 37 1055 and 38 are the next important sections and they occur in Ch. V headed A "control of certain restrictive trade practices". Sub section (1) of section 37 provides that "the Commission may inquire into any restrictive trade practice, whether the agreement, if any, relating thereto has been registered under section 35 or not, which may come before it for inquiry and, if after such inquiry it is of opinion that the practice is prejudicial to the public interest, the Commission may, by order, direct that (a) the practice shall be discontinued or shall not be repeated, (b) the agreement relating there to shall be void in respect of such restrictive trade practice or shall stand modified in respect thereof in such manner as may be specified in the order". Section 38, sub section (1) enacts that for the purposes of any proceedings before the Commission under section 37, a restrictive trade practice shall be deemed to be prejudicial to the public interest unless the Commission is satisfied of any one or more of the circumstances set out in that subsection and is further satisfied, after balancing the competing considerations, that the restriction is not unreasonable. These circumstances specified in sub section (1) of section 38 render a trade practice permissible even though it is restrictive and provide what have been picturesquely described in the English law as "gateways" out of the prohibition of restrictive trade practices. Section 55 is the next relevant section and it provides that any person aggrieved by any order made by the Central Government under Ch. III or Ch. IV or as the case may be, of the Commission under section 13 or section 37 may, within 60 days from the date of the order, prefer an appeal to the Supreme Court on "one or more of the grounds specified in section 100 of the Code of Civil Procedure 1908". This is the section under which the present appeal has been preferred by the appellant. The last section to which we must refer is section 66 which confers power on the Commission to make Regulations for the efficient performance of its functions under the Act. The Commission has, in exercise of the power conferred by this section, made the Regulations of which three arc material. namely, Regulations 65, 67 and 85. These Regulations, in so far as material, read as follows "Section 65: APPEARANCE OF PARTIES : Every respondent who wishes to be heard in the proceedings shall within 14 days of the service upon him of the copy of the notice of enquiry, enter an appearance in the office of the Commission by delivering to the Secretary six copies of a memorandum stating that the respondent wishes to be heard in the proceedings and containing the name of his advocate having an office in Delhi or New Delhi and duly authorised to accept service of processes and the Secretary 1056 shall send one copy of the memorandum to the Registrar in case where proceedings are initiated under sub clause (iii) of clause (a) of section 10, and in all other cases to the Director of Investigation." "Section 67: REPLY TO THE NOTICE: Every respondent who has entered an appearance shall within four weeks of his entering appearance deliver to the Secretary a reply to the notice (5 copies) which shall include: (a) particulars of each of the provisions of section 38 of Act on which he intends to rely; and (b) particulars of the facts and matters alleged by him to entitle him to rely on such provisions." "Section 85: AMENDMENT OR REVOCATION OF ORDER ETC.: An application under sub section (2) of section 13 of the Act for amendment or revocation of any order made by the Commission in any proceedings shall be supported by evidence on affidavit of the material change in the relevant circumstances or any other fact or circumstances on which the applicant relies. Unless the Commission otherwise directs notice of the application together with copies of the affidavits in support thereof, shall be served on every party who appeared at the hearing of the previous proceedings and every such party shall be entitled to be heard on the application and the provisions of section 114 and Order XLVII of the Code of Civil Procedure, '908 (5 of 1908), shall as far as may, be applied to these proceedings. " It is against the background of these provisions of the Act and the Regulations that we have to determine the question arising for consideration in the appeal. The contention of the appellant in support of the appeal was that the Order dated 14th May, 1976 suffered from various infirmities and was liable to be revoked or in any event modified under section 13(2) of the Act. It was said that the application of the Registrar on which the Order dated 14th May, 1976 was made did not set out any facts or features showing how the trade practices referred to in the application were restrictive of competition so as to constitute restrictive trade practices and merely contained a bald recital of the impugned clause and mechanical reproduction of the language of the relevant 1057 sections without anything more. The application of the Registrar was thus not in accordance with the law laid down in the decision of this Court in the Telco case and no order could be made upon it by the Commission. It was also urged that there was no material placed before the Commission by the Registrar on the basis of which the Commission could possibly come to the conclusion that the trade practices referred to in the application were restrictive trade practices. Even if the Commission was justified in proceeding exparte against the appellant, the highest that could be assumed in favour of the Registrar was that the facts set out in the application and the supporting affidavit of the Assistant Registrar would be deemed to be admitted, but, apart from the impugned clauses, no other facts were set out either in the application or in the affidavit of the Assistant Registrar and there was accordingly no evidence on which the order dated 14th May, 1976 could be made by the Commission. It was also contended that the Order dated 14th May, 1976 did not set out any facts peculiar to the trade of the appellant or the conditions before and after the imposition of the restraint or the actual or probable effect of the restraint nor did it indicate as to how the trade practices referred to in the impugned clauses constituted restrictive trade practices; it was a non speaking order which did not give any reasons at all for holding that the trade practices complained of were restrictive trade practices and hence it was vitiated by a legal infirmity. The appellant further urged that the Order dated 14th May, 1976 was a continuing order as it required the appellant not merely to cease but also to desist from the restrictive trade practices set out in the order and it was, therefore, required to be continually justifiable and since the facts and features of the trade set out in the application of the appellant clearly established that the trade practices referred to in the impugned clauses did not constitute restrictive trade practices, the Order dated 14th May, 1976 was not justified and in any event could not be continued and it was accordingly liable to be revoked or amended under section 13(2). It was submitted that in any event the Order dated 14th May, l 976 was contrary to the law declared by this Court in the Telco case and since the decision in the Telco case was a fact or circumstance subsequent to the making of the Order, it justified the invocation of the power under section 13(2) for revoking or modifying the Order. Lastly, it was contended that in any view of the matter there was a material change in the relevant circumstances subsequent to the making of the Order dated 14th May, 1976 in that Hindustan Motor Ltd. started manufacturing and marketing competing utility vehicles since June 1976 and this was sufficient to warrant reconsideration of the Order under section 13 (2) . The respondents raised a preliminary 1058 objection against the maintainability of the appeal on the ground that under section 55 read with the newly substituted section 100 of the Code of Civil Procedure, 1908, an appeal could lie to this Court only on a substantial question of law and since the contentions raised on behalf of the appellant did not raise any substantial question of law, the appeal was not maintainable. The respondents also urged that on a proper construction of section 13(2) read with Regulation 85, the Commission could revoke or amend the Order dated 14th May, 1976 only if there was a material change in the relevant circumstances since the making of the Order or any of the grounds specified in Order XLVlI rule 1 of the Code of Civil Procedure, 1908 was available to the appellant. The second and third grounds specified in Order XLVII, rule 1 obviously did not exist in the present case and the claim of the appellant for exercise of the power under section 13(2) could, if at all, rest only on the first ground, namely error of law apparent on the face of the record. But, said the respondents, there was no error of law apparent on the face of the record so far as the Order dated 14th May, 1976 was concerned, nor was there any material change in the relevant circumstances subsequent to the making of the order and hence section 13(2) was not attracted. The respondents contended that what the appellant was seeking to achieve by the application under section 13(2) was reconsideration of the Order dated 14th May, 1976 which was clearly impermissible, since section 13(2) could not be used as a substitute, for section 55 and that too, without the restrictive condition of that section. It was also urged on behalf of the respondents that, in any event the appellant was precluded from challenging the Order dated 14th May, 1976 by an application under Section 13(2) by reason of its subsequent conduct in acquiescing in the Order and unconditionally accepting the same. The appellant clearly waived the defects or infirmities if any in the Order dated 14th May, 1976 and was precluded from raising any contention against the validity of that Order. The respondents disputed validity of the contentions raised on behalf of the appellant and urged that in any event even if any of these defects or infirmities were present, they did not render the Order void as being without jurisdiction and hence the validity of the Order could not be challenged in the collateral proceedings under section 13(2). The respondents also contended that in any view of the matter the Order dated 14th May, 1976 was justified inasmuch as the trade practices complained of by the Registrar were restrictive trade practices. These were the rival contentions 1059 urged on behalf of the parties and we shall now proceed to examine The first question that arises for consideration in the preliminary objection of the respondents is as to what is the true scope and admit of an appeal under section 55. That section provides inter alia that any person aggrieved by an order made by the Commission under section 13 may prefer an appeal to this Court on "one or more of the grounds specified in section 100 of the Code of Civil Procedure, 1908". Now at the date when section 55 was enacted, namely, 27th December, 1969, being the date of coming into force of the Act, section 100 of the Code of Civil Procedure specified three grounds on which a second appeal could be brought to the High Court and one of these grounds was that the decision appealed against was contrary to law. It was sufficient under section 100 as it stood then that there should be a question of law in order to attract the jurisdiction of the High Court in second appeal and, therefore, if the reference in section 55 were to the grounds set out in the then existing section 100, there can be no doubt that an appeal would lie to this Court under section 55 on a question of law. But subsequent to the enactment of section 55 section 100 of the Code of Civil Procedure was substituted by a new section by section 37 of the Code of Civil Procedure (Amendment) Act, 1976 with effect from 1st February, 1977 and the new section 100 provided that a second appeal shall lie to the High Court only if the High Court is satisfied that the case involves a substantial question of law. The three grounds on which a second appeal could lie under the former section 100 were abrogated and in their place only one ground was substituted which was a highly stringent ground, namely, that there should be a substantial question of law. This was the new section 100 which was in force on the date when the present appeal was preferred by the appellant and the argument of the respondents was that the maintainability of the appeal was, therefore, required to be judged by reference to the ground specified in the new section 100 and the appeal could be entertained only if there was a substantial question of law. The respondents leaned heavily on section 8(1) of the which provides: "8(1) Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals and re enacts, with or without modification, any provision of a former enactment, then references in any other enactment or in any instrument to the provision so repealed shall, un 1060 less a different intention appears, be construed as references to the provision so re enacted." and contended that the substitution of the new section 100 amounted to repeal and re enactment of the former section 100 and, therefore, on an application of the rule of interpretation enacted in section 8(1), the reference in section 55 to section 100 must be construed as reference to the new section 100 and the appeal could be maintained only on the ground specified in the new section 100, that is, on a substantial question of law. We do not think this contention is well founded. It ignores the distinction between a mere reference to or citation of one statute in another and an incorporation which in effect means bodily lefting a provision of one enactment and making it a part of another. Where there is mere reference to or citation of one enactment in another without incorporation, section 8(1) applies and the repeal and re enactment of the provision referred to or cited has the effect set out in that section and the reference to the provision repealed is required to be construed as reference to the provision as re enacted. Such was the case in the Collector of Customs, Madras vs Nathella Sampathu Chetty & Anr. and the New Central Jute Mills Co. Ltd. vs The Assistant Collector of Central Excise, Allahabad & Ors. But where a provision of one statute is incorporated in another, the repeal or amendment of the former does not affect the latter. The effect of incorporation is as if the provision were written out in the incorporating statute and were a part of it. Legislation by incorporation is a common legislative device employed by the legislature, where the legislature for convenience of drafting incorporates provisions from an existing statute by reference to that statute instead of setting out for itself at length the provisions which it desires to adopt. Once the incorporation is made, the provision incorporated becomes an integral part of the statute in which it is transposed and thereafter there is no need to refer to the statute from which the incorporation is made and any subsequent amendment made in it has no effect on the incorporating statute. Lord Esher, M.R., while dealing with legislation in incorporation in In re. Wood 's Estate pointed out at page 615: "If a subsequent Act brings into itself by reference some of the clauses of a former Act, the legal effect of that, as has often been held, is to write those sections into the new Act. 1061 just as if they had been actually written in it with the pen, or printed in it, and, the moment you have those clauses in the later Act, you have no occasion to refer to the former Act at all." Lord Justice Brett, also observed to the same effect in Clark vs Bradlaugh at 69 : ". . there is a rule of construction that, where a statute is incorporated by reference into a second statute, the repeal of the first statute by a third statute does no affect the second. " This was the rule applied by the Judicial Committee of the Privy Council in Secretary of State for India in Council vs Hindustan Cooperative Insurance Society Ltd. The Judicial Committee pointed out in this case that the provisions of the Land Acquisition Act, 1894 having been incorporated in the Calcutta Improvement Trust Act, 1911 and become an integral part of it, the subsequent amendment of the Land Acquisition Act, 1894 by the addition of sub section (2) in section 26 had no effect on the Calcutta Land Improvement Trust Act, 1911 and could not be read into it. Sir George Lowndes delivering the opinion of the Judicial Committee observed at page 267 : "In this country it is accepted that where a statute is incorporated by reference into a second statute, the repeal of the first statute does not affect the second: see the cases collected in Craies on Statute Law, 3rd edn. 349, 350. x x x x x x x The independent existence of the two Acts is, therefore, recognized; despite the death of the parent Act, its offspring survives in the incorporating Act. x x x It seems to be no less logical to hold that where certain provisions from an existing Act have been incorporated into a subsequent Act, no addition to the former Act, which is not expressly made applicable to the subsequent Act, can be deemed to be incorporated in it, at all events if it is possible for the subsequent Act to function effectually without the addition." So also in Ramswarup vs Munshi & Ors. , it was held by this Court that since the definition of "agricultural land ' in the Punjab Alienation of Land Act, 1900 was bodily incorporated in the Punjab 1062 Pre emption Act, 1913, the repeal of the former Act had no effect on the continued operation of the latter. Rajagopala Ayyangar, J., speaking for the Court observed at pages 868 869 of the Report: "Where the provisions of an Act are incorporated by reference in a later Act the repeal of the earlier Act has, in general, no effect upon the construction or effect of the Act in which its provisions have been incorporated. x x x x In the circumstances, therefore, the repeal of the Punjab Alienation of Land Act of 1900 has no effect on the continued operation of the Pre emption Act and the expression 'agricultural land ' in the latter Act has to be read as if the definition in the Alienation of Land Act had been bodily transposed into it. " The decision of this Court in Bolani Ores Ltd. vs State of Orissa also proceeded on the same principle. There the question arose in regard to the interpretation of section 2(c) of the Bihar and Orissa Motor Vehicles Taxation Act, 1930 (hereinafter referred to as the Taxation Act). This section when enacted adopted the definition of 'motor vehicle ' contained in section 2(18) of the . Subsequently, section 2(18) was amended by Act 100 of 1956 but no corresponding amendment was made in the definition contained in section 2(c) Or the Taxation Act. The argument advanced before the Court was that the definition in section 2(c) of the Taxation Act was not a definition by incorporation but only a definition by reference and the meaning of 'motor vehicle ' in section 2(c) must, therefore, be taken to be the same as defined from time to time in section 2(18) of the . This argument was negatived by the Court and it was held that this was a case of incorporation and not reference and the definition in section 2 (18) of the as then existing was incorporation in section 2(c) of the Taxation Act and neither repeal of the nor any amendment in it would affect the definition of 'motor vehicle ' in section 2(c) of the Taxation Act. It is, therefore, clear that if there is mere reference to a provision of one statute in another without incorporation, then, unless a different intention clearly appears, section 8(1) would apply and the reference would be construed as a reference to the provision as may be in force from time to time in the former statute. But if a provision of one statute is incorporated in another, any subsequent amendment in the former 1063 statute or even its total repeal would not effect the provision as incorporated in the latter statute. The question is to which category the present case belongs. We have no doubt that section 55 is all instance of legislation by incorporation and not legislation by reference. Section 55 provides for an appeal to this Court on "one or more or the grounds specified in section 100". It is obvious that the legislature did not want to confer an unlimited right of appeal, but wanted to restrict it and turning to section 100, it found that the grounds there set out were appropriate for restricting the right of appeal and hence it incorporated then in Section 55. The right of appeal was clearly intended to be limited to the grounds set out in the existing section 100. Those were the grounds which were before the Legislature and to which the Legislature could have applied its mind and it is reasonable to assume that it was with reference to those specific and known grounds that the legislature intended to restrict the right of appeal. The Legislature could never have intended to limit the right of appeal to any ground or grounds which might from time to time find place in section 100 without knowing what those grounds were. The grounds specified in section 100 might be changed from time to time having regard to the legislative policy relating to second appeals and it is difficult to see any valid reason why the Legislature should have thought it necessary that these changes should also be reflected in section 55 which deals with the right of appeal in a totally different context. We fail to appreciate what relevance the legislative policy in regard to second appeals has to the right of appeal under section 55 so that section 55 should be inseparably linked or yoked to section 100 and whatever changes take place in section 100 must be automatically read into section 55. It must be remembered that the Act is a self contained Code dealing with monopolies and restrictive trade practices and it is not possible to believe that the Legislature could have made the right of appeal under such a code dependent on the vicissitudes through which a section in another statute might pass from time to time. The scope and ambit of the appeal could not have been intended to fluctuate or vary with every change in the grounds set out in section 100. Apart from the absence of any rational justification for doing so, such an indissolubleing of section 55 with section 100 could conceivably lead to a rather absurd and starting result. Take for example a situation where section 100 might be repealed altogether by the Legislature a situation which cannot be regarded as wholly unthinkable. It the construction contended for on behalf of the respondents were accepted. 1064 section 55 would in such a case be reduced to futility and the right of appeal would be wholly gone, because then there would be no grounds on which an appeal could lie. Could such a consequence ever have been contemplated by the Legislature? The Legislature clearly intended that there should be a right of appeal, though on limited grounds, and it would be absurd to place on the language of section 55 an interpretation which might, in a given situation, result in denial of the right of appeal altogether and thus defeat the plain object and purpose of the section. We must, therefore, hold that on a proper interpretation the grounds specified in the then existing section 100 were incorporated in section 55 and the substitution of the new section 100 did not affect or restrict the grounds as incorporated and since the present appeal admittedly raises questions of law, it is clearly maintainable under section 55. We may point out that even if the right of appeal under section 55 were restricted to the ground specified in the new section 100, the present appeal would still be maintainable, since it involves a substantial question of law relating to the interpretation of section 13(2). What should be the test for determining whether a question of law raised in an appeal is substantial has been laid down by this Court in Sir Chunilal V. Mehta and Sons Ltd. vs The Century Spinning and Manufacturing Co. Ltd. and it has been held that the proper test would be whether the "question of law is of general public importance or whether it directly or substantially affects the rights of the parties, and if so, whether it is either an open question in the sense that it is not finally settled by this Court or by the Privy Council or by the Federal Court or is not free from difficulty or calls for discussion of alternative views". The question of interpretation of section 13(2) which arises in the present appeal, directly and substantially affects the rights of the parties and it is an open question in the sense that it is not finally settled by this Court and it is, therefore, clearly a substantial question of law within the meaning of this test. We must, therefore, reject the preliminary objection raised on behalf of the respondents against the maintainability of the present appeal. That takes us to a consideration of the merits of the appeal and the first question that arises on the merits is as to the true scope and magnitude of the curial power conferred on the Commission under section 13(2). That section provides that "any order made by the Commission may be amended or revoked at any time in the manner in which it was made". The words "in the manner in which it was made" merely indicate the procedure to be followed by the Commission 1065 in amending or revoking an order. They have no bearing on the content of the power granted under section 13(2) or on its scope and ambit. That has to be determined on an interpretation of section 13(2) in the light of the context or setting in which it occurs and having regard to the object and purpose of its enactment. Now, one thing is clear that the power conferred under section 13(2) is a corrective or rectificatory power and it is conferred in terms of widest amplitude. There are no fetters placed by the Legislature to inhibit the width and amplitude of the power and in this respect it is unlike section 22 of the English Restrictive Trade Practices Act, 1956 which limits the power of the Court under that section to discharge a previous order made by it by providing in terms clear and explicit that leave to make an application for discharging the previous order shall not be granted except on prima facie evidence of material change in the relevant circumstances. This provision is markedly absent in section 13(2) and not express limitation is placed on the power conferred under that section. It is left to the discretion of the Commission whether the power should be exercised in a given case and if so, to what extent. But it must be remembered that this discretion being a judicial or in any event a quasi judicial discretion, cannot be 'arbitrary, vague or fanciful ', it must be guided by relevant considerations. It is not possible to enumerate exhaustively, the various relevant considerations which may legitimately weigh with the Commission in exercising its discretion, nor would it be prudent or wise to do so, since the teeming multiplicity of circumstances and situations which may arise from time to time in this kalisdozoopic world cannot be cast in any definite or rigid mould or be imprisoned in any straight jacket formula. Every case of an application under section 13(2) would have to be decided on its own distinctive facts and the Commission would have to find whether it is a proper case in which, having regard to the relevant consideration, the order made by it should be amended or revoked. The fact that an appeal lies against the order under section 55 but has not been preferred, would be no ground for refusing to exercise the power under section 13(2). The power conferred on the Commission under section 13(2) is an independent power which has nothing to do with the appellate power under section 55. It is not correct to say that the power under section 13(2) cannot be exercised to correct an order which could have been set right in appeal under section 55. The argument of the respondents that, if such a view is taken, it would permit section 13(2) to be used as a substitute for section 55 and that too, without its restrictive condition has no force and does not appeal to us. There is no question of using section 13(2) as a substitute for section 55. 1066 Both are distinct and independent powers and one cannot be read as subject to the other. The scope and applicability of section 13(2) is not cut down by the provision for appeal under section 55. It is perhaps because the right of appeal given under section 55 is limited to a question of law that a wide and unfettered power is conferred on the Commission to amend or revoke an order in appropriate cases. An order under section 37 or for the matter of that, under any other provision of the Act, is not an order made in a mere interparties proceeding having effect limited only to the parties to the proceeding. Not only in its radiating potencies, but also by its express terms, it affects other parties such as the whole network of distributors or dealers who are not before the Commission. It also affects the entire trade in the product including consumers, dealers and manufacturers in the same line. The provisions of the Act are infected with public interest and considerations of public interest permeate every proceeding under the Act. Hence it is necessary to ensure that if, by reason of in attitude or negligence of a party to the proceeding or on account of any other reason, an erroneous order has been made, it should be possible to correct it, lest it may, instead of promoting competition, produce an anti competitive effect or may turn out to be prejudicial to public interest. It is also possible that there may be some fact or circumstance which may not have been brought to the attention of the Commission, though having a crucial bearing on the determination of the inquiry, and which, if taken into account, may result in a different order being made, or some fact or circumstance may arise which may expose the invalidity of the order or render it bad and in such cases too, some provision has to be made for correcting or rectifying the order. So also, there may be a material change in the relevant circumstances subsequent to the making of the order which may affect the essential reasoning on which the order is based and this too may necessitate a reconsideration of the order. After all, an order under section 37 is made in a given constellation of economic facts and circumstances and if that constellation undergoes material challenge, the order would have to be reviewed in the light of the changed economic situation. No order under section 37 can be immutable. It is by its very nature transient or pro tempore and must be liable to be altered or revoked according as there is material change in the relevant economic facts and circumstances. It is obviously for this reason that such a wide and unusual power is conferred on the Commission under section 13(2) to mend or revoke an order at any time. It is a curial power intended to ensure that the Order passed by the Commission is and continues to be in confirmity with the requirements of the Act and the trade practice condemned by the order is really and truly a restric 1067 tive trade practice and it must, therefore, be construed in a wide sense so as to effectuate to the object and purpose of the grant of the power. But howsoever large may be the amplitude of this power, it must be pointed out that it cannot be construed to be so wide as to permit rehearing on the same material without anything more, with a view to sowing that the order is wrong on facts. This is the only limitation we would read in section 13(2). Outside of that, the power of the Commission is large and ample and the Commission may, in the exercise of such power, amend or revoke an order in an appropriate case. The respondents relied strongly on Regulation 85 but we fail to see how that Regulation assists the respondents in limiting the width and amplitude of the power under section 13(2). Regulation 85 does not say that an application under section 13(2) shall be entertained only on certain specific grounds. It is true that it is open to a statutory authority to lay down broad parameters for the exercise of the power conferred upon it, so long as those parameters are not based on arbitrary or irrational considerations and do not exclude altogether scope for exercise of residuary discretion in exceptional cases. But we do not think that even broad parameters for exercise of the power under section 13(2) are laid down in Regulation 85. That Regulation is in two parts. The first part provides that an application under section ]3(2) "shall be supported by evidence on affidavit of the material change in the relevant circumstances or any other fact or circumstances on which the applicant relies. " This is a procedural provision which prescribes that if the applicant relies on any material change in the relevant circumstances or 011 any other facts or circumstances in support of the application, he must produce the necessary evidence in proof of the same by affidavits. This provision merely lays down a rule of procedure and it has nothing to do with the grounds on which an application under section 13(2) may be maintained and it is difficult to see how it can be pressed into service on behalf of the respondents. The second part states that unless the Commission otherwise directs "notice of the application together with copies of the affidavits in support thereof shall be served on every party who appeared at the hearing of the previous proceedings and every such party shall be entitled to be heard on the application and the provisions of section 114 and Order XLVII rule 1 of the Code of Civil Procedure, 1908 shall as far as may, be applied to these proceedings". This part first deals with the question as to which parties shall be served with the notice of the application and who shall be entitled to appear at the hearing of the application. This is purely 1068 procedural in nature and does not throw any light on the issue before us. But this part then proceeds to add that the provisions of section 114 and Order XLVII rule 1 shall, as far as may, be applied to the proceedings in the application. Can this provision be read to mean that an application under section 13(2) can be maintained only on the grounds set out in section 114 and Order XLVII, rule 1? The answer must obviously be in the negative. The words "as far as may" occurring in this provision are very significant. They indicate that the provisions of section 114 and Order XLVII, rule 1 are to be invoked only to the extent they are applicable and if, in a given case. they are not applicable, they may be ignored but that does not mean that the power conferred under section 13(2) would not be exercisable in such a case. The reference to the provisions of section 114 and Order XLVII, rule 1 does not limit the grounds on which an application may be made under section 13(2). In fact, the respondents themselves conceded that the grounds set out in section 114 and Order XLVII, rule 1 were not the only grounds available in an application under section 13(2) and that the application could be maintained on other grounds such as material change in the relevant circumstances. It is, therefore, clear to our mind that even if a case does not fall within section 114 and Order XLVII, rule 1, the Commission would have power, in an appropriate case, to amend or revoke an order made by it. If, for example, a strong case is made out showing that an order made under section 37 is plainly erroneous in law or that some vital fact or feature which would tilt the decision the other way has escaped the attention of the Commission in making the order or that the appellant was prevented by sufficient cause from appearing at the hearing of the inquiry resulting in the order being passed exparte, the Commission would be entitled to interfere in the exercise of its power under section 13(2). These examples given by us are merely illustrative and they serve to show that Regulation 85 does not in any manner limit the power under section 13(2). Before we proceed to consider whether any case has been made out by the appellant for the exercise of the power under section 13(2), we may briefly dispose of the contention of the respondents based on acquiescence and estoppel. The argument of the respondents was that the appellant, by his subsequent conduct, acquiesced in the making of the Order dated 14th May, 1976 and was, in any event, estopped from challenging the same. We find it difficult to appreciate this argument. We do not see anything in the conduct of the appellant which would amount to acquiescence or raise any estoppel against it. It is obvious that the appellant did not wish to be heard in the proceeding before 1069 the Commission because the decision of the Commission in the Telco case held the field at that time and it was directly against the appellant. Otherwise, there is no reason why the appellant should not have entered an appearance under Regulation 65 and filed a proper reply as provided in Regulation 67 and appeared at the hearing of the inquiry to oppose the application of the Registrar. The appellant did make its submissions in writing by its letter dated 3rd February, 1976, but since the appellant did not enter an appearance as required by Regulation 65, it was precluded from filing a reply under Regulation 67 and the Commission was legally justified in refusing to look at the submissions contained in the letter of the appellant, though we may observe that it would have been more consonant with justice if the Commission had, instead of adopting a technical and legalistic approach, considered the submissions of the appellant before making the Order dated 14th May, '976. Be that as it may, the Commission declined to consider he submissions of the appellant and proceeded to make the order dated 14th May, 1976 exparte in the absence of the appellant. Now, once the order dated 14th May, 1976 was made, it was the bounden duty of the appellant to obey it, until it might be set aside in an appropriate proceeding. the appellant, therefore, stated preparing a draft of the revised distributorship agreement in conformity with the terms of the O der dated 14th May, 1976 and since the preparation of the draft was likely to take some time, the appellant applied for extension of time which was granted upto 31st March, 1977. However, before the extended date was due to expiry, this Court reversed the decision of The Commission in the Telco case and as soon as this new fact or circumstance came to its knowledge, the appellant made an application dated 31st March, 1977 stating that in view of the decision given by this Court in the Telco case, the applicant was advised to move a suitable application for amendment and/or modification of the Order dated 14th May, 1976 and the time for filing the revised distributorship agreement should, therefore, be further extended and on this application, the Commission granted further extension of time upto 4th June, 1977. It is difficult to see how any acquiescence or estoppel could be spelt out from this conduct of the appellant. It is true that the appellant did not prefer an appeal against the Order dated 14th May, 1976, but he application under section 13(2) being an alternative and perhaps a more effective remedy available to it, the failure of the appellant to prefer an appeal can not be construed as acquiescence on its part. The appellant undoubtedly asked for extension of time from the Commission for the purpose of implementing the Order dated 14th May, H; 1976 but that also cannot amount to acquiescence, because until the decision of the Commission in the Telco case was reversed in appeal 1070 by this Court, the appellant had no reason to believe that the Order dated 14th May, 1976 was erroneous and as soon as the appellant came to know about the decision of this Court reversing the view taken by the Commission, the appellant immediately pointed out to the Commission that it was moving an application for amendment or revocation of the Order dated 14th May, 1976 under section 13(2). The appellant did not at any time accept the Order dated 14th May, 1976 knowing that it was erroneous and it is elementary that there can be no acquiescence without knowledge of the right to repudiate or challenge. Moreover, it may be noted that the appellant did not, right upto the time it made the application under section 13(2), implement the Order dated 14th May, 1976 by entering into revised distributorship agreement with the distributors. There was, therefore, no acquiescence on the part of the appellant so far as the Order dated 14th May, 1976 is concerned. Nor could there be any estoppel against the appellant precluding it from challenging the Order by an application under section 13(2), for estoppel can arise only if a party to a proceeding has altered his position on the faith of a representation or promise made by another and here there is nothing to show that the Registrar had altered his position on the basis of the application for extension of time made by the appellant. Both the contentions, one based on acquiescence and the other on estoppel, must, therefore, be rejected. That takes us straight to the consideration of the question whether the appellant has made out any case for the exercise of the power of the Commission under section 13(2). The first ground canvassed by the appellant was that the application on which the Order dated 14th May, 1976 was made was not in accordance with law inasmuch as it did not set out any facts or features which would show that the trade practices complained of by the Registrar were restrictive trade practices. Now, it is true, as laid down by this Court in the Telco case, that an application by the Registrar under section 10(a) (iii) "must contain facts which, in the Registrar 's opinion, constitute restrictive trade practice" and it is not sufficient to make "mere references to clauses of the agreement and bald allegations that the clauses constitute restrictive trade practice". The application must set out facts or features "to show or establish as to how the alleged clauses constitute restrictive trade practice in the context of facts". The application of the Registrar in the present case was, therefore, clearly contrary to the law laid down by this Court in the Telco case. but on that account alone it cannot be said that the Order dated 14th May, 1976 was vitiated by a legal infirmity. Even if the application did 1071 not set out any facts or features showing how the trade practices complained of by the Registrar were restrictive trade practices, the Registrar could still at the hearing of the inquiry, in the absence of any demand for particulars being made by the appellant, produce material before the Commission disclosing facts or features which would go to establish the restrictive nature of the trade practices com plained of by him and if the Registrar did so, the defect in the application would not be of much consequence. But unfortunately in the present case the only material produced by the Registrar was the affidavit of the Assistant Registrar which did nothing more than just reproduce the impugned clauses of the distributorship agreement and the words of the relevant sections of the Act. There was no material at all produced by the Registrar before the Commission which would show how, having regard to the facts or features of the trade of the appellant, the trade practices set out in the offending clauses of the distributorship agreement were restrictive trade practices. The Order dated 14th May, 1976 was, therefore, in the submission of the appellant, based on no material at all and was accordingly vitiated by an error of law. The respondents, however, contended that it was not necessary to produce any material before the Commission in support of the claim of the Registrar, because the trade practices referred to in the offending clauses were per se restrictive trade practices and in any event, even if any supporting material was necessary, it was to be found in the admission of the appellant contained in its letter submitting the distributorship agreement for registration under section 33. We do not think there is any force in this contention of the respondents and the Order dated 14th May, 1976 must be held to be bad on the ground that it was based on no material and could not possibly have been made by the Commission. It is now settled law as a result of the decision of this Court in the Telco case that every trade practice which is in restraint of trade is not necessarily a restrictive trade practice. The definition of restrictive trade practice given in section 2(o) is a pragmatic and result oriented definition. It defines 'restrictive trade practice ' to mean a trade practice which has or may have the effected of preventing, distorting or restricting competition in any manner and in clauses (i) and (ii) particularises two specific instances of trade practices which fall within the category of restrictive trade practice. It is clear from the definition that it is only where a trade practice has the effect, actual or probable, of restricting, lessening or destroying competition that it is liable to be regarded as a restrictive trade practice. If a trade practice merely regulates and thereby promotes competition, it would not fall 1072 within the definition of restrictive trade practice, even though it may be, to some extent, in restraint of trade. Whenever, therefore, a question arises before the Commission or the Court as to whether a certain trade practice is restrictive or not, it has to be decided not on any theoretical or a priori reasoning, but by inquiring whether the trade practice has or may have the effect of preventing, distorting or restricting competition. This inquiry obviously cannot be in vacuo but it must append on the existing constellation of economic facts and circumstances relating to the particular trade. The peculiar facts and features of the trade would, be very much relevant in determining whether a particular trade practice has the actual or probable effect of diminishing or preventing competition and in the absence of any material showing these facts or features, it is difficult to see how a decision can be reached by the Commission that the particular trade practice is a restrictive trade practice It is true that on the subject of restrictive trade practices, the law in the United States has to be approached with great caution, but it is interesting to note that the definition of "restrictive trade practice" in our Act echoes to some extent the 'rule of reason ' evolved by the American Courts while interpreting section 1 of the Sherman Act. That section provides that "every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce is hereby declared to be illegal" and literally applied,, it would outlaw every conceivable contract which could be made concerning trade or commerce or the subjects of such commerce. The Supreme Court of United States, therefore, read a 'rule of reason ' in this section in the leading decision in Standard Oil Company vs United States. It was held by the Court as a 'rule of reason ' that the term "restraint of trade" means that it meant at common law and in the law of the United States when the Sherman Act was passed and it covered only those acts or contracts or agreements or combinations which prejudice public interest by unduly restricting competition or unduly obstructing the due course of trade or which injuriously restrain trade either because of their inherent nature of effect or because of their evident purpose. Vide also United States vs American Tobacco Co. It was pointed out that the 'rule of reason ' does not freeze the meaning of "restraint of trade" to what it meant at the date when the Sherman Act was passed and it prohibits not only those acts deemed to be undue restraints of trade at common law but also those acts which new times and economic conditions make unreasonable. This 'rule 1073 of reason ' evolved by the Supreme Court in the Standard Oil Company 's case and the American Tobacco Co 's case has governed the application of section 1 of the Sherman Act since then and though it does not furnish an absolute and unvarying standard and has been applied, sometimes more broadly and some times more narrowly, to the different problems coming before the courts at different times, it has held the field and, as pointed out by Mr. Justice Reed in the United States vs E.I. Du Pont, the Supreme Court has not receded from its position on this rule. The 'rule of reason ' has, to quote again the words of the same learned Judge "given a workable content to anti trust legislation". Mr. Justice Brandeis applied the 'rule of reason ' in Board of Trade vs United States for holding that a rule prohibiting offers to purchase during the period between the close of the call and the opening of the session on the next business day for sales of wheat, corn, oats or rye at a price other than at the closing bid, was not in "restraint of trade" within the meaning of section 1 of the Sherman Act. The learned Judge pointed out in a passage which has become classical: "Every agreement concerning trade, every regulation of trade, restrains. To bind, to restrain, is of their very essence. The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition, or whether it is such as may suppress or even destroy competition. To determine that question the court must ordinarily consider the facts peculiar to the business to which the, restraint is applied; its condition before and after the restraint was imposed the nature of the restraint, and its effect, actual or probable. The history of the restraint the evil believed to exist, the reason for adopting the particular remedy, the purpose or end sought to be attained, are all relevant facts. This is not because a good intention will save an otherwise objectionable regulation, or the reverse; but because knowledge of intent may help the court to interpret facts and to predict consequences. " It will thus be seen that the 'rule of reason ' normally requires an ascertainment of the facts or features peculiar to the particular business; its condition before and after the restraint was imposed; the nature of the restraint and its effect, actual or probable; the history of the restraint and the evil believed to exist, the reason for adopting the particular restraint and the purpose or end sought to be attained and it is only on a consideration of these factors that it can be decided whether a particular act, contract or agreement, impos 1074 ing the restraint is unduly restrictive of competition so as to constitute 'restraint of trade '. The language of the definition of "restrictive trade practice" in our Act suggests, that in enacting the definition, our legislature drew upon the concept and rationale underlying the 'rule of reason '. That is why this Court pointed out in the Telco case in words almost bodily lifted from the judgment of Mr. Justice Brandeis: "The decision whether trade practice is restrictive or not has to be arrived at by applying the rule of reason and not on that doctrine that any restriction as to area or price will per se be a restrictive trade practice. Every trade agreement restrains or binds persons or places or prices. The question is whether the restraint is such as regulates and thereby promotes competition or whether it is such as may suppress or even destroy competition. To determine this question three matters are to be considered. First, what facts are peculiar to the business to which the restraint is applied. Second, what was the condition before and after the restraint is imposed. Third, what is the nature of the restraint and what is its actual and probable effect. " These various facts and features set out in the Judgment of Mr. Justice Brandeis and reiterated in the decision of this Court in the Telco case would, therefore, have to be considered before a decision can be reached whether a particular trade practice is restrictive or not. It is possible that a trade practice which may prevent or diminish competition in a given constellation of economic facts and circumstances may, in a different constellation of economic facts and circumstances, be found to promote competition. It cannot be said that every restraint imposed by a trade practice necessarily prevents, distorts or restricts competition and is, therefore, a restrictive trade practice. Whether it is so or not would depend upon the various considerations to which we have just referred. Of course, it must be pointed out that there may be trade practices which are such that by their inherent nature and inevitable effect they necessarily impair competition and in case of such trade practices, it would not be necessary to consider any other facts or circumstances, for they would be per se restrictive trade practices. Such would be the position in case of those trade practices which of necessity produce the prohibited effect in such an overwhelming proportion of cases that minute inquiry in every instance would be wasteful of judicial and administrative resources. Even in the United States a similar doctrine of per se illegality has been evolved in the interpretation of section 1 of the Sherman Act and it has been held that certain restraints of trade are 1075 unreasonable per se and "because of their pernicious effect on competition and lack of any redeeming virtue" they are "conclusively presumed to be unreasonable, and, therefore; illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use". In such cases "illegality does not depend on a showing of the unreasonableness of the practice and it is unnecessary to have a trial to show the nature, extent and degree of its market effect." Vide American Jurisprudence 2d. volume 54, p. 687, article 32. We are concerned in the present appeal with clauses of the distributorship agreement imposing restriction as to territory, area or market and providing for exclusive dealership and according to the decision of this Court in the Telco case, such trade practices are not per se restrictive trade practices. Whether such trade practices constitute restrictive trade practices or not in a given case would depend on the particular facts and features of the trade and other relevant considerations discussed above which would show the actual or probable effect of such trade practices on competition. It was, therefore, absolutely necessary to produce the necessary material before tho Commission to show that the impugned trade practices had the actual or probable effect of diminishing or destroying competition and were therefore, restrictive trade practices. The burden was clearly on the Registrar for it was the Registrar who wanted the Commission to strike down these trade practices as restrictive. The Registrar, however, did Dot produce any material at all before the Commission and the Order dated 14th May, 1976 had no basis at all on which it could be sustained. There is no doubt that the appellant by its letter dated 19th May, 1972 submitted the distributorship agreement to the Registrar for registration under section 33, but we do not see how this act of the appellant or the letter forwarding the distributorship agreement for registration can be construed as admission on the part of the appellant that the trade practices referred to in the offending clauses of the distributorship agreement constituted restrictive trade practices. In the first place, the question whether a trade practice is restrictive trade practice or not is essentially a question of law based on the application of the definition in section 2(o) to the facts of a given case and no admission on a question of law can ever be used in evidence against the maker of the admission. Therefore, even if there was any admission involved in submitting the distributorship agreement for registration, it could not be used as evidence against the appellant in the inquiry under section 37. Moreover, we do not think that in submitting the distributorship agreement for registration, the appellant 1076 made an admission that any particular clause of the distributorship agreement constituted restrictive trade practices. There is nothing in the letter of the appellant to show which were the particular clauses of the distributorship agreement regarded by the appellant as restrictive trade practices on the basis of which it made the application for registration. It is possible that the appellant might have taken the same view which the Commission did in the Telco case, namely, that the moment an agreement contains a trade practice falling within any of the clauses of section 33(1), the trade practice must irrespective of whether it falls within the definition in section 2(o) or not, be regarded as a restrictive trade practice and the agreement must be registered and on that view, the appellant might have submitted the distributorship agreement for registration. The submission of the distributorship agreement for registration cannot, therefore, possibly be construed as admission on the part of the appellant that the particular clauses of the distributorship agreement faulted by the Commission constituted restrictive trade practices. There was, accordingly, no admission of the appellant on which the Commission could rely for the purpose of making the Order dated 14th May, 1976. We must, in the circumstances, hold that, since there was no mate rial at all on the basis of which the Commission could find that the grade practices referred in the offending clauses of the distributorship agreement were restrictive trade practices, the Order dated 14th May, 1976 was contrary to law. This clearly attracted the exercise of the power of the Commission under section 13(2). The decision of this Court in the Telco case exposed the invalidity of the Order dated 14th May, 1976 and showed that it was bad as being based on no material whatsoever. When the commission passed the Order dated 14th May 1976, the decision of the Commission in the Telco case held the field and according to that decision, any trade practice which fall within one of the clauses of section 33(1) would be a restrictive trade practice and that is perhaps the reason why the Registrar did not produce any material before the Commission and even though there was no material before it, the Commission proceeded to invalidate the trade practices referred to in the offending clauses as restrictive trade practices, since they fell within one or the other clauses of section 33(1). But this view was reversed in appeal and it was held by this Court that a trade practice which does not fall within the definition in section 2(o) can not become restrictive trade practice merely because it is covered by one or the other of the clauses of section 33(1): what section 33(1) requires as the condition for registration is that the agreement must 1077 relate to a trade practice which is restrictive trade practice within the meaning of section 2(o) and such restrictive trade practice must additionally fall within one or more of the categories specified in that section. It was because of this decision in the Telco case that the necessity for production of material to show that the trade practices complained of were restrictive trade practices became evident and it came to be realised that the Order dated 14th May, 1976 was bad. The conclusion is, therefore, inescapable that the power of the Commission under section 13(2) was exerciseable in the present case and the Order dated 14th May, 1976 was liable to be revoked. Before we part with this aspect of the case, we must refer to other decision of this Court which was relied upon on behalf of the respondents and that is the decision in Hindustan Lever Ltd. vs M.R.T.P. The Judgment in this case was delivered by Beg, C.J., speaking on behalf of himself and Gupta, J. and though Beg, C.J., was also a party to the judgment in the Telco case, this judgment seem to strike a slightly different note and hence it is necessary to examine it in some detail. Two clauses of the Redistribution Stockists ' Agreement were assailed in this case as constituting restrictive trade practices. One was clause 5 which in its last portion provided that the redistribution stockists shall purchase and accept from the Company such stock as the Company shall at its discretion send to the redistribution stockist for fulfilling its obligations under the agreement and the other was Clause which imposed a restriction as to area or market by providing that the redistribution stockist shall not rebook or in any way convey transport or despatch parts of stocks of the products received by him outside the town for which he was appointed redistribution stockist. The Commission held, following the view taken by it earlier in the Telco case, that the last part of clause 5 as well as clause 9 constituted restrictive trade practices and declared them void. This view was affirmed by Beg, C.J., in the appeal preferred by Hindustan Lever Ltd. We are not concerned with the merits of the question whether the last part of clause 5 and clause 9 were on the facts of that case rightly held to be restrictive trade practices, but certain observations made by the learned Chief Justice in that judgment call for consideration, since they seem to be inconsistent with what was laid down by a Bench of three Judges of this Court in the Telco Case. In the first place, the learned Chief Justice distinguished the judgment in the Telco case by observing that the agreement in that case could not be understood without reference to the actual facts to which 1078 it was sought to be applied and extraneous evidence in regard to those facts for explaining "the nature of the special agreement for restricting or distribution of areas" was, therefore, admissible under section 92, clause 6 of the Evidence Act, but in the Hindustan Lever case the meaning of the impugned clauses was plain and certain and the principle of Section 92, clause 6 was clearly inapplicable to led in extraneous evidence and hence no oral evidence could be led to deduce their meaning or vary it in view of the provisions of sections 91 and 92. It was on this view that the learned Chief Justice held that oral evidence for the purpose of showing that the trade practices in the impugned clauses were not restrictive was shut out and all that was necessary for the court to do was to interpret the impugned clauses. Now, this view taken by the learned Chief Justice does not and we say so with the utmost respect appear to be correct. We do not see how sections 91 and 92 of the Evidence Act come into the picture at all when we are considering whether a particular trade practice set out in an agreement has or may have the effect of preventing, distorting or restricting competition so as to constitute a restrictive trade practice. It is the actual or probable effect of the trade practice which has to be judged in the light of the various considerations adverted to by us and there is no question of contradicting, varying, adding to or subtracting from the terms of the agreement by admitting any extraneous evidence. The meaning of the particular clause of the agreement is not sought to be altered or varied by reference to the various factors which we have discussed above, but these factors are required to be taken into account only for the purpose of determining the actual or probable effect of the trade practice referred to in the particular clause. The reliance placed by the learned Chief Justice on sections 91 and 92 was, therefore, quite inappropriate and unjustified and we do not think that the learned Chief Justice was right in shutting out oral evidence to determine the actual or probable effect of the trade practices impugned in the case before him. It may be pointed out that the decision in the Telco case did not proceed on an application of the principle embodied in section 92, clause (6) of the Evidence Act and with the greatest respect, the learned Chief Justice was in error in distinguishing that decision on the ground that extraneous evidence was considered in that case in view of the principle underlying section 92, clause 6, while in the case before him that principle was not applicable and hence extraneous evidence was not admissible. The learned Chief Justice was bound by the ratio of the decision in the Telco case Secondly, the learned Chief Justice seemed to take the view in his judgment at page 465 of the Report that if a clause in an agreement 1079 relates to a trade practice which infringes any of the clauses of section 33(1), it would be bad and it would be unnecessary to inquire whether the trade practice falls within the definition of 'restrictive trade practice ' in section 2(o). There were two places in the judgment where the learned Chief Justice used expressions indicating this view. He said at one place: "The last part of clause (5) would be struck by section 33(1) (b)", and at another place "inasmuch as clauses (5) expressly gives the stockist the discretion to sell at lower than maximum retail prices stipulated, the agreement was not struck by section 33(1) (b)". This view is plainly and again we say 60 with the greatest respect, contrary to the law laid down by a Bench of three Judges of this Court in the Telco case. We have already pointed out that, according to the decision in the Telco case, a trade practice does not become a restrictive trade practice merely because it falls within one or the other clause of section 33(1), but it must also satisfy the definition of 'restrictive trade practice ' contained in section 2(o) and it is only then that the agreement relating to it would require to be registered under section 33(1). It is with the greatest respect to the learned Chief Justice, not correct to say that a particular clause in an agreement is struck by one or the other clause of section 33(1). It is not section 33(1) which invalidates a clause in an agreement relating to a trade practice, but it is the restrictive nature of the trade practice as set out in section 2(o) which makes it void The view taken by the learned Chief Justice on this point can not, therefore, be accepted. Lastly, the learned Chief Justice held that the introduction of a clause in an agreement itself constitutes a trade practice and if such clause confers power which can be used so as to unjustifiably restrict trade it would constitute a restrictive trade practice. The learned Chief Justice pointed out that the definition of trade practice is wide enough to include any practice relating to the carrying on of any trade and observed that "it cannot be argued that the introduction of the clauses complained of does not amount to an action which relates to the carrying on of a trade. If the result of that action or what could reasonably flow from it is to restrict trade in the manner indicated, it will, undoubtedly, be struck by the provisions of the Act". The interpretation placed by the learned Chief Justice was that if a clause in an agreement is capable of being used to prevent, distort or restrict competition in any manner, it would be liable to be struck down as a restrictive trade practice, regardless of what is actually done under it, for it is not the action taken under a clause, but the clause itself which permits action to be taken which is unduly restrictive of competition, 1080 that is material for determining whether there is a restrictive trade practice. The learned Chief Justice emphasised that if a clause in an agreement confers power to act in a manner which would unduly restrict trade, the clause would be illegal and it would be no answer to say that the clause is in fact being implemented in a lawful manner. This view taken by the learned Chief Justice cannot, with the utmost respect, be accepted as wholly correct. It is true that a clause in an agreement may embody a trade practice and such trade practice may have the actual or probable effect of restricting, lessening or destroying competition and hence it may constitute a restrictive trade practice and the clause may be voided, but it is difficult to see how the introduction of such a clause in the agreement, as distinguished from the trade practice embodied in the clause itself, can be a restrictive trade practice. It is not the introduction of such a clause, but the trade practice embodied in the clause, which has or is reasonably likely to have the prescribed anti competitive effect. Therefore, whenever a question of restrictive trade practice arises in relation to a clause in an agreement it is the trade practice embodied in the clause that has to be examined for the purpose of determining its actual or probable effect on competition. Now a clause in an agreement may proprio vigore on its own terms, impose a restraint such as allocating a territory, area or market to a dealer or prohibiting a dealer from using machinery or selling goods of any other manufacturer or supplier or requiring the dealer to purchase whatever machinery or goods in the particular line of business are needed by him from the manufacturer or supplier entering into the agreement. Where such restraint produces or is reasonably likely to produce the prohibited statutory effect and that would depend on the various considerations referred to by us earlier it would clearly constitute a restrictive trade practice and tho clause would be bad. In such a case it would be no answer to say that the clause is not being enforced by the manufacturer or supplier. The very presence of the clause would have a restraining influence on the dealer, for the dealer would be expected to carry out his obligations under the clause and he would not know that the clause is not going to be enforced against him. This is precisely what was pointed out by Mr. Justice Day in United Shoe Machinery Corporation vs United States where the question was whether the restrictive use, exclusive use and additional machinery clauses in certain lease agreements of shoe machinery were struck by the provisions of section 3 of the Clayton Act: "The power to enforce them", that is, the impugned clauses "is omnipresent and their 1081 restraining influence constantly operates upon competitors and lessees. The fact that the lessor, in many instances, forbore to enforce these provisions, does not make them any less agreements within the condemnation of the Clayton Act". There would be no difficulty in such a case in applying the definition of restrictive trade practice, in accordance with the law laid down in the Telco case as explained by us in this judgment. Then there may be a clause which may be perfectly innocent and innocuous such as a clause providing that the dealer will carry out all directions given by the manufacturer or supplier from time to time. Such a broad and general clause cannot be faulted as restrictive of competition, for it cannot he assumed that the manufacturer or supplier will abuse the power conferred by the clause by giving directions unduly restricting trade. So much indeed was conceded by the learned Additional Solicitor General appearing on behalf of the respondents. But a genuine difficulty may arise where a clause in an agreement does not by itself impose any restraint but empowers the manufacturer or supplier to take some action which may be restrictive of competition. Ordinarily, in such a case, it may not be possible to say that the mere presence of such a clause, apart from any action which may be taken under it, has or may have the prohibited anti competitive effect. The manufacturer or supplier may take action under the clause or he may not, and even if he takes action, it may be in conformity with the provisions of the Act and may not be restrictive of competition. The mere possibilities of action being taken which may be restrictive of competition would not in all cases effect the legality on the clause. In fact, a consistent course of conduct adopted by the manufacturer or supplier in acting under The clause in a lawful manner may tend to show that The clause is not reasonably likely to produce the prohibited statutory effect. What is required to be considered for determining The legality of the clause is hot mere theoretical possibility that the clause may be utilised for taking action which is restrictive of competition, for it does not necessarily follow from the existence of such possibility that actual or probable effect of the clause would be anti competitive. The material question to consider is whether there is a real probability that the presence of the clause itself would be likely to restrict competition. This is basically a question of market effect and it cannot be determined by adopting a doctrinaire approach. There can be no hard and fast rule and each case would have to be examined on its own facts from a business and commonsense point of view for the purpose Or determining whether the clause has the actual or probable effect of unduly, restricting come petition. We cannot accept the proposition that in every case where 1082 the clause is theoretically capable of being so utilised as to unjustifiably restrict competition, it would constitute a restrictive trade practice. There is also another infirmity invalidating the Order dated 14th May, 1976. We have already pointed out and that is clear from the n decision of this Court in the Telco case that in an inquiry under section 37 the Commission has first to be satisfied that the trade practice com plained of in the application is a restrictive trade practice within the meaning of that expression as defined in section 2(o) and it is by after the Commission is so satisfied, that it can proceed to consider whether any of the 'gateways ' provided in section 38(1) exists so that the trade practice, though found restrictive, is deemed not to be prejudicial to the public interest and if no such 'gateways ' are established, then only it can proceed to make an order directing that the trade practice complained of shall be discontinued or shall not be repeated There are thus two conditions precedent which must be satisfied before a cease and desist order can be made by the Commission in regard to any trade practice complained of before it. One is that the Commission must find that the trade practice complained of is a restrictive trade practice and the other is that where such finding is reached, the Commission must further be satisfied that none of the gateways pleaded in answer to the complaint exists. Here in the present case the appellant did not appear at the hearing of the inquiry and no 'gateways? were pleaded by it in the manner provided in the Regulations and hence the question of the Commission arriving at a satisfaction in regard to the 'gateways ' did not arise. But the Commission was certainly required to be satisfied that the trade practices complained of by the Registrar were restrictive trade practices before it could validity make a cease and desist order. The Order dated 14th May, 1976 did not contain any discussion or recital showing that the Commission had reached the requisite satisfaction in regard to the offending trade practices. But we can legitimately presume that the Commission must have applied its mind to the offending causes of the distributorship agreement and come to the conclusion that the trade practices refereed to in those clauses were restrictive trade practices before it made the Order dated 14th May, 1976. There is in fact inherent evidence to show that the Commission did apply its mind to the clauses impugned in the application of the Registrar, because it struck down only a few out of those clauses and did not invalidate the rest. This circumstance clearly shows that the Commission considered with reference to each impugned clause whether it related to restrictive trade practice and made the Order dated 14th May, 1976 only in respect of those 1083 clauses where it was satisfied that the trade practices were restrictive. The charge that the Order dated 14th May, 1976 suffered from non application of mind on the part of the Commission cannot, therefore, be sustained. But the Order dated 14th May, 1976 was clearly bad inasmuch as it did not disclose the reasons which weighed with the Commission in directing the appellant to cease and desist from the trade practices set out in the order. The Order dated 14th May, 1976 was a non speaking order. It consisted merely of bald directions given by the Commission and did not set out any reasons whatsoever why the Commission had decided to issue those directions. It had a sphynx like face, which goes ill with the judicial process. It is true that the Order dated 14th May, 1976 was an exparte order, but the exparte character of the order did not absolve the Commission from the obligation to give reasons in support of the order. Even though the Order dated 14th May, 1976 was exparte, the appellant would have been entitled to prefer an appeal against it under section 55 and it is difficult to see how the appellant could have possibly attacked the order in the appeal when the order did not disclose the reasons on 1 which it was based. It is now settled law that where an authority makes an order in exercise of a quasi judicial function, it must record its reasons in support of the order it makes. Every quasi judicial order must be supported by reasons. That is the minimal requirement of law laid down by a long line of decisions of this Court ending with N. M. Desai vs Textiles Ltd. and Simens Engineering Co. vs Union of India. The Order dated 14th May, 1976 was, therefore, clearly vitiated by an error of law apparent on the face of the record inasmuch as it contained only the final and operative order made by the Commission and did not record any reasons whatsoever in support of is and the appellant was, in the circumstances, entitled to claim what the Order should be revoked by the Commission This view taken by us renders it unnecessary to consider whether there was any material change in the relevant circumstances justifying invocation of the power under section 13(2) and hence we do not purpose to deal with the same. The Commission has devoted a part of the order impugned in the present appeal to a consideration of this question and taken the view that there was no material change in the relevant circumstances subsequent to the making of the Order dated 14th May, 1976. We do not wish to express any opinion on the correctness of this view taken by the Commission, since we are setting aside the impugned order made by the Commission and also revoking 1084 the Order dated 14th May, 1976 and sending the matter back so that the application of the Registrar under section 10(a) (iii) may be disposed of afresh. We accordingly allow the appeal, set aside the order of the Com mission rejecting the application of the appellant under section 13(2), revoke the Order dated 14th May, 1976 and remit the case to the Commission so that the Commission may dispose of the application of the Registrar under section 10(a) (iii) in the light of the observations contained in this judgment. The Commission will give an opportunity to the appellant to file a proper reply in conformity with the requirements of the Regulations and after taking such relevant evidence as may be produced by both parties, proceed to dispose Of the application of the Registrar on merits in accordance with law. There will be no order as to costs of the appeal. P.B.R. Appeal allowed.

Section 10(a) (iii) of the empowers the Monopolies and Restrictive Trade Practices Commission to enquire into any restrictive trade practices upon an application made to it by the Registrar of Restrictive Trade Agreements. Section 13(2) provides that "any order made by the Commission may be amended or revoked at any time in the manner in which it was made. " Section 55 provides that any person aggrieved by an order made by the Central Government or the Commission under section 13 or section 37 may prefer an appeal to the Supreme Court on one or more of the grounds specified in section 100, Code of Civil Procedure, 1908. On the date on which the Act came into force section 100 C.P.C. specified three grounds on which a second appeal could lie to the High Court one of them being that the decision appealed against was contrary to law. By an amendment made in 1976 s.100 was substituted by a new section which provides that a second appeal shall lie to the High Court only if the High Court is satisfied that the case involves a substantial question of law. The appellant, who was a manufacturer of jeep motor vehicles, their spare parts and accessories, submitted for registration to the Registrar of Restrictive Trade Agreements, standard distributorship agreements entered into by it with its distributors. After registering the agreements, in his application to the Commission, the Registrar alleged that certain clauses in the agreement related to restrictive trade practices and that some of them were prejudicial to public interest. The appellant, in reply to the Commission 's notice, stated that it did not wish to be heard in the proceedings before the Commission, pointing out at the same time that there was nothing in the impugned clauses of the agreement which could be said to constitute restrictive trade practices the reasons whereof had already been explained in its reply. 1039 The Registrar filed before the Commission an affidavit in support of his application but that too did not contain any further or additional material than what was set out in his application. No other evidence, oral or documentary, was produced by him before the Commission in support of the allegation that the agreement constituted a restrictive trade practice. By its order dated May 14, 1976 the Commission declared certain clauses of the appellant 's distributorship agreement to be void. While correspondence was going on between the Registrar and the appellant on the submission of a revised distributorship agreement, this Court in Tata Engineering & Locomotive Co. Ltd. vs Registrar of Restrictive Trade Practices, ; gave its interpretation on the relevant provisions of the Act. Thereupon the appellant made an application to the Commission pointing out that it did not contest the enquiry proceedings under section 37 in the first instance because the Commission 's decision in the Telco case was directly applicable; but now that that decision had been reversed by the Supreme Court in appeal, its order dated May 14, 1976 needed amendment/modification. An application under section 13 (2) read with regulation 85 was accordingly made for revocation, amendment or modification of the Commission 's order of May 14, 1976. The Commission rejected this application by an order dated 28th February 1978. In its appeal under section 55 of the Act impugning the Commission 's order dated 28th February 1978 the appellant contended that (1) the Registrar 's application alleging restrictive trade practices did not set out any facts showing how the appellant 's trade practices were restrictive in nature and that the Registrar 's application not having been made in accordance with the law laid down by this Court in Telco case the impugned order of the Commission was liable to be revoked or modified under section 13(2); (2) the order did not give any reasons for its decision and so was vitiated; and (3) the order was a continuing order because it required the appellant not merely to cease but also desist from the restrictive trade practices set out in the order and was, therefore required to be continually justifiable and since it was, contrary to the law laid down in Telco case it was liable to be revoked or amended; in any event the decision of this Court being subsequent to the making of the Commission 's order, there was enough justification for revoking or modifying the order under section 13(2) of the Act. The respondent, on the other hand, contended that (1) on an application of the rule of interpretation enacted in section 8(1) or the General Clauses Act, reference in section 55 to section 100 C.P.C. must be construed as a reference to the new section 100, C.P.C. and so construed an appeal to the Supreme Court would lie only if the case involved "a substantial question of law" and not otherwise and since in this case no such question was involved, the appeal was not maintainable; (2) section 13(2) could not be used by the appellant as a substitute for section 55; and (3) by reason of its subsequent conduct in acquiescing in the Commission 's order and unconditionally accepting it, the appellant was precluded from raising any contention against its validity in appeal to this Court. Allowing the appeal, ^ HELD: The appeal is maintainable under section 55 of the Act. [1064 C] 1(a) On a proper interpretation of section 55 it must be held that the grounds speci 1040 fied in the then existing section 100 CPC were incorporated in section 55 and the substitution of the new section 100 did not affect or restrict the grounds as incorporated in section 55. In any event, the present appeal raises substantial questions of law, and so is maintainable. [1064 C] (b) There is a distinction between a mere reference to or citation of one statute in another and an incorporation. Where there is a mere reference to or citation of one enactment in another without incorporation, section 8(1) of the General Clause Act applies and the repeal and re enactment of the provision referred to or cited has the effect set out in that section and the reference to the provision repealed is required to be construed as reference to the provision as re enacted. But where a provision of one statute is incorporated in another, the repeal or amendment of the former does not affect the latter. The effect of incorporation is as if the provision incorporated were written out in the incorporting statute and were part of it. Once the incorporation is made, the provision incorporated becomes an integral part of the statute in which it is transposed and thereafter there is no need to refer to the statute from which the incorporation is made and any subsequent amendment made in it has no effect on the incorporating statute. [1060 C G] Collector of Customs, Madras, vs Nathella Sampathu Chetty & Anr., ; ; New Central Jute Mills Co. Ltd. vs The Assistant Collector of Central Excise, Allahabad 63 at 69; Council vs Hindustan Co operative Insurance Society Ltd., 58 I.A. 259, Ramswarup vs Munshi & Ors. ; ; Bolani Ores Ltd. vs State of Orissa, ; ; referred to. (c) Section 55 is an instance of legislation by incorporation and not legislation by reference. In enacting section 55 the legislature did not want to confer an unlimited right of appeal but wanted to restrict it. It found that the grounds set out in the then existing section 100 CPC were appropriate for restricting the right of appeal and hence incorporated them in s.55. The legislature could never have intended to limit the right of appeal to any ground or grounds which might from time to time find place in section 100 without knowing what those grounds were. [1063 B D] (d) Secondly, the Act is a self contained code and it is not possible to believe that the legislature could have made the right of appeal under such a code dependent on the viscititudes of a section in another statute. [1063 F] (e) That apart, an indissoluble link between section 55 and section 100, CPC would lead to a startling result. If, for example, section 100 were repealed, section 55 would be reduced to futility and the right of appeal under the Act would be wholly gone. It would be absurd to place on the language of section 55 an interpretation which might in a given situation result in denial of the right of appeal altogether and thus defeat the plain object and purpose of the section. [1063 H] (f) Even assuming that the right of appeal under s.55 is restricted to the ground specified in the new section 100 CPC the present appeal would still be maintainable because it involves a substantial question of law relating to the interpretation of section 13(2) of the Act. [1064 D] 1041 (g) The test for determining whether a question of law raised in an appeal is a substantial question of law is to see whether it is of general public importance or whether it directly or substantially affects the rights of parties and if so whether it is an open question in the sense that it is not finally settled by this Court or by the Privy Council or by the Federal Court or is not free from difficulty or call for discussion of alternative views. [1064 E] Sir Chunilal V. Mehta & Sons Ltd. vs The Century Spinning and Manufacturing Co. Ltd., [1962] Supp. 3 SCR 549; referred to. In the present case the appeal clearly involves a substantial question of law within the meaning of the Act, because the interpretation of section 13(2) directly and substantially affects the rights of the parties and is not finally settled by this Court. 2(a) The words "in the manner in which it was made ' occurring in section 13(2) have no bearing on the content or the scope and ambit of the power but merely indicate the procedure to be followed by the Commission in amending or revoking an order made by it. [1064 H] (b) The power conferred under section 13(2) is of the widest amplitude and in this respect it is unlike section 22 of the English Act. This power is intended to ensure that the order passed is and continues to be in conformity with the requirements of the Act, and the trade practice condemned by the order is really and truly a restrictive trade practices and it must therefore, be construed in a wide sense so as to effectuate the object and purpose of the grant of the power. [1065 B] (c) The powers under section 13(2) and section 55 are distinct and independent powers and one cannot be read as subject to the other. The scope and applicability of section 13(2) is not cut down by the provision for appeal under section 55. It is perhaps because the right of appeal given under section 55 is limited to a question of law that a wide and unfettered power is conferred on the Commission to amend or revoke an order in appropriate cases. [1066 A] (d) The conferment of such wide and unusual power under section 13(2) was necessary to ensure that an erroneous order is capable of being corrected. An order made under section 37 or under any other provision of the Act may affect not only the parties before the Commission but also others such as the whole net work of distributors or dealers who were not before the Commission. It may also affect the entire trade in the product. There may be some Facts or circumstances having a crucial bearing on the determination of the enquiry which, if taken into account, may result in a different order being made or some fact or circumstance may arise which may expose the invalidity of the order or render it bad. There may be a material change in the relevant circumstances subsequent to the making of the order. Therefore, by its very nature. the order of the Commission is transient or pro tempore and must be liable to be altered or revoked according as there is material change in the relevant economic facts and circumstance. [1366 B E] (e) But howsoever large may be the power under section 13(2), it cannot be construed to be so wide as to permit a rehearing on the same material without anything more with a view to showing that the order was wrong on facts. [1067] 1042 (f) When Regulation 85 says that the provisions of section 114 and O. XLVII, r. 1 CPC shall as far as may, be applied to the proceedings under section 13(2) it cannot be read to mean that an application under section 13(2) can be maintained only on the grounds set out in section 114 and O. XLVII r. 1. This regulation does not in any manner limit the width and amplitude of the power under section 13(2). A good part of it is procedural in nature and has nothing to do with the grounds on which an application under section 13(2) may be maintained. The words "as far as may" occurring in its last part do not indicate that an application under section 13(2) can be maintained only on the grounds set out in section 114 and O. XLVII, r. 1, CPC. All that they indicate is that the provisions of section 114 and O. XLVII, r. 1 are to be invoked only to the extent applicable, and if in a given case they are not applicable they may be ignored; but that does not mean that the power conferred under section 13 (2) would not be exercisable in such a case. The reference to the provisions of section 114 and O. XLVII, r. 1 does not limit the grounds on which an application may be made under section 13(2). Clearly, therefore, even if a case does not fall within section 114 and O. XLVII, r. 1, the Commission would have power in an appropriate case to amend or revoke an order made by it in the exercise of its power under section 13(2). [1067 E H] 3(a) The power of the Commission under section 13(2) was exercisable in the present case and the order dated 14th May 1976 was liable to be revoked. [1077 B] (b) The submission of the distributorship agreement for registration under section 33 cannot be construed as admission on the appellant 's part that the clauses in the agreement constituted restrictive trade practices. The appellant had possibly submitted the agreement for registration on the erroneous view (which was also the view of the Commission in the Telco case) that the moment an agreement contains a trade practice falling within any of the clauses of section 33(1) the trade practice must, irrespective of whether it falls within the definition of section 2(o) or not, be regarded as a restrictive trade practice and the agreement must be registered. The question whether a particular trade practice is restrictive or not is essentially a question of law based on the application of the definition in section 2(o) to the facts of a given case and no admission on a question of law can ever be used, in evidence against the make of the admission. Therefore, even assuming that there was an admission in submitting the agreement for registration it could not be used as evidence against the appellant in the enquiry under section 37. [1075 C G] (c) There was nothing in the conduct of the appellant which would amount to acquiescence or raise an estoppel against it. The appellant did not at any time, accept the impugned order knowing that it was erroneous. There can be no acquiescence without knowledge of the right to repudiate or challenge. [1068 H] (d) Neither did the failure of the appellant to prefer an appeal amount to acquiescence on its part because an application under section 13(2), which is An alternative and a more effective remedy, was available to it. [1069 G] (e) The fact that the appellant did not implement the impugned order by entering into revised distributorship agreements with its distributors also showed that there was no acquiescence on its part so far as the order dated 14th May 1976 was concerned. [1070 C] 1043 (f) Estoppel can arise only if a party to a proceeding had altered his position on the faith of a representation or promise made by another. In the instant case there is nothing to show that the Registrar had altered his position on the basis of the application for extension of time made by the appellant. [1107 D] 4(a). The order of the Commission was bad because it was based on no material and, could not possibly have been made by the Commission. [1076 A B] (b) The definition of restrictive trade practice in the Act is, to some extent, based on the rule of reason evolved by American courts while interpreting a similar provision in the Sherman Act. The rule of reason normally requires ascertainment of facts or features peculiar to the particular business, its condition before and after the restraint was imposed, the nature of the restraint and its effect, actual or probable, the history of the restraint and the evil believed to exist, the reason for adopting the particular restraint and the purpose sought to be attained. It is only on a consideration of these factors that it can be decided whether a particular act, contract or agreement imposing the restraint is unduly restrictive of competition so as to constitute restraint of trade. Certain restraint of trade are unreasonable per se because of their pernicious effect on competition and lack of any redeeming virtue; they are conclusively presumed to be unreasonable and, therefore, illegal without elaborate enquiry as to the precise harm they have caused or the business execuse for their use. In such cases illegality does not depend on a showing of the unreasonableness of the practice and it is unnecessary to have a trial to show the nature, extent and degree of its market effect. [1074 A, B; 1075 A B] (c) It is now settled law that every trade practice which is in restraint of trade is not necessarily restrictive trade practice. If a trade practice merely regulates and thereby promotes competition it would not fall within the definition even if it is to some extent in restraint of trade. Therefore, the question whether a trade practice is a restrictive trade practice or not has the decided not on any theoretical or a priori reasoning. but by inquirie whether it has or may have the effect of preventing distorting or restricting competition. The peculiar facts and features of the trade would be very much relevant in determining this question. [1072 H] (d) In the Telco case this Court laid down that an application by the Registrar under section 10(a) (iii) must contain facts which in his opinion constitute restrictive trade practice and show or establish as to how the alleged clauses constitute restrictive trade practice in the context of the facts. But even if the application does not set out any facts or features showing how the trade practices complained of by the Registrar are restrictive practices, the Registrar can still, at the hearing of the enquiry, in the absence of any demand for particulars being made by the opposite party produce material before the Commission disclosing facts or features which go to establish the restrictive nature of the trade practice complained of and if that is done, the defect in the application would not be of much consequence. [1070 G H] In the instant case the burden of producing the necessary material that the impugned trade practices had the actual or probable effect of diminishing or destroying competition and were therefore restrictive trade practices was on the Registrar who made on application before the Commission. No material 1044 beyond reproducing the impugned clauses of the agreement and the words of the relevant sections having been produced, the application of the Registrar was contrary to the law laid down by this Court. Therefore, the Commission had no basis for making its order dated 14th May 1976. (e) The argument that the trade practices referred to in the offending clauses were per se restrictive trade practices and in any event, even if any supporting material was necessary, it was to be found in the admission of the appellant contained in its letter submitting the distributorship agreement for registration was without any force. When the issue before the court is whether a practice trade practice set out in an agreement has or may have the effect of preventing, distorting or restricting competition so as to constitute a restrictive trade practice, it is the actual or probable effect of the trade practice which has to be judged and there is no question of contradicting, varying, adding to or substracting from the terms of the agreement by admitting extraneous evidence. The various factors stated earlier are required to be taken into account only for the purpose of determining the actual or probable effect of the trade practice referred to in the particular clause. In such a case it is not right to shut out oral evidence to determine the actual or probable effect of the trade practice. [1078 D E] (b) It is not section 33(1) which invalidates a clause in an agreement relating to a trade practice but it is the restrictive nature of the trade practice as set out in section 2(o) which makes it void. [1079 E] (c) When a question of restrictive trade practice arises in relation to a clause in an agreement it is the trade practice in the clause that has to be examined for determining its actual or probable effect on competition. A clause in an agreement may proprio vigore impose a restraint. Where such restraint produces or is reasonably likely to produce the prohibited statutory effect it would clearly constitute a restrictive trade practice and the clause would be bad. [1108 D E] Tata Engineering & Locomotive Co. Ltd., Bombay,, vs The Registrar of the Restrictive Trade Agreement New Delhi, ; , applied. Observations in Hindustan Lever Ltd. vs M.R.T.P. ; ; disapproved. (d) In a case where a clause in agreement does not by itself impose any restraint but empowers the manufacturer or supplier to take some action which may be restrictive of competition, the mere possibility of action being taken, which may be restrictive of competition, would not in all cases affect the legality of the clause. What is required to be considered for determining the legality of the clause is whether there is a real probability that the presence of the clause itself would be likely to restrict competition. This is basically a question of market effect and cannot be determined by adopting a doctrainaire approach. Each case would have to be examined on its own facts from a business and commonsense point of view. It cannot, therefore, be said that in every case where the clause is theoretically capable of being so utilised as to unjustifiably restrict competition it would constitute a restrictive trade practice. [1081 E H] 1045 6(a). The order dated 14th May 1976 was clearly vitiated by an error of law apparent on the face of the record inasmuch as it contained only the final and operative order without giving any reasons in support of it. [1083 E] (b) The two conditions precedent before the Commission can pass a cease and desist order are (i) it must be found that the trade practice complained of is a restrictive trade practice and (ii) where such a finding is reached the Commission must be satisfied that none of the "gateways" pleaded in answer to the complaint exists. [1082 D E] (c) In the instant case the appellant did not appear before the Commission and no 'gateways" were pleaded and therefore the question of the Commission arriving at a satisfaction in regard to "gateways" did not arise. Nonetheless the Commission was required to be satisfied that the trade practices complained of were restrictive trade practices. The order dated 14th May 1976 did not contain any discussion showing that the Commission had reached the requisite satisfaction. It gave merely bald directions without any reasons. The ex parte character of the order did not absolve the Commission from the obligation to give reasons in support of the order because the appellant would have been entitled to prefer an appeal even against on ex parte order and in the absence of reasons, the appellant would not be in a position to attack the order in appeal. It is well established that every quasi judicial order must be supported by reasons. [1082 E H] N.M. Desai vs Textiles Ltd., C.A. 245 of 1970, dec. On 17th Dec., 1975; Simons Engineering Co. vs Union of India, [1976] Supp. SCR 489; followed.

Civil Appeal (NCE) No. 735 of 1982. From the Judgment and order dated the 22nd April, 1981 of the Punjab &; Haryana High Court in Election Petition No. 6 of 1980. K.L. Sharma, A.S. Sohal and MC Phingra for the Appellant. M. Yeerappa and Ashok Kumar Sharma for Respondent No. 1. 416 A.S. Pundir for Respondent No. 2. The Judgment of the Court was delivered by FAZAL ALI, J. This election appeal arises out of an election to the Baghapurana Constituency (District Faridkot) to the Punjab Legislative Assembly. The polling took place on May 31, 1980 and the counting was done on June 1, 1980. Tej Singh, respondent, secured 25694 votes whereas Avtar Singh (appellant) secured 25571 votes. There were three other candidates also in the field, viz., (1) Sathi Ruplal, (2) Bhagat Puran Singh, and (3) Jagdish Chander. Ruplal secured,. 1347 votes while Bhagat Puran Singh and Jagdish Chander secured 140 and 2856 votes. respectively. It appears that the margin between the votes secured by Tej Singh (respondent) and . Avtar Singh (appellant) was only 123. Avtar Singh filed an election petition in the Punjab & Haryana High Court against Tej Singh alleging that he was guilty of committing corrupt practices, detailed in the petition an(l in the Statement of facts. Ruplal supported the appellant but Bhagat Puran Singh and Jagdish did not put in any appearance despite service and, therefore, the proceedings. were taken ex parte against them. Tej Singh denied having indulged in any corrupt practice as alleged by Avtar Singh. It is not necessary for us to . go into further details because, in our opinion, the appeal must succeed on a short point. The main corrupt practice said to have been indulged in Tej Singh was that he had got circulated pamphlets and posters among the voters of the constituency wherein he had mentioned that Ruplal: had withdrawn his candidature and any vote given to him (Tej Singh) would be deemed to be a vote for Ruplal, and the said posters were printed not by Ruplal but at the instance of Tej Singh., on a perusal of the evidence both oral and documentary adduced by the parties, we are clearly of the opinion that the allegations of corrupt practices indulged in by Tej Singh have been clearly proved. The posters said. to have been printed and circulated are Annexures P 1 and P:2 which appear at page 42 of the second paper book and it may be necessary to extract certain portions thereof "Keeping in view the present conditions in the country it is imperative to defeat the dictatorial Congress in these elections. 417 Therefore, I fervently appeal to all the voters of Baghapurana Constituency to vote and elect Shri Tej. Singh, the joint . front candidate of the Akali Dal, because Shri Tej Singh is the only candidate who can defeat the Congress. In the end r submit that every vote. cast in favour of section Tej Singh will be deemed to have been cast in my favour," According to PW 4 (Roshanlal) in whose press the posters were printed, the order for the printing was placed by Darshan Singh and Mukhtiar Singh. The witness goes on to state that a few (lays before Tej Singh had come to his printing press and informed him that he (Tej Singh) would be sending some work for printing. Soon thereafter the witness was approached by Darshan Singh and Mukhtiar Singh. Roshan Lal also admitted that Tej Singh was known to him. The witness further proved exhibit P 5 and P 6 (vouchers) which were issued by his press and signed by him, and he stated that the payment was made to him by Darshan Singh and Mukhtiar Singh. The effect of the posters was to mislead the voters so as to make them believe that one of the candidates, viz.; Ruplal, had withdrawn and any vote given to Tej Singh would be considered as a vote given to Ruplal. In other words, the effect of the posters was that all the voters who would have voted for Ruplal would now cast their votes in favour of Tej Singh. As the margin of votes between the defeated and the returned candidates was very small, viz. 123 votes, if such a misrepresentation was not made, in all probability the votes would have gone to the appellant (Avtar Singh) and, therefore, the result of the election would have been materially altered. We find a good deal of substance in the argument of the appellant. Tej Singh (R.W. 2) has not disputed that the payment of the vouchers .(Ex. P 5 and P 6) was made by him and the vouchers were appended by him along with the return of expenses incurred during his election campaign, which was verified by him to be a true and correct statement. In these circumstances, therefore, the irresistible inference and inescapable conclusion that can be arrived at is that Tej Singh had actually paid for the posters which were printed at his instance and Rup Lal was not collected with the printing of the posters. Tej Singh further admitted that Bhum Raj was incharge of his election office at Moga and that Exs. P 5 and P 6 were taken by him from Bhum Raj. He further admits that whatever expenses were incurred by Bhum Raj were incurred on his behalf. In other words, Tej Singh. falsely represented to the voters that the posters were circulated by 418 Ruplal whereas the same was done by or with the consent of Tej Singh. Therefore, it is clear that Ex P 1 and P 2 which contained the appeal purporting to be of Ruplal were in fact printed at the instance of Tej Singh and Ruplal had no connection with the same. In these circumstances, we are satisfied that the appellant has , proved beyond reasonable doubt that Tej Singh had indulged in corrupt practices particularly when the printing of the posters by Tej. Singh has been clearly admitted by him, as indicated above. It is also clear to us that in view of the very narrow margin of votes (123) between Tej Singh and Avtar Singh, a strong presumption and possibility that the votes polled in favour of Rup Lal would have gone to Avtar Singh cannot be ruled out and that would have doubtless materially altered the result of the election. Leaving aside other grounds taken by the appellant which were in fact not pressed before us, the appellant is entitled to succeed on the ground of corrupt practices (referred to above) as contemplated by section 123(2) of the Act having been adopted by the first respondent (Tej. Singh) which have been fully proved. The result is that the appeal is allowed, the judgment of the High Court is quashed and the election of the first respondent (Tej Singh) is set aside. In the circumstances, we make no order as to costs. H.S.K. Appeal allowed.

The first respondent, Tej Singh, won in legislative assembly election defeating the appellant by 123 votes and also 3 other candidates including Ruplal. The appellant challenged the election of Tej Singh on the ground that he was guilty of committing corrupt practices. The main corrupt practice said to have been indulged in by Tej Singh was that he had got circulated pamphlets and posters among the voters of the constituency wherein he had mentioned that Ruplal had withdrawn his candidature and any vote given to him (Tej Singh) would be deemed to be a vote for Ruplal, and the said posters were printed not by Ruplal but at the instance of Tej Singh. Allowing the appeal, ^ HELD . The effect of the posters was to mislead the voters so as to make them believe that one of the candidates, viz., Ruplal, had withdrawn and any vote given to Tej Singh would be considered as a vote given to Ruplal. in other words the effect of the posters was that the voters who would have voted for Ruplal would now cast their votes in favour of Tej Singh. As the margin of votes between the defeated and the returned candidates was very small, viz., 123 votes, if such a misrepresentation was not made, in all probability the votes would have gone to the appellant (Avtar Singh) and, therefore, the result of the election would have been materially altered. On a perusal of the evidence both oral and documentary adduced by the parties and in the circumstances of the case, the irresistible inference and inescapable conclusion that can be arrived at is that Tej Singh had actually paid for the posters which were printed at his instance and Ruplal was not connected p with the printing of the posters. In these circumstances the appellant has proved beyond reasonable doubt that Tej Singh had indulged in corrupt practices particularly when the printing of the posters by Tej Singh has been clearly admitted by him. [417 D E; G; 418 B]

65 of 1958. Petition under Article 32 of the Constitution of India for enforcement of fundamental rights. AND CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 112 of 1958. 277 Appeal by special leave from the judgment and order dated February 28, 1958, of the Punjab High Court in Criminal Revision No. 145 of 1958. N. C. Chatterjee and Nanak Chand, for the petitioner and the appellant. H. N. Sanyal, Additional Solicitor General of India, H J. Umrigar, R. H. Dhebar and T. M. Sen, for the respondent in both the matters. November 4. The Judgment of Das, C. J., Bhagwati, Sinha and Wanchoo, JJ. was delivered by Sinha J., Subba Rao, J., delivered a separate judgment. SINHA, J. Petition Nos. 65 of 1958, under article 32 of the Constitution, on behalf of one Thomas Dana, and Criminal Appeal No. 112 of 1958, by special leave to appeal granted to one Leo Roy Frey (appellant), raise substantially the same question of some constitutional importance, and have, therefore, been heard together, and will be covered by this judgment. The main question for determination in these two cases, is whether there has been an infringement of the constitutional protection granted under article 20(2) of the Constitution. For the sake of brevity and convenience, we shall refer to Thomas Dana as the first petitioner, and Leo Roy Frey, as the second petitioner, in the course of this Judgment. The relevant facts are these : The first petitioner is a Cuban national. He came to India on a special Cuban passport No. 11822, dated November 16, 1954, issued by the Government of the Republic of Cuba. The second petitioner is a citizen of the United States of America, and holds a U.S.A. passport No. 45252, dated July 1, 1955. In May, 1957, both the petitioners were in Paris. There, the second petitioner purchased a motor car from an officer of the American Embassy. He is said to have sold that car to the first petitioner on May 14, 1957, and the same month, it was registered in the first petitioner 's name. The two petitioners sailed by the same steamer at the end of May. The car was also shipped by the same steamer. They reached Karachi on June 11, 1957, and from there, flew to Bombay. From June 11 to 19, 1957, they 278 stayed together in Hotel Ambassador in Bombay. The car was delivered to the first petitioner in Bombay on June 13, and on June 19, both of them flew from Bombay to Delhi. In Delhi also, they stayed together at Hotel Janpath. The first petitioner received the car at Delhi by rail on June 22, and the same night, the two petitioners left by the said car for Amritsar, where they reached after mid night, and stayed in Mrs. Bhandari 's Lodge. On the morning of June 23, they reached Attari Road Land Customs Station by the same car (No. CD On arrival at Attari, the petitioners presented themselves for completing customs formalities for crossing over to Pakistan. The Customs officers at Attari Road Land Customs Station, handed over to them the Baggage Declaration forms, to declare the articles that they had in their possession, including any goods which were subject to the Export Trade Control and/or Foreign Exchange Restrictions, and/or were dutiable. Both the petitioners completed the forms aforesaid, and handed those completed statements over to the Customs officers. The first petitioner declared the under noted articles: Indian currency Rs. 40 Pakistan currency Rs. 50 U. section Dollars $. 30.00 Gold ring I (valued at Rs. 100) Personal effects Valued at $ 100.00 Car Valued at Rs. 15,000 On suspicion, the Customs officers searched his baggage which was being carried in the car aforesaid. His person was also searched, and as a result of the search, the under noted articles which had not been declared by him, were recovered : Indian currency Rs. 900 Pakistan currency Rs. 250 U. section Dollars $ 1.00 Hong Kong Dollars $ 1100 Thailand currency 78 Pocket radio 1 Time piece 1 279 The second petitioner, in his statement, had declared the following articles: Indian currency Rs. 40 U. section Dollars $ 500.00 U. section Coins $ 1.23 Belgian coins BF 26.00 French coins BF 205.00 Italian coins L. 400.00 Wrist watch I Personal effects Rs. 1,00,000 On suspicion, the Customs staff searched the person of the second petitioner also. They recovered from him one pistol of 22 bore with 48 live cartridges of the same bore. As he could not produce a valid licence under the Indian law, the pistol and the cartridges were handed over to the police, for taking appropriate action under the Indian Arms Act. The car was thoroughly searched, and as a result of the intensive search and minute examination on June 30, 1957, a secret chamber above the petrol tank, behind the hind seat of the car, was discovered. The chamber was opened, and the following things which had not been declared by the petitioners, were recovered from inside the secret chamber: Indian currency Rs. 8,50,000 U. section Dollars $ 10,000.00 Empty tin containers 10(The containers bore (rectangular) marks to indicate that they were used for carrying gold bars) Mirror 1. besides other insignificant things. Under the Indian law, Indian currency over Rs. 50, Pakistan currency over Rs. 100 and any foreign currency, could not be exported out of India, without the permission of the Reserve Bank of India. The export of a pocket radio also required a valid licence under the Imports and Exports (Control) Act, 1947. The petitioners could not produce, on demand the requisite permission from the Reserve Bank of India. ' or the licence for the export of the pocket radio, or a permit for exporting 280 a time piece, as required by the . The car also was handed over to the police for necessary action. The offending articles, namely Indian currency Rs.8,50,900 Pakistan currency Rs.250 U. section Dollars $ 10,001.00 Hong Kong Dollar $.1.00 Thailand currency T.78.00 pocket radio, and the time piece, etc., were seized under section 178 of the . Both the petitioners were taken into custody for infringement of the law. On July 7, both the petitioners were called upon to show cause before the Collector of Central Excise and Land Customs, New Delhi, why a penalty should not be imposed upon them under section 167(8) of the , and why the seized articles aforesaid, should not be confiscated under section 167(8) and section 168 of the Act. Both the petitioners objected to making any statements in answer to the show cause notice, on the ground that the matter was. subjudice and any statement made by them, might prejudice them in their defence. But at the same time, the second petitioner disclaimed any connection with the car in which the two petitioners were travelling, and which had been seized. After some adjournments granted to the petitioners to avail themselves of the opportunity of showing cause, the Collector of Central Excise and Land Customs, New Delhi, passed orders on July 24, 1957. He came to the conclusion that the petitioners had planned to smuggle Indian and foreign currency out of India, in contravention of the law. They had been acting in concert with each other, and had, throughout the different stages of their journey from France to India, been acting together, and while leaving India for Pakistan, were travelling together by the same car, until they reached the Attari Road Land Customs Station, on their way to Pakistan. He directed that the different kinds of currency which had been seized, as aforesaid, from the possession of the petitioners, be " absolutely confiscated " for contravention of section 8(2) of the Foreign Exchange Regulation Act, 1947, read with sections 23 A 281 and 23 B of the Act. He also directed the confiscation of the car aforesaid, which could be redeemed on payment of a " redemption fine " of Rs. 50,000. He also ordered the confiscation of the pocket radio and the time piece and other articles seized, as aforesaid, under section 167(8) of the , read with section 5 of the Imports and Exports (Control) Act, 1947, and section 7 of the . He further imposed a personal penalty of Rs. 25,00,000 on each of the petitioners, under section 167(8) of the . After making further inquiry, on August 12, 1957, the Assistant Collector of Customs and Central Excise, Amritsar, under authority from the Chief Customs Officer, Delhi, filed a complaint against the petitioners and a third person, named Moshe Baruk of Bombay, (since acquitted), under section 23, read with section 8, of the Foreign Exchange Regulation Act, 1947, and section 167 (81) of the . The petition of complaint, after stating the facts stated above, charged the accused persons with offences of attempt ing to take out of India Indian and foreign currency, in contravention of the provisions of the Acts referred to above. After recording considerable oral and documentary evidence, the learned Additional District Magistrate, Amritsar, by his judgment dated November 13, 1957, convicted the petitioners, and sentenced them each to two years ' rigorous imprisonment under section 23, read with section 23 B, of the Foreign Exchange Regulation Act, six month 's rigorous imprisonment under section 120 B(2) of the Indian Penal Code, the sentences to run con currently. It is not necessary to set out the convictions and sentences in respect of the third accused Moshe, who was subsequently acquitted by the High Court of Punjab, in exercise of its revisional jurisdiction. The learned Magistrate also, perhaps, out of abundant caution, directed that " The entire amount of currency and foreign exchange and the car in which the currency had been smuggled as well as the sleeveless shirt exhibit P. 39 and belt exhibit P. 40 shall be 36 282 confiscated to Government ". This order of confiscation was passed by the criminal court, notwithstanding the fact, as already stated, that the Collector of Central Excise and Land Customs, New Delhi, had ordered the confiscation of the offending articles under section 167(8) of the and the other related Acts referred to above. On appeal by the convicted persons, the learned Additional Sessions Judge, Amritsar, by his judgment and order dated. December 13, 1957, dismissed the appeal after a very elaborate examination of the facts and circumstances brought out in the large volume of evidence adduced on behalf of the prosecution. It is riot necessary, for the purposes of these cases, to set out in detail the findings arrived at by the appellate court, or the evidence on which those conclusions were based. It is enough to state that both the courts of fact agreed in coming to the conclusion that the accused persons had entered into a conspiracy to smuggle contraband property out of this country. The petitioners moved the High Court of Judicature for the State of Punjab, separately, against their convictions and sentences passed by the courts below, as aforesaid. Both the revisional applications were dismissed summarily by the learned Chief Justice. By his order dated February 28, 1958, the learned Chief Justice refused to certify that the case was a fit one for appeal to this Court. The petitioners then moved this Court for, and obtained, special leave to appeal from the judgment and orders of the courts below, convicting and sentencing them, as stated above. They also moved this Court for writs of habeas corpus. The petition of the first petitioner for a writ of habeas carp= was admitted, and was numbered as petition No. 65 of 1958, and a rule issued. The writ petition on behalf of the second petitioner was dismissed in limited. All these orders were passed on April 28, 1958. Subsequently, the first petitioner moved this Court for revocation of the special leave granted to him, and for an early hearing of his writ petition No. 65 of 1958, as the points for consideration were common to both the cases. This 283 Court granted the prayers by its order dated May 13,1958. Before dealing with the arguments advanced on behalf of the petitioners, in order to complete the narrative of events leading up to the filing of the cases in this Court, it is necessary to state that the petitioners had moved this Court separately under article 32 of the Constitution, against their prosecution in the Magistrate 's court, after the aforesaid orders of confiscation and penalty, passed by the Collector of Customs. They prayed for a writ of certiorari and/or prohibition, and for quashing the proceedings. There was also a prayer for a writ in the nature of habeas corpus. On that occasion also, the protection afforded by article 20(2) of the Constitution, was pressed in aid of the petitioners ' writ applications. This Court, after hearing the parties, dismissed those writ petitions, holding that the charge against the petitioners included an offence under s.120B of the Indian Penal Code, which certainly was not one of the heads of charge against them before the Collector of Customs. This Court, therefore, without deciding the applicability of the provisions of article 20(2) of the Constitution, to the facts and circumstances of the present case, refused to quash the prosecution. The question whether article 20(2) of the Constitution, barred the pro secution of the petitioners under the provisions of the and the Foreign Exchange Regulation Act, was apparently left open for future determination, if and when the occasion arose. In view of the events that have happened since after the passing of the order of this Court, dated October 31, 1957, (reported in ; , it has now become necessary to determine that controversy. It was vehemently argued on behalf of the petitioners that the prosecution of the petitioners under the provisions of the Acts aforesaid, and their convictions and imposition of sentences by the courts below, infringe the protection against double jeopardy enshrined in article 20(2) of the Constitution, which is in these terms 284 " No person shall be prosecuted and punished, for the same offence more than once. " It is manifest that in order to bring the petitioners ' case within the prohibition of article 20(2), it must be shown that they had been " prosecuted " before the Collector of Customs, and " punished " by him for the " same offence " for which they have been convicted and punished as a result of the judgment and orders of the courts below, now impugned. If any one of these three essential conditions, is not fulfilled, that is to say, if it is not shown that the petitioners had been it prosecuted " before the Collector of Customs, or that they had been " punished " by him in the proceedings before him, resulting in the confiscation of the properties aforesaid, and the imposition of a heavy penalty of Rs. 25,00,000, each, or that they had been convicted and " sentenced" for the " same offence ", the petitioners will have failed to bring their case within the prohibition of article 20(2). It has been argued, in the first instance, on behalf of the petitioners that they had been " prosecuted " within the meaning of the article. On the other hand, the learned Additional Solicitor General has countered that argument by the contention that the previous adjudication by the Collector of Customs, was by an administrative body which has to act judicially, as held by this Court in F. N. Roy vs Collector of Customs(1), and reiterated in Leo Roy Frey vs Superintendent, District Jail, Amritsar (2); but the Collector was not a criminal court which could in law, be said to have tried the petitioner for an offence under the Indian Penal Code, or under the penal provisions of the other Acts mentioned above. It is, therefore, necessary first to consider whether the petitioners had really been prosecuted before the Collector of Customs, within the meaning of article 20(2). To " prosecute ", in the special sense of law, means, according to Webster 's Dictionary, " (a) to seek to obtain, enforce, or the like, by legal process; as, to prosecute a right or a claim in a court of law. (b) to pursue (a person) by legal proceedings for redress or (1) ; (2) ; 285 punishment; to proceed against judicially; espy., to accuse of some crime or breach of law, or to pursue for redress or punishment of a crime or violation of law, in due legal form before a legal tribunal; as, to prosecute a man for trespass, or for a riot." According to Wharton 's Law Lexicon, 14th edn., p. 810, " prosecution " means " a proceeding either by way of indictment or information,, in the criminal courts, in order to put an offender upon his trial. In all criminal prosecutions the King is nominally the prosecutor. " This very question was discussed by this Court in the case of Maqbool Hussain vs The State of Bombay (1), with of reference to the context in which the word " prosecution " occurred in article 20. In the course of the judgment, the following observations, which apply with full force to the present case, were made: ". . and the prosecution in this context would mean an initiation or starting of proceedings of a criminal nature before a court of law or a judicial tribunal in accordance with the procedure prescribed in the statute which creates the offence and regulates the procedure. " In that case, this Court discussed in detail the provisions of the , with particular reference to Chapter XVI, headed " Offences and Penalties ". After examining those provisions, this Court came to the following conclusion: "We are of the opinion that the Sea Customs Authorities are not a judicial tribunal and the adjudgeing of confiscation, increased rate of duty or penalty under the provisions of the do not constitute a judgment or order of a court or judicial tribunal necessary for the purpose of supporting a plea of double jeopardy." The learned counsel for the petitioners, did not categorically attack the correctness of that decision, but suggested that that case could be distinguished on the ground that in the present case, unlike the case then before this Court, a heavy penalty of Rs. 25,00,000 on each of the petitioners, was imposed by the Collector of Central Excise and Land Customs, (1) ; , 738, 739, 743. 286 besides ordering confiscation of properties and currency worth over 81 lacs. But that circumstance alone cannot be sufficient in law to distinguish the previous decision of this Court, which is otherwise directly in point. Simply because the Revenue Authorities took a very serious view of the smuggling activities of the petitioners, and imposed very heavy penalties under item 8 of the Schedule to section 167 of the , would not convert the Revenue Authorities into a court of law, if the Act did not contemplate their functioning as such. That the did not envisage the Chief Customs Officer or the other officers under him in the hierarchy of the Revenue Authorities under the Act, to function as a Court, is made absolutely clear by certain provisions of that Act. The most important of those is the new section 187A, which was inserted by the Sea Customs (Amendment) Act, (21 of 1955). That section is in these terms:" 187A. No Court shall take cognizance of any offence relating to Smuggling of goods punishable under item 81 of the Schedule to section 167, except upon complaint in writing, made by the Chief Customs officer or any other officer of Customs not lower in rank than an Assistant Collector of Customs authorized in this behalf by the Chief Customs officer. " This section makes it clear that the Chief Customs Officer or any other officer lower in rank than him, in the Customs department, is not a " court ", and that the offence punishable under item 81 of the Schedule to section 167, cannot be taken cognizance of by any court, except upon a complaint in writing, made, as prescribed in that section. This section, in our opinion, sets at rest the controversy, which has been raised in the past upon certain expressions, like " offences " and " penalties used in Chapter XVI. These words have been used in that Chapter in their generic sense and not in their specific sense under the penal law. When a proceeding by the Revenue Officers is meant, as is the case in most of the items in the Schedule to section 167, those officers have been empowered to deal with the offending articles by way of confiscation, or with the person 287 infringing those rules, by way of imposition of penalties in contradistinction to a sentence of imprisonment or fine or both. When a criminal prosecution and punishment of the criminal, in the sense of the Penal law, is intended, the section makes a specific reference to a trial by a Magistrate, a conviction by such Magistrate, and on such conviction, to imprisonment or to fine or both. In this connection, reference may be made to the penalties mentioned in the third column against items 72, 74, 75, 76, 76A, 76B, 77, 78 and 81, which illustrate the latter class of the penalty in column 3. The penalties mentioned in the third column of most of the items of the Schedule to section 167 of the Act, do not make any reference to a conviction by a Magistrate and punishment by him in terms of imprisonment or of fine or of both. For example, item 76C, which was inserted by the Sea Customs Amendment Act X of 1957, in the third column meant for penalties, has only this " such vessel shall be liable to confiscation and the master of such vessel shall be liable to a penalty not exceeding one thousand rupees". Item 76A, on the other hand, specifically mentioning conviction, imprisonment and fine, was inserted by XXI of 1955. Both the amending Acts, by which the aforesaid additional offences were created, and penalties prescribed, were enacted after the coming into force of the Constitution. The Legislature was, therefore, aware of the distinction made throughout the Schedule to section 167, between a proceeding before Revenue authorities by way of enforcing the preventive and penal provisions of the Schedule and a criminal trial before a Magistrate, with a view to punishing offenders under the provisions of the same section. It is, therefore, in the teeth of these provisions to contend that the imposition of a penalty by the Revenue officers in the hierarchy created by the Act, is the same thing as a punishment imposed by a criminal court by way of punishment for a criminal offence. This distinction has been very clearly brought out in the recent judgment of this Court in the case of Sewpujanrai Indrasanrai Ltd. vs The Collector of 288 Customs(2). In that case, though the question of double jeopardy under article 20(2) of the Constitution, had not been raised, this Court has pointed out the difference in the nature of proceedings against offending articles and offending persons. A proceeding under the and the corresponding provisions of the Foreign Exchange Regulation Act, in respect of goods which have been the subject matter of the proceeding, has been held to be of the nature of a proceeding in rem whereas, a proceeding against a person concerned in smuggling goods within the purview of those Acts, is a proceeding in personam, resulting in the imposition of a punishment by way of imprisonment or fine on him, where the offender is known. In the former case, the offender may not have been known, but still the offending goods seized may be confiscated as a result of the proceedings in rem. That case was not concerned with the further question whether, besides the liability to the penalty as contemplated by section 23(1)(a), namely, a penalty not exceeding three times the value of the foreign exchange in respect of which the contravention had taken place, the person contravening the provisions of the Foreign Exchange Regulation Act, 1947, upon conviction by a court, is also punishable with imprisonment which section 23(1)(b) prescribes, namely, imprisonment for a term which may extend to 2 years, or with fine, or with both. The decision of this Court (supra) is also an authority for the proposition that in imposing confiscation and penalty under the , the Collector acts judicially. But that is not the same thing as holding that the Authority under section 167 of the Act, functions as a Judicial Tribunal or as a Court. An Administra. five Tribunal, like the Collector and other officers in the hierarchy, may have to act judicially in the sense of having to consider evidence and hear arguments in an informal way, but the Act does not contemplate that in so doing, it is functioning as a court. As already pointed out, section 187A, which was inserted by the Amending Act of 1955 (21 of 1955), brings out, in bold relief, the legal position that the Chief Customs (I) ; 289 Officer or any other officer of Customs, does not function as a court or as a Judicial Tribunal. All criminal offences are offences, but all offences in the sense of infringement of a law, are not criminal offences. Likewise, the other expressions have been used in their generic sense and not as they are understood in the Indian Penal Code or other laws relating to criminal offences. Section 167 speaks of offences mentioned in the first column in the Schedule, and the third column in that Schedule lays down the penalties in respect of each of the contravention of the rules or of the sections in the Act. There are as many as 81 entries in the Schedule to section 167, besides those added later, but each one of those 81 and more entries, though an offence, being an act infringing certain provisions of the section is and rules under the Act, is not a criminal offence. Out of the more than 81 entries in the Schedule to section 167, it is only about a dozen entries, which contemplate prosecution in the criminal sense, the remaining entries contemplate penalties other than punishments for a criminal offence. The provisions of Chapter XVII of the Act, headed " Procedure relating to offences, Appeals, etc.", also make it clear that the hierarchy of the Customs Officers under the Act have not been empowered to try criminal offences. They have been only given limited powers of search. Similarly, they have been given limited powers to summon persons to give evidence or to produce documents. It is true that the Customs Authorities have been empowered to start proceedings in respect of suspected infringements of the provisions of the Act, and to impose penalties upon persons concerned with those infringements, or to order confiscation of goods or property which are found to have been the subjectmatter of the infringements, but when a trial on a charge of a criminal offence is intended under any one of the entries of the Schedule aforesaid, it is only the Magistrate having jurisdiction, who is empowered to impose a sentence of imprisonment or fine or both. it was also suggested in the course of the argument that the use of a particular phraseology in the Act, 37 290 should not stand in the way of looking at the substance of the matter. It may be that the Act has drawn a distinction between confiscation of property and goods, and imposition of penalties on persons concerned with the infringement, on the one hand, and the imposition of a sentence of imprisonment or fine or both by a Magistrate, on the other hand; but, it is further contended, the Customs Authorities, who impose a penalty or who order confiscation of goods of very large value, are in substance imposing punishments within the meaning of the criminal law. In this connection, our particular attention was drawn to para. 24 of the order dated July 24, 1957, passed by the Collector of Central Excise and Land Customs, New Delhi, which is in these terms: " 24. Having regard to all the circumstances of the case, I find that both Sarvshri Thomas Dana and Leo Roy Frey are equally guilty of the offence. They attempted to smuggle Indian and foreign currency out of India. I hold both of them as the persons concerned in the offence committed under section 167(8) of the . The foregoing facts prove beyond doubt that the offence was the result of the most deliberate and calculated conspiracy to smuggle this huge amount of currency out of the country. The offenders, therefore, deserve deterrent punishment. 1, therefore, impose a personal penalty of Rs. 25,00,000 (Rupees twenty five lakhs only) each on Shri Thomas Dana and Shri Leo Roy Frey which should be paid within two months from the date of this order or such extended period as the adjudicating officer may allow. " The expressions " equally guilty of the offence the offence was the result of the most deliberate and calculated conspiracy to smuggle ", and " deserve deterrent punishment ", have been greatly emphasized in aid of the argument that the Collector had really intended to punish the petitioners in respect of the " offence", and found them ',guilty". It is true that these expressions are commonly used in judgments given in criminal trials, but the same argument can be used 291 against the petitioners by saying that mere nomenclature does not matter. What really matters is whether there has been a " prosecution ". It is true that the petitioners were dealt with by the Collector of Central Excise and Land Customs, for the" offence " of smuggling; were found " guilty ", and a deterrent " punishment " was imposed upon them, but as he had not been vested with the powers of a Magistrate or a criminal court, his proceedings against the petitioners were in the nature of Revenue proceedings, with a view to detecting the infringement of the provisions of the , and imposing penalties when it was found that they had been guilty of those infringements. Those penalties, the Collector had been empowered to impose in order not only to prevent a recurrence of such infringements, but also to recoup the loss of revenue resulting from such infringe ments. A person may be guilty of certain acts which expose him to a criminal prosecution for a criminal offence, to a penalty under the law intended to collect the maximum revenue under the Taxing law, and/or, at the same time, make him liable to damages in torts. For example, an assessee under the Income tax law, may have submitted a false return with a view to defrauding the Revenue. His fraud being detected, the Taxing Officer may realise from him an amount which may be some multiple of the amount of tax sought to be evaded. But the fact that he has been subjected to such a penalty by the Taxing Authorities, may not avail him against a criminal prosecution for the offence of having submitted a return containing false statements to his knowledge. Similarly, a person may use defamatory language against another person who may recover damages in tort against the maker of such a defamatory statement. But the fact that a decree for damages has been passed against him by the civil court, would not stand in the way of his being prosecuted for defamation. In such cases, the law does not allow him the plea of double jeopardy. That this is the law in America also, is borne out by the following quotation from the " Constitution 292 of the United States of America " revised and annotated in 1952 by Edward section Corwin at p. 840: "A plea of former jeopardy must be upon a prosecution for the same identical offense. The test of identity of offenses is whether the same evidence is required to sustain them; if not, the fact that both charges relate to one transaction does not make a single offense where two are defined by the statutes. Where a person is convicted of a crime which includes several incidents, a second trial for one of those incidents puts him twice in jeopardy. Congress may impose both criminal and civil sanctions with respect to the same act or omission, and may separate a conspiracy to commit a substantive offense from the commission of the offense and affix to each a different penalty. A conviction for the conspiracy may be had though the subsequent offense was not completed. Separate convictions under different counts charging a monopolization and a conspiracy to monopolize trade, in an indictment under the Sherman Antitrust Act, do not amount to double jeopardy. ". A forfeiture proceeding for defrauding the Government of a tax on alcohol diverted to beverage uses is a proceeding in rem, rather than a punishment for a criminal offense, and may be prosecuted after a conviction of conspiracy to violate the statute imposing the tax. " To the same effect is the following placitum tinder article 240 in Vol. 22 of 'Corpus Juris Secundum ', headed " Offenses and Proceedings in Which Former Jeopardy Is a Defense ": " The doctrine applies to criminal prosecution only and generally to misdemeanours as well as felonies. A former conviction or acquittal does not ordinarily preclude subsequent in rem proceedings, civil actions to recover statutory penalties or exemplary damages, or proceedings to abate a nuisance. " On behalf of the petitioners, their learned counsel placed reliance upon the two American decisions in Morgan vs Zevine (1) and United States of America vs (1) ; ; 293 Anthony La Franca (,). The former decision is really against the contention of double jeopardy, raised in this case. That case lays down that persons who steal postage stamps and postal funds from a post office of the United States, after having committed burglary, and thus, having effected their entry into the premises, committed two distinct offences which may be separately charged and punished under the United States ' Penal Code. Two separate convictions and Sentences as for two distinct offences in those circumstances were not held to be within double jeopardy within the meaning of the United States ' Constitutional 5th Amendment. The reason given for the decision against the contention of double jeopardy was that though the offences had been committed in the same transaction, they had been constituted separate and distinct offences by the United States ' Penal Code articles 190 and 192. In the latter case, the plea of double jeopardy was given effect to because the special statutes, infringements of which formed the subjectmatter of the controversy, namely, for unlawfully selling intoxicating liquor, had made a specific provision that if any act is a violation of earlier laws in regard to the manufacture and taxation of and traffic in intoxicating liquor, and also of the National Prohibition Act, a conviction for such act or offence under one statute, shall be a bar to prosecution therefor under the other. It is clear, therefore, that where there is a specific statutory provision creating a bar to a second prosecution, the court is bound to give effect to the plea of double jeopardy. It is not necessary to refer to certain decisions of the English courts, relied upon by the learned counsel for the petitioners, because those cases had reference to the question whether certain orders passed by certain courts were or were not made in a criminal case or matter within the meaning of the statutes then under consideration before the court. Those are observations made with reference to the terms of those statutes, and are of no assistance in the present controversy. The learned counsel for the petitioners was not able to produce before us any (1) ; ; 294 authority in support of the proposition that once a person has been dealt with by the Revenue Authorities for an infringement of the law against smuggling, he cannot also be prosecuted in a criminal court for a criminal offence. In view of these considerations, and particularly in view of the decision of this Court in the case of Maqbool Hussain vs The State of Bombay (1), there is no escape from the conclusion that the proceedings before the Sea Customs Authorities under section 167(8) were not " prosecution " within the meaning of article 20 (2) of the Constitution. In that view of the matter, it is not necessary to pronounce upon the other points which were argued at the Bar, namely, whether there was a " punishment " and whether " the same offence " was involved in the proceedings before the Revenue Authorities and the criminal court. Unless all the three essential conditions laid down in el. (2) of article 20, are fulfilled, the protection does not become effective. The prohibition against double jeopardy would not become operative if any one of those elements is wanting. It remains to consider a short point raised particularly on behalf of the second petitioner (Leo Roy Frey). It was argued that the letter exhibit P. DD/2, admittedly written by him to his father in German, had not been specifically put to him with a view to eliciting his explanation as to the circumstances and the sense in which it had been written. The learned Magistrate in the trial court put the following question (No. 20) to him : " It is in evidence that exhibit P. FF/I is the translation of the letter exhibit P. DD/2. What have you to say about it The answer given by the accused to this question was " The translation of exhibit P. FF/I is mostly correct except for few variations which could have been due to misinterpretation of handwriting ". It is clear from the question and answer quoted above, that the learned Magistrate did afford an opportunity to this petitioner to explain the circumstances appearing in the (1) ; , 738, 739, 743 295 evidence against him with particular reference to the letter. If the court had persisted in putting more questions with reference to that letter, perhaps, it may have been argued that the examination under section 342 of the Code of Criminal Procedure, was in the nature of a cross examination of the accused person, which is not permitted. In our opinion, there is no substance in the contention that the petitioner had not been properly examined under section 342, Criminal Procedure Code, to explain the circumstances appearing in the evidence against him. It follows from what has been said above, that there is no merit either in the appeal or in the petition. They are, accordingly dismissed. SUBBA RAO, J. I have had the advantage of reading the judgment prepared by Sinha J., but I cannot persuade myself to agree with my learned brother. The facts are fully stated in the judgment of my learned brother and therefore it would suffice if I restate briefly the facts strictly relevant to the question raised. On June 11, 1957, the petitioner arrived at Bombay, later came to Delhi and from there he travelled to Amritsar by car in company with Mr. Leo Roy Frey. On June 23, 1957, he reached Attari Road Land Customs Station and was arrested under section 173 of the (Act VIII of 1878) on suspicion of having committed an offence thereunder. He was served with a notice by the Collector of Central Excise and Land Customs, New Delhi, on July 7, 1957, to show cause why penalty should not be imposed on him under section 167(8) of the (hereinafter called the Act) and section 7(2) of the , and why the goods should not be confiscated. By order dated July 24, 1957, the petitioner was adjudged guilty under section 167(8) of the Act and currency of the value of over 9 lakhs, car worth Rs. 50,000, and other things were confiscated, and he was punished with personal penalty of Rs. 25,00,000. The petitioner was again prosecuted on the same facts before the Additional District Magistrate, Amritsar, on charges under section 167(81) of the Act and sections 23 and 23B of the 296 Foreign Exchange Regulation Act. 'He was convicted on charges under section 23 read with section 23B of the Foreign Exchange Regulation Act, section 167(81) of the Act and section 120B of the Indian Penal Code and sentenced to imprisonments of 2 years, 6 months and 6 months respectively by 'the Additional District Magistrate, Amritsar. The conviction and sentences were confirmed on appeal by the Additional Sessions Judge, and the revision filed in the High Court was dismissed. The learned counsel for the petitioner contends that the Courts in punishing him violated the fundamental right conferred on him under article 20(2) of the Constitution as he hag been prosecuted and punished for the same offence by the Collector of Customs. The learned Additional Solicitor General counters this argument by stating that the petitioner was not prosecuted earlier before a judicial tribunal and punished by such tribunal, and, in any view, the prosecution was not for the same offence with which he was charged before the Magistrate, and therefore this case does not fall within the Constitutional protection given under article 20(2). Before addressing myself to the arguments advanced it would be convenient at this stage to steer clear of two decisions of this Court. The first is Maqbool Hussain vs The State of Bombay (1). There proceedings had been taken by the Sea Customs Authorities under section 167(8) of the Act and an order for confiscation of goods had been passed. The person concerned was subsequently prosecuted before the Presidency Magistrate for an offence under section 23 of the Foreign Exchange Regulation Act in respect of the same act. This Court held that the proceeding before the Sea Customs Authorities was not a prosecution and the order for confiscation was not a punishment inflicted by a Court or a judicial tribunal within the meaning of article 20(2) of the Constitution and the prosecution was not barred. The important factor to be noticed in that case is that the Sea Customs Authorities did not proceed against the person concerned but only confiscated the goods found in his possession. At page (1) ; 297 742 Bhagwati J. says " Confiscation is no doubt one of the penalties which the Customs Authorities can impose. But that is more in the nature of proceedings in rem than proceedings in personal, the object being to confiscate the offending goods which have been dealt with contrary to the provisions of the law. . Though the observations in the judgment cover a wider field. I shall deal with them at a later stage the decision could be sustained on the simple ground that the previous proceedings were not against the person concerned and therefore he was not prosecuted and punished for the same offence for which he was subsequently proceeded against in the Criminal Court. The second decision is Sewpujanrai Indrasanrai Ltd. vs The Collector of Customs (1). There also the Customs Authorities confiscated the goods found in the possession of the appellant. Under section 8(3) of the Foreign Exchange Act, a restriction imposed by notification made under that section is deemed to have been imposed under section 19 of the , and all the provisions of the shall have effect accordingly. But the said deeming provision is subject to an important qualification contained in the words ' without prejudice to the provisions of section 23 of the former Act '. It was argued that by reason of the provisions of section 8(3) of the Foreign Exchange Regulations Act, the appellant should have been proceeded against under section 23 of that Act and it was not open to the Customs Authorities to take action against the offender under section 167(8) of the . This Court negatived that contention accepting the principle that confiscation of the goods under section 167(8) of the was an action in rem and not a proceeding in personal. Das, J., who delivered the judgment of the Court made the following observations in repelling the said argument: The penalty provided is that the goods shall be liable to confiscation. There is a further provision in the penalty column that any person concerned in any such offence shall be liable to a penalty not exceeding (1) 298 three times the value of the goods etc. The point to note is that so far as the confiscation of the goods is concerned, it is a proceeding in rem and the penalty is enforced against the goods whether the offender is known or not known; the order of confiscation under section 182, , operates directly upon the status of the property, and under section 184 transfers an absolute title to Government. Therefore, in a case where the Customs authorities can proceed only against the goods, there can be no question of applying section 23 of the Foreign Exchange Act and even on the construction put forward on behalf of the appellant company as respects section 8(3), the remedy under the against the smuggled goods cannot be barred. " This decision also indicates that the confiscation of the goods is an action in rem and is not a proceeding in personam. A combined effect of the aforesaid two decisions may be stated thus: Section 167(8) of the Act provides for the following two kinds of penalties when contraband goods are imported into or exported from India: (1) such goods shall be liable to confiscation; (2) any person concerned in any such offence shall be liable to a penalty. If the authority concerned makes an. order of confiscation it is only a proceeding in rem and the penalty is enforced against the goods. On the other hand, if it imposes a penalty against the person concerned, it is a proceeding against the person and he is punished for committing the offence. It follows that in the case of confiscation there is no prosecution against the person or imposition of a penalty on him. If the premises be correct, the subsequent prosecution of the person con cerned cannot be affected by the principle of double jeopardy, as he was not prosecuted or punished in the earlier proceedings. But the question that arises in this case is whether, when there was a proceeding in personam and a penalty was imposed upon the person concerned under section 167(8) of the Act, he could be prosecuted and punished in regard to the same act before another tribunal. On the facts of this case it is manifest that the 299 petitioner was prosecuted before the Magistrate for the same act in respect of which a penalty of Rs. 25,00,000 had been imposed on him by the Collector of Customs under section 167(8) of the Act. The question is whether the prosecution and punishment of the petitioner infringed his fundamental right under article 20(2) of the Constitution. It reads: " No person shall be prosecuted and punished for the same offence more than once. " The words of this Article are clear and unambiguous and their plain meaning is that there cannot be a second prosecution where the accused has been prosecuted and punished for the same offence previously. The clause uses the three words of well known connotation: (1) Prosecution; (2) punishment; and (3) offence. The word offence ' is defined in section 3(38) of the , to mean any act or omission made punishable by any law for the time being in force. Under section 4 of the Code of Criminal Procedure, it means any act or omission made punishable by any law for the time being in force. An offence is therefore an act committed against law or omitted where the law requires it. Punishment is the penalty for the transgression of law. The terms 'punishment ' and 'penalty ' are frequently used as synonyms of each other; and, indeed under cl. (I)of article 20 of the Constitution the word penalty issued in the sense of punishment. The punishments to which offenders are liable under the provisions of the Indian Penal Code are: (1) death; (2) imprisonment for life; (3) imprisonment, which is of two descriptions, viz., (1) rigorous, i.e., with hard labour; and (ii) simple; (4) for feature of property ; and (6) fine. The word 'prosecuted ' is comprehensive enough to take in a prosecution before an authority other than a magisterial or a criminal Court. Having regard to the historical background, a restricted meaning has been placed upon it by this Court in Maqbool Hussain vs The State of Bombay (1). Bhagwati, J., in delivering the Judgment of the Court observed at page 742 thus: (I) ; 300 Even though the customs officers are invested with the power of adjudging confiscation, increased rates of duty or penalty, the highest penalty which can be inflicted is Rs. 1,000. Confiscation is no doubt one of the penalties which the Customs Authorities can impose, but that is more in the nature of proceedings in rem than proceedings in personam, the object being to confiscate the offending goods which have been dealt with contrary to the provisions of the law and in respect of the confiscation also an option is given to the owner of the goods to pay in lieu of confiscation such fine as the officer thinks fit. All this is for the enforcement of the levy of and safeguarding the recovery of the sea customs duties. There is no procedure prescribed to be followed by the Customs Officer in the matter of such adjudication and the proceedings before the Customs Officers are not assimilated in any manner to the provisions of the Civil or the Criminal Procedure Code. The Customs Officers are not required to act judicially on legal evidence tendered on oath and they are not authorised to administer oath to any witness. The appeals, if any, lie before the Chief Customs Authority which is the Central Board of Revenue and the power of revision is given to the Central Government which certainly is not a judicial authority. In the matter of the enforcement of the payment of penalty or increased rate of duty also the Customs Officer can only proceed against other goods of the party in the possession of the Customs Authorities. But if such penalty or increased rate of duty cannot be realised therefrom the only thing which he can do is to notify the matter to the appropriate Magistrate who is the only person empowered to enforce payment as if such penalty or increased rate of duty had been a fine inflicted by himself. The process of recovery can be issued only by the Magistrate and not by the Customs Authority. All these provisions go to show that far from being authorities bound by any rules of evidence or procedure established by law and invested with power to enforce their own judgments or orders the Sea Customs Authorities are merely constituted administrative machinery for the purpose of 301 adjudging confiscation, increased rates of duty and Penalty prescribed in the Act. " This Court therefore accepted the view that the earlier prosecution should have been before a Court of law or a judicial Tribunal, and that the Sea Customs Authorities when they entertained proceedings for the confiscation of gold did not act as a judicial Tribunal. In my view the said decision unduly restricted the scope of the comprehensive terms in which the fundamental right is couched. If res integral I would be inclined to hold that the prosecution before the Customs Authority for an offence created by the Act is prosecution within the meaning of Article 20, even though the Customs Authority is not a judicial Tribunal. But I am bound by the decision of this Court in so far as it held that the earlier prosecution should have been held before a Court of law or a judicial Tribunal, and that the Customs Authority adjudging confiscation was not such a tribunal. But the said observations must be confined to the adjudication of confiscation by the Customs Authority. The outstanding question therefore is whether a Collector of Customs in adjudging on the question whether any person concerned in the importation or exportation of the prohibited goods committed an offence, and in imposing a penalty on him, acts as a judicial Tribunal. There is a current of judicial opinion in support of the contention that under a particular Act an authority may act as a judicial Tribunal in discharge of certain duties and as an executive or administrative authority in discharge of other duties. The question whether a particular authority in dis charging specified duties is a judicial tribunal or not falls to be decided on the facts of each case, having regard to the well settled characteristics of a judicial tribunal. In 'Words and Phrases ', permanent edition, Vol. 23, Judicial Tribunal " has been defined thus: " It is a body who has the power and whose duty it is to ascertain and determine the rights and enforce the relative duties of contending parties. " In I The Encyclopedia of Words and Phrases Legal Maxims ', 302 by Sanagan and Drynan, much to the same effect it is stated thus: " A 'judicial tribunal ' is one that dispenses justice, is concerned with legal rights and liabilities, which means rights and liabilities conferred or imposed by I law '. These legal rights and liabilities are treated by a judicial tribunal as preexisting; such a tribunal professes merely to ascertain and give effect to them; it investigates the facts by hearing the 'evidence ' (as tested by long settled rules), and it investigates the law by consulting precedents. A judicial tribunal looks for some law to guide it. An administrative tribunal, within its province, is a law unto itself. " In Cooper vs Wilson (1) the characteristics of a judicial decision are given as follows, at page 340: " A true judicial decision presupposes an existing dispute between two or more parties, and then involves four requisites: (1) The presentation (not necessarily orally) of their case by the parties to the dispute; (2) If the dispute between them is a question of fact, the ascertainment of the fact by means of evidence adduced by the parties to the dispute and often with the assistance of argument by or on behalf of the parties on the evidence ; (3) If the dispute be. tween them is a question of law, the submission of legal argument by the parties; and (4) A decision which disposes of the whole matter by a finding upon the facts in dispute and application of the law of the land to the facts so found, including where required a ruling upon any disputed question of law. " This passage has been approved by this Court in Maqbool Hussain 's Case (2). In Venkataraman vs The Union of India (3) this Court considered the question whether article 20 protects an Officer against whom an enquiry was held under Public Servants Enquiries Act, 1850 (Act XXXVII of 1850) from being prosecuted again on the same facts before a Criminal (Court. This Court held on a consideration of the provisions of that Act that the appellant was neither prosecuted nor punished (1) , 340, 341 (2) [1953] S C.R. 730. (3) ; 303 for the same offence before a judicial tribunal. But in coming to that conclusion the following criteria were applied to ascertain the character of the proceedings: (1) duty to investigate an offence and impose a punishment; (ii) prosecution must be in reference to the law which creates the offence and punishment must also be in accordance with what the law proscribes; (iii) there must be the trappings of a judicial tribunal and (iv) the decision must have both finality and authoritativeness, which are the essential tests of a judicial pronouncement. Having regard to the aforesaid tests, I shall now proceed to consider the applicability of Article 20 to the present prosecution. A fundamental right is transcendental in nature and it controls both the legislative and the executive acts. Article 13 explicitly prohibits the State from making any law which takes away or abridges any fundamental right and declares the law to the extent of the contravention as void. The law therefore must be carefully scrutinized to ascertain whether a fundamental right is infringed. It is not the form but the substance that matters. If the legislature in effect constitutes a judicial tribunal, but calls it ail authority, the tribunal does not become any the less a judicial tribunal. Therefore the correct approach is first to ascertain with exactitude the content and scope of the fundamental right and then to scrutinize the provisions of the Act to decide whether in effect and substance, though not in form, the said right is violated or curtailed. Otherwise the fundamental right will be lost or unduly restricted in our adherence to the form to the exclusion of the content. The question therefore is whether the petitioner was in effect and in substance prosecuted and punished by a judicial tribunal for the same offence for which he is now prosecuted. Section 167 of the Act opens with the following words: " The offences mentioned in the first column of the following schedule shall be punishable to the extent mentioned in the third column of the same with reference to such offences respectively." Chapter XVI of the Act deals with 'Offences and 304 Penalties '. Section 167 provides for offences and penalties in a tabular form. The first column gives the particulars of the offences; the second column gives the sections of the Act to which the offence has reference ; and the third column gives the penalties in respect of the relevant offences. Apart from the fact that the statute itself, in clear terms, describes the acts detailed in the first column of section 167 as offences against particular laws, the acts described therein clearly fall within the definition of 'offences ' in the and the Indian Penal Code. There cannot therefore be the slightest doubt in this case that the contravention of any of the provisions of the Act mentioned in section 167 is an offence. The next question is whether the penalties prescribed for the various offences in the third column of section 167 are punishments within the meaning of article 20 of the Constitution. A glance at the third column shows that the penalties mentioned therein include direction of payment of money, confiscation of goods and the receptacles wherein they are found, and imprisonment. The penalties may be imposed by the Customs Officers or Magistrates as the case may be. Where a person is convicted by a Magistrate and sentenced to imprisonment or payment of fine or where a penalty is imposed by a Customs Officer, in either case, the punishment is described as penalty in the third column of section 167. Section 167 clearly indicates that penalty is punishment inflicted by law for its violation for doing or failing to do something that is the duty of the party to do. Section 167 therefore defines a criminal act and fixes a penaltv or punishment for that act. The two words penalty ' and 'punishment ' are interchangeable and they convey the same idea. The more difficult question is whether a Customs Authority, when it functions under section 167 of the Act, is a judicial tribunal. It is not, and cannot be, disputed that a magistrate, who convicts and punishes a person for the infringement of some of the provisions of section 167 of the Act, is a judicial tribunal. Is it reasonable to assume that when another authority adjudges on similar offences under the same section, it is 305 functioning in a different capacity ? Section 182 defines the jurisdiction of the Customs Authority in respect of the offences mentioned in section 167 of the Act. It says: " In every case, except the cases mentioned in Section 167, Nos. 26, 72 and 74 to 76, both inclusive, in which under this Act, anything is liable to confiscation or to increased rates of duty or any person is liable to a penalty, such confiscation, increased rate of duty or penalty may be adjudged (a) without limit, by a Deputy Commissioner or Deputy Collector of Customs, or a Customs collector; (b) up to confiscation of goods not exceeding two hundred and fifty rupees in value, and imposition of penalty or increased duty, not exceeding one hundred rupees, by an Assistant Commissioner or Assistant Collector of Customs ; (c) up to confiscation of goods not exceeding fifty rupees in value, and imposition of penalty or increased duty not exceeding ten rupees, by such other subordinate officers of Customs as the Chief Customs authority may, from time to time, empower in that behalf in virtue of their office : ". Section 187 : " All offences against this Act, other than those cognizable under section 182 by officers of Customs, may be tried summarily by a Magistrate. " It is therefore clear that some offences under section 167 are cognizable by the Customs Authorities and some offences by Magistrates. Section 171A, inserted by the Sea Customs (Amendment) Act, 1955 (Act 21 of 1955), confers power on officers of Customs to summon any person to give evidence and produce documents; it reads: " 171A. (1) Any officer of Customs duly employed in the prevention of smuggling shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making in connection with the smuggling of any goods. 39 306 (2) A summons to produce documents or other things may be for the production of certain specified documents or things or for the production of all documents or things of a certain description in the possession or under the control of the person summoned. (3) All persons so summoned shall be bound to attend either in person or by an authorised agent, as such officer may direct;. and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and to produce such documents and other things as may be required: Provided that the exemption under section 132 of the Code of Civil Procedure, 1908, shall be applicable to any requisition for attendance under this section. (4) Every such inquiry as aforesaid shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code. " Under this section, the Customs Authority, who makes an inquiry, is empowered in connection with that inquiry, to summon persons to give evidence and produce documents and the witnesses summoned are under a statutory duty to speak the truth. The cir cumstance that under el. (4) of the said section, an inquiry is deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code, viz., for the purpose of punishment for giving false evidence and for contempt of Court, does not detract from the judicial characteristics conferred upon the authority by the other clauses of the section. Clause (4) must have been enacted only by way of abundant caution to guard against the contention that the authority is not a Court ; and to bring in the inquiry made by the Customs Officer in regard to administrative matters other than those conferred upon him under section 167, within the fold of section 193 and section 228 of the Indian Penal Code. Sections 188, 189, 190A and 191 provide a hierarchy of tribunals for deciding appeals and revisions. The Chief Customs authority May, suo motu or otherwise exercise revisional powers in regard to the orders of the subordinate officers. Power is also conferred on Government to 307 inter in matters in regard whereof no appeal is provided for. It is true that no rules have been framed providing the manner in which the Customs collector should proceed with the inquiry in regard to offences committed under the Act of which he is authorized to take cognizance. But the record discloses that a procedure analogous to that obtaining in criminal Courts is followed in regard to the said offences. Charges are framed, evidence is taken, advocates are heard, decision is given on the question whether an offence is committed or not; and, if the offence is held to have been committed, the person concerned is con victed and a penalty is imposed. When the statute empowers the officer to take cognizance of an offence, to adjudge upon the question whether the offence is committed or not and to impose a penalty for the offence, it is implied in the statute that the judicial procedure is to be followed. The entire scheme of the Act as disclosed in the leaves no doubt in my mind that so far as offences mentioned in section 167 are concerned, the Customs Authority has to function as a Judicial Tribunal. I have therefore no hesitation to hold that the Customs Officers in so far as they are adjudicating upon the offences mentioned under section 167 of the Act are functioning as judicial tribunals. If the other view, viz., that an authority is not a judicial tribunal, be accepted, it will lead to an anomalous position, which could not have been contemplated by the legislature. To illustrate, a Customs Collector may impose a penalty of Rs. 25,00,000 as in this case on his finding that a person has committed an offence under section 167 (8) of the Act, and the accused can be prosecuted again for the same offence before a Magistrate. On the other hand, if the prosecution is first laid before a Magistrate for an offence under section 167(81) and he is convicted and sentenced to a fine of a few rupees, he cannot be prosecuted and punished again before a Magistrate. Unless the provisions of the Constitution are clear, a construction which will lead to such an anomalous position should not be accepted, for, by accepting such a construction, the right itself is defeated. 308 It is then contended that the offence for which the petitioner was prosecuted by the Magistrate is different from that in regard whereof he was sentenced by the Customs Officer. The petitioner was convicted under section 167(8) of the Act, whereas he was subsequently prosecuted and punished under section 167(81) of the Act. Section 167(81) of the Act reads as follows : "If any person knowingly, and with intent to defraud the Government of any duty payable thereon, or to evade any prohibition or restriction for the time being in force under or by virtue of this Act with respect thereto acquires possession of, or is in any way concerned in carrying, removing, depositing, harboring, keeping or concealing or in any manner dealing with any goods which have been unlawfully removed from a warehouse or which are chargeable with a duty which has not been paid or with respect to the importation or exportation of which any prohibition or restriction is for the time being in force as aforesaid ; or if any person is in relation to any goods in any way knowingly concerned in any fraudulent evasion or attempt at evasion of any duty chargeable thereon or of any such prohibition or restriction as aforesaid or of any provision of this Act applicable to those goods, such person shall on conviction before a Magistrate be liable to imprisonment for any term not exceeding two years, or to fine, or to both. " It is contended that under section 167(81) knowledge or intention to defraud is an ingredient of the offence, whereas under section 167(8) they are not part of the offence, that offences under sections 167(8) and 167(81) are different, and that therefore the prosecution and punishment for an offence under the former sub section would not be a bar for prosecution and punishment under the latter sub section. It is not necessary to consider the decisions cited in support of the contention that for the application of the principle of double ' jeopardy the offence for which a person is prosecuted and punished in a second proceeding should be the same in respect of which he has been prosecuted and 309 punished at an earlier stage. That fact is self evident from article 20(2) of the Constitution itself. If so, the only question is whether the petitioner was prosecuted before the Magistrate for the same offence in regard to which he was prosecuted before the Collector of customs. It is true that the phraseology in section 167(8) is more comprehensive than that in sub section (81) in that the offences under the former sub section take in acts committed without knowledge or intent to defraud. But it does not exclude from its scope acts committed with knowledge or with intent to defraud. For, a person who imports or exports prohibited goods with intent to defraud is also concerned in the offence of such importation or exportation. The question of identity of offence is one to be determined on the facts and circumstances of a particular case. One of the tests is whether an offence for which a person was earlier prosecuted takes in all the ingredients of the offence, the subject matter of the second prosecution. The fact that he might have been prosecuted for a lesser offence is not a material circumstance. The question therefore is not whether under section 167(8) a person can be found guilty of an offence even if there is no fraudulent intent or knowledge, but the question is whether the petitioner was prosecuted and punished on the same facts in regard to which he was subsequently prosecuted and punished before the Magistrate. The record discloses that the petitioner was prosecuted before the Customs Authority as well as the Magistrate on the same facts, viz., that he, along with others, attempted to take out of India, Indian currency (as detailed in paragraphs 14 and 17 of the complaint of the Assistant Collector of Customs and Central Excise, Amritsar), in contravention of the law prohibiting such export. It is not the case that the knowledge on the part of the petitioner of his illegal act is excluded from the first prosecution and included in the subsequent one. In the circumstances, I cannot hold that the offence for which he was prosecuted by the Magistrate is different from that in regard to which he was prosecuted and punished by the Customs Authority. In this view, the prosecution and punishment by the Magistrate 310 directly infringes the fundamental right under article 20 (2) of the Constitution. No attempt has been made by the learned Solicitor General to contend that the offence under sections 23 and 23B of the Foreign Exchange Regulations Act for which the petitioner is convicted is an offence different from that for which he was prosecuted earlier under section 167(8) of the Act. It is conceded that the decision in the writ petition covers the decision in the connected appeal also. In the result, the writ petition and the appeal are allowed. ORDER In view of the opinion of the majority, the Petition and the Appeal are dismissed.

The two petitioners were apprehended while attempting to smuggle a huge amount of Indian and foreign currency and other contraband goods out of India and the Collector of Central Excise and Land Customs passed orders confiscating the seized goods and imposing heavy personal penalties on both of them under 275 section 167(8) of the Sea Customs Act. On a subsequent complaint made by the Customs Authorities on the same facts, the petitioners were convicted and sentenced by the Additional District Magistrate to various terms of imprisonment under section 23, read with section 23B, of the Foreign Exchange Regulation Act, section i67(8I) of the Sea Customs Act and section 120B of the Indian Penal Code. The Additional Sessions judge in appeal affirmed the said orders of conviction and sentences and the High Court refused to interfere in revision. It was contended on behalf of the petitioners, who had, at an earlier stage, made an unsuccessful attempt to move this Court under article 32 and have the prosecutions quashed, that the orders of conviction and sentences passed on them by the Courts below infringed the constitutional protection against double jeopardy afforded by article 20(2) Of the Constitution. Held, (Per Das, C. J., Bhagwati, B. P. Sinha and Wanchoo, Jj., Subba Rao, J., dissenting) that the contention was without substance and must be negatived. In order to sustain a plea of double jeopardy and to avail of the protection of article 20(2) of the Constitution it was incumbent to show that (1) there was a previous prosecution, (2) a punishment and (3) that for the same offence, and unless all the three conditions were fulfilled the Article did not come into operation. The word 'prosecution ' as used in that Article contemplated a proceeding of a criminal nature either before a court or a judicial tribunal. Maqbool Hussain vs The State of Bombay, ; , relied on. The insertion of section 187A into the Sea Customs Act by the amending Act of 1955, left no scope for doubt that the hierarchy of Authorities under that Act functioned not as Courts or judicial tribunals but as administrative bodies, even though in recording evidence or hearing arguments they acted judicially. The words " offences " and " penalties " used by the Act could not have the same meaning as in Criminal Law and a penalty or confiscation ordered under section 167(8) of the Act could not be a punishment such as is inflicted by a Criminal Court for a criminal offence. Sewpujanrai Indrasanrai Ltd. vs The Collector of Customs and others; , , referred to. Nor were the Customs Authorities invested with the powers of a Criminal Court under the Schedule to section 167 and the procedure laid down by Ch. XVII of the Act, and any orders passed by them either in rem or in personal, by way of confiscation of the goods or imposition of penalties on the person, could only be in the nature of administrative ones made in the interest of revenue and could not bar a criminal prosecution. Morgan vs Devine, ; and United States of America vs Anthony La Franca, ; , considered. 276 The proceedings against the petitioners before the Collector of Customs under section 167(8) of the Sea Customs Act could. not therefore, be a prosecution within the meaning of article 20(2) Of the Constitution and the petitioners were not put to double jeopardy. Per Subba Rao, J. The prosecution of 'the petitioners before the Magistrate and the punishment inflicted on them directly infringed article 20(2) of the Constitution. There can be no inconsistency in an authority under an Act functioning in an administrative capacity in respect of certain specified duties while it acts as a judicial tribunal in respect of others, and the question as to which of them it discharges in a judicial capacity has to be decided on the facts of each case and in the light of well settled characteristics of a judicial tribunal. Cooper vs Wilson, and Venkataraman vs Union of India; , , relied on. Although this Court has held that the Sea Customs Autho rities in adjudging confiscation do not function as judicial tribunals but as mere administrative authorities, the question as to whether imposing personal penalties they act as judicial tribunals still remains open. Maqbool Hussain vs The State. of Bombay, ; and Sewpujanrai Indrasanrai Ltd. vs The Collector of Customs, ; , explained. An examination of the entire scheme of the Sea Customs Act leaves no manner of doubt that the Customs Authorities act as judicial tribunals so far as offences under section 167 Of the Act are concerned. The word 'prosecuted ' used in article 20(2) of the Constitution is comprehensive enough to include a prosecution before an authority other than a Magistrate or a Criminal Court, and the offences described in section 167 Of the Sea Customs Act are offences within the meaning of the General Clauses Act and the Indian Penal Code and the penalties prescribed therefor are nothing but punishments inflicted for those offences either by the Customs Authorities or the Magistrate. The question of the identity of an offence has to be deter mined on the facts of each particular case and the real test is whether the previous prosecution and punishment were based on the same facts on which rested the subsequent prosecution and punishments

200 of 1955. 439 Petition under Article 32 of the Constitution of India for the enforcement of Fundamental Rights. section K. Kapoor and Ganpat Rai, for the petitioner. G. C. Kasliwal and D. Gupta, for the respondents. St 1961. March 17. , J. Section 4 of the Rajasthan Land Reforms and Resumption of Jagirs Act, 1952 (which will be hereafter referred to as the Rajasthan Act), enacts: "4. All lands liable to pay land revenue. Not withstanding anything contained in any existing jagir law or any other law, all jagir lands shall, as from the commencement of this Act, be liable to payment of land revenue to the Government; and as from such commencement, the liability of (a) all Jagirdars to pay tribute to the Government under any existing Jagir Law shall cease, and The expression 'tribute ', the liability to pay which was thus extinguished from and after the commencement of the Act, was defined in section 2(r) of that Act in the following terms: 'Tribute ' in relation to a jagir, includes rekh, rakam, chatund, chakri or other charge of a similar nature; and" In the absence of the above provision the petitioner would have been under an obligation to pay to the Government 'hukamnama ' under section 190 of the Marwar Land Revenue Act, 1949 (referred to hereafter as the Marwar Act) which codified the earlier law irk that State. The short question that is raised by this petition under article 32 of the Constitution is whether the liability of the petitioner to pay 'hukamnama, the nature of which we shall explain later, has been extinguished by the provision of the Rajasthan Act above extracted which, as would be seen, turns on whether such a payment could be comprehended within the expression 'tribute '. Relying on section 4(a) of the Rajasthan Act, the petitioner resists the demand of he same made by the respondent State and impugns the legality of the claim. 440 It is necessary to set out a few facts and certain provisions of the Marwar Act to appreciate the matter in controversy. Thakur Nathu Singh, the Jagirdar of Ras a "Scheduled Jagir" under the Marwar Act died in July 1946 leaving the petitioner, Thakur Bahadur Singh as his next heir. "Scheduled Jagirs" are, under the Marwar Act, impartable and their line of devolution was prescribed by section 182 thereof which ran: "Succession shall be governed in the case of Scheduled Jagirs by the rule of primogeniture. " The succession, " however, was not automatic but had to be recognised by the Government and a renewal granted in favour of the successor before his title to the jagir was perfected. Sections 183 185 of the Marwar Act which are of relevance in this connection, ran: "section 183. All grants of Scheduled Jagirs are only for the life time of the holder, and no person is entitled to succeed to such jagir until his succession is recognized and the grant is renewed in his favour by His Highness. section 184. Subject always to His Highness pleasure, the grant of a Scheduled Jagir, on the death of the holder, shall be renewed in favour of the person entitled to succeed him in accordance with the provisions of this Act. section 185(1). A Scheduled Jagir, on the death of the holder, and until the renewal of the grant in favour of his successor, shall be resumed by the Government and taken under direct management. Provided that the claimant to succession shall, in the, absence of special orders of His Highness be permitted to retain possession pending orders of His Highness regarding the claim, if he is a direct lineal descendant in the male line of the last holder. (2). . . . (3). . . . (4). . . . The title of the petitioner to succeed to the jagir as the next heir of his father was recognised and a renewal granted in his favour by the Government by an 441 order dated March 18, 1952. Section 190 of the Marwar Act imposes an obligation on a succeeding heir whose title has been recognised and to whom a renewal of the jagir has been granted, to make certain payments. This section runs: "section 190(1). When succession to a Scheduled Jagir is recognised by His Highness and renewal of the grant ordered, the person in whose favour the grant is ordered to be renewed shall execute within one month of the communication to him of the orders, a 'Kabuliyat ' for payment of Hukamnama and other fees payable in accordance with sub sections (2) and (3). (2). . . . . . (3). . . . . . The amount payable by the petitioner, according to the scale of fees prescribed under the Act, came to Rs. 30,000 and the respondent State demanded this sum. Before, however, the date of the order according recognition and granting renewal in favour of the petitioner, the Rajasthan Act of 1952 had been passed and having received the assent of the President on February 13, 1952, came into force on publication in the Gazette on February 16, 1952, and under section 4 of this Act, whose terms have been set out already, the liability on the part of Jagirdars to pay "all tribute" to Government got extinguished. The question debated in this petition is whether the liability to pay 'hukamnama ' or other fees under section 190 of the Marwar Act is a 'tribute ' from the payment of which the Jagirdars are thus relieved. It is common ground, subject to a submission of the learned Advocate General for the respondent State, which we shall refer to a little later, that if the 'hukamnama ' which the petitioner has been required to pay to the Government was a 'tribute ' within section 4 of the Rajasthan Act, it would cease to be exigible and cannot be enforced from and after February 16, 1952, because it is not in dispute that the petitioner is a Jagirdar and 'hukamnama ' regarding which the demand has been made on him "is a demand which 56 442 is due under an existing Jagir law", viz., the Marwar Act. The precise question which now arises for our decision came up before the High Court of Rajasthan in 1955 on facts exactly parallel with the case before us and a Bench of that Court held in a case reported as Thakur Narpat Singh vs The State of Rajasthan (1) that 'hukamnama ' and the fees payable under section 190 of the Marwar Act were not within,%. 4(a) of the Rajasthan Act. Consequently, the arguments on either side before us took the form of either supporting the reasoning contained in that judgment or in disputing its correctness. It therefore becomes necessary for us to examine the reasoning upon which the learned Judges of the Rajasthan High Court reached a conclusion adverse to the contention of the petitioner now before us. Before doing so, however, it is necessary to advert to a point sought to be raised by the learned Advocate General for Rajasthan for the respondent which would cut across all this debate. He sought to urge that section 4 of the Rajasthan Act was not retrospective and that as the recognition of the title of the Petitioner and the renewal of the grant of the jagir in his favour related back to July 1946 when the succession opened, the Rajasthan Act could not be invoked to put an end to the obligation which had accrued years before it came into force notwithstanding that the orders of recognition and renewal were passed only in March 1952. In the circumstances of this case, however, and also regard being had to the point not having been raised in the answer filed by the State to the writ petition, we did not consider it proper to permit the Advocate General to pursue the submission. We will now proceed to consider the correctness or otherwise of the conclusion reached by the learned Judges of the Rajasthan High Court in the case just now referred to. Stated briefly, the ratio of their decision was as follows: Under the law governing jagir grants and the tenure on which they are held in Marwar, a 'hukamnama ' is a levy chargeable for recognition of the succession of a person to a Scheduled Jagir (1) I.L.R. 443 of his deceased ancestor. The specific dues, Rekh and Chakri enumerated in the definition of section 2(r) of the Rajasthan Act are those levied in Marwar, the former being 8 per cent of the gross rental value of an estate and the second the cash equivalent of the obligation to supply horsemen or camelsowars or foot soldier, , by Jagirdars dependent upon the value of the estate. Similar payments are known as 'Rakam ' in the State of Bikaner and 'Chatund ' in the State of Udaipur, these States being the components of the State of Rajasthan. All these dues, Rekh, Rakam, Chatund and Chakri were annual and recurring payments made by Jagirdars. When therefore the definition in section 2(r) concluded with the words other charges of a similar nature ', it must necessarily be held that these general words should be confined to charges which were also recurring. The 'hukamnama ' and other dues payable under section 190 of the Marwar Act, however, were not recurring payments and were in consideration of the ruler exercising his discretion to recognise a succession and grant renewal of the jagir in favour of the next heir. In other words, these were payments due to the ruler in recognition of his sovereign right to the ownership of the land which was statutorily embodied in sections 169 170 of the Marwar Act which ran: "section 169. The ownership of all land vests in His Highness and all jagirs, bhoms, sansans, dolis or similar proprietary interests are held and shall be deemed to be held as grant, from His Highness. and section 170. All grants shall be held by the original grantee or his successors during His Highness ' pleasure. " The payments under section 190 of the Act therefore were not of the same category as the payments enumerated in section 2 (r) of the Rajasthan Act and hence could not be comprehended within the meaning of the expression 'tribute '. The same matter was also put in a slightly different form by saying that whereas the payments enumerated in the definition of 'tribute ' were those made by Jagirdars as such, i.e., after they got into possession, a 'hukamnama ' was a payment made not by a 144 Jagirdar but by a person who was merely a claimant to a jagir and as a condition of his title to it being recognised. The correctness of this reasoning was challenged before us by learned Counsel for the petitioner who urged that the learned Judges of the High Court did not accord sufficient consideration to the fact that the definition in section 2(r) was an 'inclusive ' definition and could, therefore, include others not falling within the enumerated types. In this connection, learned Counsel relied upon the meaning of the word 'tribute ' in Webster 's New International Dictionary and in the Oxford English Dictionary, Volume IT. In the former, one of the meanings given is: "A tax, impost, duty, rental, or the like, paid by a subject vassal to his sovereign or lord". and in the latter: "A tax or impost paid by one prince or state to another in acknowledgement of submission or as the price of peace, security and protection". He therefore urged that the expression 'tribute ' in section 2(r) would include those which fell within the ordinary dictionary meaning of the term , in addition to those specifically enumerated therein. If the word were understood in its ordinary dictionary meaning without any statutory definition, learned Counsel added, the incidence of recurrence would not be a necessary attribute of the concept of a 'tribute '. The submission was that the learned Judges of the Rajasthan High court erred in confining the meaning of 'tribute ' to the enumerated payments and "other charges of a similar nature", without taking into account the fact that this was an inclusive and not an exhaustive or even an illustrative definition. We see force in these submissions and it must also be said that the argument in this form and the construction of section 2(r) from this aspect has not been considered by the learned Judges of the Rajasthan High Court. We have, therefore, to examine whether the submission can be sustained. Our task is, to discover whether the expression 'tribute ', as it occurs in the Rajasthan Act, includes payments of the type now in 445 controversy. Apart from the usual express saving contained in the opening words of section 2 that the definitions set out are to be applied "unless the context otherwise requires", the meaning of the word 'tribute ' has to be ascertained from a consideration of the various provisions of the Act and not merely from section 4(a) of the Act read in the light of the definition. It would be seen that in ultimate analysis the question of construction posed for our decision may be thus set out: The four specific enumerated dues in the definition in section 2(r) are recurring annual payments. "Other charges of a like nature" which follows this enumeration, would obviously partake of that character and they would also have to be similarly annual. and recurring. This was the basis of the decision of the learned Judges of the Rajasthan High Court and the correctness of this view up to this point cannot be and has not, been disputed. The definition, however, being "inclusive" and not "meaning" these, it is said it must "include" something else. It must, however, be added that the possibility cannot be ignored that the definition was made inclusive out of caution and with a view not to exclude any payment which jagirdars were making or were under an obligation to make, to Government, seeing that the Act was to apply to an integrated State composed of several States in which there might have been great diversity of nomenclature in designating these payments, and so as not to exclude any payment which would squarely fall within the category regarding which provision was made in the operative portion of the enactment. Learned Counsel for the petitioner urges that every payment by a Jagirdar to the Government, whatever be the nature of the payment and whatever be the consideration therefore, is included in the expression. If the expression 'tribute ' occurred only in section 4(a) in the operative provisions of the Act, there might be much to be said for the view presented by learned Counsel for the petitioner and for invoking its dictionary meaning to ascertain the content of that word. The Act, however, has used the word 'tribute ' in several other sections and in different contexts and we 446 consider that the precise ambit of this expression of rather indefinite import as contemplated or intended by the framers of this Act has necessarily to be gathered from the entirety of the provisions. The ,word tribute ' was apparently no equivalent in the local languages, so that it was obviously used as a convenient and compendious expression to designate certain imposts which were levied by the rulers of the several States which integrated to form the State of Rajasthan. Further, this circumstance should obviously induce some caution before the dictionary meaning of the English word tribute ' is treated as expressing the intention of the framers of the Rajasthan Act. We shall therefore proceed to set out and consider the other provisions of the enactment in which the word is used to discover the intentions of the framers of the Act as to what they meant by it. Before proceeding further, we should add, that as under section 4(a) of the Rajasthan Act, the payment of Land Revenue computed under it is to be the substitute for the 'tribute ' previously demandable or paid, the manner in which the land revenue under the Act is determined would be relevant as throwing light on for what it is substituted. We have already set out the terms of section 4 of the Rajasthan Act under which in substitution of the payment of 'tribute ' all lands are made liable to the payment of land revenue. The amount of land revenue payable by a Jagirdar is fixed by section 8 and this is based in part on the annual rental income which could be derived from the jagir computed in the manner set out in sections 6 and 7. For our present purpose section 8 is of importance, because the amount of 'tribute ' payable forms one of the factors for determining the amount of 'land revenue payable '. Section 8 enacts: "section 8. Amount of land revenue payable. The land revenue payable by a Jagirdar in respect of his jagir lands shall be (a) for the agricultural year 1951 52, an amount equal to the amount of tribute payable by him to the Government for that year; (b) for the agricultural year 1952 53 and each of the six succeeding agricultural years 447 (i) in the case of jagir lands the annual rental income of which as determined under section 6 or section 7, exceeds five hundred rupees but does not exceed five thousand rupees, one sixteenth of such rental income or the amount of the tribute which was payable by the Jagirdar for the agricultural year 195051, whichever is greater; (ii) in the case of jagir lands the rental income of which as determined under section 6 or section 7 exceeds five thousand rupees, one eighth of such annual rental income or the amount of the tribute which was payable by the Jagirdar for the agricultural year 1950 51, whichever is greater. Explanation. For the purpose of this clause the amount of tribute payable by a Jagirdar to the Government for the agricultural year 1950 51 shall be deemed to be the amount of such tribute less the amount of any tribute payable to such jagirdar by any person to whom the Jagirdar may have granted any of his jagir lands; (c) for the agricultural year 1959 60 and subsequent years, one fourth of the rental income from the jagir lands as determined under sections 6 and 7; Provided that (i) where no tribute was payable by the Jagirdar before the commencement of the Act or where the whole of the tribute has been paid before such commencement, the jagir lands shall be deemed to be exempt from the payment of land revenue for the agricultural year 1951 52; (ii) where the jagirdar has paid a part of the tribute before the commencement of this Acts, the land revenue payable by him for the agricultural year 1951 52 shall be an amount equal 'to the balance of the tribute which would have been payable by him for that year if this Act had not been passed; and (iii) the Government may direct that for the purposes of clauses (b) and (e) of this section, the rental income of any jagir land for all or any of the agricultural year mentioned in those clauses shall be 448 determined or redetermined on the basis of the rental income which actually accrued to the jagirdar from the jagir in such year or years, as the case may be." It will be seen that this section speaks of tribute payable for the, year specified 1951 52 or 1950 51and it is obvious that the tribute here referred to could only be the recurring payments like those enumerated in the definition in section 2(r) to which could be attributed the character of being a payment for a specific year. Besides, it will be, seen that under section 8(b) the land revenue payable for the seven agricultural years 1952 53 to 1959 60 is to be either a fraction of the annual rental income or "the amount of the tribute which would be payable by the Jagirdar for the year 1950 51 whichever is greater". Surely it would be most unreasonable to hold that if during the year 1950 51 a Jagirdar made a payment of 'hukamnama ' this ad hoe payment should be treated as part of the tribute for that year and the Jagirdar made liable to pay sums including 'hukamnama ' for the seven years 1952 53 to 1959 60. The main object of the Rajasthan Act was to effect resumption of jagir lands by eliminating intermediaries and the 'tribute ' payable by the erstwhile Jagirdars enters into the calculation for computing the compensation payable to them on such resumption. The second schedule to the Act sets out the principles governing the compensation payable to Jagirdars. It may broadly be stated that the compensation payable, to Jagirdars is determined on the basis of a multiple of the net income of the basic year as determined under r. 1 of the second schedule. The net income is computed by first determining the gross income of the Jagirdars under various heads including the rental income and deducting therefrom certain outgoing which included the "tribute ' Rule 4 of schedule 2 provides: "4. Net income. The net income of a Jagirdar for the basic year shall be calculated by deducting from his gross income therefore, (i) the amount that the Jagirdar would have 449 been liable to pay to the Government as tribute, and, in the case of grantee from a Jagirdar, to the Jagirdar in respect of such grant, for the basic year if this Act had not been passed; (ii) any sums of recurring nature due to the Government from the Jagirdar, or in the case of grantee from the Jagirdar to the Jagirdar, for the basic year on any account other than land revenue,; and . . . . . . It is impossible to conceive that the framers of the Act would have intended that the payment of a 'hukamnama ' in the basic year should have a permanent effect on the quantum of compensation payable to a Jagirdar under the provisions above extracted. In addition to the compensation for the presumption of the jagir under the provisions of the Rajasthan Act, the Jagirdars are entitled to be paid a rehabilitation grant under Chapter VIII A of the Act. The method of calculation of this amount is set out in Schedule III of the Act and for this purpose Jagirdars are classified on a graduated scale into various categories depending on the gross income from the estate. This is followed by a proviso in these terms: "Provided that for the purpose of calculating the rehabilitation grant payable to a Jagirdar falling in this category such marginal adjustments shall be made as will ensure that a Jagirdar having a higher net income does not get an amount by way of rehabilitation grant which is less than that payable to a Jagirdar having a lower net income. Provided further that, in comparing Jagirdars with different amounts of income for the purpose of the first proviso to this sub clause, (i) Jagirdars who were riot paying tribute shall be compared only with Jagirdars who were not paying tribute, (ii) Jagirdars who were paying tribute shall be compared only with Jagirdars who were paying ' tribute, (iii) Jagirdars who were paying any sums of 57 450 recurring nature referred to in sub clause (ii) of clause 4 of the Second Schedule shall be compared only with Jagirdars Who were paying such sums, and (iv) in respect of Jagirdars who were paying tribute or any sums of recurring nature referred to in sub. clause (ii) of clause 4 of the Second Schedule at different scales, the Government shall prescribe a percentage of the gross income at which the amount of tribute or such sums in respect of each Jagirdar shall be calculated irrespective of whether the amount of tribute or such sums of recurring nature that were being actually paid by him. " What we have said earlier about the construction of the word 'tribute ' in r. 4 of Schedule II would equally apply to the construction of that expression as it occurs in the provision extracted from Schedule III. Notwithstanding therefore that the definition in section 2(r) of the Rajasthan Act is 'inclusive ' it appears to us from an examination of the meaning of the word as used in the operative provisions of the Act, that it could refer only to recurring payments which could be said to be attributable to particular years and not to the type of ad hoc payments of which hukamnamas and patta fees are examples. It might very well be that the words at the end of section 2(r) "other charges of a similar nature" might not exhaust all the payments which a 'tribute ' connotes but still if the rest of the Act indicates unmistakably the intention, that the word 'tribute ' has been used in a special sense taking into account the law and usage obtaining in the locality, these cannot be disregarded in favour of a wider construction based merely upon the dictionary meaning of the expression. We need hardly add that the provision to which we have adverted should suffice to show that the construction put forward by learned Counsel for the petitioner would work to the grave disadvantage of the Jagirdars and would cause them deprivation which could never have been intended. We have thus reached the same conclusion as the learned Judges of the Rajasthan High Court, though on a different line of reasoning. 451 On the construction which we have adopted of the expression 'tribute ' in section 4 of the Rajasthan Act the petitioner can have no legal or legitimate grievance against the enforcement of the payment made against him. The petition fails and is dismissed. There will st, be no order as to costs. Petition dismissed.

The title of the petitioner to succeed to the jagir as the next heir of his father who died in July 1946 was recognised and a renewal granted in his favour by the Government by an order dated March 8, 1952. Section 190 of the Marwar Land Revenue Act, imposed an obligation on the succeeding heir to 1949, execute within one month of the communication to him of the order a kabuliyat for payment of hukammama and other fees according to the scale of fees prescribed under the Act, and the amount payable by the petitioner thereby which came to Rs. 30,000 was demanded by the respondent State. In the meantime, the Rajasthan Land Reforms and Resumption of jagirs Act, 1952, had been passed and came into force on February 16, 1952, and section 4(a) of this Act enacted that "the liability of all jagirdars to pay tribute to the Government under any existing jagir Law shall cease", while "tribute" was defined by section 2(r) in the following terms . "Tribute ' in relation to a jagir, includes rekh, rakam, chatund, chakri or other charge of a similar nature". The petitioner challenged the legality of the demand on the ground that the liability to pay hukamnama was a tribute within the meaning of that word in section 4(a). Held, that notwithstanding that the definition of the ex pression "tribute" in section 2(r) of the Rajasthan Land Reforms and Resumption of jagirs Act, 1952, is inclusive, on an examination of the meaning of the word as used in the operative provisions of the Act, it could refer only to recurring payments which could be said to be attributable to particular years and not to the type of ad hoc payments of which hukamnama was an example. Accordingly, the liability to pay hukamnama is not compre hended within the expression "tribute" under section 4(a), and, consequently, was not extinguished by the provisions of the Rajasthan Act of 1952. Thakur Narpat Sinah vs The State of Rajasthan, I.L.R. , referred to.

Appeal No. 4075 of 1991. From the Judgment and Order dated 3.12.1990 of the Calcutta High Court in Second Appeal No. 1063 of 1982. D.N. Mukherjee, N.R. Choudhary and Ranjan Mukherjee for the Appellant. Manoj Swarup, Ms. Lalita Kohli, Ms. Sarla Chandra and S.K. Mitra for the Respondent. The Judgment of the Court was delivered by THOMMEN, J. Leave granted. This appeal by the plaintiff in a suit for eviction arises from the judgment of the Calcutta High Court dismiss ing his appeal against the judgment of the 1st appellate court allowing the defendant 's appeal against the decree of the trial court. The trial court found that the plaintiff was entitled to evict the tenant on the ground of reasonable requirement specified under Section 13(1)(ff) of the West Bengal Premises Tenancy Act, 1956 (the "Act"). Reversing that finding, the 1st appellate court held that the plain tiff was not the owner of the premises and was, therefore, not entitled to seek eviction. This finding was affirmed by the High Court by the judgment under appeal. The only question which arises in the present appeal is whether or not the plaintiff is the owner of the suit prem ises for the purpose of instituting a suit for eviction in terms of the Act. The dispute concerns a flat allotted to the plaintiff by the Kadamtola Housing Co operative Society, Calcutta (the "Society"). This was one of the 16 flats held by the Society under a 99 years lease granted by the Calcut ta Metropolitan Development Authority under a registered document. The Society in turn allotted these flats to its members, among whom the appellant is one, by a sub lease for a term of 99 years. The appellant, being an allottee, is thus a sub lessee under the Society with a heritable and transferable title. The 248 appellant subsequently inducted the respondent into the flat on a rent of Rs. 110 per month. On 29.10.1976, a notice of termination of the tenancy was issued by the appellant to the respondent calling upon him to vacate the premises not later than December, 1976. Since the respondent did not vacate the premises, title suit No. 165/77 was instituted by the appellant on the ground of default of payment of rent as specified under Section 13(1)(i) of the Act and also on the ground of reasonable requirement for occupation as provided under Section 13(1)(ff). The trial court found that the premises were reasonably required by the appellant, and the suit was accordingly decreed on the ground mentioned under Section 13(1)(ff). It was, however, held that the tenant was not in arrears of rent. It is important to note that the defendant in his writ ten statement did not question the plaintiff 's title or claim of ownership. No issue regarding ownership had been framed as it was never questioned by the defendant at any stage of the proceedings in the trial court. On appeal by the defendant, the 1st appellate court examined the plain tiffs title and held that, since he was only a lessee under a 99 years lease granted by the Society, which itself was a lessee holding a 99 years lease from the Metropolitan Devel opment Authority, he was not an 'owner ' within the meaning of Section 13(1)(ff) of the Act and was, therefore, not entitled to seek eviction under that provision. Accordingly, the merits of the plaintiffs claim were not examined by the 1st appellate court. This finding was affirmed by the High Court, and, like the 1st appellate court, it also did not consider the merits of the plaintiffs case for eviction. Section 13 protects a tenant from eviction except on one or more of the grounds specified thereunder. That Section, in so far as it is material, reads: "S.(13)(1) Notwithstanding anything to the contrary in any other law, no order or decree for the recovery of possession of any premises shall be made by any Court in favour of the landlord against a tenant except on one or more of the following grounds, namely: (fl ') Subject to the provisions of sub section (3A), where the premises are reasonably re quired by the landlord for his own occupation if he is the owner or for the occupation of any person for whose benefit the premises are held and the landlord or such person is not in possession of any reasonably suitable accommo dation. 249 On the facts of this case, the provision of sub section 3(A) of this Section are not attracted. Clause (ff) is attracted as a ground for eviction if the landlord is in a position to prove that the premises are required by him for his own occupation, if he is the owner of the premises, or for the occupation of any person for whose benefit the premises are held, and the landlord or such other person, as the case may be, is not in possession of any reasonably suitable accommodation. The 'landlord ' is defined by Section 2 in wide terms so as to include any person who, for the time being, is enti tled to receive or but for a special contract, would be entitled to receive the rent of any premises, whether or not on his own account: ' This definition shows that even if the rent is received by a person not on his own account but on account of any other person, such as his principal or his ward, he is for the purpose of the Act a landlord. Any such person is, therefore, entitled to institute a suit for eviction. But to attract clause (fl '), the requirement of the landlord must be either for his own occupation, if he is the owner, or, for the occupation of any person for whose benefit the premises are held. This clause is, of course, available only when no reasonably suitable accommodation is available to the person for whose occupation the eviction is sought. It is submitted on behalf of the respondent that the appellant, although a 'landlord ' within the meaning of Section 2, is not an owner so as to be able to seek eviction on the ground specified under clause (ff) of sub section (1) of Section 13. The contention is that the appellant is only a lessee, and that too in terms of a sub lease of 99 years granted by a Society which is itself holding a lease for the same period. Such a lessee is not an owner, for his rights are not absolute. He cannot claim to be an owner for the purpose of seeking eviction by recourse to the provisions of an Act which is intended to protect the tenant and prevent eviction except on specified grounds. The expression owner should be so strictly construed as to exclude any person having less than full ownership right. Ownership denotes the relation between a person and an object forming the subject matter of his ownership. It consists in a complex of rights, all of which are rights in rem, being good against all the world and not merely against specific persons '. (Salmond on Jurisprudence, 12th ed., Ch. 8, p. 246 et. seq.). There are various rights or incidents of ownership all of which need not necessarily be present in every case. They may include a right to possess, use and enjoy the thing owned; and a right to consume, destroy or alienate it. Such a right may be indeterminate in duration and residuary in character. A person has a right to possess the thing which he owns, even when he is not in possession, but only retains a rever 250 sionary interest, i.e., a right to repossess the thing on the termination of a certain period or on the happening of a certain event. All that a plaintiff needs to prove is that he has a better title than the defendant. He has no burden to show that he has the best of all possible titles. His ownership is good against all the world except the true owner. The rights of an owner are seldom absolute, and often are in many respects controlled and regulated by statute. The question, however, is whether he has a superior right or interest vis a vis the person challenging it. The plaintiff is an allottee in terms of the West Bengal Co operative Societies Act, 1983: (See Sections 87 and 89). He has a right to possess the premises for a period of 99 years as a heritable and transferable property. During that period he has a right to let out the premises and enjoy the rental income therefrom, subject to the statutory terms and conditions of allotment. The certificate of allotment is the conclusive evidence of his title or interest. It is true that he has to obtain the written consent of the Society before letting out the premises. But once let out in accord ance with the terms of allotment specified in the statute, he is entitled to enjoy the income from the property. Al though he is a lessee in relation to the Society, and his rights and interests are subject to the terms and conditions of allotment, he is the owner of the property having a superior right in relation to the defendant. As far as the defendant is concerned, the plaintiff is his landlord and the owner of the premises for all purposes dealt with under the provisions of the Act. In view of what we have stated above, the High Court and the 1st appellate court were wrong in setting aside the decree of the trial court solely on the question of the appellant 's title. The appellant 's title was never an issue at any stage of the trial. There was no plea to that effect and no issue was, therefore, framed on the question. This being the position, the appellant 's claim has to be decided on the basis of the pleadings, i.e., on the basis that he is the owner of the premises in question. Accordingly, we set aside the judgment of the High Court and that of the 1st appellate court and remand this case to the 1st appellate court for fresh disposal of the respond ent tenant 's appeal on the merits. This appeal is accordingly allowed with costs of the appellant throughout. N.P.V Appeal allowed.

The appellant plaintiff rented out to the respondent defendant the suit premises allotted to him, by sub lease, by a Housing Co operative Society, which itself held the flat under a 99 years lease granted by the Metropolitan Development Authority. Sometime later he issued a notice of termination of the tenancy to the respondent and called upon him to vacate the premises within a stipulated time. On respondent 's failure to vacate the premises, he/instituted a suit on grounds of default of payment of rent and reasonable requirement for occupation under Sections 13(1) (i) and 13(1)(ff) respectively. The trial court decreed the suit on the ground of reasonable requirement but held that the respondent tenant was not in arrears of rent. On appeal by the respondent, the first appellate court did not examine the merits of the appellant 's claim of reasonable requirement, but examined the appellant plain tiff 's title, though the respondent had not questioned the same and held that, since the appellant was only a lessee under a 99 years lease granted by the Society, which itself was a lessee holding a 99 years lease from the Metropolitan Development Authority, he was not an 'owner ' within the meaning of Section 13(I)(II) of the Act and was, therefore, not entitled to seek eviction under that provision. The High Court also did not examine the appellant 's claim for evic tion and affirmed the first appellate Court 's finding on the question of title. Hence the appeal by the appellant plain tiff. On the question: whether the appellant was the owner of the suit premises for the purpose of instituting a suit for eviction in terms of the West Bengal Premises Tenancy Act, 1956. 246 Allowing the appeal, this Court, HELD: 1.1 Ownership denotes the relation between a person and an object forming the subject matter of his ownership. It consists in a complex of rights, all of which are right 's in rem, being good against all the world and not merely against specific persons. [249 G] Salmond on Jurisprudence, 12th ed. Ch. 8, p. 246 et. referred to. 1.2 There are various rights or incidents of ownership all of which need not necessarily be present in every case. They may include a right to possess, use and enjoy the thing owned; and a right may be indeterminate in duration and residuary in character. A person has a right to possess the thing which he owns, even when he is not in possession, but only retains a reversionary interest, i.e., a right to repossess the thing on the termination of a certain period or on the happening of a certain event. [249 G H; 250 A] 1.3 All that a plaintiff needs to prove is that he has a better title than the defendant. He has no burden to show that he has the best of all possible titles. His ownership is good against all the world except the true owner. The rights of an owner are seldom absolute, and often are in many respects controlled and regulated by statute. The question, however, is whether he has a superior right or interest vis a vis the person challenging it. [250 B] 1.4 In the instant case, the appellant plaintiff is an allottee in terms of the West Bengal Co operative Societies Act, 1983. He has a right to possess the premises for a period of 99 years as a heritable and transferable property. During that period he has a right to let out the premises and enjoy the rental income therefrom, subject to the statu tory terms and conditions of allotment. The certificate of allotment is the conclusive evidence of his title or inter est. No doubt he has to obtain the written consent of the Society before letting out the premises. But once let out in accordance with the terms of allotment specified in the statute, he is entitled to enjoy the income from the proper ty. Although he is a lessee in relation to the society, and his rights and interests are subject to the terms and condi tions of allotment, he is the owner of the property having a superior right in relation to the defendant. As far as the respondent is concerned, the appeliant is his landlord and the owner of the premises for all purposes dealt with under the provisions of the Act. [250 C E] 1.5 Hence. the High Court and the first appellate court were wrong in setting aside the decree of the trial court solely on the question of 247 appellant 's title, which was never an issue at any stage of the trial. There was no plea to that effect and no issue was, therefore, framed on the question. This being the position, the appellant 's claim has to be decided on the basis of the pleadings, i.e. on the basis that he is the owner of the premises in question. Accordingly, the Judg ments of the High Court and first appellate court are set aside and the matter remanded to the first appellate court for fresh disposal of respondent tenant 's appeal on merits. [250 E G]

Appeal No. 18 of 1952. Appeal from the Judgment and Order dated December 12, 1949, of the High Court of Judicature at Bombay (Weston and Shah JJ.) in First Appeal No. 456 of 1949, arising out of Judg ment and Decree dated January 24, 1949, of the 186 Bombay City Civil Court in Civil Suit No. 106 of 1948. M.C. Setalvad, Attorney General for India, (S.B.Jatharwith him) for the appellant. N. P. Engineer (E. H. Bhaba with him) for the respondent. November 5. The Judgment of the Court was delivered by DAS J. This is an appeal filed with the special leave of this Court. It is directed against the judgment and decree passed December 2, 1949, by a Division Bench (Weston and Shah JJ.) of the Bombay High Court reversing, the ground of absence of jurisdiction, the judgment and decree for possession passed January 24, 1949, by the Bombay City Civil Court and directing the return of the plaint for presentation to the proper Court. There is no dispute as to the facts material for the purposes of this appeal. or about April 15, 1908, the Board of Trustees for the Improvement of the City of Bombay put up to auction plots Nos. 16, 17 and 18 of new survey Nos. 8234, 8235 and 8244 situate the Princess Street Estate of the Board containing an area of 2235 square yards for being let certain conditions. One Sitaram Luxman was the highest bidder and was declared the tenant at an annual rent per square yard to be calculated at the rate of 41/2 per cent of Rs. 29 per square yard and he signed the memorandum of agreement incorporating the conditions upon which the auction was held and by which he agreed to be bound. He deposited the moneys in terms of clause 3 of the conditions, and upon such payment entered into possession of the plots. By clause 7 Sitaram Luxman agreed, within the time specified therein, to build and complete at a cost of not less than Rs. 50,000 a building consisting of 5 floors with suitable offices, drains etc. according to plans and specifications to be made by an approved architect and approvedby the Board By clause 17 187 he agreed, so soon as the main building should be roofed in, to insure in the joint names of the Board and of himself and, until the granting of the lease thereinafter provided, keep insured the buildings and works the plots for the full value thereof. Clause 18 of the conditions was as follows: "18. The lease. Immediately after the completion within the time limited by condition 7 of the said buildings and works to the satisfaction of the Trust Engineer testified by his certificate the Trustees will if the contract has not previously been determined grant to the tenant or his approved nominee who shall accept the same a lease of the said plot with buildings thereon for the term of 999 years from the date of the auction at the yearly rent calculated in accordance with the accepted bidding for the plot. " Clause 25 gave power to the Board, if the buildings were not completely finished within the stipulated time and certain other contingencies, to forfeit the deposit and to enter upon and retain possession of the plots and all buildings and works then standing thereon. Pursuant to this agreement the said Sitaram Luxman erected those plots a building which has since come to be known as the New Sitaram Building. the completion of the building, by an Indenture of lease made April 19, 1916, between, the Trustees for the Improvement of the City of Bombay and one Rustomji Dhunjibhoy Sethna the receiver of the estate of Sitaram Luxman appointed by the High Court in Suit No. 720 of 1913, the Trustees, pursuant to the said agreement and in consideration of the monies which had been expended in the erection of the buildings and of the rent and the covenants thereinafter reserved and contained, demised unto the lessee all that piece of land situate their Princess Street estate together with the buildings erected thereon to hold the same for 999 years from April 15, 1908, paying therefor up to January, 15, 1909, the rent of Re. I and during the remainder of 188 the term the yearly rent of Rs. 2,916 by equal quarterly payments. By the said Indenture the lessee covenanted to pay all rates and taxes, not to use or to permit to be used, without the lessor 's consent, the portion of land not built upon except as open space, not to pull down, add to or alter the buildings without such consent, to keep in repair all drains sewers etc., to repair, pave, cleanse and paint and amend all the buildings, walls etc., to permit the lessors and their employees to enter upon the premises to inspect the conditions thereof 48 hours ' notice, to use the demised premises for residential purposes or as offices and schools only and not as a public house or liquor shop or for any business or trade, throughout the term to keep the buildings insured against fire in the joint names of the lessor and the lessee and to rebuild or reinstate and repair the building if destroyed or damaged by fire or otherwise. There was a proviso for re entry for nonpayment of rent for 30 days or for breach of any of the lessee 's covenants. In 1925 all the properties of the Trustees for the Improvement of the City of Bombay vested in the Bombay Municipality under and by virtue of Bombay Act XVI of 1925. By a deed of assignment made April 26, 1948, Shri Bhatia Co operative Housing Society Limited, a society registered under the Bombay Co operative Societies Act, VII of 1921, the appellant before us, acquired the lessee 's interest in the demised premises. June 29, 1948, the appellant served a notice the respondent before us who was a monthly tenant in occupation of Block No. B/2 the ground floor of the New Sitaram Building at a monthly rental of Rs. 52 5 9 to quit and vacate the same July 31, 1948. By his advocate 's reply the respondent maintained that he had been paying the rent regularly and otherwise performing the terms of his tenancy and claimed the protection of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (Act LVII of 1947); 189 The respondent not having vacated the block under his occupation the expiry of the notice to quit, the appellant filed summary Suit No. 106 of 1948 against the respondent in the City Civil Court at Bombay for vacant possession of the said Block No. B/2 the ground floor of the said New Sitaram Buildings and mesne profits from August 1, 1948, until delivery of possession. After stating the material facts, the appellant submitted that the Bombay Act LVII of 1947 did not apply to the demised premises. The respondent filed his written statement maintaining that under section 28 of the Bombay Act the CityCivil Court had no jurisdiction to entertain the suit. He averred that he had performed and observed all the conditions of his tenancy and was ready and willing to do so, that the New Sitaram Building had been constructed at the expense of the appellant 's predecessor in title and that the premises belonged to the appellant and not to the Government or a local authority and that the respondent was entitled to the protection of the Bombay Act LVII of 1947. Leaving out the issue as to whether the appellant was entitled to any compensation, there were 4 issues raising in effect two points, namely, (1) whether the Court had jurisdiction and (2) whether the Bombay Act LVII of 1947 applied to the premises in suit. The learned City Civil Court Judge in a well considered and careful judgment answered the issues in favour of the appellant and decreed the suit. The respondent appealed to the High Court. The High Court reversed the decision of the trial Judge and holding that the Bombay Act LVII of 1947 did apply to the premises and consequently that the City Civil Court, by virtue of section 28 of that Act, had no jurisdiction to entertain the suit, directed that the plaint, be returned to the appellant for being filed in the proper Court. The High Court having declined to grant leave to the appellant to appeal to this Court, the appellant applied for and obtained special leave 190 of this Court to prefer this appeal and filed this appeal pursuant to such leave. Learned counsel for the respondent took a preli minary objection, founded the provisions of section 28 of the Bombay Act, that the City Civil Court had no jurisdiction to entertain the suit, for that section clearly states that in Greater Bombay the Court of Small Causes alone shall have jurisdiction to entertain and try any suit between a landlord and a tenant relating to the recovery of rent or possession of any premises to which any of the provisions of that Part of the Act applied and to decide any application made under the Act and to deal with any claim or question arising out of the Act and no other Court should have jurisdiction to entertain any suit or proceeding or to deal with such claim or question. If, as contended for by the appellant, the Act does not apply to the premises, then section 28 which is an integral part of the Act and takes away the jurisdiction of all Courts other than the Small Causes Court in Greater Bombay cannot obviously be invoked by the respondent. The crucial point, therefore, in order to determine the question of the jurisdiction of the City Civil Court to entertain the suit, is to ascertain whether, in view of section 4 of the Act, the Act applies to the premises at all. If it does, the City Civil Court has no jurisdiction but if it does not, then it has such jurisdiction. The question at once arises as to who is to decide this point in controversy. It is well settled that a Civil Court has inherent power to decide the question of its own jurisdiction, although, as a result of its enquiry, it may turn out that it has no jurisdiction over the suit. Accordingly we think, in agreement with the High Court, that this preliminary objection is not well founded in principle or authority and should be rejected. The main controversy between the parties is as to whether the Act applies to the demised premises. The solution of that controversy depends upon a true construction of section 4 (1) of the Bombay Act LVII of 1947, Which runs as follows: 191 "4. (1) This Act shall not apply to any promises belonging to the Government or a local authority or apply as against the Government to any tenancy or other like relationship created by a grant from the$ Government in respect of premises,taken lease or requisitioned by the Government; but it shall apply in respect of premises let to the Government or a local authority. " It is clear that the above sub section has three parts, namely (1) This Act shall not apply to premises belonging to the Government or a local authority, (2) This Act shall not apply as against the Government to any tenancy or other like relationship created by grant from the Government in respect of premises taken lease or requisitioned by the Government, (3) This Act shall apply in respect of premises lot out to the Government or a local authority. The contention of the appellant Society is that the demised premises belonged to the Trustees for the improvement of the City of Bombay and now belong to the Bombay Municipality both of which bodies are local authorities and, therefore, the Act does not apply to the demised premises. Learned counsel for the respondent, however, urges that the object of the Act, as recited in the preamble, is inter alia, to control rent. It follows, therefore, that the object of the legislation was that the provisions of the Act would be applicable only as between the landlord and tenant. Section 4 (1) provides for an exemption from or exception to that general object. The purpose of the; first two parts of section 4 (1) is to exempt two cases of relationship of landlord and tenant from the operation of the Act, namely, (1) where the Government or a local authority lets out premises belonging to it, and (2) where the Government lets out premises taken on lease or requisitioned by it. It will be observed that the second part of section 4 (1) quite clearly exempts "any tenancy or other like relationship" created by the Government but the first part makes no 192 reference to Any tenancy or other like relationship at all but exempts the premises belonging to the Government or a local authority. If the intention of the first #part were as formulated in item (1), then the first part of section 4 (1), like the second part, would have run thus: This Act shall not apply to any tenancy or other like relationship created by Government or local authority in respect of premises belonging to it. The Legislature was familiar with this form of expression, for it adopted it in the second part and yet it did not use that form in the first. The conclusion is, therefore, irresistible that the Legislature did not by the first part intend to exempt the relationship of landlord and tenant but intended to confer the premises belonging to Government an immunity from the operation of the Act. Learned counsel for the respondent next contends that the immunity given by the first part should be held to be available only to the Government or a local authority to which the premises belong. If that were the intention then the Legislature would have used phraseology similar to what it did in the second part, namely, it would have expressly made the Act inapplicable "as against the Government or a local authority". This it did not do and the only inference that can be drawn from this circumstance is that this departure was made deliberately with a view to exempt the premises itself. It is said that if the first part of the section is so construed as to exempt the premises from the operation of the Act, not only as between the Government or a local authority the one hand and its lessee the other, but also as between that lessee and his subtenant, then the whole purpose of the Act will be frustrated, for it is well known that most of the lands in Greater Bombay belong to the Government or one or other local authority, e.g., Bombay Port Trust and Bombay Municipality and the greater number of tenants will not be able to avail themselves of the benefit and protection of the Act. In the first place, the 193 preamble to the Act clearly shows that the object of the Act was to consolidate the law relating to the control of rents and repairs of certain premises and not of all premises. The Legislature may well have thought that an immunity given to premises belonging to the Government or a local authority will facilitate the speedy development of its lands by inducing lessees to take up building leases terms advantageous to the Government or a local authority. Further, as pointed out by Romer L. J. in Clark vs Downes(1), which case was approved by Lord Goddard C.J. in Rudler vs Franks(1) such immunity will increase the value of the right of reversion belonging to the Government or a local authority. The fact that the Government or a local authority may be trusted to act fairly and reasonably may have induced the Legislature all the more readily to give such immunity to premises belonging to the Government or a local authority but it cannot be overlooked that the primary object of giving this immunity was to protect the interests of the Government or a local authority. This protection requires that the immunity should be held to attach to the premises itself and the benefit of it should be available not only to the Government or a local authority but also to the lessee deriving title from it. If the benefit of the immunity was given only to the Government or a local authority and not to its lessee as suggested by learned counsel for the respondent and the Act applied to the premises as against the lessee, then it must follow that under section 15 of the Act it will not be lawful for the lessee to sublet the premises or any part of it. If such were the consequences, nobody will take a building lease from the Government or a local authority and the immunity given to the Government or a local authority will, for all practical purposes and in so far at any rate as the building leases are concerned, be wholly illusory and worthless and the underlying purpose for bestowing such immunity will be rendered wholly ineffective. In our opinion, therefore, the consideration of the (I) (2) 194 protection of the interests of the sub tenants in premises belonging to the Government or a local authority cannot override the plain meaning of the preamble or the first part of section 4 (1) and frustrate the real purpose of protecting and furthering the interests of the Government or a local authority by conf erring its property an immunity from the operation of the Act. Finally, learned counsel for the respondent urges that the words "belonging to" have not been used in a technical sense and should be read in their popular sense. It is pointed out that it was the lessee who erected the building at his own cost, he is to hold it for 999 years, he has the right of subletting the building in whole or in part rent and terms to be fixed by him, of ejecting sub tenants, and of assigning the lease. Therefore, it may fairly be said that the premises or, at any rate, the building belongs to the lessee and the rights reserved by the lease to the lessor are only by way of security for the preservation of the building which, the expiry or sooner determination of the lease, will vest in the lessor. This line of reasoning has found favour with the High Court which has held that although in form the building belongs to the Bombay Municipality who are the successors in interest of the lessors, in substance the building belongs to the appellant, the assignee of the lessee, and not to the Bombay Municipality. We are unable to accept this reasoning, for we see no reason to hold, in the circumstances of this case, that the substance does not follow the form. By the opera tive part of the lease the demise is not only of the land but also of the building standing thereon. This demise is 'certainly an act of ownership exercised by the lessor over the land as well as the buildings. Under section 105 of the Transfer of Property Act a lease is a transfer only of a right to enjoy the demised, premises, but there is no transfer of ownership or interest in the demised promises to the lessee such as there is in a sale (section 54) or a mortgage (section 58). In the present case, the lessee cannot, his 195 own covenant, use the buildings in any way he likes. He has to use the game only as offices or schools or for residential purposes and cannot, without the lessor 's consent, use them for purposes of any trade or, business. He cannot pull down the buildings or make any additions or alterations without the lessor 's consent. He cannot build upon the open space. He must, if the premises are destroyed by fire or otherwise, reinstate it. The lessor has the right to enter upon and inspect the premises at any time giving 48 hours ' notice. All these covenants clearly indicate that the lessor ha$ the dominant voice and the real ownership. What are called attributes of ownership of the lessee are only the rights of enjoyment which are common to all lessees under well drawn leases, but the ownership, in the land and in the building is in the lessor. It is true that the lessee erected the building a this own cost but he did so for the lessor and the lessor 's land agreed terms. The fact that the lessee incurred expenses in putting up the building is precisely the consideration for the lessor granting him a lease for 999 years not only of the building but of the land as well at what may, for all we know, be a cheap rent which the lessor may not have otherwise agreed to do. By the agreement the building became the property of the lessor and the lessor demised the land and the building which, in the circumstances, in law and in fact belonged to the lessor. The law of fixtures under section 108 of the Transfer of Property Act may be different from the English law, but section 108 is subject to any agreement that the parties may choose to make. Here, by the agreement the building became part of the land and the property of the lessor and the lessee took a lease that footing. The lessee or a person claiming title through him cannot now be heard to say that the building does not belong to the lessor. Forfeiture does not, for the first time, give title to the lessor. forfeiture he re enters upon what has all along been his own property. Said Lord Macnaghten in Heritable Reversionary Company vs Mullar(1): (I) (1892] A.C. 598 at 021, 196 "The words 'Property ' and 'belonging to ' are not technical words in the law of Scotland. They are to be understood, I think, in their ordinary signification. They are infact convertible terms; you can hardly explain the one except by using the other. A man 's property is that which is his own, that which belongs to him. What belongs to him is his pro perty. " In our opinion the interest of the lessor in the demised premises cannot possibly be described as a contingent interest which will become vested the expiry or sooner determination of the lease, for then the lessor could not have demised the premises including the building as he did or before the determination, of the lease exercise any act of ownership or any control over it as he obviously has the right to do under the covenants referred to above. The truth is that the lessor, after the building was erected, became the owner of it and all the time thereafter the demised premises which include the building have belonged to him subject to the right of enjoyment of the lessee in terms of the lease. If it were to be held that the building belonged to the lessee by reason of his having put it up at his own cost and by reason of the attributes of ownership relied by learned counsel, then as between the local authority (the lessor) and the lessee also the building must for the same reason founded what,have been called the attributes of ownership be held to belong to the lessee and the Act will apply. Surely that could not possibly be the case, for it would mean that the Government or a local authority will always be bound by the Act in respect of the building put up by the lessee under building leases granted by it in respect of land belonging to it. In that case the immunity given to the Government or a local authority will be wholly illusory and worthless. In ' our view in the case before us the demised premises including the building belong to a local authority and are outside the operation of the Act. This Act being out of the way, the appellants were well within their 197 rights to file the suit in ejectment in the City Civil Court and that Court had jurisdiction to entertain the suit and to pass the decree that it did. I The result, therefore, is that we allow this appeal, set aside the judgment and decree of the High Court and restore the decree passed by the City Civil Court. The appellant will be entitled to costs throughout in all Courts. Appeal allowed.

Section 4 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, which provides that the Act shall not apply to premises belonging to the Government or a local authority applies not only to suits between the Government or a local authority as a landlord against the lessee, but also to suits by a lessee of the Government or a local authority against his sublessee. The indemnity conferred is in respect of premises belonging to the Government or a local authority. A building site was auctioned to a person by the City Im provement Trust of Bombay with a condition that the bidder Was to put up a building of a certain description at a cost of not less than Rs. 50,000 and after the Completion of the building, the site and the building were to be leased to the bidder for a period of 999 years at a fixed yearly rent. Held, a construction of the lease deed that the building put up by the bidder belonged to the Trust and not to the bidder and a suit by the lessee against his sub lessee was not governed by the Bombay Rents, Hotels and. Lodging House Rates Control Act, 1947, as the premises belonged to a local authority within the meaning of section 4 (1) of the Act, and the suit could accordingly be instituted in the City Civil Court of Bombay. A civil Court has inherent jurisdiction to decide the question of its own jurisdiction and to entertain a suit although as a result of the inquiry it may turn out that it has no jurisdiction.

tition (C) No. 499 of 1991. (Under Article 32 of the Constitution of India). WITH Civil Appeal Nos. 4788 & 4794 of 1992. C.S. Vaidyanathan, K. Lahiri, P.P.Rao, Vishwajeet Singh, R.B. Misra, 4 R.K. Khanna, Surya Kant, R. Singhvi, C.V.S. Rao, Ms. A. Subhashini, R.P. Singh, S.N. Terdol, A. Sharan, H.K. Puri, Ms. Abha Sharma and K.K. Lahiri for the appearing parties. The Judgment of the Court was delivered by K. RAMASWAMY, J. Special leave granted. As the trio raised common questions of law, they are disposed of by a common judgment. The 1st petitioner in the Writ Petition is an Association representing the officers of the State Civil Service of U.P. and petitioner Nos. 2 to 17 are its members. some of them and Bihar State Officers are the appellants in the two appeals respectively. On January 19, 1984, the association represented to the Govt. of India requesing to remove wide disparity prevailing in different States of promotional avenues from the State Civil Services to All India Administrative Service. The officers from Andhra Pradesh and Kerala, on completion of 8 to 9 years of service are becoming qualified for promotion to All India Administrative Service, while the officers from States like Uttar Pradesh and Bihar would get chance only after putting 24 to 27 years of service. The Estimate Committee of Seventh Lok Sabha too in its 77th Report highlighted the injustice. A committee of A senior Secretaries constituted by the Union Govt. recommended, after due consideration, to evolve equitable principles of comparable seniority from different States for promotion to Indian Administrative Service. Pursuant thereto the Central Govt. proposed to amend the Indian Administrative Service (Regulation of Seniority) Rules, 1954, for short 'the Seniority Rules '. In the meantime the Rules were repealed and replaced by I.A.S. (Regulation of Seniority) Rules, 1987 which came with effect from Nov. 6, 1987 for short 'New Seniority Rules '. The first respondent issued (Circular letter dated September 9, 1986 to the State Govts. indicating amendments for fixation of seniority of officers promoted from State Civil Services ' to I.A.S. to give weightage over and above 4 years in the assignment of year of allotment as per the existing relevant rules, namely, four years for the first 12 years State service with additional weightage of one year for every two to three years ' completed service subject to a maximum of five years. After receiving suggestions or comments from State Governments, the Central India exercising the power under sub sec. (1) of Sec. 3 of All India Service Act, 1951 for short, 'the Act ' amended the New Seniority Rules, 1987 which amendment was published in the Gazette of India on February 3, 1989 for short the 'First Amendment Rules '. The proviso thereto was made limiting its operation prospectively from February 3, 1989. Putting the proviso and its prospective operation in issue, the appellants from U.P. in Civil Appeal No. 4788 of 1992[S.L.P. (C) No. 13823 of 1991] filed Original Application No. 18 of 1989 in the Central Administrative Tribunal, Allahabad at Lucknow Circuit Bench, contending that they were promoted in 1980 onwards but by limiting its application to November 6, 1987, they were discriminated. Bihar Officers questioned the Rule in O.A. No. 136 of 1989 before the C.A.T. at Patna. Therein the appellants though found to be entitled to the total weightage of 9 years since their juniors were given 1983 as the year of allotment by operation of proviso to Rule 3(3)(ii) of the First Amendment Rules were given 1983 as the year of allotment. Thereby they were denied 3 years weightage. The Tribunal at Lucknow held that the prospective operation discriminated the Senior State Civil Service Officers but it refused to direct the Union Govt. to amend the Rules with retrospective effect. However, the Govt. of India was requested to reconsider the matter to give retrospective operation to the First Amendment Rules. The Tribunal at Patna upheld the rules and dismissed the application. The Officers from Uttar Pradesh through their Association filed the Writ Petition under article 32 of the Constitution seeking writ of certiorari to quash the order dated December 12, 1990 made by the Ministry of Personnel, Public Grievance and Pension Department and for a mandamus to extend the benefits flowing from the First Amendment Rules to its members promoted prior to January 1988 and to the petitioners Nos. 2 to 17 in particular. It is needless to state that the First Amendment Rules would operate with full effect from 1992, while the Promotee Officers promoted between 1988 to 1991 would reap partial benefit. Rule 3 of the Seniority Rules, 1954 postulated assignment of the year allotment as per the Rules to every officer appointed to the Indian Administrative Service, be it a direct recruit or a Promotee officer. The Promotee officer appointed in accordance with rule 9 of the IAS Recruitment Rules read with regulation 9 of IAS Promotion Regulations shall be allotted an year of allotment next below the junior most direct recruit officer recruited in accordance with rule 7 of the Recruitment Rules (Direct Recruitment Rules) and who officiated continuously in a senior post from a date earlier than the date of the commencement of such officiation by the Promotee officer. Under the New Seniority Rules 1987, rule 3(1) postulates that every officer shall be assigned year of allotment in accordance with the provisions hereinafter contained in the rules. The year of allotment of an officer in service at the commencement of the amended Seniority Rules shall be the same as per the rule 3(2) as has been assigned to him by the Central Govt. in accordance with the orders and instructions in force immediately before the commencement of the New Seniority Rules. Sub rule (3) of Rule 3 provides thus: "3(3) The year of allotment of an officer appointed to the Service after the commencement of these rules shall be as follows: 3(3)(i) the year of allotment of a direct recruit officer shall be the year following the year in which the competitive examination was held: Provided that if a direct recruit officer is permitted to join probationary training under rule 5(1) of the IAS (Probation) Rules, 1954, with direct recruit officers of a subsequent year of allotment, then he shall be assigned that subsequent year as the year of allotment. 3(ii) The year of allotment of a promotee officer shall be determined in the following manner]: (a) For the service rendered by him in the State Civil Service upto twelve years, in the rank not below that of a Deputy Collector or equivalent, he shall be given a weightage of four year towards fixation of the year of allotment; (b) He shall also be given a weightage of one year for every completed three years of service beyond the period of twelve years, referred to in sub clause (a), subject to a maximum weightage of five years. In the calculation, fractions are to be ignored. (c) The weightage mentioned in sub clause (b) shall be calculated with effect from the year in which the officer is appointed to the service: Provided that he shall not be assigned a year of allotment earlier than the year of allotment assigned to an officer senior, to him in that select list or appointed to the service on the basis of an earlier Select List. 3(3) (iii) The year of allotment of an officer appointed by selection shall be determined in the following manner: a) for the first 12 years of gazetted service, he shall be given a weightage of 4 years towards fixation of the year of allotment; (b) he shall also be given a weightage of one year for every completed 3 years of service beyond the period of 12 years, referred to in sub clause (a), subject to a maximum weightage of 5 years. In this calculation, fractions are to be ignored; (c) the weightage mentioned in sub clause (b) shall be calculated with effect from the year in which the officer is A appointed to the service: Provided that he shall not become senior to another non State Civil Service Officer already appointed in the service. Provided further that he shall not be allotted a year earlier than the year of allotment assigned to an officer already appointed to the service in accordance with sub rule (1) of rule 8 of the Recruitment Rules, whose length of class I continuous service in the State Civil Service in the State Civil Service is equal to or more than the length of Class I continuous service of the former in connection with the affairs of the State". A plain and fair reading of the sub rules manifests the Central Govt 's intention that the year of allotment of a direct recruit officer shall be the year following the year in which the competitive examination was held. If any such officer was permitted to join probationary training with direct recruit officers of a subsequent year of allotment then he shall be assigned that subsequent year as the year of allotment. In determining the seniority of a promotee officer in assigning year of allotment, the service rendered in the State Civil Service upto 12 years as Dy. Collector, or equivalent posts, weightage of 4 years shall be given. In addition he/she shall also be given further benefit of one year weightage of every completed 3 years of service, beyond the period of 12 years, subject to a maximum weightage of 5 years. In its calculations fractions are to be ignored. the weightage shall be computed from the year of appointment of the officer to the service. The offending proviso limits the operation of Rule 3(3)(ii)(a) and (b) that such an officer shall not be assigned an year of allotment earlier than the year of allotment assigned to the officers senior to him in that select list or appointed on the basis of an earlier select list. Under rule 3(3) (iii) also, though not relevant for the purpose of the case but serves as an analogy, that the year of allotment of an officer appointed by selection shall also be given the year of allotment in the same manner as adumbrated in sub rule 3(3) (ii) and its effect also was circumscribed under the proviso that he shall not become senior to another non State Civil Service Officer already appointed to the service. It is, therefore, clear that the New Seniority Rules were to be operative from November 6, 1987 and the First Amendment Rules from February 3, 1989 with the result that in assigning the year of A allotment, full weightage of 9 years ' eligible service was given to the promotee State Civil Service Officers. However, the senior officer to him/her appointed from the State Civil Service earlier in the same select list or one above him in the previous select list shall remain senior to him. Thereby the proviso averted the effect of pushing an officer who gained entry into IAS service by application of rule of weightage in 3(3)(ii) of the rules down in seniority. It is settled law that ability, merit and suitability are the criteria to select an officer of the State Civil Service for inclusion in the select list for promotion under regulation 9 of the IAS Promotion Regulations, 1955 read with rule 9 of the IAS Recruitment Rules, 1954. In that behalf no change was brought about. A junior officer who thus superseded a senior State Civil Officer became entitled to carry his year of allotment and became senior to him in the cadre of l. But for the proviso, the operation of Rule 3(3)(ii), the senior officer would have been saddled with the disability to be pushed down in seniority which would have nullified and frustrated the hard earned earlier promotion and consequential effect on seniority earned by dint of merit and ability. Moreover, the entry into the service is from different streams and predominantly by direct recruitment and promotion. The direct recruit gets his year of allotment from the succeeding year of his recruitment. The direct recruit officers appointed earlier to 1988 also would be adversely effected in their seniority. Under sec. 3(2) of the Act, every rule made by the Central Govt. under sec.3(1) and every regulation made thereunder or in pursuance of any such rules, shall be laid, as soon as may be, after such or regulation is made, before each House of Parliament while in session. Before the expiry of the session, if both Houses agree to make any modification to such rules or regulations or both Houses agree to make any modification to such rules or regulations or both Houses agree that such rules or regulations should not be made, the rule or regulation shall thereafter have effect, only in such modified form or be of no effect as the case may be. SO, however, that any such modification or annulment shall be, without prejudice to the validity of anything previously done under that rule or the regulation. Thereby the rules or regulations made in exercise of the power under sec. 3(1) of the Act regulating recruitment and the conditions of service for persons appointed to an All India Service are statutory in character. No statute shall be construed so as to have retrospective operation unless its language is such as plainly to require such construction. The Legislature, as its policy, give effect to the statute or statutory rule from a specified time or from the date of its publication in the State Gazette. It is equally settled law that court would issue no mandamus to the legislature to make law much less retrospectively. It is the settled cannons of construction that every word, phrase or sentence in the statute and all the provisions read together shall be given full force and effect and no provision shall be rendered surplusage or nugatory. I is equally settled law that the mere fact that the result of a statue may be unjust, does not entitle the court to refuse to give effect to it. However, if two reasonable interpretations are possible, the court would adopt that construction which is just, reasonable or sensible. Courts cannot substitute the words or phrases or supply casus omissus. The court could in an appropriate case iron out the creases to remove ambiguity to give full force and effect to the legislative intention. But the intention must be gathered by putting up fair construction of all the provisions reading together. This endeavour would be to avoid absurdity or unintended unjust results by applying the doctrine of purposive construction. In Smt. Hire Devi & Ors. vs District Board, Shahjahanpur, , the constitution bench of this court interpreting sections 70 and 90 of the U.P. District Board Act, in particular, the expression. "orders of any authority whose sanction is necessary", held that " No doubt it is the duty of the court to try to harmonise various provisions of an Act passed by the Legislature. But it is certainly not the duty of the court to stretch the words used by the Legislature to fill in gaps or omissions in the provisions of an Act". In Nalinakhaya Bysck vs Shyam Suder haldar 7 Ors.[1953] SCR 533 at 545, this court held that it is not competent to any court to proceed upon the assumption that the Legislature has made a mistake. The court must proceed on the footing that the Legislature intended what it has said. Even if there is some defect in the phraseology used by the Legislature the court cannot aid the Legislature 's defective phrasing of an act or add or amend or, by construction make up deficiencies which are left in the Act. The approach adopted contra by the High Court was held illegal. In Commissioner of Sales Tax, U.P. vs Auriya Chamber of Commerce, Allahabad; , at 438, this court held that in a developing country like ours any legal system may permit judges to play a creative role and innovate to ensure justice without doing violence to the norm as set by legislation. But to invoke judicial activism to set at naught legislative judgment is subversive of the constitutional harmony and comity of in strumentalities. Thus it is settled law that where the intention of statutory amendment is clear and expressive, words cannot be interpolated. In the first place they are not, in the case, needed. If they should be added, the statute would more than likely fail to carry out the legislative intent. The words are the skin of the language which the Legislature intended to convey. Where the meaning of the legislative intent is what the statute says to be so. If the language is plain, clear and explicit, it must be given effect and the question of interpretation does not arise. If found ambiguous or unintended, the court can at best iron out the creases. Any wrong order or defective legislation cannot be righted merely because it is wrong. At best the court can quash it, if it violates the fundamental rights or is ultra vires of the power or manifestly illegal vitiated by fundamental laws or gross miscarriage of justice. It could thus be held that the legislature intended that the First Amendment Rules would operate prospectively from February 3, 1989, the date of their publication in the Gazette of India. Its policy is explicit and unambiguous. Rule 3(3) (ii) intended to remedy the imbalances while at the same time the proviso intended to operate prospectively to avert injustice to the officers recruited/promoted earlier than the officer promoted later to that date. Whether the proviso is violative of article 14 and article 16(1) of the Constitution of India? Undoubtedly all the promotees form the state civil service constitute a class preceding or succeeding or succeeding the First Amendment Rules. The purpose of temporary truce carved out by the proviso is self evident. By dint of merit, ability and suitability a junior officer could seal a march over the senior officers in the state civil service and get entry into the Indian Administrative services earlier to the senior officers and thus becomes a member of the Indian Administrative services officer, who was superseded and subsequently became qualified for inclusion in the select list, after the New seniority Rules or the First Amendment Rules came into force, indisputably would be junior in I.A.S. cadre to his erstwhile junior officers in state civil services. If he gets benefit of the free play of the First Amendment Rules, it would have the inevitable effect of depriving and he would be pushed down and would again become junior to him in senior officer, though had varied length of services, but because of late promotion to Indian Administrative service, would receive and forego proportionate weightage of past service for a short period till the rules fully become operational. The first Amendment Rules doubtless provided the weightage to a maximum of 9 years and would track back the year of allotment anterior to the date of inclusion in the select list under the Recruitment Rules read with Promotion Regulations. The proviso intended to protect the seniority of the officer promoted/appointed earlier than the appellants and its effect would be that till rule 3(3) (ii) fully becomes operational graded weightage was given to the promotees. In other words it prevented to get seniority earlier to the date of his/her appointment to the Indian Administrative service. Equally it intended not to let endless compulsive circumstances denied the benefits of full 9 years weightage to officers promoted during 1987 to 1992. The discrimination, though is prevented unequals to become equals. The contention of sri P.P Rao, therefore, that invidious discrimination was meted out to senior officers and that they are similarly circumstanced are devoid of force. This Court by a Constitution Bench in the state of Jammu & Kashmir V. T. N. Khosa, ; at 463, held that the amended rules varying the conditions of service would operate in future and governs the future rights of the existing personnel. The promoted state civil Service Officers who had already the year of allotment in I.A.S cadre are not discriminated. But the benefit o f full weightage of 9 years was cut down and applied in varied degree to officers promoted during the transitional period to prevent unjust results and to mete out justice to the junior officers or officers promoted earlier and upto 1992. It is equally settled law that in an affirmative action the court strike down a rule which offends the right to equality enshrined in articles 14 and 16(1) of the Constitution like the one arose in D.S. Nakara vs Union of India, ; and B. Prabhakar Rao vs state of A.P., [1985]2 suppl, SCR 379, this court extended parity in an affirmative action by reading the rule down without doing violence to the language or injustice to others. The application of the First Amendment Rule has the inevitable and insiduous effect of doing injustice to the direct recruit/promotee officers or officers promoted earlier to Feb. 3 1989 and the proviso avoided such injustice to the date of promotion to I.A.S the rule to all the senior irrespective of the date of promotion to I.A.S. cadre would land in or lead to inequitous or unjust results which itself is unfair, arbitrary and unjust results which itself is unfair, arbitrary and unjust, offending article 14 of the Constitution. To avoid such unconstitutional consequences the proviso to rule 3(3) (ii) of the First Amendment Rules was made. The doctrine or kicking down or picking up, put forth in Union of India vs P.K. Roy, at 201 202, equally cannot be extended to the facts of the case. But for the proviso the operation of rule 3(3) (ii) would be inconsistent with sec. 3(1A) of the Act. Equally though the doctrine of reading down is a settled principle of law, its application to the facts of the case would lead to injustice to the officers promoted earlier to the appellants. A writ of mandamus commanding the respondents to give full benefit of weightage of rule 3(3) (ii) and (b) of the First Amendment Rules would amount to direct the executive to disobey the proviso which is now held to be intra vires of the Constitution. In the light of the above discussion no directions could be given to the central Govt. to amend to Rules. Therefore, we have no hesitation to hold that though Govt. of India has power to amend the New Seniority Rules by First Amendment Rules prospectively giving weightage of total 9 years services to promotee officers of state Civil services in assigning a year of allotment, no direction or mandamus could be issued commanding the Central Govt. To disobey the proviso or to apply the rules retrospectively to all the officers even to word out monetary benefits as contended by sri Vaidyanathan. His further contention that the First Amendment Rules would be applied with effect form the date of the New seniority Rules or date of intimation of the proposed First Amendment Rules to the state Government for limited retrospectivity also cannot be acceded to for the same reasons. In this context it is necessary to note that Sec. 3(1A) of the Act which provides: "3(1A) The power to make rules conferred by this section shall include the power to give retrospective effect from a date not earlier than the date of commencement of commencement of this Act, to the rules or any of them but no retrospective effect shall be given to any rule so as to prejudicially affect the interests of any person to whom such rule may be applicable. " Its bare reading clearly indicates that the Rules made under the Act shall not be given retrospective effect so as to prejudicially affect the "interest of any person to whom such rules may be applicable". The attempt of Sri Vidyanathan that this rule may be so read as applicable only to the promotee officers vis a vis the senior promotee officers cannot be accepted. The Lucknow Bench of the C.A.T glossed over it by adopting strange construction that since the offending proviso to rule 3(3) (ii) of the First Amendment Rules would apply to promotee officers inter se , sub section (1) (a) of section 3 of the Act would not apply to the direct recruits, to say the least, is disparate construction. There is a distinction between right and interest. No one has vested right to promotion or seniority, but an officer has an interest to seniority , But an officer has an interest to seniority acquired by working out the rule. Of course, it could be taken away only by operation of valid law. Sub section (1A) of sec. 3 of the Act enjoins the authorities not to give retrospective effect to such a rule or regulation so as to avoid "Prejudicial affect to the interest" of any person to whom such rule may be applicable. The operation of law may have the effect of postponing the future consideration of the claims or legitimate expectation of interest for promotion. Take a case as an illustration. Articles 14 16(1), 16(4) ,335 and 46 read with proviso to article 309 of the Constitution empowers the President or the Governor to make satutory rules of reservation, where there is no adequate representation to persons belonging to scheduled castes and scheduled Tribes in a service or posts in connection with the affairs of the Central Govt. or the state Government. By operation of rule of reservation appointments or promotions given to a Scheduled Caste or Scheduled Tribe officer, though prejudicially affect the interest of officers of general category on parity of merit, in the larger public interest by the operation of the rule of reservation discrimination in favour of scheduled castes and scheduled Tribes ins constitutionally permissible as class. Therefore, the proviso to rule 3(3) (ii) of the Amendment Rules is consistent with section 3(1A) of the Act, and that therefore, it is not ultra vires of the power of the central Govt. nor it offends articles 14 and 16(1) of the constitution. Counsel for the appellants/petitioners are their contention that there is no vested right to seniority and is variable and defeasible by operation of law. In A.K. Bhatnagar vs Union of India,[1991] 1 SCR 544 this court held that seniority is an incidence of services and when rules prescribe the method of computation, It is squarely governed by such rules. This would be amplified by following hypothetical illustrations. In a direct recruitment the seniority would be arranged in the order of merit and it starts from the date of joining the duty. Suppose 'A ' to 'D ' were appointed on the same day and 'A ' was senior most among them. But 'A ' did not pass the prescribed tests and for varied reasons 'A 's probation was confirmed after a long period. In the meanwhile 'B ' to 'D ' were confirmed 'B ' to 'D ' thereby became senior to 'A ' though appointed in the same day and 'A ' was No. I among them. Suppose probation was not declared mala fide resulting in delayed confirmation and 'A ' challenged it in a court of law issued by the court to confirm 'A ' challenged it in court of law and succeeded in proving mala fide action and consequential direction was issued by the court to confirm 'A ' from the date of his appointment. Though 'B ' to 'D ' become seniors to 'A ' later confirmation and the consequential defeasance of acquired seniority. An empolyee has an interest in the accrued seniority which by operation of law also is liable to be varied. by 'A ' later confirmation and the consequential defeasance of acquired seniority. An employee has an interest in the accrued seniority which by operation of law also is liable to be varied. Suppose 'A ' to 'D ' were appointed on the same day by direct recruitment 'A ' and 'D ' are general candidates and 'B ' and 'C ' though far below in merit and yet were assigned 2nd and 3rd places as per roster and 'D ' lost seniority though secured at the competitive examination due to operation of roster system 'D ' became junior to 'B ' and 'C '. BY operation of law 'D ' s legitimate interest was thereby defeated. suppose in promotion posts also similar situation may emerge. 'A ' though senior most in the feeder cadre, due to pendency of charges, he was superseded by 'B ' to 'D ' and thereby they gained early entry into promoted posts and thereby was promoted. Though 'B ' to 'D ' became initially seniors to 'A ' he was rested to his seniority in 'D ' became initially seniors to 'A ' he was restored to his seniority in promotion posts as well and 'B ' to 'D ' interest was defeated. Suppose the promotion was on the basis of merit and ability 'D ' was found to be more meritorious and was promoted earlier to `A ' to `C ', `D ' thereby would become senior to `A ' to `C ' though he was junior most in the feeder service. The right to seniority and interest thereby were varied by operation of law. Suppose `B ' and `C ' also have the benefit of reservation in promotion as well and by its application they were promoted earlier to `A ' though the latter was more meritorious. `A ' was later on promoted. He cannot claim his seniority over `B ' and `C ' who scaled a march over `A ' and became senior to `A ' in promoted cadre or service. The seniority of `A ' thereby was varied. However, law itself may protect the legitimate interest in seniority while granting relief to persons similarly circumstanced like the one under sec. 3(1A) of the Act read with proviso to Rule 3(3)(ii) & (iii) of the First Amendment Rules. It was neither void nor ultra vires offending articles 14 and 16(1) of the Constitution. Admittedly, the draft of the First Amendment Rules, as circulated to the State Government did not contain the offending proviso. It is stated in the counter affidavit filed on behalf of the Central Govt. that some of the State Government had suggested to incorporate the proviso and after necessary consultation the proviso was added to the First Amendment Rule. Section 3(1) of the Act provide thus: "3(1) Regulation of recruitment and conditions of services. (1) The Central Govt. may, after consultation with the Governments of the State concerned (including the State of Jammu and Kashmir), (and by notification in the Official Gazette) make rules for the regulation of recruitment, and the conditions of service of persons appointed to an All India Service. " It is thereby clear that sec. 3(1) empowers the Central Govt. to make any rule regulating the recruitment and the conditions of service of All India Service, which include amendment from time to time, but the rider it engrafted is that the power should be exercised "after consultation with the Governments of the State concerned". It is already held that by operation of sub section (2) of section 3 of the Act, the rules or regulations are statutory in character. The meaning of the word `consultation ' was considered in catena of case. This Court in Union of India vs Sankalchand Himatlal Sheth & Anr.,[1977] 4 SCC 193, held that the word "consult" implies a conference of two or more persons or an impact of two or more minds in respect of a topics in order to enable them to evolve a correct or at least a satisfactory solution. In order that the two minds may be able to confer and produce a mutual impact it is essential that each must have for its consideration full and identical facts which can at one contitute both the source and foundation of the final decision. In that case the question related to the transfer of a High Court from one High Court to another. In that context this court considered whether sounding of the Chief Justice of India without meaningful consultation would be proper discharge of the constitutional obligation by the President. In that context the principle of law laid was that the respective view point of the Govt. and the Chief Justice must be known to each other and both were to the discuss and examine the merits of the proposed transfer. The meaning of the word "consultation" was evaluated in that backdrop. This Court approved the dictum laid by K. Subba Rao. J., as he then was, in R.Pushpam vs State of Madras, AIR 1953 Madras 392. In State of U.P. vs Manmohan Lal Srivastava, ; at 542, the word "consultation" in article 320 of the Constitution of India was considered by a Constitution Bench. It was held that the word "consultation" did not envisage mandatory character for consultation, but the Constitution makers allowed the discretion to the appointing authority to consult the Public Service Commission. But the executive Govt. cannot completely ignore the existence of the Public Service Commission or to pick up and choose cases in which it may or may not be consulted. However, prior consultation was held to be not mandatory for removal of a Govt. servant as the Central Govt. has not been tied down by the advice of the U.P.S.C. This court did not extend the rule of consultation to making the advice of the Commission on those matter binding on the Govt. In the absence of a binding character, this Court held that non compliance of article 320(3)(c) would not have the effect of nullifying the final order passed by the Govt. of removal of the Govt. servant from service. In U.R. Bhatt vs Union of India, AIR 1962 SC 1344, this Court held that the absence of consultation of the Public Service Commission or any irregularity in consultation under article 320 does not effect the ultimate decision taken by the authority under article 311 of the Constitution. In Ram Gopal Chaturvedi vs State of Madhya Pradesh, ; , the same view was reiterated. In N. Raghavendra Rao vs Dy. Commissioner, South Kanara, Mangalore, ; , words "prior approval" of the Central Govt. in construing the proviso to sec. 115(7) of S.R. Act of the words of varying the conditions of service the Constitution Bench held that "prior approval" would include general approval to the variation in the conditions of service with certain limits indicated by the Central Govt. Same view was reiterated by another Constitution Bench in Mohd. Sujat Ali & Ors. vs Union of India. , ; at 469 471. In Chandramouleshwar Prasad vs Patna High Court & Ors. ; at 674 & 675, construing the word "consultation" in article 233 of the Constitution, another Constitution Bench in the context of removal of a District Judge by the Governor on the recommedation of the High Court, held that "consultation" or "deliberation" is not complete or effective unless the parties thereto, i.e., the State Govt. and High Court make their respective points of view known to each other and discuss and examine the relative merits of their views. If the one party makes a proposal to the other who has a counter proposal in his mind which is not communicated to the proposer the direction to give effect to the counter proposal without anything more, cannot be said to have been issued after consultation. In that case it was held that the absence of any consultation with the High Court rendered the order to removal dated October 17, 1968 passed by the State Govt. illegal. In Narain Sankaran Mooss vs State of Kerala & Anr., ; , the facts were that the State Govt. , exercising the power under Sec. 4 (1) of the Electricity Supply Act, cancelled the licence of the appellant without consulting the Electricity Board. The question was whether cancellation would be ultra vires of the power. While examining that question, this court considered whether consultation was mandatory or directory, and held that the revocation of the licence trenches into the right to carry on business guarantee under article 19(1)(g) of the Constitution. Therefore, when the Act prescribed prior consultation of the Electricity Board such condition was incorporated to prevent abuse to power and to ensure just exercise of the power. Section 4 of the Electricity Supply Act enjoins, in public interest, to consult the Board before revocation of the licence. Consultation provided an additional safeguard to the license and when revoking the licence the Govt. act in two stages. Before and after the explanation was received and when the Govt. considered the explanation, it is mandatory that it should consult the Electricity Board and non consultation rendered the order as void. Consultant of the Board, was therefore, held to be a condition precedent for making order of revocation. In Naraindas Indurkhya vs State of M.P. & Ors., , M.P. Madhyamik Siksha Adhiniyam Act, 1973 provided that before prescribing the text books the Chairman of the Board was to be consulted. Its infraction was considered and held that any attempted exercise of the power by the State Govt. without complying with this condition would be null and void. On the facts of the case, it was held that the notification issued by the State Govt. without consultation of Chairman was invalid being in breach of mandatory requirement of the proviso to Sec.4 (1) of the Act. In Hindustan Zinc Ltd. vs A.P Electricity Board & Ors., ; the revision of tariff was effected without consulting the Consultative Council. This Court held that the revision of tariff was a question of policy under Sec 78A of the Indian Electricity Supply Act. The failure of the Board to consult the Consultative Council whether rendered the revision of tariff invalid. It was held that the consequence of non compliance of Sec. 16 was not provided and the nature of the function of the Consultative Council and force of its advice being at best only persuasive, it cannot be said that the revision of tariff, without seeking the advice of the Consultative Council, rendered the revision of tariff itself invalid. On the other hand the Board after revision of the tariff has to place the revised tariff on the table of the House or Houses of the Stat Legislature and such statement is open to discussion therein, the Board is bound to take into consideration such modification, if made, or any comments made on such statement by the State Legislature. Under those circumstance it was held that the non compliance of Sec 16(5) did not render the revision of tariff invalid. In Rollo & Anr. vs Minister of Town & Country Planning [1948] 1 All Eng. Report of the Towns Act, 1946 envisages the Minister of Town & Country Planning after consultation with the local authorities, if satisfied that it is expedient in the national interest that any area of land should be developed as a new town by the Corporation established under the Act, he may make an order designating that area as a site of the proposal of the new town. On October 7, 1946 press notice was issued giving the date of meeting of the representatives of the local authorities and the Minister explained in the meeting what he had in his mind in arriving at the boundaries of the area. Objections were raised and public enquiry was held. But actual explanation was not sought from any local authorities. In those circumstance contention was raised that there was no consultation as adumbrated under Sec. Repelling the contention, the House of Lords held that in the meeting the local authorities clearly were informed of the general nature of the proposal, the areas suggested, it size and what the Minister wished and intended to do. Discussion was followed. Minutes were prepared and press notice was issued stating what had happened. In those circumstance it was held that there was consultation and the requirement was complied with. The ratio of Morris, J. in Elecher & Ors. vs Minister of Town & Country Planning, [1947] 2 All. Reports 496, was approved. The same view was reiterated in Sinfield & Ors. vs London Transport Executive Law Report 1970 Chancery Divn. In Derham & Anr. vs Church Commissioners of England, 1954 Appeal Cases 245, the Judicial Committee was to consider the question of consultation with Church Commissioners of effecting the union of beneficers under Sec. 3(1) of the Pastoral Reorganisation Measure, 1949 which postulates of "consultation so far as is practicable". Construing the language it was held that a meeting was held explaining the proposed scheme, the members of the Church though opposed the scheme, it was approved. As such it was held that the action was valid and their was proper consultation. In Port Louis Corporation vs Attorney General of Mauritius, 1965 Appeal Cases 1111, the local Govt. of Mauritius was empowered under the Local Government Ordinance, 1962 by sec. 73 (1) to alter the boundries of any town, district or village, after consultation with the local authorities concerned. The Governor and Council of Ministers in May 1963 had in their minds to alter the boundaries of Port Louis, so that the villages surrounding Port Louis Township would be embraced within and would enlarge the area of the town of Port Louis. The Minister by a letter asked the views of the local authorities, enclosing the details of the proposed alternation and the map. Majority Councillors had resigned on the ground that they has no mandate to express any views. On subsequent nomination, those Councillors raised certain points and asked for information, which was duly complied with. Further information was called for, but the Minister refused to extend time nor supplied information. The Governor in Council has issued a proclamation extending the boundaries of Port Louis Action was initiated by the local authorities for declaration that the proclamation was ultra vires, null and void in so far as it related to the extended boundries of the town of Port Louis, contending that there had been no consultation as required by Sec. 73 (1) of the Ordinance. The Judicial Committee construing the word "after consultation" in that setting held that the local authorities has received a clear proposal. The failure to supply information by detailed answers to their questions would not render the proclamation as invalid. Accordingly uphold the action as affirmed by the Supreme Court of Mauritius. The ratio in Union of India & Ors. vs Dr. section Krishna Murthy & Ors., ; , renders little assistance to the appellants. In that case the question was the year of allotment under the Forest Service (Regulation of Seniority) Rules, 1968. By fixation of the year of allotment it had retrospective effect from the dated when the promotee was brought into select list or the date of appointment whichever was later. Under those circumstance it was held that retrospective operation of the rules did not prejudicely affect any vested right much less any fundamental rights of the officers recruited from the State service. The result of the above discussion leads to the following conclusions: (1) Consultation is a process which requires meeting of minds between the parties involved to evolve a correct or at least satisfactory solution. There should be meeting of mind between the proposer and the persons to be consulted on the subject of consultation. There must be definite facts which constitute foundation and source for final decision. The object of the consultation is to render consultation meaningful to serve the intended purpose. Prior consultation in that behalf is mandatory. (2) When the offending action effects fundamental rights or to effectuate built in insulation, as fair procedure, consultation is mandatory and non consultation renders the action ultra vires or invalid or void. (3) When the opinion or advice binds the proposer, consultation is mandatory and its infraction renders the action or order illegal. (4) When the opinion or advice or view does not bind the person or authority, any action or decision taken contrary to the advice is not illegal, nor becomes void. (5) When the object of the consultation is only to apprise of the proposed action and when the opinion or advice is not binding on the authorities or person and is not bound to be accepted, the prior consultation is only directory. The authority proposing to take action should make known the general scheme or outlines of the actions proposed to be taken, be put to notice of the authority or the persons to be consulted; have the views or objections, taken them into consideration, and thereafter, the authority or person would be entitled or has/have authority to pass appropriate orders or take decision thereon. In such circumstance it amounts to an action "after consultation". (6) No hard and fast rules could be laid, no useful purpose would be served by formulating words or definitions nor would it be appropriate to lay down the manner in which consultation must take place. It is for the Court to determine in each case in the light of its facts and circumstances whether the action is "after consultation"; "was in fact consulted" or was it a "sufficient consultation". (7) Where any action is legislative in character, the consultation envisages like one under Sec. 3(1) of the Act, that the Central Govt. is to intimate to the State Governments concerned of the proposed action in general outline and on receiving the objections or suggestions, the Central Govt. or Legislature is free to evolve its policy decision, make appropriate legislation with necessary additions or modification or omit the proposed one in draft bill or rules. The revised draft bill or rules, amendments or additions in the altered or modified form need not again be communicated to all the concerned State Governments nor have prior fresh consultation Rules or Regulations being legislative in character, would tacitly receive the approval of the State Government through the people 's representative when laid on the floor of each House of Parliament. The Act or the Rule made at the final shape is not rendered void or ultra vires or invalid for non consultation. The proposal for amending the new Seniority Rules in the draft was only for inviting discussion and suggestions on the scope and ambit of the proposed law and the effect of the operation of the First Amendment Rules. Keeping the operational effect in view the proposed amendment could be modified or deleted or altered. The Central Govt. is not bound to accept all or every proposal or counter proposal. Consultation with the Ministry of Law would be sufficient. Thereby the Central Govt. is not precluded to revise the draft rules in the light of the consultation and advice. The Central Govt. had prior consultation with the State Governments concerned and the Law Department. In the light of the above principle and applying them to the facts of this case we have no hesitation to hold that the general consultation has by the Central Govt. with the State Govts. and Union Territories was sufficient and it was not necessary to have prior consultation again to bring the proviso on statutes as part of the First Amendment Rules. The contention of Sri Vaidyanathan that the proviso is rendered void for the absence of consultation of the State Govts. is devoid of any force. By operation of sub sec. (2) of Sec. 3 the rules laid on the floor of each House of the Parliament. There were no suggestions or alterations made by either House of Parliament. Under the circumstance we have no hesitation to hold that the failure to consult all the State Governments or Union Territories on the proviso to rule 3(3)(ii) or (iii) of the First Amendment Rules does not render the proviso ultra vires, invalid or void. Accordingly, we do not find any merit to issue the writ as prayed for in the writ petition. The Writ Petition and Civil Appeal arising out of S.L.P. (C) No. 12469/90 are dismissed. The appeal arising out of S.L.P. (C) No. 13823/91 is allowed and the order of the Central Administrative Tribunal, Allahabad Bench at Lucknow is set side. But in the circumstance parties are directed to bear their own costs throughout. WP (C) No. 499/91 dismissed. C.A. No. 4794/92 dismissed. C.A. No. 4788/92 allowed.

On 19.1.1984, the Association [petitioner No. 1 in W.P. (C) No. 499 of 1991] requested the Union Government (Respondent) to remove the disparity prevailing in different states of promotional avenues from State Civil Services to All India Administrative Service. A Committee of Senior Secretaries, constituted by the Union Government, recommended an equitable principle of comparable seniority from different States for promotion to the Indian Administrative Service. The I.A.S. (Regulation of Seniority) Rules, 1987 came into force with effect from 6.11.1987, repealing the old Rules. In a Circular dated 9.9.1986 issued by the respondent Union Government directed the State Governments to give weightage over and above four years the assignment of year of allotment as per the existing rules, namely, four years for the first 12 years State service with additional weightage one year for every two to the years completed service subject to a maximum of five years. Union Government amended and published the New Seniority Rules, 1987, after considering the suggestions from the State Governments. The First Amendment Rules was published in the Gazette of India on 32.1989 which was given prospective operation from 3.2.1989. The appellants in C.I. No. 4794 of 1992 questioned Rule 3(3) (ii) proviso of the First Amendment Rules, in an application before the CAT. at Patna. They contended that though they were found to be entitled to the total weightage of 9 years since the juniors were given 1983 as the year of allotment by operation of proviso to Rule 3(3)(ii) of the First Amendment Rules, were given 1983 as the year of allotment and thereby the appellants were denied the 3 years weightage. The Tribunal upheld the Rules and dismissed the application, against which appeal C.A. No. 4794 of 1992 was filed in this Court. The appellants in C.A. No. 4788 of 1992, some members of the Association petitioner No. 1 of the W.P. (C) No. 499 of 1991 filed an application before the Central Administrative Tribunal at Lucknow contending that they were promoted in 1980 onwards, and they were discriminated in fixation of their seniority. The Tribunal held that the prospective operation of the 1987 Rules discriminated the Senior State Civil Service Officers, but refused to direct the Union Government to amend the Rules but retrospective effect. However, it requested the Government of India to reconsider the matter and to give retrospective operation to the First Amendment Rules. This decision was questioned hl an appeal C.A. No. 4788 of 1992. In WP(C)No. of 499 of 1991, Petitioner No. 1 An Association representing the officers of the U.P. State Civil Service and petitioners 2 17, its members filed the writ petition under Article 32 of the Constitution to quash the order of the respondent Union Government dated 12.12.1990, and for a direction to extend the benefit flowing from the First Amendment Rules to its members promoted prior to January 1988. It was contended that the First Amendment Rules operated with effect from 1992, whereas the promotee Officers were promoted between 1988 to 1991 and that they would get only partial benefit. As these cases raised common questions of law, they were heard together. Dismissing WP(C)No. 499/1991 and CA No. 4794 of 1992, and allowing C.A No. 4788 of 1992, this Court, HELD: 1.01. The entry into the service is from different streams and predominantly by direct recruitment and promotion. The direct recruit gets his year of allotment from the succeeding year of his recruitment. The direct recruit officers appointed earlier to 1988 also would be adversely affected in their seniority. [403 D] 1.02. Rule 3(31 manifests the Central Govt 's intention that the year of allotment of a direct recruit officer shall be the year following the year in which the competitive examination was held. If any such officer was permitted to join probationary training with direct recruit officers of a subsequent year of allotment then he shall be assigned that subsequent year as the year of allotment. [400 G H] 1.03. In determining the seniority of a promotee officer in assigning year of allotment, the service rendered in the State Civil Service upto 12 years as Dy. Collector, or equivalent posts, weightage of 4 years shall be given. In addition he/she shall also be given, further benefit of one year weightage of every completed 3 years of service. beyond the period of 12 years, subject to a maximum weightage of 5 years. In its calculations fractions are to be ignored. The weightage shall be computed from the year G of appointment of the officer to the service. [402 E] 1.04. The offending proviso limits the operation of Rule 3(3) (ii) (a) and (b) that such an officer shall not be assigned an year of allotment earlier than the year of allotment assigned to the officer senior to him in that select list or appointed on the basis of an earlier select list. [1402 F] 105. The proviso aims that the State Civil Service senior officer ' though had varied length of services, but because of late promotion to Indian Administrative Service, would receive and forego proportionate weightage of past service for a short period till the rules fully become operational. [406 B] 1.06. The first amendment rules doubtless provided the remedy to remove existing discriminatory results by giving graded weightage to a maximum of 9 years and would track back the year of allotment anterior to the date of inclusion in the select list under the Recruitment Rules read with Promotion Regulations. [406 C] 1.07. The Proviso intended to protect the seniority of the officers promoted/appointed earlier than the appellants and its effect would be that till rule 3 (3) (ii) fully becomes operational graded weightage was given to the promotees. In other words it prevented to get seniority earlier to the date of his/her appointment to the Indian Administrative Service. Equally it in tended not to let endless chain reaction occur to unsettle the settled interests in seniority. These compulsive circumstances denied the benefits of full 9 years weightage to officers promoted during 1987 to 1992. The discrimination, though is discernible, but inevitable to ensure just results. In other words the proviso prevented unequals to become equals. [406 D E] 1.08. The new Seniority Rules were to be operative from November 6, 1987 and the First Amendment Rules from February 3, 1989 with the result that in assigning the year of allotment, full weightage of 9 years ' eligible service was given to the promotee State Civil Service Officers. However, the senior officer to him/her appointed from the State Civil Service earlier in the same select list or one above him in the previous select list shall remain senior to him. Thereby the proviso averted the effect of pushing an officer who gained entry into IAS service by application of rule of weightage in Rule 3(3) (ii) of the Rules down in seniority. [402 H, 403 A B] 1.09. By dint of merit, ability and suitability junior officer could steal a march over the senior officers in the State Civil Service and get entry into the Indian Administrative Service earlier to the senior officers and thus becomes a member of the Indian Administrative Service. Thereby he becomes senior in service. The senior State Civil Service officer, who was superseded and subsequently became qualified tor inclusion in the select list, after the new Seniority Rules or the First Amendment Rules came into force, indisputably would be junior in I.A.S. cadre to his erstwhile junior officers in State Civil Service. If he gets the benefit of the free play of the First Amendment Rules, it would have the inevitable effect of depriving the promoted erstwhile junior officer of the benefit of early promotion and he would be pushed down and would again become junior to him in the Indian Administrative Service. [405 G H; 406 A B] 1.10. A junior officer who superseded a senior State Civil Officer became entitled to carry his year of allotment and became senior to him in the cadre of I.A.S. But for the proviso, the operation of Rule 3(3)(ii), the senior officer would have been saddled with the disability to be pushed down in seniority which would have nullified and frustrated the hard earned earlier promotion and consequential effect on seniority earned by dint of merit and ability. [403 E] 2.01. No statute shall be construed so as to have retrospective operation unless its language is such as plainly to require such a construction. The legislature, as its policy, give effect to the statute or statutory rule from a specified time or from the date of its publication in the State Gazette. 1404 A] 2.02. Court would issue no mandamus to the legislature to make law much less retrospectively. It is the settled cannons of construction that every word, E phrase or sentence in the statute and all the provisions read together shall be given full force and effect and no provision shall be rendered surplusage or nugatory. [404 B] 2.04. The mere fact that the result of a statute may be unjust, does not entitle the court to refuse to give effect to it. However, if two reasonable interpretations are possible, the Court would adopt that construction which is just, reasonable or sensible. Courts cannot substitute the words or phrases or supply casus omissus. The court could in an appropriate case iron out the creases to remove ambiguity to give full force and effect to the legislative intention. But the intention must be gathered by putting up fair construction of all the provisions reading together. This endeavour would be to avoid absurdity or unintended unjust results by applying the doctrine or purposive construction. 1404 C D] 2.05. Where the intention of statutory amendment is clear and expressive, words cannot be interpolated. In the first place they are not, in the ease, needed. If they should be added, the statute would more than likely fail to carry out the legislative intent. The words are the skin of the language which the legislature intended to convey. [405 B] 2.06. Where the meaning of the statute is clear and sensible, either with or without omitting the words or adding one, interpolation is improper, since the primary purpose of the legislative intent is what the statute says to be so. If the language is plain, clear and explicit, it must be given effect and the question of interpretation does not arise. [405 C] 2.07. If found ambiguous or unintended, the court can at best iron out the creases. Any wrong order or defective legislation cannot be righted merely because it is wrong. At best the court can quash it, if it violates the fundamental rights or is ultra vires of the power or manifestly illegal vitiated by fundamental laws or gross miscarriage of justice. [405 D] 2.08. The Legislature intended that the First Amendment Rules would operate prospectively from February 3, 1989, the date of their publication in the Gazette of India. Its policy is explicit and unambiguous, Rule 3(3)(ii) intended to remedy the imbalances while at the same time the proviso intended to operate prospectively to avert injustice to the officers recruited/promoted earlier than the officer promoted later to that date. The proviso carved out an exception to ward off injustice to the officers that became members of I.A.S. earlier to those dates. [405 E] Smt. Hire Devi & Ors. vs District Board, Shahjahanpur, ; Nalinakhaya Bysck vs Shyam Sunder Haldar & Ors., ; at 545 and Commissioner of Sales Tax, U.P. vs Auriya Chamber of Commerce, Allahabad, 119861 2 SCR 430 at 438, referred to. 3.01. The application of the First Amendment Rules has the inevitable and insiduous effect of doing injustice to the direct recruit promotee officer or officers promoted earlier to Feb. 3, 1989 and the proviso avoided such unjust results. Giving retrospective effect or directing to apply the rule to all the seniors irrespective of the date of promotion to I.A.S. cadre would land in or lead to inequitous or unjust results which itself is unfair, arbitrary and unjust. offending article 14 of the Constitution. To avoid such unconstitutional consequences the proviso to Rule 3(3)(ii) of the First Amendment Rules was made. [407 C] 3.02. But for the proviso the operation of Rule 3(3)(ii) would be inconsistent with Sec. 3(1A) of the Act. Equally though the doctrine 'Reading down ' is a settled principle of law, its application to the facts of the case would lead to injustice to the officers promoted earlier to the appellants. A writ of mandamus commanding the respondents to give full benefit of weightage of Rule 3(3)(ii)(a)&(b) of the First Amendment Rules would amount to direct the executive to disobey the proviso which is now held to be intra vires of the Constitutions. [407 D] 3.03. The proviso to Rule 3(3)(ii) of the First Amendment Rules is consistent with section 3(1A) of the Act and it is not ultra vires of the power the Central Govt. nor it offends articles 14 and 16(1) of the Constitution. [409 A] 3.04. There is a distinction between right and interest. No one has a vested right to promotion or seniority, but an officer has an interest to seniority acquired by working out the rule. Of course, it could be taken away only by operation of valid law. [408 E] 3.05. Law itself may protect the legitimate interest in seniority while granting relief to persons similarly circumstanced like the one under sec. 3(1A) of the Act read with proviso to Rule 3(3) (ii) & (iii) of the First Amendment Rules. It was neither void nor ultra vires offending articles 14 and 16(1) of the Constitution. [410 C] State of Jammu & Kashmir vs T.N. Khosa, ; at 779; J. Kumar vs Union of India, ; at 463 and Union of India vs P.K Roy, 11968] 2 SCR 186 at 201 202, distinguished. D.S. Nakara vs Union of India,. ; ; B. Prabhakar Rao vs State of A.P., [1985] 2 Supp. SCR 379 and A.K Bhatnagar vs Union of India, [1991] 1 SCC 544, referred to. Consultation is a process which requires meeting of minds between the parties involved in the process of consultation on the material facts and points involved to evolve a correct or at least satisfactory solution. There should be meeting of minds between the proposer and the persons to be consulted on the subject of consultation. There must be definite facts which constitute foundation and source for final decision. [415 E] 4.02. The object of the consultation is to render consultation meaningful to serve the intended purpose. Prior consultation in that behalf is mandatory. [415 E] 4.03. When the offending action effects fundamental rights or to effectuate built in insulation, as fair procedure, consultation is mandatory and non consultation renders the action ultra vires or invalid or 4.04. When the opinion or advice binds the proposer, consultation is mandatory and its infraction renders the action or order illegal. 1415 F] 4.05. When the opinion or advice or view does not bind the person or authority, any action or decision taken contrary to the advice is not illegal, nor becomes void. [415 G] 4.06. When the object of the consultation is only to apprise of the proposed action and when the opinion or advice is not binding on the authorities or person and is not bound to be accepted, the prior consultation is only directory. The authority proposing to take action should make known the general scheme or outlines of the actions proposed to be taken, be put to notice of the authority or the persons to be consulted, have the views or objections, taken them into consideration, and there after, the authority or person would be entitled or has/have authority to pass appropriate orders or take decision thereon. In such circumstances it amounts to an action "after consultation". [415 H, 416 A B] 4.07. No hard and fast rule could be laid, no useful purpose would be served by formulating words or definitions nor would it be appropriate or lay down the manner in which consultation must take place. It is for the Court to determine in each case in the light of its facts and cir cumstances whether the action is "after consultation", "was in fact consulted" or was it a "sufficient consultation". [416 C] 4.08. Where any action is legislative in character, the consultation envisages like one under Sec. 3 (1) of the Act, that the Central Govt. is to intimate to the State Governments concerned of the proposed action in general outlines and on receiving the objections or suggestions, the Central Govt. or Legislature is free to evolve its policy decision, make appropriate legislation with necessary additions or modification or omit the proposed one in draft bill or rules. The revised draft bill or rules, amendments or additions in the altered or modified from need not again be communicated to all the concerned State Governments nor have prior fresh consultation. Rules or Regulations being legislative in character, would tacitly receive the approval of the State Governments through the people 's representatives when laid on the floor of each House of Parliament. The Act or the Rule made at the final shape is not rendered void or ultra vires or invalid for non consultation. [416 D F] 4.09 The proposal for amending the new Seniority Rules in the draft was only for inviting discussion and suggestions on the scope and ambit of the proposed law and the effect of the operation of the First Amendment Rules. Keeping the operational effect in view the proposed amendment could be modified or deleted or altered. [416 G] 4.10 The Central Govt. is not bound to accept all or every proposal or counter proposal. Consultation with the Ministry of Law would be sufficient. Thereby the Central Govt. is not precluded to revise the draft rules in the light of the consultation and advice. [416 H] 4.11 The general consultation had by the Central Govt. with the State Govts. and Union Territories was sufficient and it was not necessary to have prior consultation again to bring the proviso on statutes as part of the First Amendment Rules. [417 B] 4.12 By operation of sub sec. (2) of Sec. 3 the rules were laid on the floor of each House of the Parliament. There were no suggestions or alterations made by either House of Parliaments. Thus the First Amendment Rules stood approved by the Parliament. [417 C] 4.13 The failure to consult all the State Governments or Union Territories on the proviso to Rule 3(3) (ii) or (iii) of the First Amendment Rules does not render the proviso ultra vires, invalid or void. [417 D] Union of India vs Sankalchand Himatlal Sheth & Anr., ; ; R. Pushpam vs State of Madras, AIR 1953 Madras 392; State of U.P. vs Manmohan Lal Srivastava, ; at 542; U.R. Bhatt vs Union of India, AIR 1962 SC 1344; Ram Gopal Chaturvedi vs State of Madhya Pradesh, ; ; N. Raghavendra Rao vs Dy. Commissioner, South Kanara, Mangalore, ; ; Mohd. Sujat Ali & Ors. vs Union of India, ; at 469 471; Chandramouleshwar Prasad vs Patna High Court & Ors., ; at 674 675; Narain Sankaran Mooss vs State of Kerala & Anr, ; ; Naraindas Indurkhya vs State of M.P. & Ors., ; Hindustan Zinc Ltd. vs A.P. Electricity Board, Ors.; , ; Rollo & Anr. vs Minister of Town & Country Planning, [1948] 1 All Eng. Reports 13; Electher & Ors. vs Minister of Town & Country Planning, [1947] 2 All. Reports 496; Sinfield & Ors. vs London Transport Executive, Law Reports 1970 Chancery Divn., Derham & Anr. vs Church Commissioners for England, 1954 Appeal Cases 245 and Port Louis Corporation vs Attorney General of Mauritius, 1965 Appeal Cases 1111, referred to. Union of India & Ors. vs Dr. section Krishna Murthy & Ors.,[1989] 4 SCC 689, distinguished.

241 and 242 of 1960. Petitions under article 32 of the Constitution of India for enforcement of Fundamental Rights. P. B. DaS, K. Choudhoury, Balbhadra Prasad Singh and I. N. Shroff, for the petitioners. M. C. Setalvad, Attorney General of India, B. Sen and R. H. Dhebar, for the respondents. February 10. The Judgment of the Court was delivered by MUDHOLKAR, J. The petitioner in W. P. 241 of 1960, Messrs. Burrakur Coal Co., Ltd., and the petitioner in W. P. 242 of 1960, Messrs. East India Coal Co., Ltd., claim to have acquired mining rights in two blocks in Mouza Sudamdih and Mouza Sutikdih respectively situated in Dhanbad district in the State of Bihar. On July 28, 1960, the Central Government published a notification bearing No. section 0. 1927 under section 4 of the Coal Bearing Areas (Acquisition and Development) Act, 1957 (No. 20 of 1957), stating its intention to prospect for coal in an area approximately five sq. miles which includes Sudamdih colliery aud Sutikdih colliery. The petitioners have stated in their respective petitions that in consequence of the issue of the aforesaid notification they are precluded from carrying on any mining operations in the respective collieries and that the Central Government is entitled to acquire mining rights in the area covered by the notification within a period of two years from the date of notification or within such further period not exceeding one year as the Central Government may specify by notification in the Official Gazette. The petitioners have come up to this Court under article 32 of the Constitution contending that the aforesaid notification is ultra vires and illegal inasmuch as it interfere,% with their fundamental right to own property and to carry on business. Assuming that an incorporated company is a citizen we may point out that the East India Coal Co., Ltd. is incorporated in the United Kingdom while the Burrakur Coal Co., Ltd. is 47 incorporated in India. Therefore, in so far as the rights conferred by article 19 are concerned it may only be the latter which is entitled to the protection of the Constitution but not the former company. Both the petitioners, however, contend that the right conferred by article 31(2) of the Constitution is also infringed by the aforesaid notification and if their contention is correct they will be entitled to protection in respect of that right inasmuch as it is not limited to the citizens of India as is the case with regard to the rights enumerated in article 19. Both the petitions were argued together though the arguments were addressed mainly with reference to the case of Burrakur Coal Co., Ltd. and, therefore, it is that case with which we will deal fully. After dealing with the arguments advanced with reference to that case we will deal briefly with the other case. The challenge to the notification rests on two grounds, firstly that the notification is ultra vire8 the Act and secondly that the Act is itself ultra vires the Constitution. The petitioner 's learned counsel Mr. P. R. Das contends that the Act applies to "unworked" coal mines which according to him, mean virgin lands and not to those which are being worked at present or which were worked in the past. In support of this contention he strongly relies upon the preamble to the Act. The preamble runs thus: "An Act to establish in the economic interest of India greater public control over the coal mining industry and its development by providing for the acquisition by the State of unworked land containing or likely to contain, coal deposits or of rights in or over such land, for the extinguishment, or modification of such rights accruing by virtue of any agreement, lease, licence or otherwise. and for matters connected therewith. " His argument proceeds to the length of saying that even abandoned mines are not touched by the Act. According to him, however, the Sudamdih colliery was not an abandoned mine nor could it be regarded as abandoned because, though it was not actually worked 48 between the year 1932 and the month of May. 1960. the petitioner had purchased it for a large consideration amounting to over Rs. 1,46,000 and thereafter it paid annually the minimum rent and royalty which totals upto over Rs. 1,23,000 from May 1, 1939, to June 30, 1960. According to the petitioner the mine was not actually worked during this period because in the petitioner 's opinion it was uneconomical to work it. The petitioner in fact made ' an application on December 3, 1959, to the Coal Board as required by the provisions of the Coal Mines (Conservation and Safety) Act, 1952 (XII of 1952), for permission to reopen the colliery but it did not receive any reply from the Coal Board. Even so, the petitioner commenced drilling operations in the beginning of May, 1960 and carried them on till August 12, 1960, during which a depth of 235 ft. was reached at one point. The petitioner, however, stopped these operations consequent upon the publication of the impugned notification in the Gazette of August 6, 1960. We are mentioning. these facts because on their basis a further argument is raised by Mr. Das to the effect that prior to the issue of the notification the mine was being actually worked. Before, however, we deal with that argument we must consider the main contention of Mr. Das which is to the effect that the Act applies only to virgin land. Mr. Das contended that the preamble to an Act is a key to understanding the provisions of the Act and referred us in this connection to the advisory opinion of this Court in re the Kerala Education Bill, 1957 In that case Das, C. J., who delivered the opinion of the Court has observed: "The long title of the said Bill (The Kerala Education Bill, 1957) describes it as A Bill to provide for the better organisation and development of educational institutions in the State '. Its preamble recites thus: 'Whereas it is deemed necessary to provide for the better organisation and development of educational institutions in the State provid ing a varied and comprehensive educational service (1) [1959] S.C.R. 995, 1022. 49 throughout the State '. We must, therefore, approach the substantive provisions of the said Bill in the light of the policy and purpose deducible from the terms of the aforesaid long title and the preamble and so construe the clauses of the said Bill as will subserve the said policy and purpose". While. holding that it is permissible to look at the preamble for understanding the import of the various clauses contained in the Bill this Court has not said that full effect should not be given to the express provisions of the Bill even though they appear to go beyond the terms of the preamble. It is one of the cardinal principles of construction that where the language of an Act is clear, the preamble must be disregarded. Though, where the object or meaning of an enactment is not clear, the preamble may be resorted to explain it. Again, where very general language is used in an enactment which, it is clear must be intended to have a limited application, the preamble may be used to indicate to what particular instances the enactment is intended to apply (1). We cannot, therefore, start with the preamble for construing the provisions of an Act, though we would be justified in resorting to it, nay, we will be required to do so, if we find that the language used by Parliament is ambiguous or is too general though in point of fact Parliament intended that it should have a limited application. Mr. Das then contended that the various provisions of the Act clearly show that Parliament intended the Act to apply only to virgin land. In support of this contention he referred to the provisions of as. 4,5,6, 7 and 8 of the Act. He pointed out that whenever it appears to the Central Government that coal is likely to be obtained from land in any locality it is empowered by sub a. (1) of section 4 to give notice of its intention to prospect for coal therein. According to him, where a mine has been worked at some time in the past all the necessary information would be available in the working plan of the mine, and, by way of illustration pointed out that the fullest information (1) Craies Interprotation of Statutes, 5th Edn., pp. 188, 189. 50 was available in the working plan, Annexure B1 of the Sudamdih colliery. He further pointed out that this information was in fact in the possession of the Government as would appear from Annexure B which was appended to the notification of July 20, 1960. We may point out that this annexure sets out that this is a statement of percentage of worked and unworked areas in different coal mines and. after setting out the various seams which have been proved, the percentages of worked and unworked areas have been specified therein. Prospecting, according to Mr. Das, would be necessary only if nothing is known about an area and therefore there can possibly be no need for prospecting when a mine has been worked. Admittedly, sub section (1) of a. 4 does not specifically say that it applies to unworked land. All the same, according to Mr. Das, it must be so construed as to apply to unworked land only; for, there would be no need for the Government to undertake prospecting for coal in worked land on which there is a colliery. We cannot accept the argument of Mr. Das. The bulk of the coal in a mine is underground and even though the existence of some seems may have been proved in particular areas it is impossible to say that the information obtained when it was prospected once or when it was being worked, as to the quality and quantity of coal or the dimensions of the seams is complete. The seams are not necessarily horizontal and more often are inclined and sometimes even folded. Then again there may be faulting in the strata of coal as a result of which an impression may be created that a seam has disappeared at a particular place though further borings or drilling may show that even. beyond that point but at greater depths the same seam reappears. So where a mine was worked in the past but mining operations therein were stopped either because the coal therein was thought to have been exhausted or because it was not thought to be of a sufficiently good quality such as to make the working of the mine economic, further prospecting may well reveal the existence of additional coal bearing strata or of a better type of coal than that found 51 earlier. On the plain language of sub a. (1) of section 4 the Central Government has been empowered to issue a notification with reference to its intention of prospecting any land in a locality and not only such land as is virgin in the sense in which Mr. Das uses that expression. Then Mr. Das referred sub section (3) of a. 4 and said that the whole of the country has been subjected to a geological survey of a very detailed kind and all known coal fields are mentioned in one report or the other of the department of Geological Survey of India. Collieries which have been worked at some time in the past must have been mentioned in one of these reports and. , therefore, it would be wholly unnecessary for the legislature to confer upon the Government the power as is done by cl. (a) of sub section (3) of section 4 to enter upon and survey any land in the locality in which such colliery is situate. The very fact that power has been given to the Central Government to enter upon and survey land for ' the purpose of ascertaining whether there is any coal in that land shows that the legislature had in mind only that land which has not been mentioned as coal bearing in any of the reports of the Geological Survey of India. Here again we may point out that the object of survey of land is to enable the Government to satisfy itself not merely about the fact that any coal exists in that land but also about the quality and quantity of coal therein and whether it would be an economical proposition to work the mines already existing on that land. Indeed a perusal of the provisions of sub a. (4) of section 4 would show that the Act is not restricted to unworked lands only but applies equally to those lands on which there are existing mines but those mines are not being worked. That sub.section reads as follows: "In issuing a notification under this section the Central Government shall exclude therefrom that portion of any land in which coal mining operations are actually being carried on in conformity with the provisions of any enactment, rule or order for the time being in force or any premises on which any process ancillary to the getting, dressing or 52 preparation for sale of coal obtained as a result of such operations is being carried on are situate". Under this provision the Central Government is required to exclude that portion of any land in which coal mining operations are being carried on "in conformity with any enactment, rule or order". This would indicate that the language of sub section (1) of section 4 was understood as applying also to that land in which coal mining operations were actually being carried on. Unless we hold so, the whole of sub section (4) would be rendered otiose. Mr. Das, however, says that sub section (4) enacts a "rule of exclusion" and that it had been enacted by way of abundant caution. We cannot accede to this argument for the simple reason that if the language of sub section (1) of section 4 is capable of being interpreted as applying to any land in which coal mining operations are actually being carried on, then there is all the greater reason why that provision should be held also to apply to land in which coal mining operations were carried on in the past, though they are not being carried on at present. If Parliament was cautious enough to exclude land in which coal mining operations are actually being carried on why did it stop there and not exercise the same caution with respect to land in which coal mining operations were once being carried on but have now ceased? For, on the plain meaning of the word "unworked" such lands would more readily fall within the terms of sub section (1) of section 4 than land in which coal mining operations were actually being carried on, that is to say, "worked lands". Then Mr. Das referred to cl. (b) of section 5 which runs thus: "any mining lease in so far as it authorises the lessee or any person claiming through him to undertake any operation in the laid, shall cease to have effect for so long as the notification under that sub. section is in force". He contended that what this provision prohibits is the undertaking of any operation in the land and not carrying on of an operation. Undertaking of an operation, according to himself 'relates to the initial 53 working of the mine and riot to the resumption of work on the mine after work thereon had stopped nor to carrying on work on a mine the working of which had not been stopped. As a consequence of the issue of a notification under sub section (1) or section 4 what the lessee of a mining lease is prohibited from doing is undertaking any operation on land on which no operations were being carried on. But he is not prohibited from continuing to carry on operations which he was carrying on at the date of the notification. We cannot, however, accede to the contention that the resumption of mining operations on a land is outside the bar created by this pro vision. The words used in the section are "to undertake any operations in the land" which, according to the Concise Oxford Dictionary mean "to enter upon (work, enterprise, responsibility)". The meaning of the provision, therefore, is that what the lessee is prohibited from doing is something which he was not doing at the date of the notification though he was authorised to do it under his lease. Thus if a colliery was not functioning at the date of the notification then by virtue of the provisions of a. 5(b) he would not be permitted to work it. Undoubtedly the provision has to be interpreted reasonably and it does not mean that if the notification came into force on the Monday and the mine was not worked on Sunday because of a holiday, the lessee was prohibited by the notification from working it. The resumption of working of a mine after a casual closure or a closure in the ordinary course of working a mine would not fall within the bar created by section 5(b). In this connection we may refer to r. 7 of the Coal Mines Regulations of 1957, which provides that when it is intended to reopen a mine after abandonment for a period exceeding 60 days not less than 30 days notice before resumption of mining operations must be given to certain authorities. The Coal Mines Regulations of 1957 have been framed under section 57 of the Mines Act of 1952, section 16 of which provides for the giving of notice before commencement of mining operations. It is in the light of these provisions that we must interpret the provisions of section 5(b) of the Act. So what must be said to have 54 been prohibited would be the undertaking of an operation on land not for the first time only but also the resumption of an operation which had been abandoned or discontinued. Mr. Das then contended that a mining area is always extensive and it is not possible to work on every bit of it simultaneously and, therefore, if work is carried on at one point in a colliery the whole colliery must be deemed to be working, that is to say, coal mining operations must be deemed to have been carried on over the entire area on which the colliery is situate. In support of his contention he relied upon the decision of the Privy Council in Nageswar Bux Roy vs Bengal Coal Co., Ltd. (1), and upon a passage in Halsbury 's Laws of England(2). Both the decision of the Privy Council as well as the passage in Halsbury deal with the question of possession and state the law to be that a person can be said to be in possession of minerals contained in a well defined mining area even though his actual physical possession is confined to a small portion, that is, to the mine which is being actually worked. The decision of the Privy Council as well as the passage in Halsbury are nus not in point. Further it is difficult to see how an exemption under section 4(4) is admissible in the case of the Sudamdih colliery or Sutkidih colliery unless it is shown that they were actually being worked at the date of the notification in conformity with the provisions of "any enactment, rule or order for the time being in force". It is an admitted fact that though a notice was given under section 16 of the , by the Sutkidih Colliery, the petitioners in W.P. 242 of 1960, it aid not actually start working the colliery in view of the impugned notification. As we have al. ready pointed out the Burrakur Coal Co., Ltd. did commence working the Sudamdih Colliery in May, 1960, even though it had not obtained the permission of the appropriate authorities. We must, therefore, examine here the argument of Mr. Das that every colliery must be held to be exempted under sub section (4) of section 4. We have already referred (1) (1930) L.R. 58 I A. 29. (2). 3rd Edn., Vol. 26, p. 630. 55 to section 16 of the , and regulation 7 of Mining Regulations, 1957. In addition, there is Regulation 3 of 1957 which requires that the notice contemplated by section 16 should be submitted in Form I. No doubt the petitioner had given notice as required by these provisions. No doubt also that it was necessary for the authorities concerned to take appropriate action on the notice. But it is difficult to say that the inaction of the authorities can be availed of by the petitioner. We must give effect to the plain lan guage of sub section (4) of section 4. That provision in clear terms makes an exclusion or exemption only with regard to that portion of the land in which coal mining operations are actually being carried on in conformity with the provisions of any enactment, rule or order. Therefore, it is clear that Parliament was exempting only such collieries as were being worked in consonance 'with the provisions of law. Mr. Das 's argument, however, is that the Act prescribes penal ties for the breach of its provisions and of those of the regulations and so the petitioner could well be visited with an appropriate penalty but that its right to run the mine could not be affected. We are not here concerned with the question whether the failure of the petitioner to comply with the requirements of the Coal or of the Regulations of 1957 precludes the petitioner under that Act or under those regulations from carrying on mining operations. We are concerned here only with one point, and that is whether the petitioner could be said in point of fact to have been carrying on mining operations in accord ance with law. That the petitioner was not doing so is not even denied by Mr. Das and in the circumstances it is clear that the petitioner is not entitled to the benefit of sub section (4) of section 4. We should have dealt with this part of Mr. Das 's argument elsewhere but in order to avoid repetition we have thought it convenient to deal with it here. Adverting to section 6(1) of the. Act which deals with compensation for any necessary damage done under section 4 of the Act, learned counsel contended that Parliament plainly intended the Act to apply to virgin land. 56 If the section was intended to apply to worked mines there would have been provision, according to learned counsel, for payment of compensation to the owner or lessee of the mine, for being deprived of his right to work the mine consequent upon the . issue of the notification. It is sufficient to point out that section 4 does not contemplate entering upon any land which is actually being worked and there will thus be no deprivation in fact of the owner 's or lessee 's right of working the mine. The Act applies only to "unworked lands". This expression would include not only virgin lands but also lands on which mines may have been opened and worked sometime in the past but working on those mines was either discontinued or abandoned. Of course, it is possible to say that the action of the Government would interfere with the potential right of the owner or the lessee to work the mines and this would interfere with his right to hold property and carry on his business. When we deal with the other part of Mr. Das 's argument we shall deal with this question. It was next contended that section 7 which deals with the power of the Central Government to acquire land or rights in or over land notified under section 4 also indicates the limited operation of the Act. Sub section (1) of section 7 runs thus: "If the Central Government is satisfied that coal is obtainable in the whole or any part of the land notified under sub section (1) o f section 4, it may, within a period of two years from the date of the said notification or within such further period not exceeding one year in the aggregate as the Central Government may specify in this behalf, by notification in the official Gazette, give notice of its intention to acquire the whole or any part of the land or of any rights in or over such land, as the case may be". The argument was that in respect of mines which have already been worked at some time in the past all the relevant material would be at the disposal of the Government even previous to the issuing of a notification under sub section (1) of section 4 and, therefore, there 57 could be no necessity for the Government to enter on and prospect the land for being satisfied that coal is obtainable therefrom. Therefore, the argument proceeds, the provision could not have been intended to apply to land other than virgin land. This is really a repetition of the argument which was addressed to us in connection with sub. (1) of section 4 and what we have said with regard to that sub section would equally apply here. Sub section (1) of section 7 provides for a period of two years within which a notice of acquisition could be given by the Central Government. It is argued that this period is too long for keeping out an owner or lessee of land, the mines on which had been worked in the past and that Parliament could not have intended this effect. Therefore, the argument proceeds, this provision also points to the conclusion that the word "land" wherever it occurs in the Act should be read as virgin land. Prospecting operations are necessarily prolonged because what lies under the surface of land cannot be easily ascertained except by undertaking drilling or other appropriate operations at a number of places. Such operations are bound to be prolonged. Parliament apparently thought that it would be reasonable to allow a period of two years to the Government for carrying on the necessary operations and for, making up its mind. The mere length of the period so allowed to the Government cannot be regarded as indicative of the intention of Parliament to give to the word 'land ' the meaning 'virgin land '. Reliance was placed on the explanation to sub a. (1) of section 8. That sub section and the explanation are as follows: "Any person interested in any land in respect of which a notification under section 7 has been issued may, within ' thirty days of the issue of the notification, object to the acquisition of the whole or any part of the land or of any rights in or over such land. Explanation. It shall not be an objection within the meaning of this section for any person to say 58 that he himself desires to undertake mining operations in the land for the production of coal and that such operations should not be undertaken by the Central Government or by any other person". It was argued that in the explanation the words used are "to undertake mining operations" and not "to carry on mining operations" and therefore the Act could not be intended to apply to worked mines. Here again the argument is similar to that advanced on the basis of cl. (b) of section 5 and what we have said regarding it would equally apply here. Adverting to section 13 of the Act which deals with compensation for prospecting licences ceasing to have effect and rights under mining leases being acquired, it was contended that as there is no provision for compensation in respect of the minerals lying underground, Parliament could not be deemed to have enacted this law for the purpose of acquiring mines which have been worked in the past. According to Mr. Das if we have understood him right, when a person has acquired land either as an owner or as a lessee carrying with it the rights to win minerals and has opened in that land mines which he worked for sometime, there takes place a severance between the right to the surface and right to the minerals and that consequently such person will thereafter be holding the minerals as separate tenement, that is, something apart from the land demised and this separate tenement cannot be acquired under the terms of the present Act or, if it can be so acquired, it has to be specifically compensated for. Reference to the several provisions of the Act and in particular to those of section 13 indicates, according to learned counsel, the limited scope of the Act. It is difficult to appreciate the contention that merely because the owner or the lessee of a land had opened mines on that land, a severance is effected between the surface and the underground minerals. It may be that a trespasser by adverse possession for the statutory period can acquire rights to underground minerals. It may also be that if that happens the surface rights would become severed from the mineral rights as a result of which the 59 minerals underground would form a separate tenement. It is, however, difficult to see how the owner or the lessee of land who has right to win minerals can effect such a severance between the mineral rights and surface rights by opening and operating the mines of that land. For, even while he is carrying on mining operations he continues to enjoy the surface rights also. We cannot, therefore, accept the contention that there was any severance of the mineral rights and surface rights in either of these two cases. It is no doubt true that section 13 does not make any specific provision for compensation in respect of minerals, but on the other hand it provides in the explanation to el. (a) of sub section (5) that the value of minerals lying in the land shall not be taken into consideration in assessing compensation. Whether the absence of a provision for compensation ' would make the Act ultra vire8 in so far as it contemplates acquisition of land will be considered presently. We may, however, point out that the Act does not make provision for compensation for minerals in respect of even virgin land and the argument of Mr. Das would equally apply to such land. Therefore, no point can be made from the absence of a provision for compensation for minerals that the Act was applicable only to virgin lands. For all these reasons it is clear that the notification is not ultra vires the Act because, in our view the Act applies not only to virgin lands but also to dormant collieries or unworked lands. To sum up, in our view, the preamble of this Act need not be resolved to for construing its provisions and in particular for understanding the meaning of the word "land" used in the Act; that even if the preamble is taken into consideration the expression "unworked land" occurring in the preamble should be given its ordinary meaning, that is to say, land which was not being worked at the time of the notification issued under the Act, which would include dormant mines; that the provisions of the Act and in particular those of sub section (4) of section 4 and section 5(b) clearly militate against the contention that the Act was intended to apply only to virgin lands, to the exclusion of land on 60 which there are dormant mines, and that the absence of a provision in section 13 of the Act providing for compensation for mineral rights cannot by itself justify the conclusion that the Act was intended to apply to virgin land only. Now we come to the second part of the argument. It is contended that sections 4, 5 and 6 invade the fundamental rights of the petitioner under article 19(1)(g) of the Constitution because under section 5, a mining lease ceases to have effect for two years and possibly for three years. Mr. Das concedes that reasonable restrictions can be placed by the State upon the rights enumerated in this article in the interests of the general public but he contends that the period of two to three years is too long and, therefore, the restrictions cannot be regarded as reasonable. We have already indicated that prospecting operations, in their very nature, must take a long time to complete and presumably Parliament had fixed this period after bearing in mind this factor and also on the basis of expert advice. Of course, there are no pleadings to that effect in the affidavit of the State. But in our opinion the petitioner cannot be permitted to complain of the absence of pleadings because it has not itself stated in the petition what would be reasonable time for conducting prospecting operations. We are, therefore, unable to accede to the argument. The next attack, and that is a more formidable one, is based upon the ground that the Act does not contain any provision for compensation for the deprivation of the petitioners right to carry on its business for two to three years and that consequently one of its fundamental rights is infringed. It is no doubt true that in a. 13(4) which deals with the question of compensation there is no provision for payment of compensation for the deprivation of the right of a mine owner or a lessee to carry on his business for a period of two or three years, but the petitioner cannot complain about it. In article 31A, cl. (1), sub el. (e), of the Constitution, which was inserted by the Constitution First Amendment Act, 1951, it is provided that "notwithstanding anything contained in article 13, no 61 law providing for. . . the extinguishment or modification of any rights accruing by virtue of any agreement, lease or licence for the purpose of searching for, or winning, any mineral or mineral oil, or the premature termination or cancellation of any such agreement, lease or licence, shall be deemed to be void on :the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by article 14, article 19 or Art 31. " Then follows a proviso with which we are not concerned. The effect of a notification under section 4(1) of the Act read with section 5(b) is to prevent an owner or lessee of a mine from working his mine far a certain period of time. His rights are thus modified by the notification. According to Mr. Das, however, the effect of the notification is to suspend the rights of a mine owner or lessee of the mine for a certain period and that such suspension is not modification. In this connection he relied upon the observations of Mahajan, J., (as he then was), in Thakur Raghbir Singh vs Court of Wards, Ajmer (1). That was a case where, in connection with a notification issued under the Court of Wards Act, the learned Judge observed that the word "modification" used in the aforesaid provision of the Constitution does not include suspension of a right. The observations made in that case fell for consideration by this Court in Sri Ram Ram Narain Medhi vs The State of Bombay (2) and Atma Ram vs The State of Punjab and Ors. Explaining them this Court observed in the latter case: "Those observations must be strictly limited to the facts of the case, and cannot possibly be extended to the provisions of Acts wholly dissimilar to those of the Ajmer Tenancy and Land Records Act, XLII of 1950, which was the subject matter of the challenge in the case then before this Court. This Court held, on a construction of the provision of that Act, that they only suspended the right of management but did not amount to any extinguishment or modification of any proprietary rights (1) ; ,1053. (2) [1959] Supp. S.C.R. 489, 519 (3) [1959] SUPP. S.C.R. 748, 767. 62 in an estate. The provisions of the Act then under consideration of this Court, have absolutely no resemblance to those of the Act now before us, and it is impossible to put a similar interpretation on these provisions. In the recent decision of this Court (not yet reported) this Court had been invited to apply the observations of this Court referred t o above, to the provisions of the Bombay Act. It was pointed out in that case that those observations of Mahajan, J., (as he then was), must be read as limited to an Act which only brings about a suspension of the right of management of an estate, and could not be extended to the provisions of an Act which either extinguishes or modifies certain rights of a proprietor in an estate or a portion thereof". This Court did not intend to lay down as law in Thakur Raghbir Singh vs Court of Wards, Ajmer (1) that article 1A(i)(e) is inapplicable to a case where the property rights of a person are kept in abeyance for a certain period. The meaning of the word "modify" fell to be considered, in re The As pointed out in the opinion of Kania, C. J., the word "modify" means, according to Oxford Dictionary, to limit, restrain, to assuage, to make less severe, rigorous, or decisive; to tone down". It also means "to make partial changes in; to alter without radical transformation". In Rowland Burrows" 'Words and Phrases ', the word "modify" has, however, been defined as meaning "vary, extend or enlarge, limit or restrict". According to the learned Chief Justice "It has been held that modification implies an alteration. it may narrow or enlarge the provisions of the former Act". Bearing in mind the principle that a constitutional enactment must be construed liberally we would be right in according the dictionary meaning to the word " modification" occurring in the aforesaid provision. Mr. Das, however, contends that for a thing to amount to a modification of a right it must be of a permanent character and not of a temporary duration. We see no ground whatsoever for holding that for a (1) ; ,1053. (2) 63 thing to be a modification it must be of a permanent duration. A right may well be modified for all time or for a limited duration and in either case the right must be regarded as having been modified. For these reasons we hold that the provisions of article 31A, cl. (1)(e), debar the petitioners from challenging the validity of sections 4 and 5 of the Act on the ground that they infringe the provisions of article 31(2) of the Constitution. What remains to be considered is whether the provisions permitting acquisition of land are ultra vires the Constitution because they offend article 31(2) of the Constitution. According to the learned Attorney General the petitioners have no present grievance on that score because the notification in question empowers the State only to prospect for coal in the petitioner 's land and not to acquire it. We cannot accept this contention. The whole object of Parliament in enacting the law was to empower the State to acquire coal bearing lands. Prospecting on a piece of land for coal is merely a stage preceding the actual acquisition of that land. If, therefore, those provisions of the law which deal with the question 'of acquisition are unconstitutional the whole Act will be rendered unconstitutional. Article 31(2) of the Constitution, as amended by the Fourth Amendment Act, 1955, runs thus: "No property shall be compulsorily acquired or requisitioned save for a public purpose and save by authority of a law which provides for compensation for the property so acquired or requisitioned and either fixes the amount of the compensation or specifies the principles on which, and the manner in which, the compensation is to be determined and given; and no such law shall be called in question in any court on the ground that the compensation provided by that law is not adequate". Mr. Das pointed out that section 13 of the Act, though it deals with the payment of compensation, does not contain any provision for payment of compensation for mineral rights. Not only that, but the explanation to cl. (a) of section 5 clearly lays down that in computing the 64 compensation for the land the value of minerals will not be taken into account. The acquisition of mineral rights would, therefore, according to him, be impermissible under article 31(2) without payment of compensation. The learned Attorney General quite rightly pointed out that section 13 deals with the whole subject of payment of compensation to the owner or lessee of the mine for his entire interest in the land including the rights to minerals and even though that section specifically says that the value of the minerals cannot be taken into account in determining the amount of compensation, the concluding words of article 31(2) preclude the petitioners from challenging the law. Mr. Das pointed out that the only ground on which the Central Government in their affidavit have tried to sustain the validity of the provisions relating to the acquisition of land under the Act is that a challenge to the validity of the law is barred by the provisions of article 3lA(1)(e) and that it is not now open to the Central Government to say that the law can be sustained on another ground. We cannot accept this contention. Where the validity of a law made by a competent legislature is challenged in a Court of law that Court is bound to presume in favour of its validity. Further, while considering the validity of the law the court will not consider itself restricted to the pleadings of the State and would be free to satisfy itself whether under any provision of the Constitution the law can be sustained. There is no doubt that the entire Act cannot be sustained by resorting only to article 31A(1)(e) or to article 31(2A) of the Constitution because these provisions do not deal with the question of acquisition and the Attorney General fairly admitted that it could not be so sustained. The opening words of sub section (2) of section 13 read thus: "Where the rights under a mining lease are acquired under this Act, there shall be paid to the person interested compensation, the amount of which shall be a sum made up of the following items, namely. . Then follow the items which have to be added up Undoubtedly they are items of expenditure and 65 interest on such expenditure. Sub section (3) deals with the procedure to be adopted where the rights acquired under section 9 relate only to part of the land covered by the mining lease. Sub section (4) deals with the compensation to be paid where the mining lease ceases to have effect for any period under cl. (b) of section 5. Subsection (5) provides for payment of compensation for any land acquired under section 9 and lays down the principles to be followed in computing the compensation. Sub section (6) provides for payment of com pensation for damage done to the surface of any land or any works thereon and in respect whereof no provision for compensation is made elsewhere in the Act. Sub section (7) deals with the question of compensation for maps, charts and other documents. Section 14 of the Act deals with the method of determining the compensation. It will be clear from these provisions that the Act specifies the principles on which and the manner in which the compensation should be determined and given. This is all that is required of a law relating to the acquisition of property by article 31(2) of the Constitution. Where provisions of this kind exist in a law that Article lays down that such law cannot be called in question in any court on the ground that the compensation provided by that law is not adequate. Here compensation is specifically provided for the land which is to be acquired under the Act. The land includes all that lies beneath the surface or, as Mr. Das put it, all that is "locked up " in the land. Parliament has laid down in sub B. (5) of section 13 how the value of this land is to be calculated. The contention that the provisions made by Parliament for computing the amount of compensation for the land do not take into account the value of the minerals is in effect a challenge to the adequacy of the compensation payable under the Act. The concluding words of article 31(2) preclude such a challenge being made. But Mr. Das contended that the minerals are separate tenement and have to be separately compensated for. We have already dealt with the contention of Mr. Das that the minerals underlying the surface are a separate tenement and we need not repeat here all 66 that we have said before. In our opinion the minerals cannot be regarded as a separate tenement except perhaps in a case of a trespass and, therefore, there is no question of the law providing for a separate compensation for them. Apart from that if minerals have become a separate tenement then the present Act may not apply to such a tenement at all. As we have pointed out the coal contained in the two collieries in question is not held by the respective petitioners as a tenement separate from the surface. In the circumstances the challenge to the validity of the Act on the ground that it offends article 31(4) of the Constitution fails, and we dismiss the petition with costs. We must say a few words about W. P. 242 of 1960. Out of 737 bighas of land held by the petitioner in that writ petition, we are informed that 321 bighas have been worked. The working,of this mine was closed in the year 1928 on the ground that the mine was flooded. An application Was made by the petitioner for reopening the mine on June 5, 1957. Repeated reminders were sent subsequently but there was no reply to any of them either. In its application the petitioner, it may be stated, did not apply for opening new mines. Since the necessary permission was not received, it did not commence any operations. We are informed that over a million tons of coal was extracted by the petitioner from its colliery in the past. Even so, we do not think that any different considerations could apply to the petitioner 's case from those which apply to the case of the Burrakar Coal Co. The petitioner 's colliery was also dormant for too long a period and was thus an "unworked mine". The impugned Act and the notification made thereunder both apply to it in the same way as they apply to the Sudamdih colliery belonging to Burrakur Coal, Co., Ltd. The writ petition thus fails and is dismissed with costs. Cost of the hearing be paid half and half by the two petitioners. There will be only one hearing fee, to be divided equally between the two petitioners. Petitions dismissed.

The Coal Bearing Areas (Acquisition and Development) Act, 1957, was enacted, as indicated in the preamble, for providing for the acquisition by the State of unworked land containing or likely to contain coal deposits, and under section 4(1) of the Act, the Central Government was empowered to issue a notification with reference to its intention to prospect for coal from land in any locality. By section 5(b) any mining lease granted to a person and in respect of which a notification had been issued shall cease to have effect, and under section 7 the Central Government was entitled to acquire the mining rights within a period of two or three years from the date of the notification. On July 29, 1960, the Central Government published a notification under s, 4(1) of the Act in respect of an area included in the colliery in which the petitioners had acquired mining rights. Between the year 1932 and the month of May, 1960, the colliery was not worked because it was uneconomical to work it, but the petitioners made an application on December 3, 1959, to the Coal Board for permission to reopen the Colliery and though no reply was received from the Board, the petitioners commenced drilling operations in May, 1960, but discontinued them from August 12, 1960, in view of the notification. The petitioners challenged the validity of the notification on the ground that the preamble of the Act and sections 4, 5, 6, 7 and 8 show that the Act was applicable only to unworked mines which must mean virgin lands,, and not to those which were being worked at the time of notification or which were worked in the past, whereas the petitioners ' coal field had been worked and the working had ceased for some time only due to the unremunerative market for the produce. The petitioners also contended that the Act contravened articles 19(1)(g) and 31(2) of the Constitution of India on the grounds (1) that the effect of a notification under the Act was to prevent an owner or lessee of a mine from working for two or three years, which was too long a period and, therefore, the restrictions could not be regarded as 45 reasonable, (2) that the Act did not contain any provision for compensation for the deprivation of the petitioners ' right to carry on their business for two or three years, and (3) that section 13 of the Act, though it dealt with the payment of compensation, did not provide for compensation for mineral rights. Held: (1) that the expression "unworked land" occurring in the preamble of the Coal Bearing Areas (Acquisition and Development) Act, 1957, means land which was not being worked at the time of the notification issued under the Act and includes dormant mines. Where the object or meaning of a enactment is not clear, the preamble may be resorted to to explain it. In re the Kerala Educatiion Bill, 1957, [1959] S.C.R. 995. referred. (2) that the Act is applicable not only to virgin lands but also to dormant collieries or unworked lands, including mines which were worked in the past but mining operations therein are not being carried on at present. (3) that the expression "to undertake any operation in the land" in section 5(b) of the Act refers to the undertaking of an operation on land not for the first time only but at the resumption of an operation which had been abandoned or discontinued. The resumption of the working of a mine after a casual closure or a closure in the ordinary course of the working of a mine would not fall within the bar created by section 5(b). (4) that the restrictions imposed upon an owner or lessee of a mine by which he is prevented from working his mine for a certain period of time under ss.4 and 5 of the Act are not unreasonable and that the Act does not contravene article 19(1)(g) of the Constitution. (5) that such restrictions amount to a modification of his rights within the meaning of article 31A(1)(e) of the Constitution; and that the validity Of sections 4 and 5 Of the Act cannot be challenged on the ground that they infringe article 31(2) in view of the provisions of article 31A(1)(e). Thakur Raghbir. Singh vs Court of Wards, Ajmer, ; , explained. Sri Ram Ram Narain Medhi vs State of Bombay, [1959] Supp. 1 section C. R. 489, Atma Ram vs The State of Punjab, [1959] Supp. r S.C.R. 748 and In re , [1951] S.C.R. 793, relied on. (6) that the Act cannot be challenged on the ground that sections 5(a) and 13 do not provide for payment of compensation for mineral rights, because sections 13 and 14 lay down the principles on which compensation is to be determined, and under Art 31(2) such a law cannot be called in question on the ground of the inadequacy of the compensation provided.

433 of 1955 and 40 41 of 1956. Petitions under Article 32 of the Constitution of India for enforcement of Fundamental Rights. M.C. Setalvad, Attorney General for India, M. K. Nambiyar, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the petitioners. T. M. Sen, for the State of Madras. K. V. Suryanarayana Iyer, Advocate General for the State of Kerala and T. M. Sen, for the State of Kerala. M. R. Krishna Pillai, for respondents Nos. Purshottam Tricumdas and M. R. Krishna Pillai, for respondent No. 12 in Petitions Nos. 40 and 41 of 1956. K.R. Krishnaswami, for respondents Nos. 11, 13 17 in Petn. No. 443 of 55. Purshottam Tricumdas and K. R. Krishnaswami, for respondent No. 12 in Petn. No. 443 of 55. A.V. Viswanatha Sastri and M. R. Krishna Pillai, for Intervener No. 1. Sardar Bahadur, for Intervener No. 2. M. R. Krishna Pillai, for Intervener No. 3. 1959. March 4. The Judgment of Das, C. J., Bhagwati, Sinha and Subba Rao, JJ., was delivered by Das, C. J. Wanchoo, J., delivered a separate Judgment. DAS, C. J. The circumstances leading up to the presentation of the above noted three petitions under article 32, which have been heard together, may be shortly stated : In pre British times the Kavalappara Moopil Nair, who was the senior most male member of Kavalappara Swaroopam of dynastic family, was the ruler of the Kavalappara territory situate in Walluvanad 320 Taluk in the district of South Malabar. He was an independent prince or chieftain having sovereign rights over his territory and as such was the holder of the Kavalappara sthanam, that is to say, " the status and the attendant property of the senior Raja ". Apart from the Kavalappara sthanam, which was a Rajasthanam the Kalvappara Moopil Nair held five other sthanams in the same district granted to his ancestors by the superior overlord, the Raja of Palghat, as reward for military services rendered to the latter. He also held two other sthanams in Cochin, granted to his ancestors by another overlord, the Raja of Cochin, for military services. Each of these sthanams has also properties attached to it and such properties belong to the Kavalappara Moopil Nair who is the sthanee thereof. On the death in 1925 of his immediate predecessor the petitioner in Petition No. 443 of 1955 became the Moopil Nair of Kavalappara and as such the holder of the Kavalappara sthanam to which is attached the Kavalappara estate and also the holder of the various other sthanams in Malabar and Cochin held by the Kavalappara Moopil Nair. The petitioner in Petition No. 443 of 1955 will hereafter be referred to as " the sthanee petitioner ". According to him all the properties attached to all the sthanams belong to him and respondents 2 to 17, who are the junior members of the Kavalappara family or tarwad, have no interest in them. The Madras Marumakkattayam Act (Mad. XXII of 1932) passed by the Madras Legislature came into force on August 1, 1933. This Act applied to tarwads and not to sthanams and section 42 of the Act gave to the members of a Malabar tarwad a right to enforce partition of tarward properties or to have them registered as impartible. In March 1934 respondents 10 to 17, then constituting the entire Kavalappara tarwad, applied under section 42 of the said Act for registration of their family as an impartible tarwad. In spite of the objection raised by the sthanee petitioner, the SubCollector ordered the registration of the Kavalappara tarwad as impartible. The sthanee petitioner applied to the High Court of Madras for the issue of a writ to 321 quash the order of the Sub Collector, but the High Court declined to do so on the ground that the sthanee petitioner had no real grievance as the said order did not specify any particular property as impartible property. While this decision served the purpose of the sthanee petitioner, it completely frustrated the object of respondents 10 to 17. On April 10, 1934, therefore, respondents 10 to 17 filed O. section No. 46 of 1934 in the court of the Subordinate Judge of Ottapalam for a declaration that all the properties under the management of the defendant (meaning the sthanee petitioner) were tarwad properties belonging equally and jointly to the plaintiffs (meaning the respondents 10 to 17 herein) and the defendant, i.e., the sthanee petitioner, and that the latter was in management thereof only as the Karnavan and manager of the tarwad. The sthanee petitioner contested the suit asserting that he was the Kavalappara Moopil Nair and as such a sthanee and that the properties belonged to him exclusively and that the plaintiffs (the respondents 10 to 17 herein) had no interest in the suit properties. By his judgment pronounced on February 26, 1938, the Subordinate Judge dismissed the O. section 46 of 1934. The plaintiff (the respondents 10 to 17 herein) went up in appeal to the Madras High Court, which, on April 9, 1943, allowed the appeal and reversed the decision of the Subordinate Judge and decreed the suit. That judgment will be found reported in Kuttan Unni vs Kochunni (1). The defendant, i.e., the sthanee petitioner herein carried the matter to the Privy Council and the Privy Council by its. judgment, pronounced on July 29, 1947, reversed the judgment of the High Court and restored the decree of dismissal of the suit passed by the Subordinate Judge. In the meantime in 1946 respondents 10 to 17 had filed a suit (O. section 77 of 1121) in the Cochin Court claiming similar reliefs in respect of the Cochin sthanam. After the judgment of the Privy Council was announced, respondents 10 to 17 withdrew the Cochin suit. The matter rested here for the time being. (1) (1943) I.LR. 41 322 On February 16, 1953, respondents 10 to 17 took the initiative again and presented a Memorial to the Madras Government asking that legislation be undertaken to reverse the Privy Council decision. The Government apparently did not think fit to take any action on that Memorial. Thereafter a suit was filed in the court of the Subordinate Judge at Ottapalam by respondents 2 to 9 who were then the minor members of the tarwad claiming Rs. 4,23,000 as arrears of maintenance and Rs. 44,000 as yearly maintenance for the future. The suit was filed in forma pauperism There were some interlocutory proceedings in this suit for compelling the defendant (i.e., the sthanee petitioner) to deposit the amount of the maintenance into court which eventually came up to this Court by special leave but to which it is not necessary to refer in detail. During the pendency of that paper suit, the sthanee petitioner, on August 3, 1955, executed two deeds of gift, one in respect of the Palghat properties in favour of his wife and two daughters who are the petitioners in. Petition No. 40 of 1956 and the second in respect of the Cochin properties in favour of his son who is the petitioner in Petition No. 41 of 1956. Meanwhile respondents 2 to 17 renewed their efforts to secure legislation for the reversal of the decree of the Privy Council and eventually on August 8, 1955, procured a private member of the Madras Legislative Assembly to introduce a Bill (L. A. Bill No. 12 of 1955) intituled " The Madras Marumakkathayam (Removal of Doubts) Bill, 1955 " with only two clauses on the allegation, set forth in the statement of objects and reasons appended to the Bill, that certain decisions of courts of law had departed from the age old customary law of Marumakkathayees with regard to stha nams and sthanam properties and that those decisions were the result of a misapprehension of the customary law which governed the Marumakkathayees from ancient times and tended to disrupt the social and economic structure of several ancient Marumakkathayam families in Malabar in that Karnavans of tarwad were encouraged to claim to be sthanees and thus deny the legitimate rights of the members of tarwads 323 with the result that litigation had arisen or were pending. It was said to be necessary, in the interests of harmony and well being of persons following the Marumakkathayam law, that the correct position of customary law governing sthanams and sthanam properties should be clearly declared. This Bill came before the Madras Legislative Assembly on August 20, 1955, and was passed on the same day. The Bill having been placed before the Madras Legislative Council, the latter passed the same on August 24, 1955. The assent of the President to the Bill was obtained on October 15, 1955, and the Act intituled "the Madras Murumakkathayam (Removal of Doubts) Act, 1955 " being Madras Act 32 of 1955 and hereinafter referred to as the impugned Act, was published in the official gazette on October 19, 1955. Section I of the impugned Act is concerned with the short title and its application. Section 2, which is material for our purposes, is expressed in the following terms: " 2. Certain kinds of sthanam properties declared to be tarwad properties: Notwithstanding any decision of Court, any sthanam in respect of which (a) there is or had been at any time an intermingling of the properties of the sthanam and the properties of the tarwad, or (b)the members of the tarwad have been receiving maintenance from the properties purporting to be sthanam properties as of right, or in pursuance of a custom or otherwise, or (c)there had at any time been a vacancy caused by there being no male member of the tarwad eligible to succeed to the sthanam, shall be deemed to be and shall be deemed always to have been a Marumakkathayam tarwad and the properties appertaining to such a sthanam shall be deemed to be and shall be deemed always to have been properties belonging to the tarwad to which the provisions of the Madras Marumakkathayam Act, 1932, (Madras Act XXII of 1933), shall apply. Explanation All words and expressions used in this Act shall bear the same meaning as in the Madras 324 Marumakkathayam Act, 1932 (Madras Act XXII of 1933). " Almost immediately after the publication of the impugned Act in the gazette, respondents 2 to 17 published notices in " Mathrubumi ", a Malayalam daily paper with large circulation in Malabar, Cochin and Travancore, to the effect that by reason of the passing of the impugned Act, Kavalappara estate had become their tarwad properties and that rents could be paid to the sthanee petitioner only as the Karnavan of the properties and not otherwise. The notices further stated that the donees under the two deeds of gift executed by the sthanee petitioner were not entitled to the properties conveyed to them and should not be paid any rent at all. After the passing of the impugned Act one of the respondents filed another suit, also in forma pauperis, in the same court. It is also alleged by the petitioners that respondents 2 to 17 are contemplating the filing of yet another suit for partition, taking advantage of the provisions of the impugned Act. It was in these circumstances detailed above that the Kavalappara Moopil Nair, i.e., the sthanee petitioner, on December 12, 1955, filed the present petition No. 443 of 1955 under article 32 of the Constitution. This was followed by Petition No. 40 of 1956 by his wife and two daughters and Petition No. 41 of 1956 by his son. Both the last mentioned petitions were filed on February 3, 1956. The first respondent in all the three petitions is the State of Madras and respondents 2 to 17 are the members of the sthanee petitioner 's tarwad. In his petition the sthanee petitioner prays " that a writ of Mandamus or any other proper ,writ, order or directions be ordered to issue for the purpose of enforcing his fundamental rights, directing the respondents to forbear from enforcing any of the provisions of the Madras Act 32 of 1955 against the petitioner, his Kavalappara sthanam and Kavalappara estate, declaring the said Act to be unconstitutional and invalid ". The prayers in the other two petitions are mutatis mutandis the same. Shri Purshottam Tricumdas appearing for some of 325 the respondents has taken a preliminary objection as to the maintainability of the petitions. The argument in support of his objection has been developed and elaborated by him in several ways. In the first place, he contends that the petitions, in so far as they pray for the issue of a writ of Mandamus, are not maintainable because the petitioners have an adequate remedy in that they can agitate the questions now sought to be raised on these petitions and get relief in the pauper suit filed by one of the respondents after the passing of the impugned Act. This argument overlooks the fact that the present petitions are under article 32 of the Constitution which is itself a guaranteed right. In Rashid Ahmed vs Municipal Board, Kairana (1) this Court repelled the submission of the Advocate General of Uttar Pradesh to the effect that, as the petitioner had an adequate legal remedy by way of appeal, this Court should not grant any writ in the nature of the prerogative writ of Mandamus or Certiorari and observed: " There can be no question that the existence of ,an adequate legal remedy is a thing to be taken into consideration in the matter of granting writs, but the powers given to this Court tinder article 32 are much wider and are not confined to issuing prerogative writs only." Further, even if the existence of other adequate legal remedy may be taken into consideration by the High Court in deciding whether it should issue any of the prerogative writs on an application under article 226 of the Constitution, as to which we say nothing now this Court cannot, on a similar ground, decline to entertain a petition under article 32, for the right to move this Court by appropriate proceedings for the enforcement of the rights conferred by Part III of the Constitution is itself a guaranteed right. It has accordingly been held by this Court in Romesh Thappar vs The State of Madras (2) that under the Constitution this Court is constituted the protector and guarantor of fundamental rights and it cannot, consistently with the responsibility so laid upon it, (1) ; (2) ; 326 refuse to entertain applications seeking the protection of this Court against infringement of such rights, although such applications are made to this Court in the first instance without resort to a High Court having concurrent jurisdiction in the matter. The mere existence of an adequate alternative legal remedy cannot per se be a good and sufficient ground for throwing out a petition under article 32, if the existence of a fundamental right and a breach, actual or threatened, of such right is alleged and is prima facie established on the petition. The second line of argument advanced by learned counsel is that the violation of the right to property by private individuals is not within the purview of article 19(1)(f) or article 31(1) and that a person whose right to property is infringed by a private individual must, therefore, seek his remedy under the ordinary law and not by way of an application under article 32. In support of this part of his argument, learned counsel relies on the decision of this Court in P. D. Shamdasani vs Central Bank of India Ltd. (1). In that case the respondent Bank had, in exercise of its right of lien under its articles of association, sold certain shares belonging to the petitioner and then the latter started a series of proceedings in the High Court challenging the right of the Bank to do so. After a long lapse of time, after all those proceedings had been dismissed, the petitioner instituted a suit against the Bank challenging the validity of the sale of his shares by the Bank. The plaint was rejected by the court under O. 7, r. 11(d) of the Code of Civil Procedure as barred by limitation. Thereupon the petitioner filed an application under article 32 of the Constitution praying that all the adverse orders made in the previous proceedings be quashed and the High Court be directed to have " the above suit set down to be heard as undefended and pronounce judgment against the respondent or to make such orders as it thinks fit in relation to the said suit ". It will be noticed that the petitioner had no grievance against the State as defined in article 12 of the Constitution and his petition (1)[1952] S.C.R. 391. 327 was not founded on the allegation that his fundamental right under article 19(1)(f) or article 31(1) had been infringed by any action of the State as so defined or by anybody deriving authority from the State. The present position is, however, entirely different, for the gravamen of the complaint of the sthanee petitioner and the other petitioners, who claim title from him, is directly against the impugned Act passed by the Madras Legislature, which is within the expression" State " as defined in article 12. Therefore in the cases now before us the petitions are primarily against the action of the State and respondents 2 to 17 have been impleaded because they are interested in denying the petitioner 's rights created in their favour by the impugned Act. Indeed by means of suits and public notices, those respondents have in fact been asserting the rights conferred upon them by the impugned Act. In these circumstances, the petitioners ' grievance is certainly against the action of the State which by virtue of the definition of that term given in article 12 of the Constitution, includes the Madras Legislature and it cannot certainly be said that the subject matters of the present petitions comprise disputes between two sets of private individuals unconnected with any State action. Clearly disputes are between the petitioners on the one hand and the State and persons claiming under the State or under a law made by the State on the other hand. The common case of the petitioners and the respondents, therefore, is that the impugned Act does affect the right of the petitioners to hold and enjoy the properties as sthanam properties; but, while the petitioners contend that the law is void, the respondents maintain the opposite view. In our opinion these petitions under article 32 are not governed by our decision in P. D. Shamdasani 's case (1) and we see no reason why, in the circumstances, the petitioners should be debarred from availing themselves of their constitutional right to invoke the jurisdiction of this Court for obtaining redress against infringement of their fundamental rights. (1)[1952] S.C.R. 391, 328 The third argument in support of the preliminary point is that an application under article 32 cannot be maintained until the State has taken or threatens to take any action under the impugned law which action, if permitted to be taken, will infringe the petitioners ' fundamental rights. It is true that the enactments abolishing estates contemplated some action to be taken by the State, after the enactments came into force, by way of issuing notifications, so as to vest the estates in the State and thereby to deprive the proprietors of their fundamental right to hold and enjoy their estates. Therefore, under those enactments some overt act had to be done by the State before the proprietors were actually deprived of their right, title and interest in their estates. In cases arising under those enactments the proprietors could invoke the jurisdiction of this Court under article 32 when the State did or threatened to do the overt act. But quite conceivably an enactment may immediately on its coming into force take away or abridge the, fundamental rights of a person by its very terms and without any further overt act being done. The impugned Act is said to be an instance, of such enactment. In such a case the infringement of the fundamental right is complete eo instanti the passing of the enactment and, therefore, there can be no reason why the person so prejudicially affected by the law should not be entitled immediately to avail himself of the constitutional remedy under article 32. To say that a person, whose fundamental right has been infringed by the mere operation of an enactment, is not entitled to invoke the jurisdiction of this Court under article 32, for the enforcement of his right, will be to deny him the benefit of a salutary constitutional remedy which is itself his fundamental right. The decisions of this Court do not compel us to do so. In the State of Bombay vs United Motors (India) Limited (1) the petitioners applied to the High Court on November 3, 1952 under article 226, of the Constitution challenging the validity of the Bombay Sales Tax Act, 1952, which came into force on November 1, 1952. No notice had (1) ; 329 been issued, no assessment proceeding had been started and no demand had been made on the petitioners for the payment of any tax under the impugned Act. It should be noted that in that petition one of the grounds of attack was that the Act required the dealers, on pain of penalty, to apply for registration in some cases and to obtain a license in some other cases as a condition for the carrying on of their business, which requirement, without anything more, was said to have infringed the fundamental rights of the petitioners under article 19(1)(g) of the Constitution and no objection could, therefore, be taken to the maintainability of the application. Reference may also be made to the decision of this Court in Himmatlal Harilal Mehta vs The State of Madhya Pradesh (1). In that case, after cotton was declared, on April 11, 1949, as liable to sales tax under the Central Provinces and Berar Sales Tax Act, 1947, the appellant commenced paying the tax in respect of the purchases made by him and continued to pay it till December 31, 1950. Having been advised that the transactions (lone by him in Madhya Pradesh were not " sales " within that State and that consequently he could not be made liable to pay sales tax in that State, the appellant declined to pay the tax in respect of the purchases made during the quarter ending March 31, 1951. Apprehending that he might be subjected to payment of tax without the authority of law, the appellant presented an application to the High Court of Judicature at Nagpur under article 226 praying for an appropriate writ or writs for securing to him protection from the impugned Act and its enforcement by the State. The High Court declined to issue a writ and dismissed the petition on the ground that a mandamus could be issued only to compel an authority to do or to abstain from doing some act and that it was seldom anticipatory and was certainly never issued where the action of the authority was dependent on some action of the appellant and that in that case the appellant had not even made his return and no demand for the tax could be made from him. (1) ; 42 330 Being aggrieved by that decision of the High Court, the petitioner in that case came up to this Court on appeal and this Court held that a threat by the State to realise the tax from the assessee without the authority of law by using the coercive machinery of the impugned Act was a sufficient infringement of his fundamental right which gave him a right to seek relief under article 226 of the Constitution. It will be noticed that the Act impugned in that case had by its terms made it incumbent on all dealers to submit returns, etc., and thereby imposed restrictions on their fundamental right to carry on their businesses under article 19(1) (g). The present case, however, stands on a much stronger tooting. The sthanee petitioner is the Kavalappara Moopil Nair and as such holds certain sthanams and the petitioners in Petitions Nos. 40 and 41 of 1956 derive their titles from him. According to the petitioners, the sthanee petitioner was absolutely entitled to all the properties attached to all the sthanams and respondents 2 to 17 had no right, title or interest in any of the sthanam properties. Immediately after the passing of the impugned Act, the Madras Marumakkathayam Act, 1932, became applicable to the petitioners ' sthanams and the petitioners ' properties became subject to the obligations and liabilities imposed by the last mentioned Act. On the passing of the impugned Act, the sthanee petitioner immediately became relegated from the status of a sthanee to the status of a Karnavan and manager and the sthanam properties have become the tarwad properties and respondents 2 to 17 have automatically become entitled to a share in those properties along with the petitioners. The right, title or interest claimed by petitioners in or to their sthanam properties is, by the operation of the statute itself and without anything further being done, automatically taken away or abridged and the impugned Act has the effect of automatically vesting in respondents 2 to 17 an interest in those properties as members of the tarwad. Indeed respondents 2 to 17 are asserting their rights and have issued public notices on the basis thereof and have also instituted a suit on the strength of the rights 331 created in them by the impugned Act. Nothing fur; the remains to be done to infringe the petitioners right to the properties as sthanam properties. It is true that the sthanee petitioner or the other petitioners deriving title from him are still in possession of the sthanam properties, but in the eye of law they no longer possess the right of the sthanee and they cannot, as the sthanee or persons deriving title from the sthanee, lawfully claim any rent from the tenants. In view of the language employed in section 2 quoted above and its effect the petitioners can legitimately complain that their fundamental right to hold and dispose of the sthanam properties has been injured by the action of the Legislature which is " State " as defined in article 12 of the Constitution. In the premises, the petitioners are prima facie entitled to seek their fundamental remedy under article 32. The next argument in support of the objection as to the maintainability of these petitions is thus formulated: The impugned Act is merely a piece of a declaratory legislation and does not contemplate or require any action to be taken by the State or any other person and, therefore, none of the well known prerogative writs can afford an adequate or appropriate remedy to a person whose fundamental right has been infringed by the mere passing of the Act. If such a person challenges the validity of such an enactment, he must file a regular suit in a court of competent jurisdiction for getting a declaration that the law is void and, therefore, cannot and does not effect his right. In such a suit he can also seek consequential reliefs by way of injunction or the like, but he cannot avail himself of the remedy under article 32. In short, the argument is that the proceeding under article 32 cannot be converted into or equated with a declaratory suit under section 42 of the Specific Relief Act. Reference is made, in support of the aforesaid contention, to the following passage in the judgment of Mukherjea, J., as he then was, in the case of Chiranjit Lal Chowdhuri vs The Union of India(1) : " As regards the other point, it would appear from (1)[1950] S.C.R. 869, 900. 332 the language of article 32 of the Constitution that the sole object of the article is the enforcement of fundamental rights guaranteed by the Constitution. A proceeding under this article cannot really have any affinity to what is known a,; a declaratory suit". But further down on the same page his Lordship said: Any way, article 32 of the Constitution gives us very wide discretion in the matter of framing our writs to suit the exigencies of particular cases, and the application of the petitioner cannot be thrown out simply on the ground that the proper writ or direction has not been prayed for ". It should be noted that though in that case the petitioner prayed, inter alia, for a declaration that the Act complained of was void under article 13 of the Constitution it was not thrown out on that ground. The above statement of the law made by Mukhekjea, J., is in accord with the decision of this Court in the earlier case of Rashid Ahmed vs Municipal Board, Kairana (1). The passage from our judgment in that case, which has already been quoted above, also acknowledges that the powers given to this Court by article 32 are much wider and are not confined to the issuing of prerogative writs only. The matter does not rest there. In T. C. Basappa vs T. Nagappa (2) Mukherjea, J., again expressed the same view: (Page 256). " The language used in articles 32 and 226 of our Constitution is very wide and the powers of the Supreme Court as well as of all the High Courts in India extend to issuing of orders, writs or directions including writs in the nature of habeas corpus, mandamus, quo warranto, prohibition and certiorari as may be considered necessary for enforcement of the fundamental rights and in the case of the High Courts, for other purposes as well. In view of the express provisions of our Constitution we need not now look back to the early history or the procedural technicalities of these writs in English law, nor feel oppressed by any difference or change of opinion expressed in particular cases by English Judges ". (1) ; (2) ; , 256. 333 In Ebrahim Vazir Mayat vs The State of Bombay (1) the order made by the majority of this Court was framed as follows: " As a result of the foregoing discussion we declare section 7 to be void under Article 31(1) in so far as it conflicts 'which the fundamental right of a citizen of India under article 19(1) (e) of the Constitution and set it aside. The order will, however, operate only upon proof of the fact that the appellants are citizens of India. The case will, therefore, go back to the High Court for a finding upon this question. It will be open to the High Court to determine this question itself or refer it to the court of District Judge for a finding ". That was a case of an appeal coming from a High Court and there was no difficulty in remanding the case for a finding, on an issue, but the fact to note is that this Court did make a declaration that section 7 of the Act was void. We are not unmindful of the fact that in the case of Maharaj Umeg Singh vs The State of Bombay(2) which came up before this Court on an application under article 32, the petitioner had been relegated to filing a regular suit in a proper court having jurisdiction in the matter. But on a consideration of the authorities it appears to be well established that this Court 's powers under article 32 are wide enough to make even a declaratory order where that is the proper relief to be given to the aggrieved party. The present case appears to us precisely to be an appropriate case, if the impugned Act has taken away or abridged the petitioners ' right under article 19(1) (f) by its own terms and without anything more being done and such infraction cannot be justified. If, therefore, the contentions of the petitioners be well founded, as to which we say nothing at present, a declaration as to the invalidity of the impugned Act together with the consequential relief by way of injunction restraining the respondents and in particular respondents 2 to 17 from asserting any rights under the enactment so declared void will be the only appropriate reliefs which the petitioners will be entitled to get. Under article 32 we must, in appropriate cases, exercise our discretion and (1) ; , 941 (2) ; 334 frame our writ or order to suit the exigencies of this case brought about by the alleged nature of the enactment we are considering. In a suit for a declaration of their titles on the impugned Act being declared void, respondents 2 to 17 will certainly be necessary parties, as persons interested to deny the petitioners ' title. We see no reason why, in an application under article 32 where declaration and injunction are proper reliefs, respondents 2 to 17 cannot be made parties. In our opinion, therefore, there is no substance in the argument advanced by learned counsel on this point. The last point urged in support of the plea as to the non maintainability of these applications is that this Court cannot, on an application under article 32, embark upon an enquiry into disputed question of fact. The argument is developed in this, way. In the present case the petitioners allege, inter alia, that the impugned Act has deprived them of their fundamental right to the equal protection of the law and equality before the law guaranteed by article 14 of the Constitution. Their complaint is that they, have been discriminated against in that they and their sthanam properties have been singled out for hostile treatment by the Act. The petitioners contend that there is no other sthanam which comes within the purview of this enactment and that they and the sthanams held by them are the only target against which this enactment is directed. The res pondents, on the other hand, contend that the language of section 2 is wide and general and the Act applies to all sthanams to which one or more of the conditions specified in section 2 may be applicable and that this Court cannot, on an application under article 32, look at any extraneous evidence but must determine the issue on the terms of the enactment alone and that in any event this Court cannot go into disputed questions of fact as to whether there are or are not other sthanees or sthanams similarly situate as the petitioners are. In support of his contention Shri Purshottam Tricumdas refers us to some decisions where some of the High Courts have declined to entertain applications under article 226 of the Constitution involving disputed 335 questions of fact and relegated the petitioners to regular suits in courts of competent jurisdiction. We are not called upon, on this occasion, to enter into a discussion or express any opinion as to the jurisdiction and power of the High Courts to entertain and to deal with applications under article 226 of the Constitution where disputed questions of fact have to be decided and we prefer to confine our observations to the immediate problem now before us, namely, the limits of the jurisdiction and power of this Court *hen acting under article 32 of the Constitution. Shri Purshottam Tricumdas concedes that the petitioners have the fundamental right to approach this Court for relief against infringement of their fundamental right. What he says is that the petitioners have exercised that fundamental right and that this fundamental right goes no further. in other words he maintains that nobody has the fundamental right that this Court must entertain his petition or decide the same when disputed questions of fact arise in the case. We do not think that that is a correct approach to the question. Clause (2) of article 32 confers power on this Court to issue directions or orders or writs of various kinds referred to therein. This Court may say that any particular writ asked for is or is not appropriate or it may say that the petitioner has not established any fundamental right or any breach thereof and accordingly dismiss the petition. In both cases this Court decides the petition on merits. But we do not countenance the proposition that, on an application under article 32, this Court may decline to entertain the same on the simple ground that it involves the determination of disputed questions of fact or on any other ground. If we were to accede to the aforesaid contention of learned counsel, we would be failing in our duty as the custodian and protector of the fundamental rights. We are not unmindful of the fact that the view that this Court is bound to entertain a petition under article 32 and to decide the same on merits may encourage litigants to file many petitions under article 32 instead of proceeding by way of a suit. But that consideration cannot, by itself, be a cogent reason 336 for denying the fundamental right of a person to approach this Court for the enforcement of his fundamental right which may, prima facie, appear to have been infringed. 'Further, questions of fact can and very often are dealt with on affidavits. In Chiranjitlal Chowdhuri 's case (1) this Court did not reject the petition in limine on the ground that it required the determination of disputed questions of fact as to there being other companies equally guilty of mismangement. It went into the facts on the affidavits and held, inter alia, that the petitioner had not discharged the onus that lay on him to establish his charge of denial of equal protection of the laws. That decision was clearly one on merits and is entirely different from a refusal to entertain the petition at all. In Kathi Raning Rawat vs The State of Saurashtra (2) the application was adjourned in order to give the respondent in that case an opportunity to adduce evidence before this Court in the form of an affidavit. An affidavit was filed by the respondent setting out facts and figures relating to an increasing number of incidents of looting, robbery, dacoity, nose cutting and murder by marauding gangs of dacoits in certain areas of the State in support of the claim of the respondent State that " the security of the State and public peace were jeopardised and that it became impossible to deal with the offences that were committed in different places in separate courts of law expeditiously ". This Court found no difficulty in dealing with that application on evidence adduced by affidavit and in upholding the validity of the Act then under challenge. That was also a decision on merits although there were disputed questions of fact regarding the circumstances in which the impugned Act came to be passed. There were disputed questions of fact also in the case of Ramkrishna Dalmia vs Shri Justice section R. Tendolkar (3). The respondent State relied on the affidavit of the Principal Secretary to the Finance Ministry setting out in detail the circumstances which lead to the issue of the impugned notification and the matters (1) ; , 900. (2) ; (3) ; 337 recited therein and the several reports referred to in the said affidavit. A similar objection was taken by learned counsel for the petitioners in that case as has now been taken. It was urged that reference could not be made to any extraneous evidence and that the basis of classification must appear on the face of the notification itself and that this Court should not go into disputed questions of fact. This Court overruled that objection and held that there could be no objection to the matters brought to the notice of the Court by the affidavit of the Principal Secretary being taken into consideration in order to ascertain whether there was any valid basis for treating the petitioners and their companies as a class by themselves. As we have already said, it is possible very often to decide questions of fact on affidavits. If the petition and the affidavits in support thereof are not convincing and the court is not satisfied that the petitioner has established his fundamental right or any breach thereof, the Court may dismiss the petition on the ground that the petitioner has not discharged the onus that lay on him. The court may, in some appropriate cases, be inclined to give an opportunity to the parties to establish their respective cases by filing further affidavits or by issuing a commission or even by setting the application down for trial on evidence, as has often been done on the original sides of the High Courts of Bombay and Calcutta, or by adopting some other appropriate procedure. Such occasions will be rare indeed and such rare cases should not in our opinion, be regarded as a cogent reason for refusing to entertain the petition under article 32 on the ground that it involves disputed questions of fact. For reasons given above we are of opinion that none of the points urged by learned counsel for the respondents in support of the objection to the maintainability of these applications can be sustained. These applications will, therefore, have to be heard on merits and we order accordingly. The respondents represented by Shri Purshottam Tricumdas must pay one set of costs of the hearing Of this preliminary objection before us to the petitioners, 43 338 WANCHOO, J. I have read the judgment just delivered by my Lord the Chief Justice, with which my other brethren concur, with great care. With the utmost respect for my brethren for whom I have the highest regard, I must state that if these applications were based only on the infringement of article 14 of the Constitution, I would have no hesitation in dismissing them as not maintainable. I need riot elaborate my reasons in this case and shall content myself by observ ing that where the law, as in this case, is general in terms and there is no question of its direct enforcement by the State in the form, for example, of grant of licences, issue of notices, submission of returns, and so on, actually resulting in wholesale abuse of its provisions, this Court will not permit an applicant under article 32 to lead evidence to show that the law was meant to hit him alone. However, the applicants also rely on the infringement of the fundamental right guaranteed under article 19(1)(f). As to that, I have doubts whether an application under article 32 challenging a general law of this kind, which affects one or other. of the fundamental rights guaranteed under article 19, can be maintained, in the absence of any further provision therein for direct enforcement of its provisions by the State in the form already indicated above, by a person who merely apprehends that he might in certain eventualities be affected by it. However, on the present occasion, I do not propose to press my doubts to the point of dissent and therefore concur with the proposed order. Preliminary objection overruled.

The petitioner in Petition No. 143 was the Moopil Nair of the Kavalappara sthanam and, as the sthanee, claimed to be the sole proprietor of the sthanam properties. The respondents Nos. 2 to 17, who were the junior members of the Kavalappara tarward or family, resisted the claim on the ground that the properties were tarward properties and they had rights in them. There was litigation between the parties and ultimately the Privy Council held in favour of the petitioner. The petitioner transferred some of the properties to his wife and two daughters and son and they were the petitioners in the two other petitions. The parties were governed by the Marumakkathayam Law and in 1955 the Madras Legislature, purporting to remove certain misapprehensions evident in decisions of courts, passed the Madras Marumakkathayani (Removal of Doubts) Act, 1955 (Act 32 of 1955) which by section 2 provided as follows: " 2. Certain kinds of sthanam properties declared to be tarward properties : Notwithstanding any decision of Court, any sthanam in respect of which (a)there is or had been at any time an intermingling of the properties of the sthanam and the properties of the tarward, or (b)the members of the tarwad have been receiving main tenance from the properties purporting to be sthanam properties as of right, or in pursuance of a custom or otherwise, or (c)there had at any time been a vacancy caused by there being no male member of the tarwad eligible to succeed to the sthanam, shall be deemed to be and shall be deemed always to have been a Marumakkathayam tarwad and the properties appertaining to such a sthanam shall be deemed to be and shall be deemed always to have been properties belonging to the tarwad to which the provisions of the Madras Marumakkathayam Act, 1932, (Madras Act XXII Of 1932), shall apply." 317 Immediately after the publication of the Act, the respondents Nos. 2 to 17, published notices in the press that by reason of the passing of the Act, Kavalappara estate had become their tarwad property and that rents could be paid to the sthanee only as the Karnavan of the properties and not otherwise. The notices further stated that the donees under the two deeds of gift executed by the sthanee were not entitled to the properties conveyed to them and should not be paid any rents at all. One of the respondents filed a partition suit and others also contemplated doing the same. The petitioners sought for a writ of mandamus or any other writ or order directing the respondents to forbear from enforcing the impugned Act against the sthanee and the sthanam estate and declaring the Act to be unconstitutional and invalid. Preliminary objection was raised on behalf of some of the respondents as to the maintainability of the petitions and it was contended that (1) the prayer for a writ of mandamus Was not maintainable since there was an adequate remedy in the partition suit filed by one of the respondents ; (2) that violation of right of property by private individuals was not within the purview of article 19(1)(f) or article 31(1) and the remedy was not by way of application under article 32; (3) that no application under article 32 could be maintained until the State had taken or threatened to take any action under the impugned law that would infringe fundamental rights; (4) that the proceeding under article 32 could not be converted into or equated with a declaratory suit under section 42 Of the Specific Relief Act in and (5) that this court could not, on an application under article 32, embark upon an enquiry into disputed questions of fact. Held (per Das, C. J., Bhagwati, Sinha and Subba Rao, jj.), that all the contentions must be negatived and all the preliminary objections must fail. The right to enforce a fundamental right conferred by the Constitution was itself a fundamental right guaranteed by article 32 of the Constitution and this court could not refuse to entertain a petition under that Article simply because the petitioner might have any other adequate, alternative, legal remedy. Rashid Ahmed vs Municipal Board, Kairana, ; and Romesh Thappar vs The State of Madras, [1950] S.C.R. 594, referred to. In the instant cases as the grievance of the petitioners was primarily against the impugned Act passed by the Madras Legislature, which was a State as defined by article 12 of the Constitution and the dispute was not one between two sets of private individuals but between the petitioners on the one hand and the State and persons claiming under a law made by the State on the other, article 32 must apply. P.D. Shamdasani vs Central Bank of India Ltd., [1952] S.C.R. 391, distinguished and held inapplicable. Where an enactment such as the impugned Act, unlike 318 others that contemplated some further action to be taken by the State after the enactment had come into force, automatically took away or abridged a person 's fundamental rights immediately it came into force, there was no reason why the aggrieved person should not immediately be entitled to seek the ' remedy under article 32 Of the Constitution. State of Bombay vs United, Motors (India) Limited, ; and Himmatlal Harilal Mehta vs The State of Madhya Pradesh, , referred to. In view of the language used in section 2 of the impugned Act and its effect, there could be no doubt that the petitioners could legitimately complain that their fundamental right to hold and dispose of the sthanam properties have been violated by the action of the Legislature. Article 32 of the Constitution conferred wide powers on this Court and such powers were not confined to the issuing of prerogative writs alone. In appropriate cases, this court had the right in its discretion to frame its writs or orders suitable to the exigencies created by enactments. It was clear on the authorities that this Court could, where the occasion so required, make even a declaratory order with consequential relief under article 32 of the Constitution. Chiranjit Lal Chowdhury vs The Union of India, [1950] S.C.R. goo, Rashid Ahmed vs Municipal Board, Kairana, [1950] S.C.R. 566, T. C. Basappa vs T. Nagappa, ; and Ebrahim Vazir Marat vs The State of Bombay, [1954] S.C.R. 933, relied on. Maharaj Umeg Singh vs The State Of Bombay, [1955] 2 S.C.R. 164, considered. This court would fail in its duty as the custodian and pro tector of the fundamental rights if it were to decline to entertain a petition under article 32 simply because it involved the determination of disputed questions of fact. Clause (2) of article 32 conferred on this court the power to issue directions or orders or writs of various kinds mentioned therein and in dismissing a petition, it had either to hold that any particular writ asked for was not appropriate to the occasion or that the petitioner had failed to establish a fundamental right or its breach . In either case, however, it had to decide the petition on merits. Chiranjit Lal Chowdhuri vs The Union of India, [1950] S.C.R. 869,Kathi Raning Rawat vs The State of Saurashtra, ; and Ramkrishna Dalmia vs Shri ' justice section R. Tendolkar; , , referred to. In appropriate cases opportunity might also be given to the parties to establish their cases by further affidavits, or by issuing a commission or even by setting the application down for trial on evidences. Per Wanchoo, J. If the petitions were based solely on the infringement of article 14, there could be no doubt that they would not be maintainable. Even though they were based on the 319 infringement of article 19(1)(f) also, their maintainability would still be in doubt in the absence of any further provision in the impugned Act for its direct enforcement by the State.

ppeals Nos. 125 and 164 of 1958. Appeals by special leave from the Award dated August 26, 1957, of the Fifth Industrial Tribunal at West Bengal in Case No. VIII 264/56. section C. Issacs and section N. Mukherjee, for the Appellants in C. A. No. 125/58 and Respondents in C. A. No. 164/58. N. C. Chatterjee and Dipak Datta Choudhri, for the. Respondents in C. A. No. 125/58 and Appellants in C. A. No. 164/58. January 28. The Judgment of the Court was delivered by SUBBA RAO, J. These appeals are by Special Leave from the Award by Shri G. Palit, Judge, Fifth Industrial Tribunal, West Bengal, in the matter of a dispute between Messrs. Bengal Chemical & Pharmaceutical Works Limited, Calcutta, and their employees, represented by Bengal Chemical Mazdoor Union, Calcutta. The Government of West Bengal by its order dated September 13, 1956, referred the following dispute between the parties referred to above to the Second Industrial Tribunal under section 10 of the (Act 14 of 1947), hereinafter referred to as the Act. " Is the demand of the employees for increase in Dearness Allowance justified ? If so, at what rate?". The said Act was amended by the 139 Industrial Disputes (Amendment & Miscellaneous Provisions) Act, 1956 (36 of 1956), which came into force on August 28, 1956. On April 9, 1956, the ' Government made ail order transferring the said dispute from the file of the Second Industrial Tribunal to that of the Fifth Industrial Tribunal. The Fifth Industrial Tribunal, after making the necessary inquiry, made the award on August 26,1957, and it was duly notified in the Calcutta Gazette on September 26, 1957. As a mistake had crept in, the award was modified by the Tribunal by its order dated the 29th November, 1957; and the modified award was published in the Calcutta Gazette on the 29th November, 1957. Under the award the Tribunal held that there was a rise in the cost of living index and that to neutralise the said rise the employees should get an increase of Rs. 7 in dearness allowance on the pay scale up to Rs. 50 and Rs. 5 on the pay scale above Rs. 50. On that basis the dearness allowance payable to the employees was worked out and awarded. The correctness of the award is questioned in these appeals. The Company preferred Civil Appeal No. 125 of 1958 against the award in so far it was against it and the Union preferred Civil Appeal No. 164 of 1958 in so far it went against the employees. For convenience of reference, the parties will be referred to in the course of the judgment as the Company and the Union. Learned Counsel for the Company raised before us the following points: (1) The order dated April 9, 1957, made by the Government transferring the dispute from the file of the Second Industrial Tribunal to that of the Fifth Industrial Tribunal was illegal; (2) the previous award made by the Tribunal between the same parties on April 26, 1951, and confirmed by the Labour Appellate Tribunal by its order dated August 30, 1951, had not been terminated in accordance with the provisions of section 19(6) of the Act and therefore the present reference was bad in law and without jurisdiction; (3) there was no change in the circumstances obtaining at the time the previous award was made and those prevailing at the time of the present reference as to justify making out a new award; (4) the Tribunal 140 went wrong in taking the rise in the cost of living index between the years 1954 and 1957 instead of taking the fluctuating rate in the index between the date of the earlier award, i.e., August 30, 1951, and the date of the present reference in the year 1957 ; (5) the Tribunal went wrong in so far as it based its decision on the Second Engineering Award of 1950 which was already considered by the Tribunal in its earlier award of the year 1951; and (6) in any event, in computing the amount, the Tribunal applied wrong criteria. We shall consider the above contentions seriatim. But before doing so, it will be convenient to refer briefly to the scope of jurisdiction of this Court under article 136 of the Constitution vis a vis the awards of Tribunals. Article 136 of the Constitution does not confer a right of appeal to any party from the decision of any tribunal, but it confers a discretionary power on the Supreme Court to grant special leave to appeal from the order of any tribunal in the. territory of India. It is implicit in the discretionary reserve power that it cannot be exhaustively defined. It cannot obviously be so construed as to confer a right to a party where he has none under the law. The is intended to be a self contained one and it seeks to achieve social justice on the basis of collective bargaining, conciliation and arbitration. Awards are given on circumstances peculiar to each dispute and the tribunals are, to a large extent, free from the restrictions of technical considerations imposed on courts. A free and liberal exercise of the power under article 136 may materially affect the fundamental basis of such decisions, namely, quick solution to such disputes to achieve industrial peace. Though article 136 is couched in widest terms, it is necessary for this Court to exercise its discretionary jurisdiction only in cases where awards are made in violation of the principles of natural justice, causing substantial and grave injustice to parties or raises an important principle of industrial law requiring elucidation, and final decision by this Court or discloses such other exceptional or special circumstances which merit the consideration of this Court. The points raised by the 141 learned Counsel, except perhaps the first point , do not stand the test of any one of those principles. Learned Counsel for the Company, however, says that, though the ' said principles might be applied at the time of granting leave, once leave is given no such restrictions could be imposed or applied at the time of the final disposal of the appeal. The limits to the exercise of the power under article 136 cannot be made to depend upon the appellant obtaining the special leave of this Court, for two reasons, viz., (i) at that stage the Court may not be in full possession Of all material circumstances to make up its mind and (ii) the order is only an ex parte one made in the absence of the respondent. The same principle should, therefore, be applied in exercising the power of interference with the awards of tribunals irrespective of the fact that the question arises at the time of granting special leave or at the time the appeal is disposed of. It would be illogical to apply two different standards at two different stages of the same case. The same view was expressed by this Court in Pritam Singh vs The State of Madras (1), Hem Raj vs State of Ajmer(1) and sadhu Singh vs State of Pepsu(3) The first question turns upon the construction of the relevant provisions of the Act as amended by the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956. The relevant provisions inserted by the Amending Act read as follows: "Section 2(r) : I Tribunal ' means an Industrial Tribunal constituted under section 7A." " 7 A. Tribunals. (1) The appropriate Government may, by notification in the official Gazette, constitute one or more Industrial Tribunals for the adjudication of industrial disputes relating to any matter, whether specified in the Second Schedule or the Third Schedule. (2) A Tribunal shall consist of one person only to be appointed by the appropriate Government. (3) A person shall not be qualified for appointment as the presiding officer of a Tribunal unless (1) ; (2) (3) A.I.R. 1954 S.C. 271. 142 (a) he is, or has been, a Judge of a High Court; or (b) he has held the office of the Chairman or any other member of the Labour Appellate Tribunal constituted under the Industial Disputes (Appellate Tribunal) Act, 1950 (48 of 1950), or of any Tribunal, for a period of not less than two years. (4) The appropriate Government may, if it so thinks fit, appoint two persons as assessors to advise the Tribunal in the proceeding before it." "33B. (1) The appropriate Government may, by order in writing and for reasons to be stated therein, withdraw any proceeding under this Act pending before a Labour Court, Tribunal, or National Tribunal, ' as the case may be, for the disposal of the proceeding and the Labour Court, Tribunal or National Tribunal to which the proceeding is so transferred may, subject to special directions in the order of transfer, proceed either de novo or from the stage at which it was so transferred : Provided that where a proceeding under section 33 or section 33A is pending before a Tribunal or National Tribunal, the proceeding may also be transferred to a Labour Court. " Section 30 of the Amending Act reads: " If immediately before the commencement of this Act, there is pending any proceeding in relation to an industrial dispute before a Tribunal constituted under the (14 of 1947), as in force before such commencement, the dispute may be adjudicated and the proceeding disposed of by the Tribunal after such commencement, as if this Act has not been passed." Section 7, before the Amendment ran thus: " The appropriate Government may constitute one or more Industrial Tribunals for the adjudication of industrial disputes in accordance with the provisions of this Act. (2) A Tribunal shall consist of such number of members as the appropriate Government thinks fit. Where the Tribunal consists of two or more members, one of them shall be appointed as chairman. 143 (3) Every member of the Tribunal shall be an independent person, (a) who is or has been a Judge of a High Court or a District Judge, or (b) is qualified for appointment as a Judge of a High Court: Provided that the appointment to a Tribunal of any person not qualified under part (a) shall be made in consultation with the High Court of the Province in which the Tribunal has or is intended to have, its usual place of sitting. " It will be seen from the aforesaid provisions that the Amending Act, which came into force on August 28, 1956, changed the constitution of a tribunal to some extent and conferred a power for the first time on the Government to transfer a proceeding pending before a tribunal to another tribunal; or in the case of a proceeding under section 33 or 33A pending before a tribunal to another tribunal or to a Labour Court. Section 30 of the Amending Act expressly saves a pending proceeding before a tribunal constituted under the Act before the Amending Act came into force and directs that such dispute shall be adjudicated and the proceeding disposed of by that tribunal after the commencement of the Amending Act as if that Act had not been passed. A combined and fair reading of the aforesaid provisions, it is argued, was that section 33B, inserted in the Act by the Amending Act, was prospective in operations i.e., it would apply only to proceedings initiated in the tribunal constituted Under the amended Act and that proceedings pending before the tribunals constituted under the Act before the commencement of the Amending Act would be disposed of as if the Amending Act had not been passed. The Parliament, presumably to clarify the position, brought out another Amending Act styled the Industrial Disputes (Amendment) Act, 1957 (18 of 1957), whereunder among other things, a new definition of " Tribunal " was given in substitution of that in section 2(r) of the Act. The substituted definition reads: " 'Tribunal ' means an Industrial Tribunal constituted under section 7A and includes an Industrial 144 Tribunal constituted before the 10th day of March, 1957, under this Act. " Sub section (2) of section I of the Amending Act 18 of 1957 says that section 2 shall be deemed to have come into force on the 10th day of March, 1957. The result is that section 33B should be read along with the definition of a " Tribunal " inserted by the Amendment Act 18 of 1957, as if that definition was in the Act from March 10, 1957. If that definition of a " Tribunal " 'be read in place of the word ,Tribunal" in section 33B, the relevant part of that section reads: " (1) The appropriate Government may, by order in writing and for reasons to be stated therein, withdraw any proceeding under this Act pending before a Tribunal constituted before the 10th day of March, 1957, and transfer the same to another Tribunal constituted under section 7A of the Act." So construed it follows that in respect of proceedings pending in a tribunal constituted before the 10th day of March, 1957, the Government has the power to transfer them from that date to any other tribunal. It is said that this construction would make section 30 of the Amending Act 36 of 1956 otiose or nugatory. That section contained only a saving clause and it was not inserted in the Act; it served its purpose, and even if it ceased to have any operative force after the Amendment of 1957, that circumstance cannot have any bearing on the impact of the amendment of the definition of " Tribunal " on the provisions of section 33B of the Act. In the present case, the Government made the order of transfer on April 9, 1957, i.e., after section 2 of Amendment Act 18 of 1957 was deemed to have come into force. It must, therefore, be held that the Government acted well within its powers in transferring the dispute pending before the Second Industrial Tribunal, to the Fifth Industrial Tribunal. The second contention, namely, that the Award of 1951 was not terminated in accordance with law, does not appear to have been pressed before the Tribunal. The governing section is section 19(6) which says: " Notwithstanding the expiry of the period of operation under sub section (3), the award shall 145 continue to be binding on the parties until a period of two months has elapsed from the date on which notice is given by any party bound by the award to the other party or parties intimating its intention to terminate the award '. " In the first written statement filed by the Company before the Tribunal, no plea was taken based upon section 19(6) of the Act. In the second written statement filed by the Company on December 20, 1956, a contention was raised to the effect that the award dated June 21, 1951, was not terminated under section 19(6) of the Act, that the said award was binding between the parties and therefore the reference was bad in law. Notwithstanding the said allegation, the award dis closes that no issue was raised on that count and no argument was advanced in support thereof. This attitude might have been adopted by the Company either because it did not think fit to rely upon a technical point but had chosen to get a decision of the Tribunal on merits, or it might be that there was no basis for the contention, as the company might have received notice under the said section. Though it may not be quite relevant, it may be mentioned that even in 1951 when the dispute between the parties was referred to the Industrial Tribunal, though a similar contention was open to the Company and indeed was suggested by the Tribunal, it moved the Tribunal to give an award on the merits of the matter. If this plea had been seriously pressed, the Tribunal would have raised a separate issue and the Union would have been in a position to establish that notice had been served on the Company as required by section 19(6) of the Act. As the question raised depends upon elucidation of further facts, we do not think that we would be justified in allowing the Company to raise the plea before us, and we, therefore, do not permit them to do so. The fourth point turns on the construction of the terms of the agreement entered into between the parties on September 15, 1954. The dispute between the parties had an earlier origin and apart from the 19 146 present reference, there were as many as four references and four awards, and the last of them was dated April 3, 1951. The Company preferred an appeal against that award to the Labour Appellate Tribunal , Calcutta, which, with some modification, confirmed the award of the Tribunal on August 30, 1957. That award as modified by the Appellate Tribunal fixed the basic wages and the rate of dearness allowance payable to the employees. The employees were not satisfied with the award and they placed before the. Company a new charter of demands claiming higher rates of dearness allowance and wages, but the dispute was compromised and the parties entered into an agreement dated September 15, 1954, by virtue of which, the Company introduced the incremental scale in the wage structure. As regards the dearness allowance, it was stated in cl. 1 1 of the agreement as follows: "The existing rate of D. A. will prevail unless there is a substantial change in the working class cost of living index,in which case the rate will be suitably adjusted." On the construction of this clause depends the question of the Union 's right to claim enhanced dearness allowance. It is common case that if the cost of living index in the year 1951 was taken as the basis, there was a fall in the rate of working class cost, of living index in 1957. On the other hand, if the cost of living index in 1954 was the criterion, there was a substantial increase in the cost of living index in 1957. The question, therefore, is what did the parties intend to agree by the aforesaid clause in the agreement. To ascertain the intention of the parties, we should con sider the circumstances under which the said agreement was entered into between the parties. Exhibit 6 is the said agreement. The preamble to the agreement reads : " The Company and the Union came to a settlement in respect of the Pay Scales and Grades in the Charter of Demands dated 25th June, 1953, at the intervention of Shri A. R. Ghosh, Asstt. Labour Commissioner during the Conciliation proceedings ending on the 30th August, 1954. " 147 The preamble indicates that the entire situation obtaining on the date of the agreement was reviewed and the parties agreed to the terms of the settlement mentioned therein. Under clause (1) of the agreement, pay scale and grade as given in annexure B was agreed upon for the time being for a period of three years as an experimental measure, to be reviewed, modified or suspended or withdrawn after three years, depending upon the Company 's business and financial condition. By el. (2), the employees agreed not to raise any dispute involving any further financial burden on the Company during the next three years in respect of pay scale and grade. Clauses (3) to (5) deal with increments and the age of retirement. Clause (6) provides for the piece rated (contract) workers in respect of their increments. Clause (7) is in respect of increment for the daily rated workers. Clause (8) is in respect of the grade and scale of pay and increments of Chemists, Engineers and Doctors, etc. Clause (9) is to the effect that the employees who would be made permanent thence forward would be grouped under two divisions for the purposes of giving effect to the scale of pay. Clause (11) which we have already extracted above relates to the dearness allowance. Clause (12) says " barring the question of bonus for 1358 and 1359 B. S.the Union withdraws its claim in respect of other items in the Charter of Demands dated 25th June, 1953. " We have given the agreement in extenso only for the purpose of showing that all the disputes between the parties arising out of the charter of demands dated June, 25, 1953, were settled between them and reduced to writing. The agreement was self contained and started a new chapter regulating the relationship of the parties to the dispute in respect of matters covered by it. The award must be deemed to have been superseded by the new agreement. In this context the crucial words " existing rate of D. A. ", on which both the learned Counsel relied, could have only one meaning. Do the words " existing rate " refer to the date of the agreement or to the date of the award ? It is true that the existing rate of D. A. had its origin in the award and was made to prevail 148 under the agreement, that is to say that the rate was accepted by the parties as reasonable on the date of "the agreement, till there was a substantial change in the working class cost of living index. If the contention of the learned Counsel for the Company should prevail, the agreement would not be self contained, but only to be construed as modifying the earlier award to some extent. We are satisfied that in regard to matters covered by it, the agreement replaced the earlier award and therefore the date of the agreement is the crucial one for ascertaining whether there was substantial change in the working class cost of living index in the year 1957. We, therefore, reject this contention. Contentions 3, 5 and 6 raise pure questions of fact. The Tribunal, on the consideration of the entire material placed before it, came to the conclusion that there was change of circumstances which entitled the employees to claim an increase in their dearness allowance. It has also fixed the rate of increase in the dearness allowance on the basis of the rise in the cost of living index. In doing so, it also took into consideration the difficulties facing the industry and the repercussion of the rise in the dearness allowance on the consumers in general. Having regard to the overall picture, it came to the conclusion that full neutralisation of the deficiency as a result of rise in the cost of living index by dearness allowance could not be permitted and therefore allowed them only 75 per cent. of the increase in the dearness allowance to which they would have otherwise been entitled on the basis of the rise in the cost of living index. The finding given by the Tribunal is one on fact and we do not see any permissible ground for interference with it in this appeal by special leave. Before closing, one point strenuously pressed upon us by the learned Counsel for the Company which is really another attempt to attack the finding of fact given by the Tribunal from different angle must be mentioned; it was that the Tribunal wrongly relied upon Exhibit 3, corrected on the basis of the information given by the State Statistical Bureau, West Bengal, for ascertaining the working class cost of living index since August 1954 up to March 1957. On the 149 basis of Exhibit 3, the Tribunal held that the working class cost of living index stood at 344.1 in August 1954 and it rose to 400.6 in May 1957, with the result that there was a rise of 56 points, a substantial rise in the cost of living index. Exhibit 3 certainly supports the finding of the Tribunal. The learned Counsel for the Company points out with reference to the relevant entries in the Monthly Statistical Digest, West Bengal, that the said figures relate only to working class menials and the corresponding entries in regard to the working class cost of living index do not indicate so much increase as in the case of the menial class. Learned Counsel has also taken us through the relevant figures. The relevant entries in the Monthly Statistical Digest were not filed before the Tribunal. Indeed when the Union 's witness, Shri Satyaranjan Sen, was examined before the Tribunal, he was not cross examined with a view to elicit information that Exhibit 3 did not relate to the working class cost of living index. When Shri Chatterjee, the Assistant Manager of the Company, who was examined after Shri Sen, gave evidence, he not only did not object to the entries in Exhibit 3 but stated that he was not aware of any substantial increase in the working class cost of living index and complained that similar entries for all the relevant years had not been produced. Even before the Tribunal it does not appear that any argument was advanced contesting the relevancy of Exhibit 3 on the ground that it did not refer to the working class cost of living index. In the circumstances, we do not think that we are justified to allow the learned Counsel for the Company to make out a new case for the first time before us, upsetting the Tribunal 's basis for calculation and involving further and different calculations. In the result, we confirm the award of the Tribunal and dismiss the appeal with costs. The learned Counsel, appearing for the Union, did not press the appeal No. 164 of 1958, filed by the Union, and therefore it is also dismissed with costs. Appeals dismissed.

Aggrieved by an Award of 195, the employees placed before the Company a fresh charter of demands which was mutually settled by a written agreement which provided, inter alia, that the existing rate of dearness allowance should prevail which was adjustable to any future substantial change in the cost of living index of the working class. As the cost of living increased disputes arose, and in spite of the said Award of 1951, 137 which was not terminated according to law, the dispute arising out of the said written agreement was referred for adjudication by the Government to the Second Industrial Tribunal, Calcutta, in September, 1956. In April 1957, the Government transferred the dispute from the Second Industrial Tribunal to the Fifth Industrial Tribunal. The Company, inter alia, contended that the Government had no power to transfer the dispute from one Tribunal to another and that the reference was bad as the 1951 Award had not been duly terminated. The Industrial Disputes (Amendment and Miscellaneous Provisions) Act (36 of 1956) amending the Industrial Disputes Act (14 Of 1947) came into force on August 28, 1956, giving authority to the Government to transfer a reference from one Tribunal to another, which was followed by a further amending Act, being Industrial Disputes (Amendment) Act (18 of 1957) whereunder among other things a new definition of 'Tribunal ' was given, whereby the Industrial Tribunal constituted prior to March 10, 1957, under section 7A of Act 14 Of 1947 was included. Held, that as a result of the amendments to the , the Government had authority to transfer a case from one Tribunal to another. 'Tribunal ' as defined by section 2(r) of the , as amended by Act 36 of 1956, read with amending Act 18 of 1957, empowers the Government to transfer a reference from one Tribunal to another. Where, in spite of a previous award, the employees after raising fresh demands entered into a new agreement with the employer which started a fresh chapter regulating the relationship of the parties, the previous award, though not terminated in accordance with the provisions of law, must be deemed to have been superseded. Held, further, that though article 136 of the Constitution is couched in the widest terms and confers a discretionary power, (which cannot exhaustively be defined) on the Supreme Court to grant special leave to appeal from the order of a tribunal, but it is necessary for the Supreme Court to exercise its said discretionary jurisdiction only in cases (a) where there is a violation of the principle of natural justice, (b) raises an important principle of industrial law requiring elucidation and final decision by the Supreme Court, or (c) discloses such other exceptional or special circumstances which merit the final decision by the Supreme Court. Such discretionary reserve power cannot obviously be so construed as to confer a right of appeal to any party from the decision of a Tribunal, where he has none under the law. is intended to be a self contained one and it seeks to achieve social justice on the basis of collective bargaining, conciliation and arbitration. Awards are given on circumstances peculiar to each dispute and the Tribunals are to a 18 138 large extent free from restrictions of technical considerations imposed on courts. A free and liberal exercise of the discretionary powers by the Supreme Court may materially affect the fundamental basis of the decision, namely, quick solution to such disputes to achieve industrial peace. Where an Industrial Tribunal on the consideration of the entire material placed before it and having regard to the overall picture, came to a conclusion of facts, the Supreme Court will not interfere with such finding of fact nor will it be justified to allow to make a new case for the first time before it. Pritam Singh vs State of Madras, ; ; Hem Raj vs State of Ajmer, and Sadhu Singh vs State of PEPSU, A.I.R. 1954 S.C. 272, referred to.

Appeal No. 177 of 1960. 554 Appeal from the Judgment and order dated March 27, 1958, of the Orissa, High Court in O. J.C. No. 191 of 1956. Hemendra Chandra Sen and section Ghose, for the appellants. N. section Bindra, V. N. Sethi and P. D. Xenon, for the respondents. April 30. The Judgment of the Court was delivered by SINHA, C. J. This appeal on a certificate granted by the High Court of Orissa raises the question of the interpretation of certain provisions of The Orissa Estates Abolition Act, 1951 (Orissa Act 1 of 1952) which hereinafter will be referred to as the Act. The appellants who were petitioners in the High Court were the proprietors of an Estate, known as Paikpara Estate, in the district of Puri, bearing Touzi Nos. 268, 269 and 270. The respondents are the State of Orissa and its officials. The facts on which the High Court based its judgment under appeal areas follows. Within the said Paikpara Estate, there were several tenures and sub proprietory interests. The Paikpara Estate vested in the State of Orissa by virtue of a notification issued under section 3 of the Act, on August 23, 1953. It is common ground that the interests of tenure holders and sub proprietors within the said estate have not yet been taken over under the provisions of the Act. Under the tenure holders aforesaid, there were some occupancy holdings which Lad been purchased by the proprietors, the appellants in this Court, long ago. Thus the proprietors by virtue of their purchase became occupancy raiyats, under the tenure holders or sub proprietors, in respect of the holdings purchased by them. It is also common ground that in the last Settlement Khatians their interests as occupancy 555 raiyat8 in respect of the holdings purchased by them have been recorded. On the lands of the occupancy holdings, there were several buildings which were used as Katcheri houses by the proprietors, for the administration of their estate. In January 1954, according to the petitioners in the High Court, the State Officials took illegal possession of those buildings situate on the raiyati land, as aforesaid. The appellants thereupon made an application to the Collector of Puri for vacant possession of the lands and the buildings, described in the petition, on the allegation that those lands together with the buildings, purchased from tenants with rights of occupancy, were, after purchase by the proprietors, used as Katcheri house by them. They also alleged that those properties had not vested in the State of Orissa as a result of the said notification, under the Act. Part of the said house had been let out to the Postal Department. The Anchal Adhikari of that area wrote to the Postmaster, and Superintendent of Post Offices, not to pay rent to the proprietors. The Postal Department, therefore, vacated that portion of the building in their occupation, which has gone into the occupation of the State Government. Another portion of the property, which was used as dhangola was let out for storing paddy, to a third party. That dhangola was also taken illegal possession of by the Naib Tehsildar of the place. Other portions of the property also are in illegal possession of the State Government, through its Anchal Adhikari. It was thus claimed on behalf of the proprietors that the State Government had no right to take possession of the property, as it did not form part of the estate which had been acquired under the Act, and had, on notification, vested in the State Government. The learned Collector of Puri did not concede the demand of the proprietors, and held that the occupancy holding is situated within the tenure held 556 under the proprietors and lay within the geographical limits of the (state which had vested in the Government. Being aggrieved by the aforesaid order of the Collector, dated November 20, 1956, the proprietors moved the High Court under article 226 of the Constitution for relief against what was alleged to be illegal interference with their interest not as proprietors but as occupancy tenants. The High Court dismissed the proprietors ' claim chiefly on the ground that the question raised by the petition before the High Court was "practically concluded by the observations of the Supreme Court in the case of K. C. Gajapati Narayan Deo vs The State of Orissa (1). It is manifest that the controversy raised in this case has to be answered with reference to the provisions of the Act. 'Estate ' has been defined in cl. (g) of section 2 of the Act as follows : " 'estate ' includes a part of an estate and means any land held by or vested in an Inter mediary and included under one entry in any revenue roll or any of the general registers of revenue paying lands and revenue free lands, prepared and maintained under the law relating to land revenue for the time being in force or under any rule, order, custom or usage having the force of law, and includes revenue free lands not entered in any register or revenue roll and all classes of tenures or under tenures and any jagir, inam or muafi or other similar grant"; Explanation I. Land Revenue means all sums and payments in money or in kind, by whatever name designated or locally known, received or claimable by or on behalf of the State from an Intermediary on account of or (1) ; 557 in relation to any land hold by or vested in such intermediary; Explanation II. Revenue free land includes land which is, or but for any special covenant, agreement, engagement or contract would have been, liable to settlement and assessment of land revenue or with respect to which the State has power to make laws for settlement and assessment of land revenue; Explanation III. In relation to merged territories estate ' as defined in this clause shall also include any mahal or village or collection of more than one such mahal or village held by or vested in an Intermediary which has been or is liable to be assessed as one unit to land revenue whether such land revenue be payable or has been released or compounded for or redeemed in whole or in part". The definition makes reference to an 'Intermediary ', which has been defined in cl.(h) as follows: 'Intermediary ' with reference to any estate means a proprietor, sub proprietor, landlord, landholder, malguzar, thikadar, gaontia, tenure holder, undertenure holder, and includes an inamdar a jagirdar, Zamindar, Ilaquadar, Khorgoshdar, Parganadar, Sarbaraka r and Maufidar including the Ruler of an Indian State merged with the State of Orissa and all other holders or owners of interest in land between the raiyat and the State; Explanation I. Any two or more Intermediaries holding a joint interest in an estate which is borne either on the revenue roll or on the rent roll of another Intermediary shall be deemed to be one Intermediary for the purposes of this Act; 558 Explanation II. The heirs and successors in interest of an Intermediary and where an Intermediary is a minor or of unsound mind or and idiot, his guardian, committee or other legal curator shall be deemed to be an Intermediary for the purposes of this Act. All acts done by an Intermediary under this Act shall be deemed to have been done by his heirs and successors in interest and shall be binding on them. Reading the two definitions together, the position in law is that 'estate ' includes the interest, by whatever name called, of all persons, who hold some right in land between the State at the apex and the raiyat at the base. That is to say, the Act is intended to abolish all Intermediaries and rentreceivers and to establish direct relationship bet ween the State, in which all such interests vest, after abolition under the Act, and the tillers of the soil. The interest of a raiyat is designated by the word 'holding and is defined by the Orissa Tenancy Act (Bihar and Orissa Act II of 1913), as follows: . " holding" means a parcel or parcels of land held by a raiyat and forming the subject of a separate tenancy". Under the, Orissa Tenancy Act, the unit of interest of a proprietor is an 'estate '. Under a proprietor may be a number of sub proprietors. 'Sub proprietor ' is also defined in the Tenancy Act, but we are not concerned in this case with that class of holders of land. The interest of a tenure holder or an under tenureholder is characterised as a "tenure '. Thus, the process of in feudalist and sub infeudation, which has been similar in all places where the Permanent Settlement took place, that is to say, in Bengal, Bihar and Orissa and Madras and Andhra Pradesh, 559 has led to the coming into existence of proprietors, with their estates, sub proprietors under them, tenure holders and under tenure holders and ultimately the tiller of the soil, the raiyat, whose unit of interest is a 'holding '. The Act was intended to abolish all proprietors, sub proprietors, tenureholders and under tennure holders, with a variety of names; but did not touch the interest of the raiyat. The same person, by transfer or by operation of law, might at the same time occupy different status in relation to land. He maybe in respect of a particular area, which is geographically included in the estate, the proprietor. That land may be held by a raiyat not directly under a proprietor but under a tenure holder, who holds directly under proprietor. The proprietor may have acquired the interest of a raiyat. Thus the proprietor, in his capacity as the owner of the estate holds the entire estate, and he may have by purchase acquired the interest of a raiyat, paying rent for the raiyati interest to his immediate landlord, the tenure bolder. The tenure holder, in his turn, may have been liable to pay rent to the proprietor. That is what appears to have happened in this case. The appellants held the Paikpara estate as proprietors. They also appear to have purchased the properties in question comprising raiyati lands with certain buildings thereon from the raiyat. Hence, the position in law is that though these lands with the buildings are situate geographically within the ambit of the appellants ' estate, they are not part of the estate. In other words, the appellants hold those properties with the buildings not as proprietors as such, but as rayats. It appears that the Courts below have not kept clearly in view this distinction. The Collector, in the first instance, and the High Court in the proceedings under article 226 of the Constitution, appear to have fallen into the error of confusing the petitioners ' position as ex proprietors, with their present position as raiyat in 560 respect of the land on which the buildings stand. The High Court has drawn the conclusion from the decision of this Court in K. C. Gajapati Narayan Deo vs The State of Orissa, (1) and has observed that whether the buildings in question vested in the Government, on the vesting of the estate under section 3 of the Act, world depend not upon whether it formed part of the estate acquired by the Government but on the, purpose for which the buildings wore used by the proprietors. As the buildings in question had been primarily used as office or Katcheri for the collection of rent or for the use of servants or for storing grains by way of rent in kind, the buildings will vest in the Government on the vesting of the estate itself. In our opinion, this conclusion drawn by the High Court from the decision of this Court is not well founded in law. The High Court draw its conclusions from the following observations of this Court in the aforesaid case at Pages 25 26. "Assuming that in India there is no absolute rule of law that whatever is affixed to or built on the soil becomes a part of it and is subject to the same rights of property as the soil itself, there is nothing in law which prevents the State legislature from providing as a part of the estates abolition scheme that buildings, lying within the ambit of an estate and used primarily for management or administration of the estate, would vest in the Government as appurtenances to the estate itself. This is merely ancillary to the acquisition of an estate and forms an integral part of the abolition scheme. Such acquisition would come within article 31 (2) of the Constitution and if the conditions laid down in clause (4) of the article are complied with, it would certainly attract the protection afforded by that clause. Compensation has (1) , 561 been provided for these buildings in section 26(2)(iii) of the Act and the annual rent of these buildings determined in the prescribed manner constitutes one of the elements for computation of the gross asset of an estate. " The observations quoted above of this Court have reference to the following definition of ,homestead ' in el. (i) of section 2 of the Act: "homestead ' means a dwelling house used by the Intermediary for the purpose of his own residence or for the purpose of letting out on rent together with any courtyard, compound, garden, orchard and outbuildings attached thereto and included any tank, library and place of worship appertaining to such dwelling house but does not include any building comprised in such estate and used primarily as office or kutchery for the administration of the estate on and from the is day of January, 1946". it will appear from this definition that the Legislature placed a proprietor 's homestead ' in two categories, namely (1) a dwelling house used by the Intermediary for his own purposes and (2) any building comprised in such estate and used primarily as office or. Katcheri for the administration of the estate on and from the list day of January, 1946. In respect of first category the Act provides in a. 6 that portion of the homestead shall be deemed to be settled by the State with the Intermediary, who will continue to hold it as a tenant under the State Government, subject to the payment of fair and equitable groundrent, except where under the existing law no rent is payable in respect of homestead lands. It will be noticed further that the second category in the definition of homestead, which has not been permitted to the outgoing 562 Intermediary has reference to "any building comprised in such estate". It has no reference to any building standing on rayati holding or a portion thereof. This becomes further clear with reference to the provisions of a. 5, which lays down the consequences of vesting of an estate in the State. Under cl (a) of section 5, the entire estate, including all kinds of lands described in meticulous details, and other non raiyati lands vest absolutely in the State Government. This Court, while dealing with the constitutionality of the Act, was not concerned with raiyati lands. Its observations had reference only to such buildings as stood upon the proprietor 's private lands like peel, seer, Zirat, etc., whicl, were in his possession as proprietor or as tenure bolder. It is thus clear that the very basis of the judgment of the High Court is entirely lacking. That the High Court was not unaware of this distinction becomes clear from the following passage in its judgment: "Doubtless, Ryoti lands are excluded from the scope of this clause. But buildings and structures standing on Ryoti lands and in the possession of the proprietor are not expressly saved. " The first sentence quoted above is correct, but not the second. 'I here is no question of expressly saving structures on ratyati lands, when it is absolutely clear that raiyati lands are not the subject matter of legislation by the Act. The same remarks apply to the reference in section. 26 (b) (iii). Section 26 begins with the words ,for the purpose of this chapter", namely, Chapter V, headed "Assessment of Compensation". Reading section 26 as a whole it is absolutely clear that for the purpose of assessment of the compensation payable to the outgoing proprietor or tenure holder, of the estate to be acquired, gross assets have to be determined, by aggregating the rents payable by 563 tenure holders or under tenure holders and raiyats. It is, thus, clear that the rent payable by the appellants as raiyats in respect of the disputed lands would form part of the assets which have to be included in the gross assets in determining compensation. But that does not mean that the interests of raiyats also have become vested in the State as a result of the notification under. 3, read with section 5. For the reasons aforesaid, it must be held that the appellant 's raiyati interests in the lands and in the buildings standing on those lands have not been affected by the abolition of his interest as proprietors, and that the State authorities had illegally taken possession of those. The appeal is accordingly allowed with costs here and below. Appeal allowed.

The appellants held the Paikpara estate as proprietors. They had purchased the properties in question comprising raiyati lands with certain buildings thereon from the raiyat. Thus the proprietors became occupancy raiyat8 under the tenure holders or sub proprietors. By virtue of a notification issued under section 3 of the Orissa Estates Abolition Act, 1951, the Paikpara estate vested in the State of Orissa. But the interest of tenure holders and sub proprietors within the estate had not been taken over under the provisions of the Act: 553 The said buildings on the lands of the occupancy holdings were used as Katcheri houses by the proprietors for the administration of their estates. The state officials took possession of these buildings situated on the raiyati land. The appellants made an application to the collector, Puri, for vacant possession of the lands and the buildings. The Collector did not concede the demand and held that the occupancy holding was situated within the tenure held under the proprietors and lay within the geographical limits of the estate which had vested in the Government. The High Court dismissed the writ petition of the appellant under article 226 on the ground that the question raised was practically concluded by the Supreme Court in K. C. Gajapati Narayan vs Deo State of Orissa. The appellants came up in appeal on a certificate granted by the High Court. Held, that the appellants ' raiyati interests in the lands and in the buildings standing on those lands had not been affected by the abolition of their interests as proprietors, and the State Authorities had illegally taken possession of them. Held, further, that the Orissa Estates abolition Act,1951, was intended to abolish all proprietors,sub proprietors, tenureholders, with a variety of names, but did not touch the interest of the raiyat. Hence though these lands with buildings was situate geographicaiy within the ambit of the appellant 's estate, they were not part of the estate. The appellant held those properties with the buildings not as proprietors as such, but as raiyats. Held, also, that the conclusion drawn by the High Court from the decision in K. C. Gajapati Narayan Deo vs The State of Orissa is not well founded. The observation of this Court on which it drew its conclusion had reference to the definition of 'home stead ' in cl. (1) of section 2 of the Act. This court while dealing with the constitutionality of the Act, in the above case, was not concerned with raiyati lands. Its observations had reference only to such buildings as stood upon the proprietor 's private land, which were in his possession as proprietor or as tenure holder. K. C. Gajapati Narayan Deo vs The State of Orissa; , , not applicable.

etition (Civil) Nos. 13097 13 176 Of 1984 (Under Article 32 of the Constitution of India). M.S. Ganesh for the Petitioners. V. Kanth, Ms. Halida Khatun, C.V. Subba Rao and N.S. Das Bahl for the Respondents. The Judgment of the Court was delivered by 1016 VENKATARAMIAH, J. The petitioners in these petitions, 80 in number. are employees of the Central Government working in the Central Bureau of Investigation. Some of them are holding the posts of Sub Inspectors, some are Inspectors and the remaining are the Deputy Superintendents of Police in the Central Investigating Units of the Central Bureau of Investigation. There are two classes of officials amongst those who are holding the posts of Sub Inspectors, Inspectors and Deputy Superintendents of Police. The first class of those officials to which the petitioners belong consists of those who have been recruited directly to the Central Bureau of Investigation. They are hereinafter referred to as 'non deputationists '. The other class of officials in those cadres consists of those who have been drawn from various State cadres. They are hereinafter referred to as 'deputationists. In this case the dispute relates to the discrimination that has been brought about by the Central Government re garding the Special Pay payable to the two groups of offi cers, namely, 'deputationists ' and 'non deputationists '. While a Deputy Superintendent of Police who belongs to the category of 'deputationists ' is getting Rs. 150 per month by way of Special Pay, a Deputy Superintendent of Police who is a non deputationist gets Rs. 100 per month as Special Pay. Similarly while an Inspector belonging to the former catego ry gets Rs. 125 per month as Special Pay, an Inspector belonging to the latter category gets Rs.75 per month as Special Pay and while a Sub Inspector belonging to the former category gets Rs. 100 per month by way of Special Pay, a Sub Inspector belonging to the latter category gets Rs.50 per month. The petitioners, who are non deputation ists, claim that they should also be paid the same Special Pay which the deputationists are getting with effect from the date on which the deputationists commenced to draw the Special Pay at higher rates. The two groups of officers, referred to above are all working in the 14 Branches of the Central Bureau of Investi gation which are called Central Investigating Units. It is not disputed that the two sets of officers, namely the 'non deputationists ' and the 'deputationists ' in the ranks of Sub Inspectors, Inspectors and Deputy Superintendents of Police discharge the same functions, duties and responsibil ities in the various Central Investigating Units. They have to travel to different places for purposes of investigation into the several cases entrusted to them. The Special pay that is being paid to the deputationists is in addition to the Deputation Allowance paid to them which is not admissi ble to the non deputationists. The Deputation Allowance is paid to the 1017 deputationists as compensation for the temporary displace ment from their parent cadres occasioned by their deputation to the Central Bureau of Investigation. At present a Deputy Superintendent of Police who is on deputation gets Rs. 150 per month as Deputation Allowance, an Inspector who is on deputation gets Its. 125 per month as Deputation Allowance and a Sub Inspector who is on deputation gets Rs. 100 per month as Deputation Allowance. It is also alleged that in the non Central Investigating Units of the Central Bureau of Investigation the rates of Special Pay paid to the officers working in the three cadres of Sub Inspectors, Inspectors and Deputy Superintendents of Police are the same both in the case of deputationists and non deputationists, but in the case of Central Investigating Units, however, to which the petitioners belong the deputationists in all the three ranks get Special Pay at higher rates as stated above. It would also appear that between June, 1976 and August, 1979 the Deputy Superintendents of Police belonging to the cate gory of non deputationists were totally denied the Special Pay of Rs. 150 per month which was being given to the Deputy Superintendents of Police who are on deputation. It is contended by the petitioners that the denial, of the Special pay at the same rates at which. the deputationists are being paid amounts to violation of Articles 14 and 16 of the Constitution of India. In answer to the above claim of the petitioners it is stated on behalf of the Central Government in the counter affidavit filed by Shri R.S. Nagpal, Under Secretary to the Government of India, Ministry of Home Affairs (Department of Personnel and Administrative Reforms) that because the State Governments had revised scales of pay of their staff including the State Police from different dates merging whole or substantial portion of the dearness allowance and because the dearness allowance and the structure of pay scales differed widely from one State to another, there could not be any comparison between the scales of pay of the deputationists and the scales of pay of the non deputation ists which had been fixed on the recommendation of the Third Pay Commission. It is further stated that the Special Pay was being paid to the deputationists at a higher rate to attract officers of high caliber from their parent depart ments and the arduous nature of their duties. It is well settled by several decisions of this Court that in order to pass the test of permissible classification of persons belonging to the same class into groups for purposes of differential treatment two conditions must be fulfilled, namely, that the classification must be founded on an intelligible differentia which distinguishes persons who 1018 are grouped together from others left out of the group and that that differentia must have a rational relation to the object sought to be achieved by the law which brings about discrimination between the two groups. The Deputation Allow ance which is paid to the deputationists with which the petitioners have no quarrel compensates the difficulties which the deputationists may encounter on account of their displacement from their parent departments. The Special Pay, however, is not actually paid as compensation for such displacement. This is quite evident from the recent proposal which was submitted to the FOurth Pay Commission by the Government of India. it reads thus: "Considering special nature of duties of Investigating Officers in Central Branches and the fact that they were to remain on extensive tours spreading about 20 days a month, the rate of special pay for deputationist officers only was raised by Rs.50 p.m. for S.Is, Inspectors and Dy. P. They get special pay at the following rates: Dy. S.P . . Rs. 150 Inspector . Rs. 125 Sub Inspector . . Rs. 100 There has been a demand that departmental officers posted in Central Branches should also be entitled to the same amount of enhanced special pay which has been sanc tioned to the deputationists. It is considered that this demand is genuine and the Government had desired it should be projected before the Fourth Pay Commission. " It is clear from the foregoing proposal submitted to the Fourth Pay Commission that the Special Pay was being paid at higher rates to the deputationists not because of their displacement from the parent departments but as compensation for the arduous nature of the duties performed by them as Investigating Officers in the Central Branches which includ ed extensive tours spreading over about 20 days a month which they had to undertake. It is not in dispute that the nature of the duties performed by the deputationists as Investigating Officers is the same as the nature of duties performed by the non deputationists as Investigating Offi cers. It is significant that the said proposal which was submitted perhaps during the pendency of this Writ Petition does not 1019 refer to the difference in the rates of pay and dearness allowance which the deputationists were getting as members belonging to the Police departments of different States nor does it state that the Special Pay was being paid for at tracting talent from the State Services. The petitioners have alleged that the non deputationists holding the posts of Sub Inspectors, Inspectors and Deputy Superintendents of Police are highly qualified persons and are equally talented and this allegation is not properly traversed in the coun ter affidavit. It is seen that pursuant to the recommendation of the Third Pay Commission as accepted by the Central Government both the nondeputationists and the deputationists in the ranks of Sub Inspectors and Inspectors were being paid the same Special Pay with effect from January 1, 1973. On that occasion the Deputy Superintendents of Police of either category were not granted any Special pay. By its letter No. 203/13/76 AVD II dated 21.6, 1976 the Government of India intimated the Director, Central Bureau of Investigation its decision that the Police officers on deputation to the Central Bureau of Investigation as Deputy Superintendents of Police, Inspectors and Sub Inspectors and posted in one of the Central Units had been granted Special Pay at the fol lowing rates with effect from the date of issue of the said order: Dy. section P . . Rs. 150 p.m. Inspector . Rs. 125 p.m. Sub Inspector . Rs. 100 p.m. By the aforesaid decision dated 21.6.1976 the Central Gov ernment disturbed the existing parity of Special Pay between non deputationists and deputationists which it had accepted pursuant to the recommendation of the Third Pay Commission, as stated above, and commenced the discrimination complained of in this case. The Government Order dated 21.6. 1976 did not give any reason as to why in the case of the deputation ists alone there was an increase in the rates of Special Pay, but it is clear from its letter written on 6.7.1976 by Shri D. Sen, Director of the Central Bureau of Investigation to the Superintendents of Police of the Central Units that the Higher Special Pay had been sanctioned in order to compensate to a certain extent the arduous nature of the job which the Investigating Officers had to perform. He stated in the course of the letter thus: "Recently . . we have been able to get higher special pay sanctioned for all the Investigating officers posted in 1020 Central Units. This should compensate them to a certain extent for the arduous nature of the job which they have to perform in a Central Unit . " A reading of that letter does not, however, suggest that the Director had noticed that the rates of Special Pay had been increased only in the case of deputationists and not in the case of non deputationists. By its letter dated 2.2.1978 Shri P.C. Sharma, who was then working as Sub Inspector (now Inspector and one of the Petitioners herein) submitted a representation to the Director requesting that he might also be granted enhanced rate of Special Pay at par with the deputationist Sub Inspectors posted in Central Units with retrospective effect. He pointed out that he had been work ing in one of the Central Units and that he had been per forming the same duties as any of the deputationist officers in the Central Units. He further stated that the job re quirements in the Central Units did not make any distinction between a deputationist and a non deputationist Sub Inspec tor and that often it had been found that assignments of complicated nature had been entrusted to the non deputation ists. Similar representations were made by other Sub Inspec tors and Inspectors who are petitioners before us. Along with his letter dated 8.2.1978 the Superintendent of Police, Central Bureau of Investigation forwarded to the Central Government eight such representations for the grant of Special Pay at the enhanced rates. On 22.2. 1978 the Minis try of Home Affairs intimated the Superintendent of Police, Central Bureau of Investigation that the question of grant of Special Pay to the non deputationist Inspectors and Sub Inspectors of the Central Bureau of Investigation working in the Central Branches at the same rates at which it was then admissible to the deputationist officers of the correspond ing ranks had already been taken up with the Department of Personnel & Administrative Reforms and that the Government decision in that regard was Still awaited. On 27.8.1979 the Government of India sanctioned with immediate effect a Special Pay of Rs. 100 per month to the non deputationist Deputy Superintendents of Police in the Central Bureau of Investigation. The question of maintaining parity in the matter of payment of Special Pay between the deputationists and the non deputationists was taken up for consideration at the meeting of the CBI Staff Council presided over by the then Home Minister Shri Zail Singh. The Home Minister as sured the Staff Council that the request of the non deputa tionists would be considered sympathetically by the Govern ment and an early decision would be taken. The said question was again raised at the meeting of the Staff Council on the 30th October, 1982 and at the meeting held on 1021 17.1. On 11.27.1983 the Home Department again wrote to the Superintendent of Police, Central Bureau of Investiga tion that the question of granting of Special Pay to the non deputationists in the Central Bureau of Investigation at the rates applicable to deputationists was still under consideration with the Government and that its decision would be communicated as and when it was taken. Again on 26.3.1984 the Home Department addressed a letter to all the Superintendents of Police on the subject of Special Pay. It reads thus: No. A. 110 19/6/80 IWSU Government of India Ministry of Home Affairs Department of Personnel & A.R. C.B.I, Kotah House Hutments, New Delhi Dated 26.3.84 To The Superintendents of Police, Central Bureau of Investiga tion, All Central Units located in Delhi Subject: Grant of special pay of the enhanced rates to the non deputationist Dy. P., Inspectors and section Is. working in the Central Branches. Sir, I have the honour to say that of late a number of representations have been received from departmental offi cers of the level of S.Is. to Dy. P. working in the Central Units, requesting for special pay at par with the deputationist officers. I am to inform your that a proposal has already been sent to the Government requesting them to sanction higher rates of special pay for non deputationists Dy. Ss. P., Inspectors and section Is. while working in the Central Units of C.B.I. The decision when taken will be communicated to all concerned. You are requested to inform all departmental officers suitably in the matter. Yours faithfully, Sd (R.S. Nagpal) Administrative Officer (E) C.B.I." 1022 It is thus seen that at no point of time there was any suggestion by the Government of India that the non deputa tionists were not entitled to the same treatment with the deputationists as regards Special Pay. On the other hand. the letter addressed to the Fourth Pay Commission by the Home Department which is referred to above clearly stated that: "There has been demand that departmental officers posted in Central Branches should also be entitled to the same amount of enhanced special pay which has been sanc tioned to deputationists. It is considered that this demand is genuine and the Government had desired it should be projected before the Fourth Pay Commission". There appears to be thus no rational explanation for the Government taking up a contrary stand in the counter affidavit filed before us while it had accepted that the demand made by the petition ers, who were the departmental officers posted in the Cen tral Units, was a genuine one. From the foregoing discussion it emerges that the Spe cial pay that was being paid to all the officers in the cadre of Sub Inspectors, Inspectors and Deputy Superintend ents of Police in the Central Investigating Units of the Central Bureau of Investigation has nothing to do with any compensation for which the deputationists may be entitled either on the ground of their richer experience or on the ground of their displacement from their parent departments in the various States, but it relates only to the arduous nature of the duties that is being performed by all of them irrespective of the fact whether they belong to the category of the 'deputationists ' or to the category of the 'non deputationists '. That being the position. the classification of the officers working in the said cadres into two groups, namely, deputationists and non deputationists for paying different rates of Special Pay does not pass the test of classification permissible under Articles 14 and 16 of the Constitution of India since it does not bear any rational relation to the object of classification. In these circumstances,. it is difficult to accept the stand of the Central Government justifying the discriminato ry treatment meted out to the non deputationists as regards payment of Special Pay. We, therefore, direct the Central Government to pay the nondeputationists who have been working in the cadres of Sub Inspectors, Inspectors and Deputy Superintendents of Police in the Central Investigating Units of the Central Bureau of Investigation Special Pay at the same rates at which the deputationists are being paid with effect from the date from which the decision contained in the letter of the 1023 Government of India, Cabinet Secretariat bearing No. 203/13/76AVD.II dated 21.6.1976 came into force upto date and to pay hereafter Special Pay to all the officers (depu tationists and non deputationists) in the said cadres at the same rates. The arrears of Special Pay payable upto date shall be paid within four months from today. The Writ Petitions are accordingly allowed. No costs.

There are two classes of officials amongst those who are holding the posts of Sub Inspectors, Inspectors and Deputy Superintendents of Police in the Central Bureau of Investi gation namely (i) who are directly recruited and (ii) those who have been drawn from various State cadres on deputation basis. The deputationists are paid Deputation Allowance as compensation for the temporary displacement from their parent cadres occasioned by their deputation to the Central Bureau of Investigation. Pursuant to the recommendation of the Third Pay Commission as accepted by the Central Govern ment both the Direct recruits and "deputationists" in the rank of Sub Inspectors and Inspectors were paid equal rate of Special Pay from 1.7.73, while the Dy. Superintendents were not paid anything. Both the direct recruits and the deputationists posted in one of the Central Units were granted Special Pay considering the special nature of duties of investigating officers, by its letter No. 203/13/76 AUD II dated 21.6.1976. But the Special Pay granted to the deputationists were more in all the three categories. Having failed to get the disparity in the pay ment of Special Pay set aright at the departmental level, the aggrieved direct recruits (non deputationists) have approached the Supreme Court for justice through their petitions under Article 32 of the Constitution. Allowing the petitions, the Court, HELD: It is well settled by several decisions of the Supreme Court that in order to pass the test of permissible classification of persons belonging to the same class into groups for purposes of differential treatment two conditions must be fulfilled, namely, that the classification must be founded on an intelligible differentia which distinguishes 1015 persons who are grouped together from others left out of the group and that differentia must have a rational relation to the object sought to be achieved by the law which brings about discrimination between the two groups. [1017G H; 1018A] The Special Pay that was being paid to all the officers in the cadre of Sub Inspectors. Inspectors and Deputy Super intendents of Police in the Central Investigating Units of the Central Bureau of Investigation has nothing to do with any compensation for which the deputationists may be enti tled either on the ground of their richer experience or on the ground of their displacement from their parent depart ments in the various States, but it relates only to the arduous nature of the duties that is being performed by all of them irrespective of the fact whether they belong to the category of the 'deputationists ' or to the category of 'non deputationists '. That being the position, the classifi cation of the officers working in the said cadres into two groups, namely, deputationists and non deputationists for paying different rates of Special Pay does not pass the test of classification permissible under Articles 14 and 16 of the Constitution of India since it does not bear any ration al relation to the object of classification. [1022D F] The Court directed the Central Government to pay the nondeputationists who have been working in the cadres of Sub Inspectors, Inspectors and Deputy Superintendents of Police in the Central Investigating Units of the Central Bureau of Investigation Special Pay at the same rates at which the deputationists are being paid with effect from the date from which the decision contained in the letter of the Government of India, Cabinet Secretariat beaming No. 203/13/76 AVD.II dated 21.6.1976 came into force upto date and to pay hereafter Special Pay to all the officers (depu tationists and non deputationists) in the said cadres at the same rates.) [1022G H; 1023A B]

Civil Appeal No. 1784 of 1966. Appeal from the judgment and decree dated March 17, 1952 of the Bombay High Court in Appeal No. 385 of 1948 from original decree. 276 D. Narsaraju, .4. K. Sen, Balkrishan Acharya and S.S. Shukla, for respondents Nos. 3 and 4. K. K, Jain, M.K. Garg and H.K. Puri, for respondents Nos. 13(a) to 13(f). The judgment of the Court was delivered by Hegde J. The main question for decision in this appeal is whether the Haveli at Nadiad in which the idol of Shree Gokulnathji is installed as well as the other properties detailed in plaint schedules A & B are the properties of a public religious trust created by the followers of Vallabh cult, residing at Nadiad. The history of the suit institution and its management as also the various pleas taken by the parties have been elaborately set out by the High Court in a well considered judgment. Hence we shall refer only to such pleas as are necessary to decide the contentions advanced before us. The plaintiffs are the residents of Nadiad. They are Vaishnavites. They belong to the Vallabh Sampradaya. They sued for a declaration that the properties mentioned in S.chs. A & B of the plaint are properties oF the ownership of the trust ,mentioned earlier. They are suing on behalf of the Vallabha Sampradayees residing at Nadiad. According to their case as finally evolved that even during the last quarter of the 18th century, the Mandir of the Gokulnathji existed at Nagarwad in Nadiad Prant but in about 1821 a new Mandir was constructed by the followers of the Vallabha School at Santh Pipli, Nadiad and the idol of Gokulnathji which was previously worshiped at Nagarwad was taken and consecrated there. In about 1831 they invited Goswami Mathuranathji, a direct descendant of Shree Vallabhacharya to come over to Nadiad and take up the management of the Mandir as its Maha Prabhu. According to the plaintiffs the Mandir in question was constructed by the Vallabha Sampradayees and the expenses of the sevas as well as the utsavas performed in the Mandir were contributed by them. They ,further say that the properties belonging to the trust were purchased from the contributions made by the devotees of that temple. They assert that the persons belonging to the Vallabha Sampradaya have a right to have darshan of the deities in the Mandir, according to usage, as of right. In short their case is that the Mandir in question is a place of public religious worship by the persons belonging to Vallabh Sampradaya and the Maha 'Prabhuji is ' only a trustee. He has a right to reside in the upstair portion of the Mandir and further he can utilise a reasonable portion of the income of the trust, after meeting the requirements of the trust for his maintenance as well as the maintenance of the members of his family. They contend that the suit properties were dedicated to Shri Gokulgathji 277 and the Maha Prabhu has no independent right of his own in those properties. It is further said that the management of the temple was carried on efficiently by Mathuranathji and his descendants till about the time Annirudhalalji became the Maha Prabhu in Samy 1955. Annirudhalalji under evil advice sought to. secure the Jamnagar Gadi and for that purpose spent enormous sums of money from out of the funds belonging to the suit temple. He also incurred considerable debts in that connection. He died in Samy. Thereafter defendant No. 1, his widow took over the management of the suit temple and its properties. During her management she began to. assert that she was the absolute owner of the suit properties including the suit temple. She alienated several items out of the suit properties. Hence they were constrained to bring the suit under appeal for the declaration mentioned earlier and also for a further declaration that the alienations effected by her are illegal, improper and unauthorised and not binding on the deity. They also sought a mandatory injunction against defendants Nos. 2, 7 to 14 to restore lot No. 2 property in Sch. A to defendant No. 1 for the benefit of the deity Shree Gokulnathji after declaring that the sale deed dated 19th April 1953 passed by defendant No. 1 to defendant No. 2 in respect of it is illegal, improper, unauthorised and without consideration and the same is not binding on the deity. They have also asked for a permanent injunction against defendants 3, 4, 5 and 6 restraining them from enforcing the mortgages dated 4 3 1939, 27 1 1942, 12 1 1942 and 17 12 1941 passed by defendant No. 1 in their favour. The suit was mainly contested by defendant No. 1 According to her Goswami Mathuranathji Maharaj was the owner of the idol Shri Gokulnathji. It is he who established the Haveli at Nadiad and rounded his Gadi there; he was not only the owner of the Haveli but he. was also the owner of the deities that were being worshiped in that Haveli. She further pleaded that as per the tenets ,and usages of the Vallabha school, it is not possible for the members of that cult to found a temple. They can only worship through the Acharya (Maha Prabhu) in his house known as Haveli. According to. their cult the Goswami Maharaj otherwise known as Maha Prabhu is the emblem of God head and the living representative of divinity. She went further and took up the plea that according to the. Vallabha Sampradaya no deity can own any property. She further averred that Mathuranathji Maharaj and his descendants received from time to time presents and gifts made by his followers. Those presents were made to them as a mark of reverence and respect to them and with a view to receive their grace. They were the absolute owners of the idols they worshiped, the presents and gifts made to them and of the properties acquired by them. She denied that the Haveli in which Shree Gokulnathji is worshiped is a public temple. She also denied that the Vallabh Sampradayees were entitled L2Sup. CI/70 6 278 to have the Darshana of that deity in that Haveli as of right. She denied the plaint averments that all or any portion of the suit properties were acquired from the funds raised by the devotees or that the sevas or festivals were conducted from out of the contributions made by them. She justified the impugned alienations mainly on the ground that she had absolute right to deal with the suit properties as she pleased. The other defendants supported the defence taken by the Ist defendant. They further pleaded that the alienations effected in their favour were supported by consideration and they were bona fide alienees and therefore those alienations they are not open to challenge. The trial court dismissed the plaintiffs ' suit principally on the ground that as per the tenets and usages of Vallabha School it is impermissible for Vallabh Sampradayees to found a public temple and therefore, it is not possible to uphold the pleas advanced on behalf of the plaintiffs. In appeal the High Court reversed the judgment and decree of the trial court. It accepted the plaintiffs case that suit properties were the properties of a public religious trust and the alienations impeached were not valid and binding on the trust. This appeal has been brought by the I st defendant. The alienees have not appealed against the decree of the High Court. In this Court they merely supported the pleas taken by the Ist defendant. In this case voluminous evidence both oral and documentary has been led by the parties. Fiftyone witnesses were examined in court and two on commission. The oral evidence mainly relates to the tenets and beliefs of the devotees of the Vallabh Cult and the usages that prevail in their places of worship. Before proceeding to examine the issues arising for decision in the case it is necessary to mention certain circumstances which have a bearing on those issues. At the stage of pleadings it was common ground between the parties that Mathuranathji was the first person to be recognised as their Mahraj by the Vallabh Sampradayees of Nadiad. The plaintiffs ' case as mentioned earlier, was that there was a temple of Shree Gokulnathji at Nagarwad in Nadiad even before Mathuranathji arrived ,at that place and according to them Mathuranathji had in fact been invited by the Vallabh Sampradayees of Nadiad to take over the manage ment of the temple that was already existing. In her written statement defendant No.1 admitted that Mathuranathji was the first descendant of Vallabha to settle down in Nadiad. According to her he brought with him the idol of Shree Gokulnathji and started worshiping that idol in his Haveli. At a later stage the 1st defendant changed her version and put forward the theory that the ancestors of Mathuranathji had brought the idol of Shree 279 Gokulnathji to Nadiad and installed the same there long before Mathuranathji came to that place. This significant deviation in the Ist defendant 's case has evidently been introduced to meet the evidence led on behalf of the plaintiffs about the existence of Gokulnathji temple even before Mathuranathji was born in 1806. Yet another circumstance that has to be borne in mind in appreciating the evidence adduced by the parties is about the manner in which Mathuranathji and his descendants were managing the Haveli. They had maintained regular and systematic accounts. It is obvious they were maintaining two sets of accounts, one relating to. the income and expenses of the deity and another relating to the personal income 'and expenses of the Maharaj. But when the I st defendant was summoned to produce those accounts, the accounts relating to certain important periods were not produced and no satisfactory explanation is forthcoming for their non production. From this omission the High Court has drawn the inference that those account books have been kept back as the evidence which those books would have afforded was not favorable to the 1st defendant 's case. We agree with that conclusion. Similarly certain important documents have been kept back by the 1st defendant. Some of those documents were available at the time of the inventory but when the I st defendant was summoned to produce them she failed to do so. This circumstance has again led the High Court to infer that those documents were deliberately kept back in order to suppress material evidence supporting the plaintiffs ' case. Two of the important documents produced into court namely Exhs. 501 and 503 were found to have been tampered with. 501 appears to be a register of the temple properties but the title page of that book has been mutilated. The top portion of that page had been clearly cut and removed. It is reasonable to assume that the portion that has been removed contained the title of the register. Possibly it mentioned that it is the property register of Shree Gokulnathji 's temple. It is reasonable to draw this inference from the surrounding circumstances. 503 is the register relating to the expenses incurred for repairs of Shree Gokulnathji 's temple. That register was also tampered with. The original book was not made available to us for examination but the High Court which had the opportunity of examining that book has made the following remarks. in its judgment: "a new slip was affixed to this document, and the heading which showed that the properties belonged to Shree Gokulnathji 's temple was torn out. " The High Court has also held that Exh. 633, which evidences the sale of section No. 1840, was torn in such a way as to justify the plaintiffs complaint that in the torn portion was the description 280 of the Maharaj as the Vahiwatdar of the temple. The High Court observed: "We have looked at all these three documents (Exhs. 501,503 and 633) and we are satisfied that the complaint made by the plaintiffs against the advisers of defendant No. 1 cannot be said to be without substance. It seems to us clear, on examining these documents that the advisers of defendant No. 1 have unscrupulously tampered with the documents. This conduct naturally raises suspicion against the defence, and we would be justified in drawing an inference against defendant No. 1 by holding that, if the books of account which have been kept back by her had been produced they would have supported the plaintiffs ' case. We agree with these observations. We may now proceed to examine the material on record for finding out 'the true character of the suit properties viz. whether they are properties of a public trust arising from their dedication of those properties in favour of the deity Shree Gokulnathji or whether the deity as well as the suit properties are the private properties of Goswami Maharaj. In her written statement as noticed, earlier, the Ist defendant took up the specific plea that the idol of Shree Gokulnathji is the private property of the Maharaj the Vallabh Cult does not permit any dedication in favour of an idol and in fact there was no dedication in favour of that idol. She emphatically denied that the suit properties were the properties of the deity Gokulnathji but in this Court evidently because of the enormity of evidence adduced by the plaintiffs, a totally new plea was taken namely that several items of the suit properties had been dedicated to Gokulnathii but the deity being the family deity of the Maharaj, the resulting trust is only a private trust. In other words the plea taken in the written statement is that the suit properties were the private properties of the Maharaj and that there was no trust, private or public. But the case argued before this Court is a wholly different one viz. the suit properties were partly the properties of a private trust and partly the private properties of the Maharaj. The Ist defendant cannot be permitted to take up a case which is wholly inconsistent with that pleaded. This belated attempt to bypass the evidence adduced appears to be more a manor than a genuine explanation of the documentary evidence adduced. It is amply proved that ever since Mathuranathji took over the management of the shrine, two sets of account books have been maintained, one relating to the income and expenses of the shrine and the other relating to that of the Maharaj. These account books and other documents show that 281 presents and gifts used to. be made to the deity as well as to the Maharaj. The two were quite separate and distinct. Maharaj himself has been making gifts to the deity. He has been, at times utilising the funds belonging to. the deity and thereafter reimbursing the same. The account books which have been produced clearly go. to show that the deity and the Maharaj were treated as two different and distinct legal entities. The evidence afforded "by the account books is tell tale. In the trial court it was contended on behalf of the I st defendant that none of the account books produced relate exclusively to the affairs of the temple. They all record the transactions of the Maharaj, whether pertaining to. his personal dealings or dealings in connection with the deity. This is an obviously untenable contention. That contention was given up in the High Court. In the High Court it was urged that two sets of account books were kept, one relating to the income and expenditure of the deity and the other of the Maharai, so. that the Maharai could easily find out his financial commitments relating to the affairs of the deity. But in this Court Mr. Narasaraju, learned Counsel for the appellant realising the untenability of the contention advanced in the courts below presented for our consideration a totally new case and that is that Gokulnathji undoubtly is a legal personality; in the past the properties had been dedicated in favour of that deity; those properties are the properties of a private trust of which the Maharaj was the trustee. On the basis of this newly evolved theory he wanted to explain away the effect of the evidence afforded by the account books and the documents. We are unable to accept this new plea. It runs counter to the case pleaded in the written statement. This is not a purely legal contention. The I st defendant must have known whether there was any dedication in favour of Shri Gokulnathji and whether any portion of the suit properties were the properties of a private trust. She and her adviser 's must have known at all relevant times the true nature of the accounts maintained. Mr. Narasaraju is not right in his contention that the plea taken by him in this Court is a purely legal plea. It essentially relates to questions of fact. Hence we informed Mr. Narasaraju that we will not entertain the plea in question. We shall now proceed to assess the evidence adduced in this case to find whether the plaintiffs have succeeded in establishing that the suit temple and the properties annexed thereto constitute a public trust. Before doing so, it is necessary to examine certain basic contentions advanced on behalf of the appellant. It is the case of the appellant that Vallabh Sampardaees cannot worship in a public temple; according to their cult they can have the Darshan of one or the other swaroops of Lord Krishna in the house of their Maharaj. In Other words their cult prohibits public 282 worship. They can only worship through their Maharaj and that too in his Haveli. In support of this contention great deal of reliance was placed in the High Court and the trial court on the views expressed by Dr. Bhandarkar in his Works on 'Vaishnavism, S 'aivism and Minor Religous systems '. The views expressed by Dr. Bhandarkar had greatly weighed with the trial court and it is mainly o.n the basis of those views, the trial court rejected the plaintiff 's suit. The High Court after examining the doctrines of Vallabha School, its tenants and usages as well as the views expressed by eminent writers like Dr. Radhakrishanan and Dasgupta came to. the conclusion that it would not be correct to. say that worship. in public temple is prohibited by the Vallabh cult though in the absence of any positive evidence it may be taken that the place where the Vallabha Sampardaees worship is a private temple. It is not necessary for us to go into that controversy in view of the decision of this Court in Tilkavat Shri Govindlalji Maharaj vs The State of Rajasthan and ors.(1) In that case this Court was. called upon to consider whether Nathdwara Temple in Udaipur, a temple rounded by the Vallabha Sampardaees is a public temple or not. After examining the various treatises on the subject including Dr. Bhandarkar 's book on 'Vaishnavism, S 'aivism and Minor Religious Systems ', this Court observed (at p.585): "Therefore, we are satisfied that neither the tenets nor the religious practices of the Vallabha school necessarily postulate that the followers of the school must worship in a private temple. Some temples of this cult may have been private even today. Whether or not a particular temple is a public temple must necessarily be considered in the light of the relevant facts relating to it. There can be No. general rule that a public temple is prohibited in Vallabha School. " In view of this decision Mr. Narasaraju, learned Counsel for the appellant did not press forward the contention that the Vallabha School prohibits worship in public temple. Yet another contention taken on behalf of the appellant is that the architecture of the building in which Gokulnathji is housed and the nature of that building is such as to show that it is not a public temple. It was urged that building does not possess any of the characteristics of a Hindu temple. It has not even a dome. This contention again has lost much of its force in view of the decision of this Court referred to earlier. Evidence establishes that Ballabha 's son and his immediate successor Vithaleshwar had laid down a plan for the construction of temples (1) [1964] 1 S.C.R. 561. 283 by the Vallabha Sampardaees. He did not approve the idea of constructing rich and costly buildings. for temples. Evidently he realised that religious temple buildings were not safe under the Mohommedan rule. For this reason he advised his followers to construct temples of extremely simple type. The external view of those temples gave the appearance of dwelling houses. It appears to be a common feature of the temples belonging to the Vallabha Sampardaees that the ground floor is used as the place of worship and the first floor as the residence of Goswami Maharaj, therefore the fact that Gokulnathji temple at Nadiad had the appearance of a residential house does not in 'any manner militate against the contention that the temple in question is a public temple. It was said that according to the usage prevailing in that temple, the public are asked to enter the temple only after the Maharaj had finished his worship. This circumstance again is of no consequence. Each sect nay each temple has its own customs. The usage pleaded by the appellant is not inconsistent with that temple being a public temple. The appellant attempted to prove that on two occasions certain individuals were forbidden from entering the temple. In the first place this plea has not been satisfactorily established. Further according to the evidence adduced on behalf of the appellant those individuals were kept out of the temple because of some act of indiscipline on their part. The power to manage a temple includes within itself the power to maintain discipline within the precincts of that temple. The only other circumstance relied on by the appellant to establish that the temple in question is not a public temple is that the sale proceeds of Nagarwad Haveli were credited to the account of the Maharaj. The learned judges of the High Court have carefully looked into that aspect. After examining the relevant evidence on record they arrived at the conclusion that though initially the amount in question was credited to the account of the Maharaj, at a subsequent stage it was transferred to the account of the temple by means of adjustment entries. The learned Counsel for the appellant was unable to satisfy us that this conclusion of the High Court was incorrect. We shall now see how far the plaintiffs have succeeded in establishing that Gokulnathji Mandir is a public Mandir. The burden of establishing that fact is undoubtedly on them. Though most of the present day Hindu public temples have been found as public temples, there are instances of private temples becoming public temples in course of time. Some of the private temples have acquired great deal of religious reputation 284 either because of the eminence of its founder or because of other circumstances. They have attracted large number of devotees. Gradually in course of time they have become public temples. Public temples are generally built or raised by the public and the deity installed to enable the members of the public or a section thereof to. offer Worship. In such a case the temple would clearly be a public temple. If a temple is proved to have originated as a .public temple, nothing more is necessary to be proved to show that it is a public temple but if a temple is proved to have originated as a private temple or its origin is unknown or lost in antiquity then there must be proof to show that it is being used as a public temple. In such cases the true character of the particular temple is decided on the basis of various circumstances. In those cases the courts have to. address themselves to various questions such as : (1 ) Is the temple built in such imposing manner that it may prima facie appear to be a public temple? (2) Are the members of the public entitled to worship in that temple as of right ? (3 ) Are the temple expenses met from the contributions made by the public ? (4) Whether the sevas and utsavas conducted in the temple are those usually conducted in public temples ? (5) Have the management as well as the devotees been treating that temple as a public temple ? Though the appearance of a temple is a relevant circum stance, it is by no means. a decisive one. The architecture of temples differs from place to place. The circumstance that the public or a section thereof have been regularly worshiping in the temple as a matter of course and they can take part in the festivals and ceremonies conducted in that temple apparently as a matter of fight is a strong piece of evidence to establish the public character of the temple. If votive offerings are being made by the public in the usual course and if the expenses of the temple are met by public contribution, it is safe to presume that the temple in question is a public temple. In brief the origin of the temple, the manner in which its affairs are managed, the nature and extent of gifts received by it, rights exercised by the devotees in regard to worship therein, the consciousness of the manager and the consciousness of the devotees themselves as to the public character of the temple are factors that go to establish whether a temple is a public temple or a private temple. In 285 Lakshmana vs Subramania(1) the Judicial Committee was dealing with a temple which was initially a private temple. The Mahant of this, temple opened it on certain days in each week to the Hindu public free to worship in the greater part of the temple, and on payment of fees in one part only. The income thus received by the Mahant was utilised by him primarily to meet the expenses of the temple and the balance went to support the Mahant and his family. The Privy Council held that the conduct of the Mahant showed that he had held out and represented to the Hindu public that the temple was a public temple at which all Hindus might worship and the inference was, therefore, that he had dedicated it to the public. In Mundancheri Koman vs Achutan Nair,(2) the Judicial Committee again observed that the decision of the case would depend on the inferences to be derived from the evidence as to the way in which the temple endowments had been dealt with and from the evidence as to the public user of the temples. Their Lordships were satisfied that the documentary evidence in the case conclusively showed that the properties standing in the name of the temples belonged to the temples and that the position of the manager of the temples was that of a trustee. Their Lordships further, added that if it had been shown that the temples had originally been private temples they would have been slow to hold that the admission of the public in later times possibly owing to altered conditions would affect the private character of the trusts. In Deoki Nandan vs Murlidar(3), this Court observed that the issue whether a religious endowment is a public. or a private one is a mixed question of law and fact, the decision of which must depend on the application of legal concepts of a public and private endowment to the facts found. Therein it was further observed that the distinction between a public and private endowment is that whereas in the former the beneficiaries, which means the worshipers are specific individuals and in the later the general public or class thereof. In that case the plaintiff sought to establish the true scope of the dedication from the user of the temple by the public. In Narayan Bhagwant Rao Gosavi Balajiwale vs Gopal Vinayak Gosavi and Ors.(4), this Court held that the vastness of the temple, the mode of its construction, the long user of the public as of right, grant of land and cash by the Rulers taken along with other relevant factors in that case were consistent only with the public nature of the temple. In examining the evidence adduced by the plaintiffs in proof of the fact that the temple in question is a public. temple we have to bear in mind the tests laid down by the courts for determining whether a given temple is a public temple or not. (1) [1923] A.I.R. 1924 PC. 44 (2) (3) ; (4) ; 286 The case for the plaintiffs is that this temple originated as a public temple. According to them it was rounded long before Mathuranathji was born; the idol of Gokulnathji was originally worshiped at Nagarwad and later on the suit temple was built and that idol installed therein. We have earlier seen that the case of the I st defendant on this point was that the idol of Gokulnathji was the private property of Mathuranathiji. Mathuranathji brought that idol alongwith him when he came to Nadiad and worshiped the same as his private deity. This part of her case was given up at a later stage, and she put forward a new case to the effect that the idol Gokulnathji was brought by the ancestors of Mathuranathii to: Nadiad and it is they who started worshiping that idol at Nadiad. From this it is clear that the appellant has no consistent case as to the origin of the worship of Gokulnathji at Nadiad. The new plea put forward by her was evidently intended to meet the evidence adduced to show that the idol of Gokulnathji was being worshiped at Nadiad even before Mathuranathji was born. In order to show that the idol of Gokulnathji was being worshiped in Nadiad even in the 18th century, oral evidence of local repute has been adduced by the plaintiffs. In the very nature of things that evidence cannot, but be inconclusive. In this connection the plaintiffs have also placed reliance on Exh.791, an extract showing the list of Devasthans in the Pargana of Nadiad to. which the former Baroda State was making contributions, one of such Devasthan is the "Shree Gokulnathji". This extract relates to Fasli Samvat 1833 (i.e. 1781 82 A.D.). On the basis of this exhibit, we are asked to conclude that the suit temple was in existence even before 1781 82 A.D. The. evidence afforded by this document undoubtedly probabilises the version of the plaintiffs but it cannot be said with any definiteness that the entry in question relates to the suit temple. Therefore it is not possible to come to a positive conclusion that the suit temple originated as a public temple nor there is any conclusive evidence before us to determine the date of its origin. All that we can say is that the origin of this temple is lost in antiquity. Therefore for determining whether it is a public temple or not we must depend on other circumstances. It is established by the evidence on record that Gokulnathji is neither the Nidhi Swaroop nor Seva Swaroop of Mathuranathji 's branch. Therefore it is unlikely that Mathuranathji branch would have installed the idol of Shree Gokulnathji for their private worship though the idol of Shree Gokulnathji is one of the Swaroops of Lord Krishna. The plea taken by the appellant that Gokulnathji was one of the Nidhi Swaroop given to the branch of Mamuranathji by Vallabha is opposed to the documentary evidence produced by herself. That plea has not been pressed before us for our acceptance. 287 From the account books produced in this case, it is clear that ever since 1965 two sets of accounts had been maintained by the Maharai, one relating to the temple and another relating to him. The temple accounts are referred to as "Nichena Khata" and Maharaj 's accounts as "Uparna Khata". At this stage we may emphasize that the evidence discloses that the entire ground floor is being used as the place of worship of Gokulnathji and upstairs portion as the residence of the Maharaj. For the years 187 '7 to 1892, no books of account have been produced. The appellant has stated that these books are not with her. But this is not a satisfactory explanation for their disappearance. The temple accounts for the years 1892 to 1894 have been produced but the personal accounts of the Maharaj for those years have not been produced. Again for the years 1900 to 1907, only the temple accounts have been produced but for the period from 1908 and 1934 both the sets have been produced. Again for the period 1935 to 1943, only the temple account books have been produced and not the personal account books of the Maharaj. This pick and choose method adopted in the matter of producing account books unmistakably indicate that the appellant was deliberately keeping back unfavorable evidence. Evidence on record establishes that some of the documents. which were there at the time of the inventory were not produced when summoned. Under those circumstances the High Court was justified in drawing an adverse inference against the appellant. The existence of two sets of accounts ' clearly goes to indicate that the Maharajas had always considered the temple as an entity different from themselves. That circumstance goes to negative the contention of the appellant that the deity was owned by the Maharaj and therefore the deity as well as the suit properties are his private properties. Right back in 1861 under a gift deed executed by a devotee by name Bai Jasubai, two fields and a house were gifted in favour of the temple of Gokulnathji Maharaj at Nadiad. The properties gifted by Jasubai were sold in 1865 and the sale proceeds credited in the 'Nichen Khata '. In 1865 when Sri Vrairatna Maharaj left Nadiad he made a present of Rs. 5 to the idol of Shree Gokulnathii. This was also. credited in the 'Nichen Khata '. Then we come to Exh. 593, an application made by several merchants and other residents of Nadiad to the Collector of Kaira in the year 1866. That application recites that the ancestors of the applicants had voluntarily levied a cess known as Laga on several articles four the benefit of the suit temple. Originally this Laga was separately recovered from the devotees by the Maharaj but later on at the request of the merchants the same 288 used to be recovered by the Government alongwith the custom duty and made over to Maharaj for the benefit of the temple. Therein it was prayed that the newly established municipality should be directed to collect the Laga alongwith its dues and make up over to the Maharaj. That application was signed by a large number of persons. That application inter alia states : "There is a temple of Shree Gokulnathji at Nadiad. A son of our preceptor, Shree Goswami Mathuranathji performs the seva in the said temple. Our ancestors have granted for his expenses from the town a laga on several articles which may be received, a list whereof is enclosed herewith. " The signatories to that application must have been familiar with the history of the suit temple. We can reasonably assume that the facts stated therein are correct. Those facts support the case ,of the plaintiffs. We next go to the entries in the account books. In the temple accounts for the year 1870, there is a credit entry of Rs. 27/4/It is in respect of the fine imposed by the Mahajan on three persons who appear to have played mischief at the time of darshan. This entry clearly shows that the supervision of the 'temple, in a general sense, vested in the Mahajan of the place. It appears from the accounts that in 1874, the Mahajan examined the account books of the temple see Exh. This conduct on the part of the Mahajan would be inconsistent with the appellant 's claim that Gokulnath 's shrine is her private property. In 1881 one Bai Harkore under her will made certain bequests in the name of the Gokulnathji Maharaj at Nadiad for providing Samagri for Shree Gokulnathii. This is a bequest to. the idol. 'Therein the.there is no refere.nce to the Maharaj. Then we come to Exh. 534, under which a substantial portion of lot No. 1 of the :suit properties wherein the temple is situated was purchased on April 4, 1885. The sale deed was taken in the name of Pari Pranvallabh Vrajlal and others on behalf of Shree Gokulnathji of Nadiad. This is a clear indication that the deity of Gokulnathji was treated by the devotees as an independent legal entity. Further the importance of this document is that it is taken in the name of the representatives of the public and not in the name of the Maharaj. Under Exh. 691, a gift was made in 1888 in the name of Vrajratnalalji for and on behalf of Shree Gokulnathji temple. The donor paid Rs. 1,200 and desired that a meal of six breads every day should be given till the temple exists to the person whom the Mabaraj would name and if the person named by the Maharai does not come to take the meal the same should be given to any visitor to the temple. Still more significant is the bequest contained in Exh. 512, the will executed by one Bai 289 Vasant. Under this will two bequests were made, one in favour of the temple of Shree Gokulnathji and the other in favour of the Maharani Vahuji who was then the Maharani of .the temple. This will was executed on September 20, 1897. Under a prior will executed by the same devotee (Exh. 189), the same distinction between the Maharaj and the temple is to. be found. That document was executed in 1888. Similarly when bhets (presents) were made by .the devotees to the idol as well as to the Maharaj, they were separately credited in the respective account books. As an illustration, we may refer to entries in the accounts books for the year 1896. Therein Rs. 22 was credited to the temple accounts and Rs. 5 to the Maharaj 's personal account. The account books clearly show the various presents made to the temple as well as to the Maharaj. It is established by evidence that in 1896 when the question of taxing the income of the Maharaj came up for consideration, the Maharaj pleaded that the income of the temple cannot be treated as his income. The balance sheets prepared in that connection showed the income of the temple separately from that of the Maharaj. The correspondence that passed between the Maharaj and the authorities in that connection establishes beyond doubt that the Maharaj did not treat the income of the temple as his income. The contention that the admission in question was made under wrong advice receives No. support from the evidence on record. Similarly with regard to the payment of the municipal tax, the properties of the Maharaj had been treated separately from that of the temple. In 1907 one Shah Chaganlal made a gift of some property to the temple. That property was subject to a mortgage. The donor directed that the Maharaj of the temple should divide the annual income of the mortgaged property into nine shares, out of which one share should be given for the samagri of Shree Gokulnathji Maharaj on posh vad 3rd of every year and eight shares of the income should be given for the samagri of the said Gokulnathji every year on Vaishakh Sud 8th. In that document the Maharai was shown as the agent of the temple. property was subsequently sold and the sale proceeds were credited to. the temple accounts. The: accounts show numerous other instances of receipts and expenses relating to the temple as distinguished from that of the Maharaj. The High Court has enumerated those receipts and expenses with elaborate fullness. It would be superfluous to. refer to them. The above mentioned instances go to falsify the contension of the appellant that the idol of Shree Gokulnathji was the private property of the. Maharaj. On the other hand they establish that the temple in question was treated by all concerned as a public temple. 290 In proof of her case that the suit temple and the properties are individual properties of the Maharaj, the appellant relied on the wills executed by Vrajratanlalji in 1882 and Maharani Vahuji in 1898. Under the former the testator provided for the management of the properties mentioned therein after Iris death. Therein he asserted his right to make vahivat according to his pleasure of movable and immovable properties shown in the will during his. life time. One of the stipulations in the will was that if he dies leaving no son, natural or adopted, those properties should go to his wife, as owner subject to the condition that the expenses of worship of "his Shree Thakorji" according to usage should come out of its income. There are similar assertion in the will executed by Maharani Vahuji .in 1898. These statements are at best self serving statements. They have little evidentiary value. They are likely to. have been made by the executants of those wills under a misconception as to their rights. If the account books for the years 1877 to 1892 had been produced we would have been able to find out how Vrajratanlalji himself dealt with the properties of the temple. There is clear, consistent and reliable evidence to show that Vallabha Sampardaees have been worshiping in the suit temple as of right. There is also evidence to show that the temple has all along been primarily maintained from the contributions made by the devotees belonging to the Vallabha School. The suit temple appears to be an important temple attracting a large number of devotees. Utsavas and other festivals are performed in that temple in a reasonably grand scale. The devotees as well as the Maharaj were treating that temple as a public temple. From the facts proved we have no hesitation in agreeing with the High Court that the temple in question is a public. temple. This takes us to the question whether all or any of the properties detailed in the plaint schedule are proved to. be that of the temple. We have earlier come to the conclusion that the temple has been getting substantial contributions from its devotees in diverse ways. It was also. the recipient of several gifts. It had adequate resources to make the acquisitions with which we are concerned in this case. The temple is exclusively managed by the Goswamiji Maharaj. It maintains regular accounts. Maharaj also maintains his separate accounts. Therefore it was easy for the appellant to. prove the source from which the acquisitions in question were made and how their income was treated. The appellant has led no evidence to show that they were her own properties. She has failed to produce some of the accounts relating to the relevant periods. In this background let us proceed to examine the title to the suit properties. 291 Lot No. 1 is. the site in which the suit temple is situate. It was conceded on behalf of the appellant that if we come to the conclusion that the suit temple is a public temple that item of property will have to. be considered as the property of the temple. Lot No. 2 is. the garden land in Survey No. 2031. It is used for raising flowers for worship in the temple. That land appears to have been granted to Mathuranathji but the appellant admitted in her deposition that that item of property was at all time managed by the Haveli and whoever is the owner of the Haveli is the owner of the garden. This admission is corroborated by considerable other evidence. Vaishnav merchants of Nadiad contributed for the expenses of installation of an electric pump in that garden and for its subsequent repairs. All expenses incurred for that garden have always been debited and all income received therefrom credited to the temple accounts. That garden is included in the Patriks of the temple property, prepared long before the present dispute arose. When a part of that property was compulsorily acquired on three different occasions, the compensation received was credited to. the temple account. These circumstances. conclusively establish that lot No. 2 is temple property. Lot No. 3 is the building known as Goshala. Its Survay survey No. is 994. It is used for the purpose of tethering the cows reared for supplying milk and butter for the worship of Balkrishnalalji, one of the deities installed in the temple. This property is included in Exh. 500 and 501. It is shown in the property register as the property belonging to the Devasthan Charity. The balance sheet prepared in 1896 treats the rent of the shops and houses in that site as the income from temple properties see Exh. We think the High Court was right in concluding on the basis of this evidence that that item belongs to the temple. Lot No. 4 is a shop bearing city survey No. 720. This property was gifted by Kuber Jetha Vashram as per his will Exh. 673 for the samagri of the temple. The bequest is made in favour of Shree Gokulnathji Maharai. Hence this is clearly an item of property belonging to the suit temple. Lot No. 5 is survey No. 121. It is gifted under Exh. 610 dated June 29, 1868. The gift is purported to have been made in favour of the Maharaj but the income from this property has always been credited to the temple accounts, the earliest entry being that of the year 1870. In the property register, this property is shown as temple property and the rent note Exh. 535 is taken in the name of the Vahivatdar of Shree Gokulnathji. Hence this item of the property should also be held to be that of the temple. 292 Lot No. 6 consists of 14 small items. of property. They are all agricultural fields. They have been shown in the property register as the properties of the temple. Out of 14 items in this lot, items No.s. 6, 9, 11, 12 and 14 originally belonged to the Maharaj but they have been all along dealt with by the Maharaj as temple property. Item No. 1 in lot No. 6 belongs to the temple. The mortgage Exh. 608 relates to this item and the same was executed in favour of the, temple on May 17, 1897. A rent note in respect of this property was taken on April 22, 1915 in the name of the Vahivatdar of the temple. Items 2, 3 and 4 of that lot are shown in the record of rights in the name of the Maharaj but the income from those properties and the expenses incurred for the same have always been entered in the temple accounts. Item 5 of this lot had been gifted to the temple under Exh. Item 8 of this lot had bee.n purchased in the name of the Maharani Vahuji on June; 2, 1897 for Rs. 1150. The income of this property has been shown in the temple accounts. far as item 10 is. concerned though the record of rights stands in the name of the. Maharaj personally, its sale p.rice (Rs. 800 0 6) has been credited to the temple accounts. From all this it is clear that the temple is the owner of lot No. 6. Now coming to. lot No. 7, the entries in the account books clearly show that this is temple property. The consideration for the purchase of a portion of it was paid from the temple funds. A portion of that property had been gifted to the temple under Exh. Lot No. 8 was purchased in 1877 from the temple funds and lot No. 13 was gifted to the temple. Lo.t No. 9 was received by the temple under will Exh. 512 and lot No. 10 was always treated as temple property in the account books. So also lot Nos. 11 and 12. Similarly lots Nos. 13 and 14 were always being treated as temple properties. We are in agreement with the learned judges of the High Court that the properties detailed in the plaint schedule are all temple properties. For the reasons mentioned above this appeal must fail. But before we conclude we should like to clarify one aspect which undoubtedly is implicit in the judgment of the High Court. The Goswami Maharais o.r Maharanis are not mere managers. In the temples belonging to the Vallabha School they have an important place. The Maharaj is the Maha Prabhu. The Vallabh devotees worship their deity through him. It is true that the income from temple properties. has to be primarily used for the expenses of the sevas and utsavas in the temple, the upkeep renovation and improvements of the temple premises but subject to these demands, the Maharaj has a right to utilise the temple income in 293 maintaining himself and his family in a reasonably comfortable manner. The learned Counsel for the plaintiffs conceded this position. This suit has been brought by the plaintiffs with the sole purpose of preserving the temples assets and maintaining its dignity. They do not want to undermine the position or prestige of their Maha Prabhu. In the circumstances of the case we see no useful purpose in directing the: appellant to pay the costs of the plaintiffs in this appeal. She can only pay the same from temple funds. The alienees have not appealed against the judgment of the High Court. When we mentioned this aspect to Mr. S.T. Desai, learned Counsel for the plaintiffs he indicated that the parties may be left to bear their own costs in this appeal. For the reasons mentioned above this appeal is dismissed but we make no order as to costs.

In deciding whether a temple is private or public, Courts have to address themselves to various questions such as: (1) Is the temple built in such imposing manner that it may prima facie appear to be a public temple ? (2) Are the members of the public entitled to worship in that temple as of right ? (3) Are the temple expenses met from the. contributions made by the public ? (4) Whether the sevas and utsavas conducted in the temple are those usually conducted in public temples ? (5) Have the management as well as the devotees been treating the temple as a public temple. Though the appearance of a temple is a relevant circumstance, it is by no means 'a decisive one. The architecture of temples differs from place to place. The circumstance that the public or a section thereof have been regularly worshiping in the. temple as a matter of course and they can take part in the festivals 'and ceremonies conducted in that temple apparently as a matter of right is a strong piece of evidence to establish the public character of the temple. If votive offerings are being made by the public in the usual course and if the expenses of the temple are met by public contribution, it is safe to presume that the temple question is a public temple. In brief the origin of the temple. , the manner in which its affairs are managed, the nature and extent of gifts received by it, rights exercised by the devotees in regard to worship therein, the consciousness of the manager and the consciousness of the devotees themselves as to the public character of the temple are factors that go to establish whether a temple is public temple or a private temple. [286 H H] Tilkayat Shri Govindlalji Mahraj vs The State of Rajasthan and Ors. ,[1964] 1 S.C.R. 561; Lakshmana vs Subramania, (1923) A.I.R. 1924 P.C. 44; Mundancheri Koman vs Achutan Nair (1934) 61 I.A. 405; Deoki Nandan vs Murlidar, ; ; Narayan Bhagwant Rao Gosavi Balajiwle vs Gopal Vinayak Gosavi and Ors. [1960] I S.C.R. 773; referred to.

Appeal No. 1 of 1976. Appeal by Special Leave from the Judgment and Order dated 23 5 1975 of the Allahabad High Court in First Appeal No. 392/ 64. Shana Bhushan, V.P. Goel and Subodh Markendeya, for the Appellant. L.N. Sinha, Solicitor General of India and O.P. Rana, for the Respondent No. 1. Bal Kishan Gaur and Amlan Ghosh, for Respondent No. 2. Yogeshwar Prasad and Rani Arora, for Respondent No. 3. The Judgment of the Court was delivered by KRISHNA IYER, J. Two principal submissions, whose implications ' perhaps are of profound moment and have public impact, have been, at wide ranging length, urged in this appeal by certificate, by Shri Shanti Bhushan, for the appellant/defendant and, with effective brevity, controvert ed by the Solicitor General, for respondent/1st plaintiff. The two focal points of the controversy are: (a) Is the appeal to the High Court by the State 1st plaintiff at all competent, entitlement as a 'party aggrieved ' being absent, having regard to the provisions of the U.P. Zamindari Aboli tion and Land Reforms Act, 1950 (U.P. Act 1 of 1951) (for short, the Act) ?; and (b) Is it sound to conceptualise 'area appurtenant to buildings ' in section 9 of the Act so nar rowly as has been ' done by the High Court ? There were two plaintiffs the State of Uttar Pradesh and the Gaon Sabha of Bedpura claiming common but alternative reliefs. The suit was for injunction or ejectment, on title, of the sole defendant who was the quondam zamindar of the 'estate ' which is the 'subject matter of the suit. The trial Court dis missed the suit whereupon the 2nd plaintiff dropped out of the litigation, as it were, and the State alone pursued the matter by way of appeal against the decree. The High Court partially allowed the appeal and the aggrieved defendant is the appellant before us. An expose of the facts may now be given to the extent necessary for explaining the setting of the contention between the parties. The State of Uttar Pradesh extin guished all zamindari estates by the Act and implemented a scheme of settlement of lands with intermediaries, tenants and others by first vesting all estates in the State and empowering it to vest, divest and re vest flora time to time according to flexible needs and ad hoc requirements, the same estate 's in Gaon Sabhas or other local authorities. Settlement of trees, buildings and other specified items in the intermediaries was also part of the agrarian reform. A skeletal picture of the legislation may now be projected. But, before that, a short sketch of the actual dispute may illumine the further discussion. The suit lands were part of an estate owned and.pos sessed by the defendant zamindarini. The statutory conse quence of the abolition of all zamindaris by force of section 4 is spelt out in section 6, to wit, the 1075 cesser of the ownership of the zamindar and vesting of title and possession in the State. By a notification under section 117(1) of the Act the area of lands was vested by the State in the 2nd plaintiff Gaon Sabha. The legislative nullifica tion notwithstanding, the defendant who had been conducting a lucrative bi weekly cattle fair, the best in the district, persisted in this profitable adventure strengthened by section 9 of the Act which settles in the intermediary all buildings and area appurtenant thereto. This resulted in possessory disputes between the Gaon Sabha and the defendant proceed ings under section 145 upholding the latter 's possession and the present suit for declaration of title and consequential injunction or ejectment. The estate, which is the site of the rural cattle mar ket, has a large number of trees on it, a temple in one plot, a (veterinary) clinic in another and quite a number of cattle stands and other auxiliary structures which are facilities for the bovine display and transaction of business. Taking advantage of the provisions of the Act, the defendant successfully claimed before the High Court that the trees and the two plots with the shrine and the oushadhalaya should be deemed to have been settled with her. Her ambitious demand, based on some provisions which we will presently X ray more carefully, was that the entire estate with all the buildings thereon was enjoyed as a unum quid and th.e vacant lands were as much necessary for the mean ingful running of the cattle fair as the structures them selves. To dissect and detach the buildings from the vacant spaces was to destroy the functional wholeness of the serv ice rendered. In short, the large intervening areas sur rounding the chabutras and other edifices were essential adjuncts or appurtenant lands which, together in their original entirety, should be settled under section 9 of the Act with the erstwhile intermediary viz., the defendant. The High Court declined to go the whole hog with the defendant but granted the plea to the limited degree of giving all the structures and a space of 5 yards running round each 'build ing '. In the view of the Court hats, bazars, and melas could not be held by a private owner under the scheme of the Act and reliance on the conduct of the cattle market as an indicator of 'appurtenant ' area was, therefore, impermissi ble. The suit was decreed pro tanto. The Gaon Sabha, when defeated in the trial Court, discreetly stepped out of the risks of an appeal but the Government, first plaintiff, claiming to be gravely ag grieved, challenged the dismissal of the suit and was faced with the plea that the land having vested in the Gaon Sabha, on the issue of the notification under section 117 (1 ) of the Act, .the State had no surviving interest in the property and, therefore, forfeited the position of a person ag grieved, who alone could competently appeal against a de cree. This contention, negatived by the High Court. has been reiterated before us with resourceful embellishments and that, logically, is the first question of law falling for our decision and is the piece de resistance, if we may say so, in this appeal. If the 1st plaintiff 's entire interests, by subsequent plenary vesting in the 2nd plain tiff, have perished, the former cannot, as of right, appeal under section 96 C.P.C. Survival after death is unknown to 1076 real property law and suits, without at least apprehended injury, are beyond the ken of the procedural law. To put it in a nutshell, has the State current interest in the estate, sufficient to sustain an appeal ? The anatomy of the Act, so far as this dispute is con cerned, needs to be ' set out and alongside thereof, the exercises in statutory construction necessary to resolve the two legal disputes. The Act had for its primary object, as testified by its Preamble, the extinction of intermediary rights viz., zamindaris and the like. The goal of the legislation must make its presence felt while the judicial choice of meanings of words of ambiguous import or plurality of significations is made. Section 4 is the foundational provision, the very title deed of the State; and it runs, to read: "section 4. Vesting of estates in the State. (1 ) As soon as may be after the commence ment of this Act, the State Government may, by notification, declare that, as from a date to be specified, all estate situate in the Uttar Pradesh shall vest in the State and as from the beginning of the date so specified (herin after called the date of vesting), all such estates shall stand transferred to and vest except as hereinafter provided, in the State free from all encumbrances. (2) It shall be lawful for the State Government, if it so considers necessary, to issue, from time to time, the notification referred to in sub section (1) in respect only of such area or areas as may be specified and all the provisions of sub section (1), shall be applicable to. and in the case of every such notification." Section 6 sets out the legal consequences of such vesting more specifically. We may extract the provision: "6. Consequences of the vesting of an estate in the State. When the notification under section 4 has been published in the Gazette then, notwith standing anything contained in any contract or document or in any other law for the time being in force and save as otherwise provided in this Act, the consequences as hereinafter set forth shall, from the begining of the date of vesting, ensue in the area to which the notification relates, namely (a) all rights, title and interest of all the intermediaries (i) in every estate in such area including land (cultivable or barren), grove land, forests whether within or outside village boundaries, trees (other than trees in village abadi, holding or grove), fisheries, tanks, ponds, water channels, fernes, pathways, abadi sites, hats, bazars and meals other than hats, bazars and melas held upon land to which clauses (a) to (c) of sub section (1) of Section 18 apply, and 1077 (ii) in all sub soil in such estates including rights, if any in mines and miner als, whether being worked or not; shall 'cease and be vested in the State of Uttar Pradesh free from all encumbrances; * * * * Reading the two sister sections together, certain clear conclusions emerge. Emphatically, three things happened on the coming into force of the Act. By virtue of section 4 the right, title and interest of all intermediaries in every estate, including hats, bazars and melas, stood terminated. Secondly, this whole bundle of interests came to be vested in the State, free from all encumbrances, the quality of the vesting being absolute. 'Thirdly, one and only one species of property in hats, bazars and melas was expressly excluded from the total vesting of estates in the State, viz., such as had been held on lands to which section 18(1)(a) to (c) ap plied. Section 9, at this stage, needs to be read since it is geared to the nationalisation of zamindaris by providing for settlement, under the State, of some kind 's of landed interests in existing owners or occupiers. Section 9 states: "Private wells, trees in abadi and buildings to be settled with the existing owners or occupiers thereof All wells, trees in abadi, and all build ings situate within the limits of an estate, belonging to or held by an intermediary or tenant or other person, whether residing in the village or not, shall continue to belong to. or be held by such intermediary, tenant or persons, as the case may be,, and the site, of the wells or the buildings which are appurte nant thereto: shall be. deemed to. be settled with him by the State Government on such terms and conditions as may be prescribed" A close up of this section is called for since the basic plank of the defendant 's case is the claim to the whole set of plots as building and appurtenant area of land statutori ly settled with her. If she is such a settlee, the substan tive merit of the plaintiff 's title fails. We will examine this aspect after a survey of the sections relevant to the locus standi of the State is done. So we shift to Chapter VII which relates to Gaon Sabhas vesting by the State of resumed estates in them and the limitations and other conditions to which it is subject. Attributed legal personality by s.3, the Gaon Sabhas are bodies corporate which, under the various provisions of Chapter VII, have been invested with legal viability right to own and hold property, to transfer and otherwise deal with movables and immovables and manage their landed assets through the executive agency of Land Management Com mittees. This comprehensive 'proprietary personality of the Sabha is indisputable but unhelpful for our purpose. 1078 The controversy before us comes into focus when we read section 117 (1), (2) and (6), all the limbs being taken as belong ing to a legally living corporate body. Section 117, cls. (1) and (2), provide: "117. Vesting of certain lands etc., in Gaon Shabhas and other local authorities. (1 ) At any time after the publication of the notification referred to in Section 4, the State Government may, by general or special order to be published in the manner pre scribed, declare that as from a date to be specified in this behalf, all or any of the following things, namely * * * * * (v) hats, bazars and melas except hats, bazars, and melas held on land to which, the provisions of clauses (a) to (c) of sub sec tion (1) of section 18 apply or on sites and areas referred to in section 9, and * * * * * which had vested in the State under this Act shall vest in the Gaon Sabhas or and other local authority established t.or the whole or part of the village in which the said things are situate, or partly in one such local authority (including a Gaon Sabha) and partly in another: Provided that it shall be lawful for the State Govern ment to make the declaration aforesaid subject to such exceptions and conditions as may be specified in the notifi cation. (2) Notwithstanding anything contained in this Act or in any other law ' for the time being in force, the State Government may, by general or special order to be published in the manner prescribed in the Gazette, declare that as from a date to be specified in this behalf, all or any of the things specified in clauses (i) to (vi) of sub section (1) which alter their vesting in the State under this Act had been vested in a Gaon Sabha or any other local authority, either under this Act or under section 126 of the Uttar Pradesh Nagar Mahapalika Adhiniyam 1959 (U.P. Act II of 1959) shall vest in any other .local au thority (including a Gaon Sabha) established for the whole or part of the village in which the said things are situated. " Section 117(6) injects a precarious does into the system of estates vested in Gaon Sabhas by sub s.(1) and goes on to state: "117(6). The State Government may, at any time, by general or special order to be published in the manner prescribed, amend or cancel any declaration or notification made in respect of any of the things aforesaid. ' whether 1079 generally or in the case of any Gaon Sabha or other local authority, and resume such thing and whenever the State Government so resumes any such thing, the Gaon Sabha or other. local authority, as the case may be, shall be enti tled to receive and be paid compensation on account only of the development, if any, effected by it in. or over that thing: Provided that the State Government may, after such resumption, make a fresh declara tion under sub section (1) or sub section (2) vesting the thing resumed in the same or any other local authority (including a Gaon Sabha) and the provisions of sub sections (3), (4) and (5) as the case may be, shall mutatis mutandis, apply to such declaration. * * * * * Before moving further, we may glance at a group of sections which have more than peripheral impact on the legal equation between Government and Sabha visa vis estates vested in the latter by the former. Section 119 carves out a power for the State Government to take away hats, bazars and melas vested in a Gaon Sabha and transfer them to a zilla parishad or other authority. Sections 122A and 122B create and regulate the Land Management Committee which is to administer the estates vested in the Sabha and section 126, quite importantly, gives the power to the State Government to issue orders and directions to the Management Committee. Pausing here for an instant, let us look back on the status of the State which, through its Executive branch, vests a resumed estate in a Gaon Sabha, retaining power, at any time, and without conditions or even compensation (save for actual developmental work done), to divest the land so vested and make it over to another like local authority. In such a situation where the State remains the legal master with absolute powers of disposition over the land vested pro tempore in a particular Gaon Sabha, can it be postulated that it has no legal interest in the preservation of that over which it has continuous power of operation, creation and deprivation? Government, despite vesting estates in Gaon Sabhas on the wholesome political princi ple of decentralisation and local self government, has and continues to have a constant hold on these estates, may be like a brooding omnipotence descending, when it chooses, to take away what it had given possession of to a Sabha. This is plainly present legal interest in Government and a sort of precarium tenans in the Sabha, notwithstanding the illu sory expression 'vesting ' which may mislead one into the impression that an absolute and permanent ownership has been created. An overview of these legal prescriptions, makes one sceptical about the statutory ideology of autonomous village self government since, so far as estates are concerned, these Sabhas have been handcuffed and thrown at the mercy or mood of the State Government. The pragmatics of the Act has reduced Gaon Sabhas to obedient 1080 holders, for the nonce, of the limited bounty of estates vested in them a formal, fickle, homage to article 40 of the Constitution! Shri Shanti Bhushan did draw our attention to certain cousin statutes and other 'remotely related provisions but the soul of his submission does not suffer by their omission in the discussion. We pass on to the spinal issues agitat ed before us. Locus standi The estates first vest in the State. The fulfilment of the purpose of the Act, the setting in which the corner stone for the statutory edifice is laid and the categorical language used, especially 'free from all encumbrances ', leave no doubt in our minds, nor was it disputed before us, that this initial vesting is absolute and inaugurates the scheme of abolition. The consequence of vesting articulated by section 6 only underscore this conclusion. What next ensues. when the State Government, acting under s.117(1), notifies a further vesting in a Gaon Sabha is the cardinal question. Does the State retain a residu ary legal interest, sufficient to make it a 'person ag grieved ', competent to challenge in appeal an adverse de cree? And can the State canvas for the position that a proprietary right persists in it albeit its act of vesting the same estate earlier in a local authority? Does the key word 'vest ' connote and denote divergent things in the same section and Act visa vis Government and the Gaon Sabha? Had drafting skills been better, this unlovely ambiguity could have been avoided. But courts have no choice but to take the text as it is. Zeroing in on the relevant provisions, we are inclined to concur with the High Court. With certi tude one may assert that the State has that minimal interest to follow the proprietary fortunes of the estate so as to. entitle it to. take legal action to interdict its getting into alien hands. The legislative project and the legal engineering visua lised by the Act are clear and the semantics of the words used in the provisions must bend, if they can, to subserve them. To be literal or be blinkered by some rigid canon of construction may be to miss the life of the law itself. Strength may be derived for this interpretative stand from the observation in a recent judgment of this Court(1) "A word can have many meanings. To find out the exact connotation of a word in a statute, we must look to the context in which it is used. The context would quite often provide the key to meaning of the word and the sense it ' should carry. Its setting would give colour to it and provide a cue to the inten tion of the legislature in using it. A word, as said by Holmes, is not a crystal, trans parent and unchanged; it is the skin of a living thought and may vary greatly in colour and content according to the circumstances and the time in which it is used." (1) Thiru Manickaru & Co. vs The State of Tamil Nadu. [1977] 1 S.C.R. 950. 1081 In the instant case the Act contemplates taking over of all zamindari rights as part of land reform. However, instead of centralising management of all estates at State level, to stimulate local self government, the Act gives an ena bling power not obligatory duty to make over these estates to Gaon Sabhas which, so long as they are in their hands, will look after them through management committees which will be under the statutory control of Government under s.126. Apart from management, No. power is expressly vested in the Sabhas to dispose of the estates absolutely. The fact that as a body corporate it can own and sell property does not mean that the estates vested in a Sabha can be finally sold away, in the teeth of the provisions striking a contrary note. For, under s.117(6), if, for any reasons of better management or other, the State (Government is but the operational arm of the State and cannot, as contended, be delinked as a separate entity, in this context) the. State thinks fit to amend or cancel the earlier vesting declara tion or notification, it can totally deprive the Sabha of, and resume from it, any estate. This plenary power to emasculate or extinguish the Sabha 's right to the estate is tell tale. True, this cut back on the amplitude of the vesting is not an incident of the estate created but is provided for by the Act itself. Even so, we have to envi sion, in terms of realty law, what are the nature and inci dents of the interest vested in the Sabha full ownership divestible under no circumstances or partial estate with the paramount interest still surviving in praesenti in the State ? It is reasonable to harmonize the statutory provisions to reach a solution which will be least incongruous with legal rights we are cognisant of in current jurisprudence. Novelty is not a favoured child of the law. So it is right to fix the estate created by s.117 into familiar moulds if any. Such an approach lends to the position that the vesting in the State was absolute but the vesting in the Sabha was limited to possession and management subject to divestiture by Government. Is such a construction of 'vesting ' in two different senses in the same section, sound ? Yes. It is, because 'vesting ' is a word of slippery import and has many meanings. The context controls the text and the purpose and scheme Project the particular semantic shade or nuance of meaning. That is why even definition clauses allow themselves to be modified by con textual compulsions. So the sense of the situation suggests that in s.117(1) of the Act "vested in the State ' carries a plenary connotation, while 'shall vest in the Gaon Sabha ' imports a qualified disposition confined to the right to full possession and enjoyment so long as it lasts. Lexico graphic support is forthcoming, for this meaning. Black 's Law Die 1082 tionary gives as the sense of 'to vest as 'to give an imme diate fixed right of present or future enjoyment, to clothe with possession, to deliver full possession of land or of an estate, to give seisin '. Webster 's III International Dic tionary gives the meaning as 'to give to a person a legally fixed immediate right of present or furture enjoyment '. The High Court has sought some Engilsh judicial backing(1) for taking liberties with strict and pedantic construction. A ruling of this Court(2) has been aptly pressed into service. There is thus authority for the position that the ex pression 'vest ' is of fluid or flexible content and can if the context so dictates, bear the limited sense of being in possession and enjoyment. Indeed, to postulate vesting of absolute title in the Gaon Sabha by virtue of the declara tion under s.117(1) of the Act is to stultify s.117(6). Not that the legislature cannot create a right to divest what has been completely vested but that an explanation of the term 'vesting ' which will rationalise and integrate the initial vesting and the subsequent resumption is prefera ble, more plausible and better fulfils the purpose of the Act. We hold that the State has title to sustain he action in ejectment. Aside from this stand, it is easy to take the view that the 1st plaintiff is a person I aggrieved and has the competence to carry an appeal against the dismissal of the suit. Of course, he who has a proprietary right, which has been or is threatened to be violated, is surely an 'ag grieved person '. A legal injury creates a remedial right in the injured person. But the right to a remedy apart, a larger circle of persons can move the court for the protec tion of defence or enforcement of a civil right or to ward off or claim compensation for a civil wrong, even if they are not proprietarily or personally linked with the cause of action. The nexus between the lis and the plaintiff need not necessarily be personal although it has to be more than a wayfarer 's allergy to an unpalatable episode. 'A person aggrieved ' is an expression which has expanded with the larger urgencies and felt necessities of our times. Processual jurisprudence is not too jejune to respond to societal changes and challenges: "Law necessarily has to carry within it the impress of the past traditions, the capacity to respond to the needs of the present and enough resilience to cope with the demands of the future. A code of law, especially in the social fields, is not a document for fastid ious dialectics; properly drafted and rightly implemented it can be the means of the order ing of the life of a people. "(3) (1) Richardson vs Robertson (1862) 6 L R 75; & .Hiride vs Chorlton (1866) 2 CP 104, 116. (2) Fruit & Vegetable Merchant 's Union vs The Delhi Improvement Dust, ; (3) Address by Khanna 1. at the Birth Centenary of Sir Tej Bahadur Sapru d/16 10 76 at Allahabad. 1083 The classical concept of a 'person aggrieved ' is delin eated in Re : Sidebotham ex p. Sidebotham (1880 14 Ch.D. 258). But the amplitude of 'legal grievance ' has broadened with social compulsions. The State undertakes today activ ities whose beneficiaries may be the general community even though the legal right to the undertaking may not vest in the community. The State starts welfare projects whose effective implementation may call for collective action from the protected group. or any member of them. New movements like consumerism, new people 's organs like harijan or mahila samajams or labour unions, new protective institutions like legal aid societies operate on the socio legal plane, not to beat 'their golden wings in the void ' but to intervene on behalf of the weaker classes. Such burgeoning of collec tive social action has, in turn, generated gradual processu al adaptations. Test suits, class actions and representa tive litigation are the beginning and the horizon is ex pending, with persons and organisations not personally injured but vicariously concerned being entitled to. invoke the jurisdiction of the court for redressal of actual or imminent wrongs. In this wider perspective, who is a 'person aggrieved '? Dhabolkar gives the updated answer: "The test is whether the words 'person ag grieved ' include a person who has a genuine grievance because an order has been made which prejudicially affects his inter ests '." (p. 315) "American jurisprudence has recognised, far instance, the expanding importance of consumer protection in the economic system and permit ted consumer organisations to. initiate or intervene in actions, although by the narrow rule of 'locus standi ', such a course could not have been justified (see p. 807 New York University Law Review, Vol. 46, 1971). In fact, citizen organisations have recently been compaigning for using legal actions for pro tection of community interest, broadening the scope of 'standing ' in legal proceedings (see p. 403 Boston University Law Review, Vol.51. 1971). In the well known case of Attorney General of the Gambia vs Peirra Sarr N. 'Jie 1961 A.C. 617), Lord Denning observed about the Attor ney General 's standing thus: " . The words 'person aggrieved ' are of wide import and should not be subjected to a restrictive interpretation. They do not in clude, of course, a mere busy body who is interfering in things which do not concern him; but they do include a person who has a genuine grievance because an order has been made which prejudicially affects his interests." (p. 324 325) Where a wrong against community interest is done, 'no locus standi ' will not always be a plea to non suit an interested public body chasing the wrong doff in court. In the case before us, Govern 1084 ment, in the spacious sense of 'person aggrieved ' is comfortably placed. Its, right of resumption from the Gaon Sabha, meant to be exercised in public interest, will be seriously jeopardised if the estate slips into the hands of a trespasser. The estate belonged to the State, is vested in the Gaon Sabha for community benefit, is controlled by the State through directions to the Land Management Commit tee and is liable to be divested without ado any time. The wholesome object of the legislature of cautiously decen tralised vesting of estates in local self governing units will be frustrated, if the State, the watchdog of the whole project, is to be a helpless. spectator of its purposeful bounty being wasted or lost. It must act, out of fidelity to the goal of the statute and the continuing duty to sal vage public property for public use. Long argument is otiose to make out a legal grievance in such a situation of peril and, after all, the star of processual actions pro bono publico has to be on the. ascendant in a society where supineness must be substituted by activism if the dynamic rule of law is to fulfil itself. 'Locus standi ' has a larger ambit in current legal semantics than the accepted, individualistic jurisprudence of old. The legal dogmas of the quiet past are no longer adequate to. assail the social injustices of the stormy present. Therefore, the State, in the present case, is entitled to appeal under section 96 of the Code of Civil Procedure. The second, and from a practical point of view equally potent ground of defence, is that 'appurtenant ' space envelops the whole area around the buildings and the suit for recovery of possession deserves to be dismised in toto. Let us examine this submission. Section 9 of the Act obligates the State to settle (indeed, it is deemed to be settled) with the intermediary certain items in the estate. That provision has been set out earlier. The short enquiry is whether the entire land is 'appurtenant ' to the buildings. The contention of the defendant flows along these lines. The structures accepted by the High Court as 'buildings ' within the scope of section 9 were part of a cattle fair complex. Even the mandir and the oushadalya fitted in to the hat total and the integrity of the whole could not be broken up without violating the long years of common enjoyment. It would also be, a double injury: (a) to the defendant; and (b) to the community. The hat or mela could not be held by the defendant if the land were snatched away and the Government could do. nothing on a land without the buildings belonging to the defendant. Maybe there is some sociological substance in the: presenta tion but the broader purpose of the ' section cannot be sacrificed to the marginal cases .like the. present. The larger objective is to settle with the former intermediary only. such land as is strictly appurtenant to buildings, all the rest going to the State for implementation of the agrarian reform policy. The key to the solution of the dispute lies in ascer taining whether land on which the cattle fair was being held was appurtenant to the buildings or not on the strength of its use for the hat. The Solicitor General made a two pronged attack on the defendant 's proposition. 1085 Firstly, he argued that hats, bazars and melas were a dis tinct interest in the scheme of Indian agrestic life and agrarian law. This right had been virtually nationalised by the Act and only the State or the Gaon Sabha. save where section 18(a) to (c) otherwise provided, could hold a 'fair. A ruling by this Court on an analogous subject lends support to this contention (See State of Bihar vs Dulhin Shanti Devi: AIR 1967 SC 427 relating to Bihar Land Reforms Act). The heated debate at the bar on this and allied aspects need not detain us further also because of our concurrence with the second contention of the Solicitor General that the large open spaces cannot be regarded as appurtenant to the terraces, stands and structures. What is integral is not necesarily appurtenant. A position of subordination, something incidental or ancillary or dependant is implied in appurtenance. Can we say that the large spaces are subsidi ary or ancillary to or inevitably implied in the enjoyment of the buildings qua buildings? that much of space required for the use of the structures as such has been excluded by the High Court itself. Beyond that may or may not be necessary for the hat or mela but not for the enjoyment of the chabutras as such. A hundred acres may spread out in front of a club house for various games like golf. But all these abundant acres are unnecessary for nor incidental to the enjoyment of the house in any reasonable manner. It is confusion to miss the distinction, fine but real. "Appurtenance ', in relation to a dwelling, or to a school, college . includes all land occupied therewith and used for the purpose thereof (Words and Phrases Legally Defined Butterworths, 2nd edn). "The word 'appurtenances ' has a distinct and definite meaning . Prima facie it imports nothing more than what is strictly appertaining to the subject matter of the devise or grant, and which would, in truth, pass without being specially mentioned:Ordinarily, what is necessary for the enjoyment and has been used for the purpose of the building, such as easements, alone will be appurtenant. Therefore, what is necessary for the enjoy ment of the building is alone covered by the expression 'appurtenance '. If some other purpose was being fulfilled by the building and the lands, it is not possible to contend that those lands are covered by the expression 'appurte nances '. Indeed 'it is settled by the earliest authority, repeated without contradiction to the latest, that land cannot be appurtenant to land. The word 'appurtenances ' includes all the incorporeal hereditaments attached to the land granted or demised, such as rights of way, of common . but it does not include lands in addition to that granted '. (Words and Phrase, supra). In short, the touchstone of 'appurtenance ' is dependence of the building on what appertains to it for its use as a building. Obviously, the hat, bazar or mela is not an appurtenance to the building. The law thus leads to the clear conclusion that even if the buildings were used and enjoyed in the past with the whole stretch of vacant space for a hat or mela, the land is not appurtenant to the prin cipal subject granted by section 9, viz., buildings. This conclustion is inevitable, although the contrary argument may be ingenious. What the High Court has grant ed, viz., 5 yards of 1086 surrounding space, is sound in law although based on guess work in fact. The appeal fails and is dismissed but, in the circumstances, without costs. P.B.R. Appeal dismissed. 13.385CI/76 GIPF. INDEX ACCOMPLICE: Whether a pointer an accomplice [See Representation of the People Act.] . 525 ACCUSED PLEADED GUILTY If lesser sentence could be awarded. Murlidhar Meghraj Loya etc. vs State of Maharashtra etc. . 1 ADMISSIONS: admissibility in evidence [See Evidence Act] . 967 ADMINISTRATION OF EVACUEE PROPERTY ACT, 1950 S.40(4) (a) and rule 22 Scope of, section 10(2) (n) out of the funds in his possession meaning of. Custodian of Evacuee Property vs Smt. Rabia Bai . 255 ALTERNATE REMEDY Whether a bar to writ jurisdiction under article 226 of the Constitution under Art 226 of the constitution. . 64 [See Constitution of India, 1950] . 64 ANDHRA PRADESH (ANDHRA AREA) Electricity Supply Undertaking(Acquisition) Act (Andhra 15of 1954), Ss. 5(3)(vi), 6(2)(a) (iii) and 10(2)(b)(iii) Amounts due to undertaking from consumers prior to vesting in State If can be recovered by State from the licence. Vijayawada Municipal Council vs Andhra Pradesh State Elec tricity Board and Anr. . 846 ANDHRA PRADESH GENERAL SALES TAX ACT, 1957 Excise and countervailing duty paid by the buyers directly into the Treasury Neither the invoice nor books of the assessee (manufacturer) show the excise duty Excise duty. If fails under "any sums charge by the dealer" occurring in the definition of "turnover". M/s Mc Dowell & Company Ltd. etc. vs Commercial Tax Office VII Circle Hyderabad etc. APPEAL AGAINST ACQUITT OF AN OFFENCE OF CONSUMING LIQUOR Mem because the High Court took view that a fur ther charge "possession of liquor" she have been framed setting aside the acquittal without find whether the order of acquittal erroneous and ordering re t is bad Bombay Prohibition A 1949 (Bern. XXV Sec. 66(1) r/w Sec. 378 Criminal Procedure Code (Act 11 of 1974) 1973. Patel Jethabhai Chatur vs State of Gujarat , Contract between lay parties not be thwarted by narrow pedal and legalistic interpretatic Intendment of parties regarding validity of arbitraror 's appointment, whether material. Union of India vs M/s D.M. R. &Co . ATTESTING WITNESS [See Succession Act] BENAMI TRAINSACTION Pr of Benami nature. Union of India vs Moksh Buil and Financiers and Ors. BIHAR AND ORISSA EXC ACT, 1951 as amended Amending Acts of 1970 and 1 Ss. 22 and 29 Power of State 2 to auction exclusive privilege to vend liquor Nature of payment received. Lakhan Lal etc. vs The State of Orissa and Ors. BIHAR ELECTRICITY DUTY ACT, 1948 (As amended) S.3(2) (e) Scope of. Damodar Valley Corporation vs State of Bihar and Ors. . 118 HAR LAND REFORMS ACT, 1950 Ss. 4(a) and 10 Lessee of nines If a tenure holder or intermediary under the Act. Sone Valley Portland Cement Co. Ltd. vs The General Mining Synidicate (P) Ltd. 359 BOMBAY INDUSTRIAL RELATIONS ACT, 1946 section 98(1)(a) schedule III item 6(ii) Scope of Workmen laid off Lock out de clared later alleging unruly behaviour Lockout if illegal. priya Laxmi Mills Ltd. vs Mazdoor Maharan Mandal, Baroda . 709 BOMBAY PROHIBITION ACT, 949 (Bom. XXV) Sec. 66(1)(b). [See Appeal against acquittal] . 872 BOMBAY PROVINCIAL MUNICIPAL CORPORATIONS ACT, As applied in Gujarat (Bom. 59 of 1949), S.284N Applicability of .5A, Land Acquirition Act. Farid Ahmed Abdul Samad and Anr. vs The Municipal Corpora tion of the City of Ahmedabad and Anr. . 71 BOMBAY RENT, HOTEL AND LODGING HOUSE RATES ACT, 1947 Sub. Section 13(1)(B) Suit for eviction on the grond of bonafide and personal need of a landlord Whether right to sue survives to his heirs Requirement of firm in which landlord is a partner whether his requirement Whether decree passed in favour of landlord can be disturbed on his death. Shantilal Thakordas and Ors. vs Chimanlal Maganlal Telwala . 341 5(4A) Indian Easements Act 1882 Sec. 52 62(c) Revocation of licence by efflux of time Presiden cy Small Causes Courts Act 1882 Sec. ' 47 Effect of filing of application for eviction Meaning of licence under a Subsisting agreement Interpretation of statutes Practice. D.H. Manjar & Ors. vs Waman Laxman Kudav . .403 BOMBAY VILLAGE PANCHAYAT ACT (BOM. 6 OF 1933) S.89 'House ' if includes 'building '. Tata Engineering & Locomotive Company Ltd. vs Gram Panchay at pimpri Waghere. . 306 BURDEN OF establishing urgency under the . Land Acquisition Act [See Land Acquisition Act] . 763 CENTRAL CIVIL SERVICE (CLASSIFICATION, CONTROL AND APPEAL) Rules, 1965 Scope of Rules applicable only when disciplinary proceedings are taken. Union of India and Anr. K.S. Subramanian . 87 1. 2(b) 9 Andhra Pradesh General Sales Tax Act 1957, Central Government selling foodgrains and fertilisers, whether a dealer Profit motive, if relevant Whether State carried on business. Joint Director of Food, Visakapatham vs The State of Andhra Pradesh. . 59 3 2. section 15(b) Scope of Assessee bought declared goods and paid States Sales Tax Sale by way of inter state sale If entitled to refund of State Sales Tax. Thiru Manickam and Co. vs The State of TamilNadu . .950 3. (74 of 1956) section 8(3)(6) and Central Sales Tax (Regulation and Turnover) Rules, 1957, r. 13Goods used in the manufac ture or processing of goods for sale Scope of Fertilizers used for growing tea plants, if could be included in goods used in the manufacture of tea for sale. Travancore Tea Estates Co. Ltd. vs State of Karnataka & Ors. 755 4. (74 of 1956) S.9(1), proviso Scope of. M/s Karam Chand Thapar and Bros. (Coal Sales) Ltd. vs State of Uttar Pradesh and Ant. . 25 CHARGE Fresh charge on appreciation of evidence can be ordered to be framed by the High Court in exercise of its appellate jurisdiction Criminal Procedure Code (Act. II of 1974), 1973 Secs. 386(a), 464(I) and 462(2)(a). Patel Jethabhai Chatur vs State of Gujarat . 872 CITY OF BANGALORE MUNICIPAL CORPORATION SERVICES (GENERAL) CADRE AND RECRUITMENT REGULATIONS 1971, Reg. 3 'Absorption of Senior Health Inspectors by Corporation contrary to provi sions in Reg. 3 Effect of. C. Muniyappa Naidu etc. vs State of Karnataka & Ors. CITY OF MYSORE IMPROVEMENT ACT, 1903, Ss. 16, 18 and 33(1) Relevant date for determining market value for purposes of compensation, what is. Special Land Acquisition Officer City Improvement Trust Board, Mysore vs P. Govindan. . 549 CIVIL SERVICE 1. Powers of relaxation Whether rules can be made retro spectively Andhra Pradesh State and Subordinate Serv ices Rules 1962 Rule 47 Andhra Pradesh Civil ' Services (Co operation Branch) Government of Andhra Pradesh and Ors. vs Sri D. Janardhana Rao and Anr. 702 2. Seniority Irregular recruitment Regularisation Appointments through Public Service Commission Recruitment through centralised recruitment scheme. P.C. Patel and Ors. vs Smt. T.H. Pathak and Ors. . 677 CODE OF CIVIL PROCEDURE Res Judicata, whether invocable in subsequent stage of same proceedings. Y.B. Patel and Ors. vs Y. L. patil . 320 2. Ss. 79 and 80, suit for compensation against railway administration whether impleading Union of India as a party necessary. State of Kerala vs The General Manager, Southern Railway Madras. . 419 3. S.80 Whether applicable to suits filed under s.9(1) of the (M.P.) Public Trusts Act, 1951. State of Maharashtra & Anr. vs Shri Chartder Kant . 993 4. S.115 Jurisdiction of High Court to interfere with the Trial Court 's discretionary order, when exercisable. 4 M/s Mechelec Engineers & Manu facturers vs M/s Basic Equipment Corporation. 1060 5. (Act 5 of 1908) Order VI r/w Order, XIV, rule 1(5) Courts should not allow parties to go to trial in the absence of proper pleadings. Union of India vs Sita Ram Jaiswal . 979 6. (Act v of 1908) Order V], Rule 17. [See Pleadings] . 728 7. Act V of 1908 Section 11 Principle of res judicata Applicability when gratuity was awarded in a previous proceedings under the Payment of Wages Act i.n the teeth of the clear provision of Rule 8.01 Scope of Rule 8.01. Andhra Pradesh State Road Transport Corporation Hyderabad vs Venkateswara Rao etc. . . 248 CODE OF CRIMINAL PROCEDURE 1908 1. Whether Magistrate has jurisdiction to recall dismissal order made u/s 203 Application for recalling dismissal order, whether amounts to fresh complaint. Bindeshwari Prasad Singh vs Kali Singh . 125 2. S.99 A Scope of Whether 'Statement of grounds ' a mandatory provision. State of Uttar Pradesh vs Lalai Singh Yadav . 616 3. (Act 2 of 1974)Ss. 235 and 465 Scope of. Santa Singh vs The State of Punjab . 229 4. (Act II of 1974), 1973 section 378. [See Appeal against ac quittal] . 872 5. (Act 2 of 1974) S.494 Prosecution applying for with drawal of prosecution Principles to be considered by Court in granting consent. State of Orissa vs Chandrika Mohapalra & Ors. 335 COMPULSORY RETIREMENT Compulsory retirement made in public interest under the Government of lndia Decision No. 23 dated 30th November 1962 below Fundamental Rule 56 (later substituted as a new rule FR 56(i) Mere reference to a non subsisting rule does not invalidate the order when retirement is in public interest and bona fide. Mayconghoan Rahamohan ,Singh vs The Chief Commissioner(Administration) Manipur and Ors. . 1022 2. [see Constitution of India] . 128 CONDONATION OF DELAY in applying for renewal of stage permits under the Motor Vehicles Act. [See Motor Vehicles Act] . 503 CONDUCT OF ELECTION RULES 1961, rr. 42 and 56(6) . Tendered ballot paper, what is and use of. Dr. Wilfred D 'Souza vs Francis Menino Jesus Ferrao . 942 CONSTITUTION OF INDIA 1. article 14 Combines Seniority Scheme introduced by the Reserve Bank of India to equalise opportunities of confirma tion and pro motion of Clerks Some Clerks affected ad versely by unforseen circumstances if violative of equal opportunity clause Right of State to integrate Cadres and lay down principles of seniority. Reserve Bank of India & Ors. N. C. Paliwal & Ors. . 377 5 2. articles 14, 16 Civil Service Seniority Direct Re cruits and promotees Quota Whether roster implicit Bene fit of service Words and Phrases "As far as practicable." N.K. Chauhan and Ors. vs State of Gujarat and Ors. . 1037 3. article 15(4) Reservation of seats for socially and educa tionally backward classes in educational institutions Annual family income test if valid. Kumari K.S. Jayasree and Anr. vs The State of Kerala and Anr. . 194 4. article 19(6)(ii) and 269(g): [See ] . 59 5. article 3IA(1) Second Proviso article 31(b) Meaning of right conferred 9th Schedule Whether different ceiling can be imposed for different persons Whether second proviso to article 31(A)(1) imposed a feter on the legislative competence Gujarat Agricultural Land Ceiling Act 1961 (Gujarat Act 27 of 1961) Section 2 (21), 6. Hasmukhlal Dahayabhai and Ors. vs State of Gujarat & Ors. . 103 6. article 131 Disputes between State and Union Jurisdic tion of High Court Charge of Excise Duty Condition of Whether an article manufactured or produced before the levy is imposed is excisable. Union of India vs State of Mysore . 842 7. article 136 Practice and Procedure Whether a Court of Criminal Appeal Whether can interfere with concurrent findings of fact Interference when grave and substantial injustice. Dalbir Kaur and Ors. vs State of Punjab . .280 8. article 226 High Court if could interefere with the Appellate orders of Income Tax Appellate Tribunal under article 226. Income Tax Officer, Lucknow vs M/s S.B. Singbar Singh and Sons and Anr. .214 9. article 226 When alternative remedies available, whether writ petition maintainable. G. Sarana vs University of Lucknow and Ors. . 64 10. article 226, whether concurrent findings of facts by the Revenue Authorities, can be reopened in writ petition. Y.B. Patel and Ors. vs Y. L. Patil . 32 11. article 235 Disciplinary action over subordinate judiciary Governor If bound by the recommendation of the High Court Consultation with State Public Service Commis sion If warranted by article 235. Baldev Raj Guliani and Ors. vs The Punjab & Haryana High Court and Ors. . 425 12. article 288(2) Scope of. Damodar Valley Corporation vs State of Bihar and Ors. . 118 13. articles 309, 310 and 311 Scope of article 310 Visa Vis articles 309 and 311. Union of India and Anr. vs K. section Subramanian . 87 14. article 311 Termination of services of temporary servant Protection of Article when applicable. State of U. P. vs Ram Chandra Trivedi . 462 15. article 311(2), violation of Penalty of compulsory retirement Hyderabad Civil Service (Classification, Control and Appeal Rules,) reasonable opportunity of defence at the stages of enquiry and punishment 6 Consideration of extraneous matters in recommendation of penalty by High Court Chief Justice, whether valid. State of Andhra Pradesh vs S.N. Nizamuddin Ali Khan . 128 CONTEMPT OF COURT ACT (ACT NO. 70 OF 1971) Ss. 2(b) 10 and 12(1) read with Article 215, Constitution of India Remitting the punishment awarded after accepting the apolo gy, tendered by the contemnor and ordering him to pay the cost of paper books, whether valid Whether endorsing to the Registrar a copy of the wireless message, addressed to the State Counsel for information only amounts to contempt. Arun Kshetrapal vs Registrar, High Court, Jabalpur & Anr. 98 2. 1971, S.19(1)(b) Finding of committal of contempt is basis of acceptance of apology Judge exposing himself to public controversy cannot shelter behind his office. Ram Pratap Sharma and Ors. vs Daya Nand and Ors. CONTRACT OF SALE OF GOODS Whether interstate or intra state Sale. [See sale] . 631 CORRUPT PRACTICE: [See Election] . .490 COSTS: tax matters when there is conflict among High Courts. [See Practice] . 9 , Ss. 28, 131(1)(3) and (5): [See Limitation] . .983 DEALER: Whether Central Government selling foodgrains and ferti lizers a dealer. [See ] . DELEGATION OF POWERS TO OFFICERS for execution of contracts under s.122(1) of Jammu & Kashmir Constitution Contracts containing arbitration clause validity executed on behalf of the Government cannot be questioned on the plea of violation of section 122(1.). Timber Kashmir (P) Ltd. etc. vs Conservator of Forests, Jammu and Ors. . 937 DEVELOPMENT REBATE Whether dividend when withdrawn. [See Income Tax Act] . 638 DIRECTORATE GENERAL OF TECHNICAL DEVELOPMENT (CLASS II POSTS) RECRUITMENT (AMENDMENT) RULES, 1974, Rule 2, inter pretation of whether officer on special duty in the same grade as Development Officers. section Ramaswamy vs Union of India and Ors. 221 DISCIPLINARY ACTION : Over subordinate judiciary by High Court. [See Constitution of India] . DISMISSAL ORDER, recall of [See Code of Criminal Procedure] . 125 DOCTRINE OF WAIVER Bar of waiver, whether applicable to later grievance against 'bias. ' G. Sarana vs University of Lucknow and Ors. ELECTION Representation of the People Act, 1951 Sec. 123(2) Sec. 100(1)(b) Corrupt practice Undue influ ence Conduct of Election Rules 1961 Rules 39(2) Ballot paper containing mark on the reverse of the symbol 7 Can be rejected as invalid Charge of Corrupt practice If of quasi criminal nature Degree of proof Interference with appreciation of evidence by High Court Whether elec tion result can be lightly interfered with. M. Narayana Rao vs G. Venkata Reddy & Ors. 490 ELECTRICITY ACT 1910 Section 22B Electricity Supply Act. 1948 Sections 18, 49 and 79(j) Whether section 49 invalid for excessive delegation Whether Electricity Board can reduce the quota of consumption if the State Government has done so Board having determined the quota, whether can further reduce it Whether Board can fix the quota with out framing regulations Practice and Procedure Whether appellant can be allowed to raise a new question of facts for the first time. Adoni Cotton Mills etc. vs The Andhra Pradesh State Electricity Board and Ors. .133 EMPLOYEES ' STATE INSURANCE ACT, 1948 Sec. 61 If debars grant of sick leave If the Act deals with all aspects of sickness. The Alembic Glass Industries Ltd. Baroda and Ors. vs The Workmen and Ors. 80 ESCAPED ASSESSMENT [See Income Tax ] . 207 ESTATE DUTY ACT (34 of 1953) 1. Ss. 2(15), 9 and 27 Scope of. Controller of Estate Duty, Gujarat vs Shri Kantilal Trikam lal . S.5 Land covered with wild. and natural forest growths of agricultural land. Controller of Estate Duty, Kerala v V. Venugopala Verma Rajah . 346 3. S.10 Gift of property the deemed to be part of the State of deceased doner. Controller of Estate Duty, Keral vs M/s R.V. Vishwanathan and Ors. . 64 EVIDENCE ACT (1 of 1872) 1. Ss. 17 and 33 Evidence of admission Admissibility. Union of India vs Moksh Builder and Financiers and Ors. . 96 2. S.43 and Code of Civil Procedure (Act 5 of 1908) 0.41 r. 2 Admission of Judgments in land acquisition preceedings an additional evidence. The Land Acquisition Officer, City Improvement Trust Board vs H. Narayaniah etc. 3. S.68 Discharge of onusproban by propounder when execut ic of will surrounded by suspicious circumstances. Seth Beni Chand (since dead) no by 1. rs. vs Smt. Kamla Kunwar and Ors. . 57 4. 116 Whether tenant cadeny the landlord 's title. Sri Ram Pasricha vs Jagannat and Ors. FINAL LIST, when may be set asid by Court. Union of India vs Dr. R.D. Nanjia and Ors. FINDINGS OF FACT [See Constitution of India] . 32 FIRST INFORMATION REPORT delay in lodging. [See Penal Code] . 280 FUNDAMENTAL RULE 56(j): [See Compulsory retirement] . 1025 GENERAL CLAUSES ACT 189 ' Section 3(42) Meaning of per son Whether legislatur 8 bound to follow definition in General Clauses Act. Hasmukhalal Dayabhai and Ors. vs State of Gujarat and Ors. etc. . 103 OLD CONTROL RULES, 1963, whether includes smuggled gold within their ambit. Triveni Prasad Ramkaran Verma State of Maharashtra . 519 GRATUITY, entitlement to whether a former employee of he Nizam 's State Railway can claim gratuity aS of right in addition to provident Fund Government of Hyderabad Railway establishment Code, 1949, Rule . 01, 8.02, 8.05, 8.12, 8.13, .15, 8.16, 8.17 and 8.19 read with para 17 Chapter VII interpretation of. Andhra Pradesh State .Road Transport Corporation, Hyderabad vs Venkateswara .Rao. GUJARAT MUNICIPALITIES 1963, section 38 (10)(b)(i) "act as Councillor" ScoPe of President of the Municipality applying or lease of land If debarred taking land on lease General power of supervision conferred on the President If resident should be deemed to have acted within the meaning of 38(1)(b)(i) when lease was ranted to him by the Chief officer. Rustamji Nasorvanji Danger vs shri Joram Kunverji Ganatra and Ors. . 884 HINDU LAW If a co widow can relinquish ght of survivorship Whether after relinquishment, a widow an dispose of property by will. Rindumati Bai vs Nrarbada ' Prasad . .988 RELIGIOUS ENDOWMENT Hindu temple forming part of a Jain Institution When may be treated as a Hindu religious endow ment. Commissioner of Hindu Religious & Charitable Endowments Mysore vs Sri Ratnavaram Heggde (deceased) by 1. .889 IDENTIFICATION PARADE: [See Penal Code] . 280 INCOME TAX ACT 1922 1. S.2.(4) When can single and isolated sale be a busi ness transaction within the meaning of Onus probandi on the Taxation Department Initial purchase with intention of advantageous sale Earning profit on delivery of goods not necessary. Dalmia Cement Ltd., vs The Commissioner of Income Tax, New Delhi. . 5 54 2. (11 of 1922) Ss. 2 (6A)(e) 'and 10(2) (vi b) Development rebate treated as accumulated profits Withdrawal of amount by shareholder from Company 's account if withdrawal can be treated as dividend since amount withdrawn is within accumulated profits. P.K. Badiani vs The Commissioner of Income Tax, Bombay . .638 3. S.9 Irrevocable rent If could be deducted from income from property of only one year Exemption If could be given only once. Commissioner of Income Tax, Lucknow vs Shri Madho Parsad Jatia. . 202 2(1) to Sec. 23A(1) Meaning of investment Companies, whether restricted to shares stocks and other securities or used in contradistinction with manufacturing processing and trading operations Indian Companies 87(f) Companies Act 1956 Sec. 372(11). Nawn Estates (P) Ltd. vs C.I.T., West Bengal . 798 5. 23A and 35(1) Whether income tax officer has power under section 35(1) to rectify an order passed under section 23A. Commissioner of Income Tax, Kanpur. vs M/s. J.K. Commercial Corporation Ltd. etc. 512 for partition and disruption of the Hindu Undivided family disallowed by I.T.O. Appeal under the Act filed against the orders of. I.T.O. also dis missed No reference under the Act challenging the Tribu nal 's order dismissing the appeal was taken, but subse quentiy got a preliminary decree for partition passed by the civil court during the pendency of the apPeal Whether t he Income Tax Authorities are bound by the subsequent parti tion decree of the civil court. Narendra kumar J. Madi vs Commissioner of Income Tax, Guja rat 11, Ahmedabad . 112 7. Ss. 34 and 42, Income Tax Act (43 of 1961) section 147 and Income Tax Rules, 1922, r. 33 corresponding to r. 10 of 1962 Rules One 0 f t he met hods mentioned in corresponding to r. 10 of 1962 Rules One of the methods mentioned in r. 33 applied for assessment Higher tax liability if another method in rule adopted If a case of income escaping as sessment. Commissioner of Income Tax, West Bengal 1, Calcutta vs Simon Carves Ltd. 207 8. section 5(2) Non resident company receiving income outside India Income if accrued in India. 84SCI/77 The Performing Right Socio)Ltd. & Anr. vs The Commr. Income Tax and Ors. . 1 INDUSTRIAL DISPUTES A( 1907 Sec. 2(00) Meaning of trenchment Can termination service by efflux of time cover by the expression retrenchment Hindustan Steel Ltd. vs The p siding Officer, Labour. Court Orissa and Ors. . 6 legal practioners can appear before the Tribunal Whether Secs. 36(1) an 36(2) is controlled by section '36(4) Pradip Port Trust, Pradip Their Workmen . 5 INTER STATE SENIORITY [See State 's Reorganisation Act] . INTERPRETATION 1. Amendment of a section could be used to interpret earlier provision in the Act. Sone Valley Portland Cem Co. Ltd. vs The General Mini Syndicate (P) Ltd. 3 2. "Refund meaning of Subsequent amendment of Section If could. be used to interpr earlier ambiguous provision. Thiru Manickam & Co. vs Sic of Tamil Nadu . 9 3. "should" contained in a clause "should" possesses a post graduate degree and requist experience whether mandato ry or directory "Post gradual Meaning of. Juthika Bhattacharya The State of Madhya prad and Ors. . 4 4. Contract of. [See ] INTERPRETATION OF DOCUMENTS Principles application 10 to interpretation of document Notifications Nos. F. 9/5/59 R & S published in gazette dt. 17 1 60 u/s 507 of the Delhi Municipal Corporation Act, 1957 (66 of 1957) and Notifica tion GSR 486 u/s 1(2) of Delhi Rent Control Act, 1958 (59 of 1958) gazetted on 21 4 62 Whether the whole of Mauza Chowkri Mubarakbad and whole of Onkar Nagar and Lekhpura were meant to be notified. Jangbirv. Mahavir Prasad Gupta . 670 INTERPRETATION OF STATUTES [See Bombay Rents/ Hotel and Lodging House Rates Control Act, 1947] . Estate Duty Act and other taxing statutes Principles. Controller of Estate Duty, Gujarat vs Shri Kantilal Trikam lal Expressions not being terms of art whether to be construed in technical sense or ordinary popular sense as used by businessmen Legislative history as guide to construction Genesis and development of law as key to interpretation Whether English decisions useful guides or construction of analogous provisions, fundamental concepts and general principles. Nawn Estates (P) Ltd. C.I.T., West Bengal . 798 Provision in Act substituted by another Amending provision avoid Effect. State of Maharashtra vs The Central Provinces Manganese Ore Co. Ltd. 1002 Rules as an aid Use of Statement of objects and reasons. Tata Engineering & Locomotive Company Ltd. vs Gram Panchayat Pimpri Waghere. . 306 6. Statute when retrospective. K. Eapen Chacko vs The Provident Investment Co. P. Ltd. 1026 7. When a statute could be read retrospectively. State of Kerala vs philomina etc. & Ors. . 273 JAMMU & KASHMIR CONSTITUTION, section 122 [See Delegation of Powers] . 937 Admission of judgments in Land Acquisition proceedings. [See Land Acquisition] . 178 JURISDICTION 1. of High Courts to interfere with the trial Court 's discretionary order. [See C.P.C.] . 1061 2. of High Court under article 226 to interfere with orders of the Income Tax Appellate Tribunal. [See Constitution of India ] . 214 KARNATAKA LAND REFORMS ACT, 1961, Ss. 107 and 133 'Whether applicable to land unauthorisedly held after expiry of lease. Corporation of the City of Bangalore vs B.T. Kampanna . KARNATAKA RECRUITMENT OF GAZETTED PROBATIONERS (Class I and 11 Posts appointment by competitive examination) Rules, 1966 R. 9 read with Part IV of Schedule II Scope of Awarding block marks in interview If violative of the Rule. State of Karnataka and Anr. vs M. Farida & Ors. . 323 KERALA LAND REFORMS ACT 1. 1963 section 84 Scope of interpretation When a statute could be read retrospectively. 11 State of Kerala and Ors. vs Philomina etc. and Ors. . 273 2. 1964 Secs. 81, 83, 84, 85, 85A and 86 Voluntary trans fers made after notified date whether valid. State of Kerala and Ors. vs K.A. Gangadharan . 960 3. (Kerala 1 of 1964) as amended in 1969 and 1971, Secs. 3(1), 50A, 52, 73, 108, 125 and 132(3) Scope of. K. Eapen Chacko vs The Provident Investment Co. P. Ltd. 1026 LAND ACQUISITION ACT 1. City of Bangalore Improvement Act, 1945, Ss. 16, 18 and 27 Notification under Ss. 16 and 18 on different dates Date for determining market .value for awarding compensation for acquisition of land. The Land Acquisition Officer, City Improvement Trust, Board vs 11. Narayaniah etc. 178 Ss. 5A, 6 and 17(4) Burden of establishing urgency On whom lies. Narayan Govind Gayate etc. vs State of Maharashtra . 763 3. (1 of 1894) s.6A If mandatory Effect of non compliance in case of beneficial schemes. Farid Ahmed Abdul Samad and Anr. vs The Municipal Corpn. of the City of Ahmedabad and Anr. LEGAL ENTITY [See Railways Act, 1890] . .419 LIMITATION 1. for rectification under the U.P. Sales Tax Act, 1948, section 22. [See U.P. Sales Tax Act, 1948] . Period of limitation in respect of suo moto revision by Central Government to annul or modify any order of erroneous refund of duty when begins Customs Act, , 131(1)(3)(5) scope of. Geep Flashlight Industries Ltd. vs Union of India & Ors. .983 LIMITATION ACT 1. 1963 Ss. 5 and 29(23) If applicable. Mohd. Ashfaq vs State Transport Appellate Tribunal M.P. and Ors. 563 2. whether applicable to revision petitions filed under section 10, U.P. Sales Tax Act. Time spent in obtaining second copy of. impugned order, whether to be excluded in computing limitation period for filing revi sion petitions. Commissioner of Sales Tax, U.P. vs Madan Lal and Sons Ba reilly. MADHYA pRADESH MUNICIPAL CORPORATION ACT 1956Sec. 138(b) Madhya Pradesh Accommodation Control Act Sec. 7 Must rental value under the Municipal Act follow the standard rent under Accommodation Control Act When premises let out When used by owner. Municipal Corporation, Indore, and Ors. vs Smt. Ratna Prabha ana Ors. . 1017 MADHYA PRADESH PUBLIC TRUSTS ACT 1951s. 9(1): [See Code of Civil Procedure] . 993 MADRAS GENERAL SALES TAX ACT 1959, Schedule 11, items 7(a and (b) If ultra vires. M/s. Guruviah Naidu and Sons etc vs State of T.N. and Anr. State Government reserved certain areas for exploitation of minerals in public sector If had the power to do so. State Governments If could reject application of private persons. Amritlal Nathubhai Shah and Ors. vs Union Government of India and Anr . 372 2. S.30A Scope of. State of Bihar and Anr. vs Khas Karampura Collieries Ltd. etc. 157 , Entry 22 Explanation of Schedule, construction of word includes Whether ,potteries Industry includes manufacture of Mangalore pattern roofing tiles. The South Gujarat .Roofing Tiles Manufacturers Associations and Ant. vs The State of Gujarat and Anr . 878 MONOPOLY OF BUS ROUTES Whether permitting the existing private operators to operate till the date of expiry of their permits creates a monopoly. Sarjoo Prasad Singh vs The State of Bihar and Ors. 661 MOTOR VEHICLES ACTS 1939 1. section 43(1) State Government can direct imposition of fiscal rates on stage carriage operators for carrying mails as condition of permit Ss. 48(3) and 59(3)(c) such direc tions do not interfere with quasi judicial functions of Regional Transport Authority. Special provisions of section 48(3) (XV) do not override general provisions of section 43(1)(d)(1). Sree Gajana Motor Transport Co. Ltd. vs The State of Karna taka and Ors. . 665 Motor Vehicles Rules, 1951 Rule 108(c) Whether considerations in Sec.47 for grant of stage permits to be mentioned in the order. Ikram Khan vs State Transport Appellate Tribunal and Ors. . 459 3. S.58(2) proviso Delay in.applying for renewal of exist ing permit If could be condoned Chapter IVA If a self contained code Renewal application under section 68F(ID) Whether section 57 applicable. Mohd. Ashfaq vs State Transport Appellate Tribunal U.S. and Ors. 563 of 'Whether there should be a finding on each and every separate objection raised. Sarjoo prasad Singh vs The State of Bihar and Ors. 661 MURDER: Distinction between S.299 and 300 I.P.C. [See Penal Code] . 601 NECESSARY PARTY: [See Civil Procedure Code] . 419 NEW CASE Courts ' Whether can make a [See Partnership Act] . 583 NEW DELHI HOUSE RENT CONTROL ORDER 1939 C1. Standard rent of house fixed in 1944 Rateable value enhanced on the basis of rent received in 1966 Whether rating should be correlated to actual income. New Delhi Municipal Committee vs M.N. Soi and Anr. NEW PLEA [See Adoni Cotton Mills vs Andhra Pradesh State Elec tricity Board] . 133 NOLLES PROSEQUE: Principle to be followed by court (See Criminal Procedure Code Act 2 of 1974) . .335 13 OTHER RIGHTS in Explanation 2 to section 2(15) meaning of. Controller of Estate Duty, Gujarat vs Shri Kantilal Trikam lal . 9 PARTNERSHIP ACT Whether mandatory Whether suit can be filed by unregistered firm Dissolution of firm Suit by a 'partner of erstwhile unregistered firm, If other partners of erstwhile firm necessary parties Materi al alterations in a document Effect of Suit for Specific and ascertained amount Whether court can make out new case and grant partial relief on another basis. Loonkaran Setia etc. vs Ivan E. Johan and Ors. . 853 PENAL CODE S.34 Specific evidence for infliction of fatal wound not required Community of intent with participatory presence fixes constructive liability. Harshadsingh @ Baba Pahalvansingh Thakura vs The State of Gujarat . 626 2. Ss. 299 and 300 Culpable homicide not amounting to murder and murder Distinction Tests to be applied in each case S.300 Thirdly I.P.C. Scope of. State of Andhra Pradesh vs Rayavarapu Punnayya and Anr. .601 3. Section 302 Non examination of eye witnesses Interest ed witnesses Meaning of Necessity of examining independent witnesses Motive Delay in lodging F/R and despatch to Magistrate Identification parade, necessity of. Dalbir Kaur and Ors. vs State of Punjab . 280 PLEADINGS 1. Amendments to Amendment to the pleadings to introduce an entirely different case, under the guise of permisible inconsistent pleas which is likely to cause prejudice to the other side cannot be allowed Civil Procedure Code (Act V of 1908) Order VI Rule 17. M/s Modi Spinning and Weaving Mills Co. Ltd. and Anr. vs M/s Ladha Ram and Col . .728 2. Under section 70 of the Contract (Act 9) of 1872 Ingre dients necessary to be pleaded. Union of India vs Sita Ram Jaiswal. . 979 POSSESSION "Possession" to attract criminal liability must be "conscious possession". Patel Jethabhai Chatur vs State of Gujarat . 872 POWERS OF OFFICER to rectify an order passed u/s 23A [See Income Tax Act] . 512 POWER TO AUCTION exclusive privilege to vend liquor [See Bihar and Orissa Excise Act. .811 PRACTICE 1. Costs in tax matters when there is conflict among High Courts Controller of Estate Duty, Gujrart vs Shri Kantilal Trikamalal . 2. Duty of High Court when there is conflict between deci sions the Supreme Court Upsetting concurrent findings of fact second appeal Propriety. State of U.P . vs Ram Chandrs Trivedi . 46: 3. Duty of High Court where there, is conflict between the view expressed by Divisional bench and larger benches of the Supreme Court. Union of India and Anr. K.S. Subramanian. Non suiting for want of proper pleadings at the appellate stage by the Supreme Court when parties went to trial and issues were raised and the litigation went through the course of trial and appeal is not desirable. Union of India vs Sita .Ram Jaiswal . 979 5. Supreme Court will not entertain a complaint on facts and interfere with a finding of facts by the appellate Court under Article 136 of the Constitution of India. Patel Jethabhai Chatur vs State of Gujarat . 872 PRACTICE AND PROCEDURE 1. Further plea taken in the affidavit rejoinder to the writ petition shall not be allowed to be agitate Sarjoo Prasad Singh vs The State of Bihar and Ors. 861 2. High Court 's duty to give reasons even in cases of sum mary dismissal. Shankar Gopinath Apte vs Gangabai Hariharrao Patwardhan . 411 3. Interference with findings on reliability of evidence only in exceptional circumstances. Harshadsingh@ Baba pahalvansingh Thakur vs The State . 626 5. Re appraisal of evidence by Supreme Court in spite of concurrent findings of fact, proper when miscarriage of justice has occurred. Mohammad Aslam vs State of Uttar Pradesh . 689 Whether High Court can direct a Minister to be impleaded as a party and file his personal affidavit. State of Punjab ana Anr. vs Y.P. Duggal and Ors. . 96 PREVENTION OF CORRUPTION ACT, and 5(1)(d) Sec. 5(2) Misappropriating Govt. funds. Retaining Govt. Funds by a Govt. Servant Evidence Act, Sec. 154 When can witness be declared hostile Can evidence of a hostile witness be accepted Evidence Act Sec. 105 Onus of proving exceptions in IPC on accused Degree of proof Criminal Trial Effect of non examination of materi al witness Conviction on evidence of a solitary witness Whether adverse inference can be drawn against accused for not leading evidence Onus of prosecution Pre sumption of innocence. Rabindra Kumar Dey vs State of Orissa . .439 PREVENTION OF FOOD ADULTERATION ACT 1910. 1. section 16 Proviso Scope of. Murlidhar Meghraj etc. vs State of Maharashtra etc. . 1 2. sec. 16(1) (a) (2) (1) 2(1) (c) 2(1) (j) 2(1) Preven tion of Food Adulteration of Rules. Rules 23, 28 and 29 Can conviction be based on sole testimony of Food Inspector Can an article fail under clause (j) and (i) of Sec. 2(i) Are they mutually exclusive or overlapping When rules are silent about colouring material can use of dye be punished Do provisions of Probation of Offenders Act apply to offences under the Prevention of Food Adulteration Act. Prem Ballab and Anr vs The State (Delhi Admn.) . 592 PRIVITY OF CONTRACT When a company has severa branches and there is a contract between the buyer and one of the branches, the contract of sale is between the company and the buyer. English Electric Company of India 1Ltd. vs The Deputy Commercial Tax Officer and Ors. . 631 15 PROBATION OF OFFENDERS ACT, 1958 Applicability to cases under POFA [See Prevention of Food Adulteration Act, 1950] . 59 PROCEDURE When a court of appeal can interfere in the lower court 's Judgment. Padma Uppal etc. vs State of Punjab and Ors. . 329 PROMOTIONS Right to promotion Whether promotion of class III employees to Class is governed by "Advance Correction Slip No. 7)" introducing w.e. f. March, 11, 1973, new rules 324 to 328 and substituting a new rule 301 in Chapter III of the Indian Railway Establishment Manual Scope and applica bility of Rules 301 and 328 (2) (4) and (5) S.K. Chandan vs Union of India and Ors. . 785 PROPERTY right to dispose of by will by a widow [See Hindu Law] . PROVIDENT FUND Illegal payment of gratuity in the past will not affect legal claims to Provident Fund. Andhra Pradesh State Road Transport Corporation, Hyd. P. Venkateswara Rao etc. 248 PUNJAB GENERAL SALES TAX ACT (Punjab Act 46 of 1948), section 11(2) Notice under Whether should be issued within a par ticular period. The Indian Aluminium Ltd. & Anr. vs The Excise and Taxa tion Officer and Anr. .716 PUNJAB CIVIL SERVICE RULES, Vol. 1 Rules 2.49 and 3.10 to 3.16 Junior Vernacular Cadre teachers officiating in senior vernacular cadre enti tled to benefit of their substantive post . State of Punjab and Ors. v, Labh Ram and Ors. . 832 RAILWAYS ACT, 1890 section 3(6), Railway Administration, whether a separate legal entity. State of Kerala vs The General Manager. S.R. Madras . .419 RAILWAYS ESTABLISHMENT CODE Para 157 Whether the para graph empowers the Railway Board to make rules for the gazetted Railway servants Construction of para 157. S.K. Chandan vs Union of India and Ors. 785 RAILWAY ESTABLISHMENT MANUAL Whether Rule 328 (2) providing for the invalidity of promotions made in the Diesel Locomotive Works from August 1, 1961 to March 11, 1973 casts an obligation on the Railway Board to recall all promotions and to form a fresh panel Meaning of "Promotion made in the Diesel Locomotive Works in Rule 328 (2) and promotion to the higher grades in Rules 328(4)". S.K. Chartdan vs Union of India and Ors. .785 RATEABLE VALUE (See New Delhi House Rent Control Order) . 731 REAPPRAISAL of Evidence by Supreme Court. (See Practice and Procedure) . 689 REASONABLE OPPORTUNITY See Constitution of India . 128 2. to be heard. (See State 's Reorganisation Act) . .827 REHABILITATION ACT, 1954 section 14(1) (b) "Such cash balances Meaning of. 16 Custodian of Evacuee Property, vs Smt. Rabia Bai . .255 . Election petition Not accompanied by impugned pamphlet If liable to be rejected Printer If could be called an accom plice Failure to send pamphlet to District Magistrate as required by section 127 A(2) If makes the printer an accom plice. Thakur Virendra Singh v . Vimal Kumar . 525 See. 15, 21, 22, 23"Preparation and revision of electoral roll Amendment, transposition or deletion of entries in electoral roll Provision of Sec. 23, if mandatory Repre sentation of the People Act, 1951 Every person on elec toral roll whether entitled to vote even if name not brought in accordance with law Sec. 100(1) See. 123(1) (A) Bribery Proof of Quasi criminal in nature inter ference with appreciation of evidence by High Court, Bihar and Orissa Act, Ramji Prasad Singh vs Ram Bilas Jha and four Ors. .741 . section 9A Contract signed as President, Gram Panchayat Rejection of nomination paper If valid Improper rejection If courts could give relief under section 100(1) (c). Jugal Kishore Patnaik vs Ratnakar Mohanty . Incurring expenses in excess of what is per missible Interference by this Court with appreciation of evidence by High Court. Nangthomban Ibomeha Singh vs Leisanghem Chandramoni Singh and Ors, . 573 RES JUDICATA. (See Civil Procedure Code). 320 RETRENCHMENT Meaning of (See industrial Disputes Act) . 586 RETROSPECTIVITY. service rules. (See Civil Service) . REVISION suo moto limitation for (See Limitation) . 983 RIGHT OF MANAGEMENT Hindu Law Joint Hindu Undivided family Whether a junior member of the family can act as Karta with the consent of all the other members, if the senior member gives up his right. Narendra Kurnar J. Modi vs Commissioner of Income Tax Gujarat 11. Ahmedabad . 112 RIGHT TO PLEAD by legal Practitioners before the Labour Tribunal. (See IndustriaI Disputes Act). 537 RIGHT TO SUE by the heirs (See Bombay Rents Hotel and Lodging House Rates Control Act, 1947) . 341 RIGHT TO SUE for eviction by a co owner. (See West Bengal Premises Tenancy Act, 1956) . SALE Contract for sale of goods, whether inter State sale or intraState sale Ingredients Central Sales Tax Act Section 3(a). English Electric Company of India Ltd. vs The Deputy Commercial Tax Officer and Ors. . 631 SALES REORGANISATION ACT (37 of 1956) section 115 Oppertunity to hear after final inter state seniority list is prepared 17 after giving opportunity to aggrieved officers to make representation against provisional list If should be given. Union of India vs Dr. R.D. Nanjiah and Ors. 827 SALES TAX Central Provinces Bear Sales Tax Act, 1947 section 2(g) Expln. II Goods within States at the time of contract of sale, mixed up outside state and the mixture sold 'sale ' if taxable. State of Maharashtra etc. vs Central Provinces Manganese Ore. Co. Ltd. 1002 2. Supply of crude oil by Oil and Natural Gas Commission from Assam to refinery of Indian Oil Corporation in Bihar Supply under directions of Government at price fixed, by Government If inter state sale liable to Central Sales Tax. Oil and Natural Gas Commission vs State of Bihar and Ors. 364 SECOND APPEAL 1 Disturbance of concurrent finding of fact without consid ering the objects of the notification or discussing any principle of construction of documents which could indicate that a point of law had really arisen for a decision is patently exceeding the jurisdiction of the High Court Civil Procedure Code (Act V) 1908, section 100. Jangbir vs Mahavir Prasad Gupta . 670 2. Propriety of upsetting concurrent findings in (See Practice) . 462 SENIORITY 1. Direct recruits of Promotees. (See Constitution of India) . 1037 2. When recruitment irregular. (See Civil Service) . 677 SENIORITY SCHEME Right of State to lay down principles of seniority (See Constitution of India) . 377 SENTENCE Judicial Jurisdiction to soften the sentence in economic crimes and food offences. (See ) . 1 SICKNESS BENEFIT (See ) . 80 SOLE WITNESS conviction based on (See Prevention of Corruption Act) . SPECIAL RULES 1962 Rule 4. Government of A.P. and Ors. vs Shri D. Janardhana Rao Anr. . 702 SUCCESSION ACT, 1925 Sec. 6" legal will Genuineness of Suspicious circumstances Burden of proof Degree of proof. Jaswant Kaur vs Amrit Kaur and Ors. . 925 2. 1975, section 63 (c), Attesting witness defined. Seth Beni Chand (Since dead now by 1. rs. vs Smt. Kamh Kunwar and Ors. . 578 SUMMARY DISMISSAL Court 's duty to give reasons. (See Practice and Procedure) . .411 SUSPENDED OFFICER REINSTATED AND LATER COMPULSORILY RETIRED Effect of If order of suspension merge with order of reinstatement. Baldev Raj Guliani and Ors. vs The Punjab & Haryana High Court and Ors, . 42 18 SUSPENSION ORDERS Whether merges with order of Retirement (See Suspended Officer) . .425 TERMINATION of services of temporary servants. (See Constitution of India) . 462 TRANSFER OF PROPERTY ACT (4 of 1882) section 53A, Indian Easements Act (5 of/882) section 60(b) and Indian Contract Act (9 of 1872) section 221 Scope of. Shankar Gopinath Apte vs Gangs bai Hariharrao Patwardhan . 411 U.P. INTERMEDIATE EDUCATION ACT, 1921 Whether the basic section of a college is within the scope of. Commissioner, Lucknow Division and Ors. vs Kumari Prem Lata Misra. 957 U.P. SALES TAX ACT, 1948 section 3 A, Notification issued under Rule for constructing words Whether carbon paper is taxable as 'Paper ' Whether ribbon is accessory or part of typewriter. State of Uttar Pradesh vs M/s Kores (India) Ltd. 837 section 22 Order of rectification passed within 3 years of orginal order, but served beyond 3 years /f barred by limitation. M/s Karam Chand Thapar and Bros. (Coal Sales ) Ltd. vs State of U.P. and Anr. . 25 U.P. ZAMINDARI ABOLITION AND LAND REFORMS ACT, 1950, Section 117 Scope of State vests lands in Gaon Sabha Suit for eject ment .Goan Sabha did not appeal State If had locus standi. Maharaj Singh vs State of Uttar 5. Pradesh and Ors. 1072 UNION AND STATE DISPUTES (See Constitution of India) . 842 VOLUNTARY TRANSFERS (See Kerala Land Reforms Act) . .960 WEALTH TAX ACT (27 of 1957) S.2(e)(i) Agricultural Lands, What are Tests for determining. Commissioner of Wealth Tax, A.P. vs Officer in charge (Court of Wards ) Paigah. . 146 WEST BENGAL PREMISES TENANCY ACT (f) Whether one of the co owners can file suit for eviction without impleading other co owners Whether a co owner, an owner for the purpose of an eviction suit Stage for raising objection about frame of suit. Sri Ram Pasricha vs Jagannath and Ors. 395 WILL genuineness of legal will degree of proof. (See Succession Act, 1925) . 925 WORDS AND PHRASES 1. "As far as Practicable" (See Constitution of India) . 1037 2. "House, if it concludes buildings". (See Bombay Village Panchayat Act) . 306 3. "Other rights" in Explanation 2 to section 2(15) of the Estates Duty Act, meaning of. (See "Other rights") . 9 4. "Out of the funds in his possession" and "such cash balances". Meaning of Custodian of Evacuee Property vs Smt. Rabia Bai . .255 5. See "Person" meaning of General Clauses Act) . 103 19 6. "Post graduate" Meaning of (See Interpretation) . .477 7. "restoration" in Section 70 of the Contract Act, meaning of. union of India vs Sita Barn Jaiswal . 979 8. "Substituted" meaning of. State of Maharashtra etc. vs The General Provinces Manganese Ore. Co. Ltd. 1002 9. Vest Persons aggrieved Appurtenance meaning of. Maharaj Singh vs State of Uttar Pradesh and Ors. 1072 WRIT JURISDICTION High Court cannot interfere with a finding .of fact based upon relevant circumstances and when it is not shown to be perverse The Constitution of India, Article 226. Khazan Singh Ors. vs Hukan Singh and Ors. . 636 WRIT JURISDICTION OF THE HIGH COURT Scope for interference with findings of depart. mental authorities. Mis Khushiram Behari Lal and Co. vs The Assessing Authority Sangrur Anr. . 752 M 184 SCI/77 2500 9 8 77 GIPF.

By virtue of section 4 of the U.P. Zamindari Abolition & Land Reforms Act, 1950, the right, title and interest of all the intermediaries in every estate including hats, bazars and melas stood terminated and vested absolutely in the State. Section 9 provides ' that all wells, trees in abadi and all buildings situate within the limits of an Estate, belonging to an intermediary, shall continue to belong to or be held by such intermediary and the site of the buildings which is appurtenant thereto, shall be deemed to be settled with him by the State Government. Section 117(1) empowers the State Government to vest lands in Gaon Sabhas or other local authorities. Under section 117(6) the State Government has power to resume from a Gaon Sabha the lands vested in it. By a notification under section 117(1 ) the State Government vested the land in the village in the Gaon Sabha. On the estate in dispute, the defendant who was the quondam zamindar, had been conducting a cattle fair. The estate had on it, among others, a few structures. The plaintiffs ' (the State and the Gaon Sabha) suit for eject ment of the defendant from the estate was dismissed by the trial court. The Gaon Sabha, however, did not appeal; but the State went in appeal to the High Court as 'a person aggrieved '. The High Court negatived the defendants conten tions that as a result of the notification under section 117(1) the land having vested in the Gaon Sabha, the State Government had no locus standi and that it was not a person aggrieved, but allowed the defendant to keep all the struc tures and a space of 5 yards running round each building. Dismissing the appeal, HELD: (1) The State has title to sustain the action in ejectment. The Government, despite vesting the estates in Gaon Sabhas has, and continues to have, a constant hold on these estates, when it chooses, to take away what it had given possession of to a Gaon Sabha. This is plainly 'present legal interest ' in the Government and a sort of precarium tenans in the Sabha. [1082 D; 1079 F G] (a) The Act contemplates taking over of all zamindari rights as part of land reform. Instead of centralising management of all estates at State level, the Act gives an enabling power to make over these states to Gaon Sabhas. Apart from management, no power is expressly vested in the Sabhas to dispose of the estates absolutely. If the State thinks fit to amend or cancel the earlier vesting declara tion or notification it can totally deprive the Sabha of, and resume from it, any estate. The vesting in the State was absolute but the vesting in the Sabha was limited to possession and management subject to divestiture by Government. Such a construction of vesting in two different senses in the same section is sound because the word 'vest ' has many meanings. The sense of the situation suggests that in section 117(1) 'vested in the State ' carries a plenary conno tation, while 'shall vest in the Gaon Sabha ' imports a qualified disposition confined to the right to full posses sion and enjoyment so long as it lasts. To postulate vesting of absolute title in the Gaon Sabha by virtue of the declaration under section 117(1) is to stultify section 117(6). [1081 A C; F G] 1073 (b) The State is 'a person aggrieved '. He, who has a proprietary right, which has been or is threatened by violation, is an 'aggrieved person '. The right to a remedy apart, a larger circle of persons can move the court for the protection of defence or enforcement of a civil right or to ward off or claim compensation for a civil wrong, even if they are not proprietarily or personally linked with the cause of action. The nexus between the lis and the plain tiff need not necessarily be personal. A person aggrieved is an expression which has expanded with the larger urgen cies and felt necessities of our time. [1082 E F] (c) The amplitude of 'legal grievance ' has broadened with social compulsions. The State undertakes today activi ties whose beneficiaries may be the general community even though the legal right to the, undertaking may not vest in the community. The State starts welfare projects whose effective implementation may call for collective action from the protected group or any member of them. Test suits, class actions and representative litigation are the begin ning and the horizon is expanding with persons and organi sations not personally injured but vicariously concerned being entitled to invoke the jurisdiction of the court for redressal of actual or imminent wrongs. [1083 A C] Dhabolkar ; followed. 'Locus standi ' has a larger ambit in current legal semantics than the accepted, individualistic jurisprudence of old. Therefore, the State, in the present case, is entitled to appeal under section 96 of the= Code. of Civil Procedure. [1084 D] (2) Where a wrong against community interest is done, 'no locus standi ' will not always be a plea to non suit an interested public body chasing the wrongdoer in court. In the instant case the Government is the 'aggrieved person '. Its right of resumption from the Gaon Sabha, meant to be exercised in public interest will be seriously jeopardised if the estate slips into the hands of a trespasser. The estate belonged to the State, is vested in the Gaon Sabha for community benefit, is controlled by the State through directions to the Land Management Committee and is liable to be divested. The wholesome object of the legislature of cautiously decentralised vesting of estates in local self governing units will be frustrated, if the State is to be a helpless spectator of its purposeful bounty being wasted or lost. [1083 H; 1084 A B] (3)(a) The touchstone of 'appurtenance ' is dependence of the building on what appertains to it for its use as a building. Obviously the hat, bazar, or mela is not an appurtenance to the building. Even if the buildings were used and enjoyed in the past with the whole. st.retch of.vacant space for a hat or mela, the land is not appurte nant to the principal subject granted by section 9, namely, buildings. [1085 G] (b) The larger objective of section 9 is to settle with the former intermediary only such land as is strictly appurte nant to buildings, all the rest going to the State. for implementation of the agrarian reform policy. [1084 G] (c) The large open spaces cannot ,be regarded as appurtenant to the terraces, stands and structures. What a integral is not necessarily appurtenant. A position of subordination, something incidental or ancillary or depend ent is implied in appurtenance. That much of space required for the use of the structures as such has been excluded by the High Court itself. Beyond that may or may not be necessary for the hat or mela but not for the enjoyment of the chabutras as such. [1085 B C] (d) 'Appurtenance ' in relation to a dwelling, includes all land occupied therewith and used for the purposes there of. The word 'appurtenances ' has a distinct and definite meaning. Prima facie it imports nothing more than what is strictly appertaining to the subject matter of the devise or grant. What is necessary for the enjoyment and has been used for the purpose of the building, such as easement, alone will be appurtenant. The. word 'appurtenance ' in cludes all the incorporeal hereditaments attached to the land granted or demised such as rights of way, but does not include lands in addition to that granted. [1086 D E] (e) What the High Court has granted viz., 5 yards of surrounding space is sound in law. [1086 H] 1074

SDICTION: Writ Petition (Civil) No. 811 of 1986 etc. (Under Article 32 of the Constitution of India). F.S. Nariman, G.L. Sanghi, S.N. Kacker, R.C. Kaushik, D.K. Garg, Mohan Katarki, S.S. Javali, Ravi P. Wadhwani, C.S. Vaidyanathan, K.V. Mohan, section Ravindra Bhatt, P. Chowd hry, S.R. Setia and Mukul Mudgal for the Petitioner/Appel lant. G. Ramaswamy, Additional Solicitor General, B.R.L. Iyengar, M. Veerappa and Ashok Sharma for the Respondents. The Judgment of the Court was delivered by RANGANATH MISRA, J. The obstinate problem of inter se seniority, this time amongst officers in the Karnataka Administrative Service has fallen for determination in this group of appeals by special leave and writ petitions under Article 32 of the Constitution at the instance of both direct recruits and promotees. It is not disputed that under the relevant Recruitment Rules of 1957 in regard to Class I Junior Scale posts there was a quota system 889 two thirds of the vacancies had to be filled up by promotion by selection from Class II Officers and the remaining one third by direct recruitment by competitive examination to be held by the Public Service Commission. When direct recruit ment had not been made timely as envisaged by the scheme in the Rules officiating promotions were given in respect of posts covered by the direct recruit quota. Such temporary promotions remained effective for a number of years some times varying between 5 and 8 and later when the vacancies within the direct recruitment quota were filled up, the appointments made in latter years were deemed to carry weightage for seniority on the footing of deemed filling up when vacancies had arisen. Thus the dispute as to seniority inter se between those who had manned the promotional posts beyond the 2 3rds limit and the direct recruits subsequently appointed has come for judicial determination. A three Judge Bench of this Court in V.P. Badami etc. vs State of Mysore & Ors., dealt with a situa tion of this type with reference to the same set of Rules. A similar dispute came before the Karnataka High Court in a bunch of writ petitions filed both by promotees and direct recruits and in view of common questions of fact and law involved therein, the High Court disposed them by a common leading judgment in the case of M.G. Kadali vs State of Karnataka & Ors., [1982] 2 KLJ 453. The High Court noticed the ratio in Badami 's case and found that with a view to implementing the rule in Badami 's case, the State Government issued an official memorandum on 5.7.1976. laying down guidelines for determination of seniority between the direct recruits and promotees. The Gradation List of Junior Scale officers as on 30.6.1973 was drawn up following such guide line and was notified on 10.8.1976 with the following ex planatory cover note: (i) Between 2.12.1957 and 10.9.1959, the number of substantive vacancies were thirty nine and of those, twenty six were promotional and thirteen were the share of direct re cruits. The first fifteen of the promotional posts were given to allottees and the remain ing eleven to promotees. In the absence of direct recruitment, these thirteen posts were carried forward; (ii) Between 11.9.1959 and 26.10.1964 (when 1962 direct recruits became due for promotion), the vacancies were seventy six, of which fiftyone were available for direct recruits and twentyfive for promotees in view of the change in the proportion in the 1959 Rules. Twentythree substantive vacancies were given to direct 890 recruits of 1962. The net result, therefore, was 13 direct recruit posts of the earlier period and twentyeight of this period were carried forward; (iii) After October 1964, the vacancies were classified on annual basis. Upto 7.10.1971, sixty vacancies were filled up by promotion. As noticed earlier fortyone direct recruits vacancies had been carried forward and thirty five fresh vacancies were available to direct recruits. Eleven vacancies were filled up by direct recruitment and sixtyfive were carried forward. By a latter notification dated 2.2. 197 1, when a further gradation list was pub lished, the following explanatory note was added: "(i) During the period 7.6.1974 to 15.7.76 (when direct recruits of 1974 were eligible for confirmation), eleven substantive vacan cies were available on the basis of the perma nent strength of the cadre; (ii) Out of one hundred and thirty three temporary posts available during that period, eightynine posts were assigned to promotees. The direct recruitment vacancies carried forward from the earlier period. The recruits of the 1964 batch were assigned ranks taking into account the direct recruitment vacancies carried forward for the previous period. " On a representation by the 1974 batch of direct re cruits for refixation of inter se seniority in the Gradation List taking into account only the permanent posts in the cadre and by taking into account the carried forward vacan cies, the State Government made an order on 22.5. 1980, to the effect that the 1974 batch of direct recruits should be shown immediately below serial number 64 and above serial number 65 in the continuation Gradation List published on 2.2. Certain promotees being aggrieved by this Governmental direction approached the High Court under Article 226 for relief claiming protection of their seniority. The High Court classified their contentions into the following five: (i) The only basis for determination of inter se seniority of officers in a cadre whether by promotion or direct recruitment should be the date of entry into the cadre and the quota rule is 891 not available to be used for pushing up or down officers of the cadre; (ii) Even if there be any 'carry forward ' it should not extend beyond three years; (iii) Quota rule should be applied taking into account both substantive as well as temporary vacancies in the cadre; (iv) The quota rule did no longer operate in regard to the junior scale officers when the 1959 rules became operative; at any rate it was clearly so when the 1966 Rules came into force, and (v) The impugned Government order of 1980 was invalid and liable to be quashed on several grounds, one of them being that it was made without providing an opportunity to the promo tees who were adversely affected by it. The High Court analysed the judgment of this Court in Badami 's case and also referred to, and relied upon, the observations in Col. Iyer 's case and with reference to the issues catalogued above came to the conclusion as stated below in its own words: (i) "If promotions have taken place in excess of the quota for promotion, pushing down the promotees promoted in excess of their quota or if direct recruitment was done in excess of the quota for direct recruitment, pushing down direct recruits appointed in excess of their quota in a necessary concomitant of the quota rule. Carrying forward of direct recruitment vacancies or promotional vacancies to the next recruitment period is merely the consequence of such pushing down. (What was perhaps in tended to be said was that pushing down was the direct outcome of the mandate to carry forward) we are unable to accept the conten tion of learned counsel for the promoteepeti tioners that there should be no such pushing down or such carry forward. " (ii) "In the light of the above ruling of the Supreme Court, it must be held that carry forward of direct recruitment vacancies cannot extend beyond three years. However, this ruling of the Supreme Court (In A.S. Iyer 's case) does not affect the finality and binding character of the earlier judgment of the Supreme Court in Badami 's case which specifi cally dealt with the Grada 892 tion List of Junior Scale officers as on 1.1. 1972, and gave direction as to how a fresh Gradation List should be prepared. Those directions are bound to be obeyed while pre paring such Gradation List of officers who entered that cadre upto 1.1.1972 without any limitation as to the period upto which promo tional or direct recruitment vacancies should be carried forward to the next recruitment period. But such carry forward cannot exceed three years after 1.1.1972. " (iii) "The above ruling of the Supreme Court (Badami 's case) is binding on all courts under Article 141 of the Constitution. It is not open to us to speculate what would have been the conclusion of the Supreme Court if it had known the correct factual position that the cadre of Junior Scale officers consisted both of permanent and temporary posts. That the promotee petitioners in the present writ petitions were not parties to Badami 's case, in no way detracts from the binding character of the law declared by the Supreme Court." (iv) "Hence, we reject the contention that 1959 Rules abrogated the quota rule in regard to recruitment to the cadre of Junior Scale officers . We, therefore, reject the contentions of learned counsel for promotee petitioners that after the 1966 Rules came into force, the quota rule ceased to apply to the recruitment to the cadre of Junior Scale officers and that thereafter the date of entry into the cadre, whether by direct recruitment or by promotion, became the only basis for determining the seniority in that cadre." (v) "The High Court examined the individual cases of both the groups and finally directed dismissal of Kadali 's (or promotee) writ application as also of the direct recruits of 1976 and 1977. It further quashed the Govern ment order dated 22.5. 1980 by which certain modifications were made in the Gradation List of 1976 and called upon the State Government to make appropriate alterations in the Grada tion List of 10.8. 1976 and the continuation list of 2.2. 1977 on the basis that the carry forward rule should operate for a maximum period of three years subsequent to 1.1. " We have before us a batch of appeals by special leave and two writ petitions under Article 32. Both the writ petitions are by direct recruits; Civil Appeal Nos. 2906 and 2910 and 2911 of 1984 are by 893 promotees while Civil Appeal Nos. 2902 to 2905 to 2907 to 2909 of 1984 are by direct recruits. The promotees challenge the propriety of the direction of the High Court to modify the Gradation List by applying the quota rule while the direct recruits seek to have full application of the quota rule instead of the limitation of three years and have asked for consequential benefits. This group of cases has been heard at great length and learned counsel for the parties have produced a lot of papers. On looking into the matter objectively in the back drop of Badami 's decision we are of the view that if the following aspects are answered all that arose for judicial determination would be appropriately met. Those aspects are: (i) What is the effect of the quota rule in the matter of fixation of inter se seniority in the Gradation List so far as recruits from different sources are concerned? (ii) Though admittedly in 1957 under the relevant rule, a quota existed, was that basis altered or given up during the relevant peri od? (iii) What is the effect of this Court 's judgment in Badami 's case? Was the High Court correct in observing that this Court would not have come to the conclusion that quota was confined to substantive vacancies only if the true state of facts was known? (iv) What is the effect of the observation in Iyer 's case and does it supersede the rule in Badami 's case? (v) Does the situation highlighted in this case require any other direction? It is a well settled position in law that where recruit ment is from two sources to a service, a quota rule can be applied fixing the limits of recruitment from the two sources. (H.C. Sharma vs Municipal Corporation of Delhi & Ors., ; FIRST ASPECT In S.G. Jaisinghani vs Union of India & Ors., a Constitution Bench of this Court observed: "The Solicitor General on behalf of respond ents 1, 2 894 and 3 submitted that the quota rule was merely an administrative direction to determine recruitment from two different sources in the proportion stated in the rule and a breach of that quota rule was not a justiciable issue. The Solicitor General said that there was, however, substantial compliance with the quota rule . . We are unable to accept the argument of the Solicitor General that the quota rule was not legally binding on the Government. It is not disputed that Rule 4 of the Income Tax Officers (Class I, Grade II) Service Recruitment Rules is a statutory rule and there is a statutory duty cast on the Government under this rule to determine the method or methods to be employed for the purpose of filling the vacancies and the number of candidates to be recruited by each method. In the letter of the Government of India dated October 1951 there is no specific reference to rule 4, but the quota fixed in their letter must be deemed to have been fixed by the Government of India in exercise of the statutory power given under rule 4, it is not now open to the Government of India to say that it is not incumbent upon it to follow the quota for each year and it is open to it to alter the quota on account of the particular situation. We are of opinion that having fixed the quota in exercise of their power under rule 4 between the two sources of recruitment, there is no discretion left with the Govern ment of India to alter that quota according to the exigencies of the situation or to deviate from the quota, in any particular year, act its own will and pleasure. As we have already indicated, the quota rule is linked up with the seniority rule and unless the quota rule is strictly observed in practice, it will be difficult to hold that the seniority rule i.e., rule 1(f)(iii) and (iv), is not unrea sonable and does not offend Article 16 of the Constitution. " In Badami 's case (supra) this aspect was examined by the Court. The learned Chief Justice spoke for the three Judge Bench thus: "In working out the quota rule, these principles are generally followed. First, where rules prescribe quota between direct recruits and promotees, confirmation or substantive appointment can only be in respect of clear vacancies in the permanent strength of the cadre. Second, confirmed persons are senior to those who are officiating. 895 Third, as between persons appointed in offici ating capacity, seniority is to be counted on the length of continuous service. Fourth, direct recruitment is possible only by compet itive examination which is the prescribed procedure under the rules. In promotional vacancies, the promotion is either by selec tion or on the principle of seniority cummer it. A promotion could be made in respect of a temporary post or for a specified period but a direct recruitment has generally to be made only in respect of clear permanent vacancy either existing or anticipated to arise at or about period of probation is expected to be completed. Fifth, if promotions are made to vacancies in excess of the promotional quota, the promotions may not be totally illegal but would be irregular. The promotees cannot claim any right to hold the promotional posts unless the vacancies fall within their quota. If the promotees occupy any vacancies which are within the quota of direct recruits, when direct recruitment takes place, the direct recruits will occupy the vacancies within their quota. Promotees who were occupying the vacancies within the quota of direct recruits will either be reverted or they will be ab sorbed in the vacancies within their quota in the facts and circumstances of a case. The important principle is that as long as the quota rule remains neither promotees can be allotted to any of the substantive vacan cies of the quota of direct recruits nor recruits can be allotted to promotional vacan cies. The result is that direct recruitment vacancies between 11th September, 1959 and 26th October, 1964 cannot be occupied by any promotees. The fact that direct recruits were confirmed on 28th October, 1964 will not rob the direct recruits of their quota which remained unfilled from 2nd December, 1957 . . In S.C. Jaisinghani vs Union of India (supra) it was said that when the quota was fixed for the two sources of recruitments, the quota could not be altered according to exigencies of the situation. It was held there that the promotees who had been promoted in excess of the prescribed quota should be held to have been illegally promot ed. In Bishan Sarup 's case [1978] SCR Suppl. 491 it was held that when it was ascertained that not more than 1/3rd of the vacancies were to go to the promotees and the rest to the direct recruits the ratio was not mere depend ant on whether any direct recruit was appoint ed in 896 any particular year or not. The promotees were entitled to 1/3rd of the vacancies in any particular year, whether or not there was direct recruitment by competitive examination in that year. Two principles are established in the decision referred to. One is that quotas which are fixed are unalterable. according to exi gencies of situation. Quotas which are fixed can only be altered by fresh determination of quotas under the relevant rules. The other is that on the ground one group cannot claim the quota fixed for the other group either on the ground that the quotas are not filled up or on the ground that because there has been a number in excess of quota the same should be absorbed depriving the other group of quota. In Bachan Singh & Anr. vs Union of India & Ors., the two appel lants were promoted in the year 1958 and 1959. The respondents were appointed by direct recruitment in 1962, 1963 and 1964. The re spondents were confirmed in their posts before the appellants. The appellants contended that the respondents who were directly appointed after the appellants had been promoted were not to be confirmed in permanent posts before the appellants. It was held that the direct recruits were confirmed against permanent vacancies within their quota. The earlier confirmation of direct recruits though ap pointed later was upheld on the ground that they fell within their quota of permanent vacancies. Subraman 's case [1975] 2 SCR 979 on which the appellants relied also held that each quota would have to be worked independ ently on its own force. In that case the Assistant Executive Engineers who were ini tially entitled to 3/4th and subsequently to 2/3rd of the vacancies while Assistant Engi neers who were entitled initially to 1/4th and subsequently to 1/3rd of such vacancies were held to be entitled to their respective quotas independent of the fact that whether any person from one class or the other was promot ed or not. It was illustrated by saying that if there were three vacancies in a year two would go to the Assistant Executive Engineers and one would go to the Assistant Engineers and even if there were not eligible 897 Assistant Executive Engineers who could be promoted to fill in two vacancies belonging to their quota, one vacancy is to be filled up by promotion of an Assistant Engineer if he was eligible. Similarly, if two vacancies belong ing to the quota of Assistant Executive Engi neers are to be filled by Assistant Engineers for want of availability of eligible Assistant Executive Engineers, the appointment of As sistant Executive Engineers have to be pushed down to later years when their appointment could be regularised as a result of absorption in their lawful quota for those years. " Badami 's case referred to several authorities of the Court and clearly drew out the judicial consensus on the point in issue by concluding that the quota rule had to be strictly enforced and it was not open to the authorities to meddle with it on the ground of administrative exigencies. The scheme in force relating to the services for fixing inter se seniority takes into account the filling up of the vacancies in the service from the two sources on the basis of the quota and, therefore, fixation of inter se seniority in the Gradation List has to be worked out on the basis of quota. SECOND ASPECT There was no dispute either before the High Court or before us that in the 1957 Rules there existed a quota for filling up vacancies in the Class I Junior Scale posts. The High Court found that the quota continued throughout during the relevant period. Before us Mr. Nariman supported that finding while Mr. Kacker maintained that the quota had in later years been given up. Rule 3 of Mysore Recruitment of Gazetted Probationers Rules, 1959 made the following provi sions: "(1) The provisions of these rules shall be applicable in respect of direct recruitment to the cadres in State Civil Services Class I and Class II specified in column 3 of the Schedule to these rules relating to the Services speci fied in the corresponding entries of Column 2 of the said Schedule. (2) These rules shall have effect notwith standing anything contrary contained (i) in the Cadre and Recruitment Rules for the time being in force applicable to the Cadres in the 898 State Civil Services referred to in sub rule (i) and (ii) in the Mysore State Civil Service (General Recruitment) Rules, 1957. (3) During the period of five years from the date of commencement of these rules, as nearly as may be two thirds of the number of vacan cies arising in the cadres in the State Civil Services referred in to in sub rule (i) shall be filled by appointment of candidates herein after in these rules referred to as probation ers selected in accordance with the provisions of these rules and the actual number of vacan cies to be so filled shall be determined by the Government. " Admittedly these rules related only to direct recruitment and as it appears, in sub rule (3) remained in force for five years (said to have been extended for one more year); with the lapse of a total period of six years from the date when these rules came into force, they cease to have effect. In 1966 rules were made under the proviso to Article 309 known as the Karnataka Government Gazetted Probationers Posts (Appointment by Competitive Examination) Rules, 1966 and sub rule (3) of Rule 3 thereof provided inter alia: "That notwithstanding anything contrary in the rules of recruitment to the Karnataka Adminis trative Service the number of vacancies as determined by the Government in that service should be filled by direct recruitment after holding a competitive examination by the Commission. " On the 11th of August, 1977, the Karnataka Administra tive Service (Recruitment) (Amendment) Rules, 1977 came into force. Rule 2 thereof provided: "Amendment to Schedule: In the Schedule to the Karnataka Administrative Service (Recruitment) Rules, 1957 for the entries at the Item (b) the following entries shall be subsituted, namely: 1 2 3 (b)All Class I (i)50%of vacancies to be Forpromotion;ClassII (Junior Scale) filled by promotion Officers must have 899 Posts. from Class II Officers; worked for at least a and period of four years (ii) 50% by Direct including the period of Recruitment in accor officiation or probation dance with the Karnataka Recruitment of Gazetted Probationers (Appoint ment etc.) Rules, 1966. Unless the 1957 Rules remained in force till 1977, there would have been really no necessity to refer to them for the purpose of amendment; Badami 's case did proceed on the footing that the quota system in the Recruitment Rules continued till 1971 72. It is not Mr. Kacker 's case that anything happened after 1972 which brought about dissolution of the quota. We reject the contention of Mr. Kacker that the quota system had been abandoned and confirm the finding of the High Court in that regard. It is, however, a fact that the ratio has been changed from time to time. THIRD ASPECT As already pointed out, Badami 's case was concerned with these very rules and a similar situation though for a dif ferent period. It is a decision of a three Judge Bench and we proceed on the footing that it is binding on us. The High Court has pointed out in the leading judgment in Kadali 's case: "There are numerous Government orders sanc tioning, from time to time, temporary posts of Assistant Commissioner which are the same as the posts of Junior Scale Officers and extend ing the tenure of those temporary posts from time to time . . . . . Though the Karnataka Administrative Service Cadre Rules mention of only permanent posts and not temporary posts in the cadre of Junior Scale Officers, the material produced before us clearly establishes that the cadre of Junior Scale Officers consisted of a consider able number of temporary posts at all material times. In para 6 of the statement of objec tions filed on behalf of the State in these petitions, the State has admitted thus: "The cadre strength of KAS Class I Junior Scale Officers had itself undergone revision and figures 900 showed that 152 permanent posts and 133 tempo rary posts were available as is clear from the notification No. GAD 590 SMC 74 dated 3.3. 1976. " However learned counsel for direct recruits on the following observations of the Supreme Court in Badami 's case at page 1564 of the report: "In E.P. Royappa vs State of Tamii Nadu, ; this Court said on the con struction of Rule 2 of the relevant Cadre Rules in that case that the State Government might add for a period to the cadre one or more posts. But, the posts so added could not become cadre posts. The temporary posts which are created due to exigencies of the service are posts which are outside the Cadre. " From the above observations, it would appear that the Supreme Court took the view that temporary posts which were created due to exigencies of service, were posts which were outside the cadre. In other words, the Supreme Court seems to have thought that temporary posts added to the cadre were ex cadre posts. The attention of the Supreme Court does not appear to have been drawn to Note 2 to R 49 of the KCSR which classifies temporary posts into two categories, namely, posts created to perform the ordinary work for which permanent posts already exist in the cadre, and isolated posts created for the performance of special task unconnected with the ordinary work which a service is called upon to perform. " The conclusion indicated in the decision of the learned Chief Justice of this Court in Badami 's case had been sup ported by reasons. As it would appear at page 8 19 of the Reports, this aspect was raised as the first of the six contentions formulated for consideration of the Court. Keeping the facts of the case in the background, three reasons were indicated in the judgment for the conclusion that quota covered permanent posts. Reference was made to certain decisions of this Court as also. to Rule 9 of the Probation Rules of 1959. It was held that Rule 9 establishes the exclusion of temporary posts from the cadre. Royappa 's case (supra) was relied upon for the same conclusion by saying that posts temporarily added to the cadre by exercise of power under a permissive rule would not become cadre posts and temporary 901 posts created due to exigencies of the service should be treated as posts outside the cadre. The High Court in the judgment in Kadali 's case relied upon Note 2 of Rule 49 of the KCSR and thought that this Court was not properly in formed of the factual situation when in Badami 's case it said that temporary posts were not to be taken into consid eration for the purpose of working out the quota. The note to Rule 49 has indeed no bearing on the point and we are of the view that there was really no justification for the doubt indicated by the High Court. Apart from the fact that the conclusion of this Court in Badami 's case on this score is a binding authority on us, from an examination of the matter we also reiterate that conclusion to be correct. FOURTH ASPECT The High Court in these cases has taken the view that the quota could be carried forward for a maximum period of three years and not beyond. This has been done by placing reliance on the Constitution bench judgment of this Court in the case of Col. A.S. Iyer & Ors. vs V. Balasubramanyam & Ors., ; Krishna Iyer, J. speaking for the Court at page 1058 of the Reports stated: "The total number of vacancies at the DSS level for each year shall be divided in the ratio of 2:1 (50% for the Army Corps and 25% for direct recruits). The 50% reserved for the army corps shall be available to be filled by those candidates. The 25% seats to be filled by direct recruits shall be filled only by such recruits. Even if enough direct re cruits are not available they will not be filled by the army nominees but shah be kept vacant to be carried forward and filled in later years by such direct recruits. A reason able period for the carry forward scheme will be three years, not more. Likewise, military vacancies at the DSS level each year shall be filled only by such nominees. If enough such hands are not available, a similar procedure of carry forward will govern. For the SS posts 25% belongs to promotees from Class II offi cers. The total number will be worked out by adding all the posts of SS, Deputy Directors and Directors and Surveyor General and allot ting 1/4th of it as the quota for Class II promotees for appointment as SS. Such is the reasonable interpretation of the rule." The Court in that case had been called upon to decide the dispute of 902 seniority between the direct recruits and promotees within the civilian quota in the Survey of India service. Survey of India (Recruitment) Corps of Engineer Officers, Rules, 1950 came for consideration of the Court. The opinion expressed by this Court in the extracted paragraph was with reference to the rules before the Court. The provisions as indicated in the extracted paragraph were somewhat peculiar. After the quota was provided, there was a prohibition against filling up of the vacancies in the respective quotas from other categories even when suitable candidates were not available from within the reserved sphere. This meant that the posts were allowed to go vacant even though in public interest the same should have been filled up on account of the bar in the rule. It is in that background that this Court indicated that a reasonable period for the carry forward scheme would be three years and at the end of the paragraph indicated that that would be a reasonable interpretation of that rule. Obviously nothing of general application was intended to be said and this Court did not certainly intend to lay down a time limit of general application. The Mysore State Civil Service (General Recruitment) Rules, 1957 which admittedly applied to the services in question by Rule 17 provided: "Notwithstanding anything contained in these rules or in the rules of recruitment specially made in respect of any service or post, the appointing authority may (a) recruit by direct recruitment to a post reserved to be filled by promotion when it is satisfied that the person eligible to be considered for appointment by promotion is not fit to be also appointed, or (b) fill up by promotion any vacancy relating to a post which is required to be filled by direct recruitment when such vacancy is not likely to last for more than one year . . . " In exercised of the powers conferred under this rule the appointments in excess of the quota limit appear to have been made. It is conceded that every appointment to the promotional post made in excess of the quota was at the commencement a temporary one. The 1957 Rules were substitut ed in 1977 by the Karnataka Civil Services (General Recruit ment) Rules, 1977. As far as relevant Rule 17 thereof pro vides: "Notwithstanding anything contained in these rules or in 903 the rules of recruitment specially made in respect of any service or post, the appointing authority may (a). . . . . . . . . (b). . . . . . . . . (c) fill by promotion temporarily on the basis of senioritycum merit a vacancy required to be filled by direct recruitment where selection to the post has not been finally made and there is likelihood of delay in making direct recruitment. No such promotion shall be made unless a requisition has been sent to the Commission or to the appropriate recruiting authority for selection of a suitable candi date. A candidate temporarily promoted under this sub rule shall not have any preferential claim for regular promotion and also shall not count the period of service in the promoted post for seniority; he shall revert to his original post on the expiry of one year or on the appointment of a direct recruit whichever is earlier . . . . . " The scheme in the Rules of 1977 clearly indicates that the transgression of the quota rule was a deviation of a tempo rary nature and was intended to be balanced in good time. The conclusion of Ray, C.J. is fortified by the spirit of Rule 17 of the 1957 Rules as clarified in clause (c) of that rule in 1977. The presence of such a rule in the field excludes the application of the ratio of Col. Iyer 's case to the facts hereof. We do not think the High Court was right in overlooking the binding judgment of this Court in Bada mi 's case and preferring to apply the observations of Iyer, J in the latter decision made with reference to a different set of rules containing a different scheme of implementing quota. The rule on this aspect of Badami 's case was quoted with approval by a two Judge Bench of this Court in P.S. Mahal & Ors. vs Union of India, ; A lot of argument was advanced at the Bar particularly on the side of the promotees that serious prejudice was being caused to them by enforcing the quota rule. Reliance was placed on a number of authorities of this Court begin ning with the case of A. Janardhana vs Union of India & Ors., ; ; G.S. Lamba & Ors. vs Union of India & Ors. , ; ; G.P. Doval & Ors. vs Chief Secre tary, Government of U.P. & Ors, [1985] 1 SCR70; O.P. Singla &Anr. vs Union of India & Ors., ; and D.S. Nakara & Ors. vs Union of India, ; 904 In Lamba 's case (supra) the Court found that the promo tion was not styled as temporary or ad hoc or stop gap; on the other hand, the Court at page 459 of the judgment in the Reports referred to the case of N.K. Chandan & Ors. vs State of Gujarat, ; where on the basis of a power of relaxation the Court had held such promotion to be regu lar. The Court further held: "Once the promotees were promoted regularly to substantive vacancies even if temporary unless there was a chance of their demotion to the lower cadre their continuous officiation confers on them an advantage of being senior to the later recruits under Rule 21(4). If as stated earlier by the enormous departure or by the power to relax, the quota rule was not adhered to, the rota rule for inter se senior ity as prescribed in Section 25(1)(ii) cannot be given effect. In the absence of any other valid principle of seniority it is well estab lished that the continuous officiation in the cadre grade of service will provide a valid principle of seniority. . . " This principle appears to have been followed in this Court in some cases during the last two years or so. The excep tional circumstances indicated in Lamba 's case for support ing the departure in the judicial opinion has been over looked in some of these cases and the resultant benevolent approach to protect the promotees in their claim for senior ity has been accepted without considering the special cir cumstances in which the ratio had been inducted in support of the departure. In a precedent bound judicial system binding authorities have got to be respected and the procedure for developing the law has to be one of evolution. It is not necessary for disposal of these matters before us to go into that aspect except noticing the existence of distortion in the field. The rationalisation of the view in a way known to law is perhaps to be attempted some day in future. In the present batch of cases the law being clear and particularly the mandate in the rule being that when recruitment takes place the promotee has to make room for the direct recruit, every promotee in such a situation would not be entitled to claim any further benefit than the advantage of being in a promo tional post not due to him but yet filled by him in the absence of a direct recruit. One aspect which we consider relevant to bear in mind is that the promoted officer has got the advantage of having been promoted before it became his due and is not being made to lose his 905 promotional position. The dispute is confined to one of seniority only. The advantage received by the promotee before his chance opened should be balanced against his forfeiture of claim to seniority. If the matter is looked at from that angle there would be no scope for heartburning or at any rate dissatisfaction is expected to be reduced so far as the promotees are concerned. LAST ASPECT In Karam Pal vs Union of India, ; a three Judge Bench of this Court to which one of us was a party indicated as follows: "In a vast country such as ours, strong and independent bureaucratic set up is indispens able. At the same time it is equally necessary that the service from top to bottom must be alive to the fact that it is its obligation to maintain proper attitudes, discipline and duty oriented working. While it is the right of every person in the service set up to expect just and fair treatment in regard to his employment frequent litigation between him and the State involving countless other co employees in the service in the battle is a deviation from the right direction. It is true that very often instances come to light where the grievance is genuine and the treatment meted is unwarranted and uncalled for. Govern ment in a democratic polity runs on impersonal basis but on the cadinal code that everyone shall perform his duty." This Court further observed, "There has been a phenomenal rise in service disputes in the last three decades. It is time that serious attention is devoted to discover the reason for it and take effective steps to ensure curtailment thereof. Whether such litigations come before Courts or Tribunals is of no consequence here. Frequent litigations between the States and its employees ultimate ly affect the efficiency of service and bring about indiscipline, lack of loyalty and an attitude of indifference. ' ' We are struck by the innumerable rules that have been framed within a period of about thirty years to cover the field relating to constitution, 906 recruitment and provision for other conditions of service. It is proper that service rules should be simple making reasonable provision for necessary aspects. While framing such rules, the relevant provisions of the Constitution and laws in force have to be kept in view. There should be no frequent alteration of the service rules through. Exigencies of circumstances and unforeseen situations will certainly justify alterations. Those will be indeed rare occasions. Experience shows that legal battles are fought in court between government servants whether individual pitched against individual or group against group; this embitters relationship inter se and often results in a switch over of attention from public duty to personal cause. Frequent litigations against the State or higher authorities in the hierarchies of administration, wipe out reverance, loyalty and the sense of discipline and substitute those by anger, disrespect and rancour. In the process fellow feeling is lost, the sense of brotherhood vanishes. The net resultant of all is deprivation of the efficiency of the bureaucratic community to serve the society. The undue growth of service litigation within these four decades of independence clearly calls for these observations. As and when, occasion has arisen the Court has sought to draw the attention of the State as the employer as also the Government servants to this aspect of the matter. This has been done not with a view to subjecting any litigant to undue criticism but with the fond hope that it would help the problem to receive adequate attention. We are surprised that the words spelt out in the different judgments have fallen on deaf ears and created no stir. Thereby the most powerful wing in the administrative set up is gradually moving away from its designated path. We have come across cases where officers have been in court litigating over service disputes for about twenty five to thirty years of their career which would mean almost three fourths of their service period. What would be the contribution of such officers to the public service can well be imagined. Very often a public officer is forced into litigation as he gets no justice in the hands of the superior. There are also several instances where an officer drags the employer into litigation without a cause of action. These are matters which must be taken into account without further loss of time and with fortitude so that the most effective wing of the administration does not further lose its serviceability. A public servant whatever his status be is in the position of a trustee. Social power vests in him for the purpose of rendering service to the community. Every public servant has to be cognizant to that obligation. Once the level of that consciousness grows up there is 907 bound to be a corresponding fail in the attitude to litigate over small issues. What this Court said in the case of Dr. T.G. Siddapparadhya & Ors., has to be borne in mind. These were the words then said: "The canker of litigiousness has spread even to a sphere of life where discipline should check ambition concerning personal preferment. A teacher is justified in taking legal action when he feels that a stigma or punishment is undeserved but he is expected to bear with fortitude and reconcile himself to his lot suppressing disappointment when he finds a co worker raised to a position which he him self aspired after". What applies to a teacher may perhaps well apply to everyone in positions of social trust. It is for the privileged public servant as also his employer to share this philoso phy. The net result of the discussion above requires that rule in Badami 's case has to be given full effect. The appeals and writ petitions of the direct recruits have to succeed and those by the promotees have to fail. We hope and trust that the State of Karnataka will not demote anyone who has been in a promotional post for several years to the Class II service as a consequence of this decision but the Gradation List has got to be adjusted to fit into the prin ciples indicated in the judgment. No justification was shown to us as to why the State of Karnataka failed to comply with its obligation of making recruitments in terms of the quota. Once the State frames rules they are binding on the State and like individuals the State has got to regulate its conduct in accordance with the rules nay, the State has to observe it all the more. We hope and trust that the State of Karnataka in the years ahead will comply with the quota rule with regularity so that a litigation of this type may not arise again. If any party has to be directed for payment of costs in this bunch of litigation it must be the State. We, however, do not want to saddle the State with costs for two reasons firstly, we do not want the employees to have a feeling that in the fight their employer has been vanquished and secondly we entertain a fond hope that there will be no reoccurrence. In course of arguments we had suggested to learned counsel for the parties to furnish recast Gradation List on the basis of claims advanced before us (1) showing how it would be when full claim of the promotees is granted and (2) how different it would look when the 908 total claim of the direct recruits is allowed. Such charts have been prepared and furnished and we find that the proc ess of pushing up and down would be inevitable but would be within reasonable limits and no irreparable prejudice was apparent. The appeals and writ petitions of the direct recruits are allowed, and the appeals by the promotees are dismissed. There shall be no order for costs throughout. S.L. Appeals and Petitions dis posed of.

Under the relevant Recruitment Rules relating to Class I junior scale posts, there was a quota system two thirds of the vacancies had to be filled up by promotion by selection from Class II officers and the remaining one third by direct recruitment by competitive examination to be held by Public Service Commission. When direct recruitment was not made timely as envisaged by the scheme in the Rules, officiating promotions were given in respect of the posts covered by the direct recruit quota. Such temporary promotions remained effective for a number of years and later when the vacancies within the direct recruitment quota were filled up, the appointments made in the later years were deemed to carry weightage for seniority on the footing of deemed filling up when the vacancies had arisen. Thus, the dispute as to seniority inter se between those who had manned the promotional posts beyond 2/3rds limit and the direct recruits subsequently appointed, arose for judicial determination. This Court in V.P. Badami, etc. vs State of Mysore and Ors., had dealt with a similar situation with reference to the same set of rules, and with a view to implementing the rule of this Court in Badami 's case, the State government had issued an official memorandum on 5.7.75, laying down guide lines for determination of the seniority between the direct recruits and promotees, and accordingly, gradation list of the junior scale officers as on 30.6.73 was drawn up, and notified on 10.8.75. By a later notification dated 2.2.77, a further gradation list was published. Then, on a representa tion by the 1974 batch of direct recruits for refixation of inter se seniority in the gradation list taking into account the carried forward vacancies, the State Government made an order on 22.5.80 to the effect that the 1974 batch of direct recruits should be shown immediately below serial number 64 and above serial number 65 in the continuation gradation list published on 2.2.77. 886 Aggrieved by this government direction, some promotees moved the High Court under Article 226 of the Constitution for protection of their seniority, and aggrieved by the decision of the High Court, both, the direct recruits and promotees moved this Court for relief by appeals by special leave and writ petitions. The promotees challenged the propriety of the direction of the High Court to modify the gradation list by applying the quota rule, while the direct recruits sought to have full application of the quota rule instead of the limitation of three years, and the consequen tial benefits. Allowing the appeals and the writ petitions of the direct recruits and dismissing the appeals by the promotees, the Court, HELD: The rule of this court in V.P. Badami, etc. vs State of Mysore and others, has to be given full effect. The appeals and writ petitions of the direct recruits have to succeed and those by the promotees have to fail. The Court hopes the State of Karnataka will not demote anyone who has been in a promotional post for several years in the Class II service as a consequence of this decision, but the gradation list has got to be adjusted to fit into the principles indicated in the judgment. No justification was shown as to why the State of Karnataka failed to comply with its obligation of making recruitments in accordance with the quota system. Once the State frames rules, the rules are binding on the State, and like individuals, the State has got to resulate its conduct in accordance with the rules; in fact, the State has to observe them all the more. The Court hopes that the State of Karnataka in the years ahead will comply with the quota rule with regularity so that a litigation of this type may not arise again. [907D F] Upon a suggestion of the Court, counsel for the parties filed charts, containing recast gradation list on the basis of the claims advanced before the Court showing (1) how it would be when the full claim of the promotees was granted and (2) how different it would look when the total claim of the direct recruits was allowed, and the Court notices that the process of pushing up and down would be inevitable, but would be within reasonable limits and no irreparable preju dice was apparent. [907H; 908A B] OBSERVATION: The Court was struck by the innumerable rules framed within a period of about thirty years to cover the field relating to constitution, recruitment and provi sion for other conditions of service. It is proper that service rules should be simple, making 887 reasonable provision for necessary aspects. While framing such rules, the relevant provisions of the Constitution and the laws in force hove to be kept in view. There should be no frequent alteration of the service rules. Exigencies of circumstances and unforeseen situations will certainly justify alterations. Those would be indeed rare occations. [905H; 906A B] Experience shows that legal battles are fought in court between Government servants whether an individual pitched against an individual or a group against a group; this embitters relationship inter se and often results in a switch over of attention from public duty to personal cause. Frequent litigations against the State or the higher author ities in the hierarchies of administration wipe out rever ence, loyalty and the sense of discipline, and substitute these by anger, disrespect and ram:our. In the process, fellow feeling is lost and the sense of brotherhood vanish es. The net result of all this is the deprivation of the efficiency of the bureaucratic community to serve the socie ty. The undue growth of service litigation within the four decades of independence clearly calls for these observa tions. As and when the occasion has arisen, the Court has sought to draw the attention of the State as the ' employer as also the government servants to this aspect of the mat ter. This has been done not with a view to subjecting any litigant to undue criticism but with the fond hope that it would help the problem to receive adequate attention. The Court is surprised that the words spelt out in the different judgments have fallen on deaf ears. Thereby the most power ful wing in the administrative set up is gradually moving away from its designated path. There have been cases where officers have been in court, litigating over service dis putes for about twenty five to thirty years of their career, which would mean almost three fourth of their service peri od. What would be the contribution of such officers to the public service, can be well imagined. Very often a public officer is forced into litigation as he gets no justice from his superior. There are also several instances where an officer drags the employee into litigation without a cause of action. These are matters which must be taken into ac count without further loss of time and with fortitude so that the most effective wing of the administration does not further lose its service ability. [906B G] A public servant is in the position of a trustee. Social power vests in him for rendering service to the community. Every public servant has to be cognizant to that obligation. Once the level of that consciousness grows up, there is bound to be a corresponding fail in the attitude 888 to litigate over small issues. It is for the privileged public servant as also his employer to share this philoso phy. [906H; 907C] V.P. Badami, etc. vs State of Mysore & Ors. , ; M.G. Kadali vs State of Karnataka & Ors., [1982] 2 K.L.J. 453; N.C. Sharma vs Municipal Corporation of Delhi & Ors., ; ; S.G. Jaisinghani vs Union of India & Ors., ; ; Bishan Sarup 's case, ; Bachan Singh & Anr. vs Union of India & Ors. , ; Sabraman 's case, ; Col. A.S. Iyer & Ors. vs V. Balasubramanyam & Ors., ; ; P.S. Sahal & Ors. vs Union of India, ; ; A. Janardhana vs Union of India & Ors., ; ; S.S. Lamba and Ors. vs Union of India and Ors. , ; ; G.P. Doval and Ors. vs Chief Secretary, Government of UP and Ors., ; O.P. Singla and Anr., etc. vs Union of India and Ors. , ; ; D.S. Nakara and Ors. vs Union of India, ; ; N.K. Chandan & Ors. vs State of Gujarat, ; ; Karam Pal vs Union of India; , and Dr. T.C. Siddapparadhya

Appeal No. 674 of 1965. Ml 7 Sup. C. I/66 761 762 Appeal by special leave from the judgment and order dated March 14, 1962 of the Madras High Court in T. C. No. 209 of 1959. B. Sen and R. N. Sachthey, for the appellant. A. K. Sen, and R. Ganapathy Iyer, for the respondent. The respondent is a public limited company incorporated under the Indian Companies, Act, 1913 in the year 1939 and was carrying on the business of manufacture of absorbent cotton wool. In March 1955, the Board of Directors resolved to establish a new spinning unit under the name of Sudarsanan Spinning Mills for which a licence was obtained from the Government of India under the Industries (Development and Regulation) Act, 1951 in August 1955. The respondent placed orders for purchase of necessary spinning machinery and plant in the months of January and February, 1956. The construction of factory buildings was taken in hand in March, 1956, and these constructions were completed by December, 1957. The erection of the spinning machinery and the plant in the buildings was completed in several stages commencing from June, 1957. A licence from the Inspector of Factories for working the factory was obtained in June, 1958. The statement of the case further mentioned that the time given to complete the project was extended by the Government up to 17th March, 1959. The respondent was assessed to wealth tax for the assessment year 1957 58, and in that year the respondent claimed that, in computing the wealth on the valuation date which was 30th September, 1956, an amount of Rs. 1,43,727 should be deducted as being the amount laid out in setting up this new unit. The Wealth Tax Officer disallowed the claim on the ground that the unit was set up prior to the date on which the Wealth Tax Act (hereinafter referred to as "the Act") came into force, i.e., 1st April 1957. On the same basis, the Appellate Assistant Commissioner and the Income tax Appellate Tribunal upheld that order. Thereupon, at the request of the respondent, the following question of law was referred for opinion of the High Court of Madras: "Whether the aforesaid asset of Rs. 1,43,727 is exempt under section 5(1)(xxi) read with the second proviso thereunder of the Wealth tax Act?" The High Court answered the question in favour of the respondent, and consequently, this appeal has been brought up to this Court by the Commissioner of Wealth Tax, Madras, by special leave. The question that fell for determination depended on the interpretation of section 5(1)(xxi) of the Act read with the second proviso to that clause which are reproduced below: 763 .lm15 "5(1)(xxi) that portion of the net wealth of a company established with the object of carrying on an industrial undertaking in India within the meaning of the Explanation to clause (d) of section 45, as is employed by it in a new and separate unit set up after the commencement of this Act by way of substantial expansion of its undertaking: Provided that (a) (b) Provided further that this exemption shall apply to any such company only for a period of five successive assessment years commencing with the assessment year next following the date on which the company commences operations for the establishment of such unit. " It has been urged before us by learned counsel for the Commissioner that the main provision of clause (xxi) should be interpreted in conjunction with the second proviso so as to give a harmonious construction to both parts of the provision with which we are concerned. Relying on this principle, he urged that we should hold that a new and separate unit is set up only when the company commences operations for the establishment of such unit. He relied on the principle stated by Maxwell in his book 'On Inter pretation of Statutes ' 11th Edn. at P. 155 that 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. " The view taken by the High Court was challenged on the ground that the High Court had interpreted the principal clause without giving full effect to the language of the proviso. The High Court held that unless a factory is erected and the plants and machinery installed therein, it cannot be said to have been set up. The resolution of the Board of Directors, the orders placed for purchasing machinery, licence obtained from the Government for constructing the machinery, are merely initial stages towards setting up, however necessary and essential they may be to further the achievement of the end. It is not, however, the actual functioning of the factory or its going into production that can alone be called setting up of the factory. The setting up is perhaps a stage anterior to the commencement of the factory. Thereafter, 764 the High Court referred to a decision of the Bombay High Court in Western India Vegetable Products, Limited vs Commissioner of Income tax, Bombay City,( ') and on its basis, concluded that the proper meaning to be assigned to the expression "set up" in section 5(1)(xxi) would be "ready to commence business. " We are unable to agree with the learned counsel for the Commissioner that in arriving at this view, the High Court committed any error. A unit cannot be said to have been set up unless it is ready to discharge the function for which it is being set up. It is only when the unit has been put into such a shape that it can start functioning as a business or a manufacturing Organisation that it can be said that the unit has been set up. The expression used in the proviso, under which the period for which the exemption is available is to be deter mined, is not the same as used in the principal clause. In the proviso, the period of five successive years of exemption has to commence with the assessment year next following the date on which the company commences operations for the establishment of the unit. Operations for the establishment of a unit, from the very nature of that expression, can only signify steps that have to be taken to establish the unit. The word "set up" in the principal clause, in our opinion, is equivalent to the word "established", but operations for establishment cannot be equated with the establishment of the unit itself or its setting up. The applicability of the proviso has, therefore, to be decided by finding out when the company commenced operations for establishment of the unit, which operations must be antecedent to the actual date on which the company is held to have been set up for purposes of the principal clause. This is also the meaning that the Bombay High Court derived in the case of Western India Vegetable Products Ltd.(,) where that Court was concerned with the interpretation of the expression "set up" as used in section 2(l1) of the Income tax Act. That Court held: "It seems to us that the expression 'settling up ' means, as is defined in the Oxford English Dictionary, 'to place on foot" or 'to establish ', and is contradistinction to 'commence. ' The distinction is this that when a business is established and is ready to commence business, then it can be said of that business that it is set up. But before it is ready to commence business it is not set tip. " This view was expressed when that Court was considering the difference between the meaning of the expression "setting up a business" and " commencing of a business. " In the case before us, the proviso does not even refer to commencement of the unit. The criterion for determining the period of exemption is based on the commencement of the operations for the establishment of the unit. These operations for establishment of the unit cannot be simultaneous with the setting up of the unit, as urged on behalf of the Commis sioner, but must precede the actual setting up of the unit. In fact, (1)26 I.T.R 15 1. 765 it is the operations for establishment of a unit which ultimately culminate in the setting up of the unit. On this interpretation, it is clear that in this case, the claim put forward by the respondent for exemption has been rightly held to be allowable by the High Court. In the statement of the case and in its appellate judgment, the Tribunal did not specifically record any finding as to the date when the unit was ready to go into business and to start production. In the appellate order, it was mentioned that according to the respondent, the unit was set up only when the Inspector of Factories issued a licence to the respondent for working the factory, which was in June, 1958. In the, statement of the case, the facts recited show that the construction of the factory buildings was completed by December, 1957 and the erection of the spinning machinery and plant was completed in several stages commencing from June, 1957. On these facts, the High Court, and we consider rightly, proceeded on the basis that the unit was completed and became ready to go into business only after 1st April, 1957, when the Act had already come into force. Consequently, the condition laid down in the principal clause of section 5(1)(xxi) was satisfied, and the company became entitled to exemption in respect of the value of the assets used up in setting up this unit. Learned counsel for the Commissioner, however, challenged the right of the respondent to claim this exemption on another ground, viz., that the exemption was claimed in respect of money laid out in a period which was not covered by the period envisaged in the second proviso. It was urged that if it be held that the unit was set up after the Act had come into force on the 1 st April, 1957, it must also be held that the operations for the establishment of the unit had been commenced by the company almost simultaneously with the unit having been set up, and that date would, therefore, be a date subsequent to the assessment year 1957 58 in which year the exemption was claimed. This is a question which we do not think can be legitimately raised on behalf of the Commissioner at this stage. The only contention before the Tribunal on behalf of the Commissioner was that the operations for the establishment of the unit had been commenced by the respondent before the Act came into force, and that it should be held that the unit was also set ;up at the same time when those operations were commenced. There was no contention at any stage that the operations for the establishment of the unit were commenced at a subsequent stage. In fact, it was only for the purpose of urging that the principal clause was not applicable to the case of the respondent that the position was taken up on behalf of the Commissioner that the operations for establishment of the unit had been commenced before 1st April, 1957, and the unit must be held to have been set up at the same time 766 when those operations were commenced. That submission, as we have indicated above, has no force. In any case, the judgments passed by all the Wealth tax Authorities show that it was at no stage in dispute that the operations for establishment of the unit had been commenced by the respondent prior to 1 st April, 1957. Para 5 of the statement of the case mentions that the the wealth tax officer disallowed the claim on the ground that unit was set up prior to 1st April, 1957. The Appellate Assistant Commissioner also in his judgment said: "In this view of the matter, the appellant set up the undertaking even prior to 1st April, 1957 as operations were carried out prior to that date for the establishment of the undertaking. The operations consisted of the seeking of permission from the Government to install the unit, and placing of orders with manufacturers of machinery and advancing of moneys towards the purchase of machinery. " The Tribunal also disallowed the claim on the basis that the respondent commenced operations for setting up the unit earlier than 1st April, 1957. It does not appear to be necessary for us to express any opinion as to the particular stage at which it can be said that a company commences operations for the establishment of a unit. In the present case, the Tribunal proceeded on the basis that, whatever be the exact date of commencement of the operations for establishment of this unit by the respondent, it was certainly before 1st April, 1957; and we consider that that fact, by itself, is sufficient to entitle the respondent to claim the exemption. The Commissioner cannot, at this stage, be allowed to raise a new question and ask this Court to decide that the date of commencement of the operations for establishment of the unit by the respondent was different from that accepted by the Tribunal. That question was not raised and dealt with by the Tribunal. It is not even a question that might have been raised before the Tribunal and the Tribunal might have failed to deal with, nor is it a question which may not have been raised before the Tribunal and, yet, was dealt with by it. On the principle laid down by this Court in Commissioner of Income tax, Bombay vs Scindia Steam Navigation Co., Ltd.,( ') such a question could not be canvassed before the High Court and cannot be allowed to be raised in this Court. The question referred to the High Court had to be answered on the basis that the respondent did commence operations for establishing this unit before 1st April, 1957; and the further finding of fact recorded by the Tribunal is that a sum of Rs. 1,43,727/ had been invested in setting up the unit by 30th September, 1956, which was the valuation date for the assessment year 1957 58. The very first assessment year after the commencement of the operations for establishment of the unit was this assessment year 1957 58, In the Wealth Tax Act, assessment (1) ; I.T.R. 589. 767 year has been defined to mean the year for which tax is chargeable under section 3 of that Act. Since the Act came into force on the 1st April, 1957, the financial year 1957 58 was the first assessment year for which tax became chargeable, and consequently, for purposes of the second proviso to section 5(1)(xxi), the assessment year following the commencement of operations for establishment of the unit in the case of any company which commenced the operations any time before the 1st April, 1957, will be the assessment year 1957 58. Prior to the year 1957 58, there was no assessment year as defined under the Act, and consequently, the first assessment year for which exemption could be claimed was this assessment year 1957 58. The respondent which had commenced operations for establishment of its new unit prior to 1st April, 1957, was rightly allowed exemption in respect of the amount that had been invested by it upto the relevant valuation date. The answer returned by the High Court was, therefore, correct. The appeal fails and is Appeal dismissed. dismissed with costs.

The respondent Company was assessed to wealth tax for the assessment year 1957 58 and the respondent claimed deduction of an amount laid out for setting up a new unit. The licence for setting up the new unit was granted in 1955; the construction of the factory building was completed by December 1957; the erection of the machinery and plant was completed in several stages commencing from June 1957; the licence for working the factory was obtained in June 1958; and time given to complete the project also was extended by Government up to March 17, 1959. The Wealth Tax Officer disallowed the claim on the ground that the unit was, set up prior to the date on which the Wealth Tax Act came into force, ie., April 1, 1957. This order was upheld in appeals. But in reference, the High Court answered the question in favour of the assessee, for, it proceeded on the basis that the unit was completed and became ready to go into business after the Act had come into force. HELD : The assessee was entitled to the claim as it satisfied the condition laid down in cl. (xxi) of section 5(1) of the Act. The criterion for determining the period of exemption is based on the commencement of the operations for establishment of the unit. These operations for establishment of the unit cannot be simultaneous with the setting up of the unit, but must precede the actual setting up of the unit. [1764 G H] The word "set up" in clause (xxi) of section 5(1) of the Act, is equivalent to the word "established" but operations for establishment cannot be equated with the establishment of the unit itself or its setting up. The applicability of the, proviso has, therefore, to be decided by finding out when the company commenced operations for establishment of the unit, which operations must be antecedent to the actual date on which the company is held to have been set up for purposes of the principal clause.[1764 D E] Western India Vegetable Products, Limited vs Commissioner of Income tax, Bombay City, referred to. In the present case, the Tribunal proceeded on the basis that whatever be the exact date of commencement of the operations for establishment of Ibis unit,, it was certainly before April 1, 1957 and that fact by itself is sufficient to entitle the assessee to claim the exemption. The Commissioner cannot be allowed to raise a new question and ask this Court to decide that the date of commencement of the operation for establishment of the unit by the respondent was different from that accepted by the Tribunal. That question was not raised and dealt with by the Tribunal, [766 E] Commissioner of Income tax, Bombay vs Scindia Steam Navigation Co., Ltd., ; relied on.

Civil Appeal No. 2756 of 1987. From the Judgment and Order dated 2.9.1986 of the Madhya Pradesh High Court in C.M.P. No. 742 of 1985. S.N. Khare and T.C. Sharma for the Appellants. S.K. Gambhir for the Respondents. 304 The Judgment of the Court was delivered by VENKATARAMIAH, J. The Ist respondent Ashok Deshmukh was appointed as a Panchayat and Social Education Organizer in the Social Welfare Department, Government of Madhya Pradesh, Bhopal on 16.8.1976. By an order dated 11th March, 1983 he along with 13 others was posted on deputation as an officiating Block Development Officer in the Panchayat and Rural Development Department of the Government of Madhya Pradesh. The relevant portion of the said order, posting the Ist respondent on deputation, read as follows: "GOVERNMENT OF MADHYA PRADESH PANCHAYAT AND RURAL DEVELOPMENT DEPARTMENT (DEVELOPMENT) Bhopal, dated 11th March, 1983 O R D E R Serial Number 1719/1463/22V 2/82. The following Panchayat and Social Education Organisers are appointed on the post of officiating Block Development Officer, temporarily and on deputation, from the date of taking charge in the pay scale of Rs.350 25 400 25 500 E.B. 30 650 until further orders and they are posted in Development Block shown against their names. This posting on deputation would be entirely temporary and they would not be entitled to become semi permanent or permanent on this post. If required their services may be transferred back to their parental department at any time, after notice. _____________________________________________ section Name of Panchayat Name of Development No.and Social Educational block where posted Organiser 1 2 3 _____________________________________________ 1 . . . . . . . . 7. Shri Ashok Deshmukh Kurwai (Vidisha) . . . . . . . . In the name and according to the order of Governor of Madhya Pradesh. 305 Sd/ A.K.Chandra Secretary, Govt. of M.P. Rural Development Department" The Ist respondent was transferred from the post of Block Development Officer, Kurwai, in Vidisha district which he was holding on deputation as aforesaid to the Development Block of Udaipura. District Raisen by an order dated August 1, 1983. On 29th June, 1984 the services of the Ist respondent were placed at the disposal of his parent department by an order made by the Secretary to the Government, Panchayat and Rural Development Department, Madhya Pradesh. The said order read thus: GOVERNMENT OF MADHYA PRADESH PANCHAYAT AND RURAL DEVELOPMENT DEPARTMENT (DEVELOPMENT) BHOPAL, DATED 29TH JUNE, 1984 ORDER No. 6297/1031/22/V 2/Est. 84. The services of Shri Ashok Deshmukh appointed temporarily on deputation as officiating Block Development Officer, Development Block Udaipura, Distt. Raisen, are returned back to his parental department Social Welfare Department because the same are not required in this department. In the name and according to the orders of Governor of Madhya Pradesh. sd/ Illegible Secretary Panchayat and Rural Development Department (Development)" Aggrieved by the said order of the State Government sending him back to his parent department, where he held his lien, the Ist respondent filed a suit in Civil Suit No. 16A of 1984 in the Court of Civil Judge, Udaipura for permanent injunction restraining the Government of Madhya Pradesh from repatriating him to his parent department and he obtained an order of temporary injunction in that suit on 15.11.1984 restraining the State Government from relieving 306 him from the post of Block Development Officer at Udaipura and directing the State Government to allow him to continue as the Block Development Officer. After the State Government entered appearance in the suit and filed its objections to the order of temporary injunction, the Civil Judge vacated the order of temporary injunction by his order dated 15.3.1985. Thereafter the Ist respondent filed a writ petition on the file of the High Court of Madhya Pradesh at Jabalpur requesting the High Court to quash the order of repatriation in Miscellaneous Petition No. 742 of 1985. After the writ petition was admitted and a stay order was issued the Ist respondent withdrew the suit filed by him before the Civil Judge, Udaipura. Thereafter the High Court heard all the parties and passed an order dated 2.9.1986 quashing the order of repatriation dated 29.6.1984 sending back the Ist respondent to his parent department and directed the State Government to retain him as officiating Block Development Officer on deputation in the Panchayat and Rural Development Department so long as persons junior to the Ist respondent were retained as Block Development Officers and there existed a vacancy. The High Court also quashed the order of the State Government dated 20.5.1985 directing the Ist respondent to vacate the Government quarter which had been occupied by him and also the order of suspension which had been passed in the meanwhile. The High Court also directed the State Government to pay all the salary due to the Ist respondent as Block Development Officer. Aggrieved by the order of the High Court the State Government along with its officers against whom orders were made by the High Court has filed this appeal by special leave. In the writ petition two principal contentions were urged on behalf of the Ist respondent (i) that the order of repatriation was contrary to rule 14 of the Madhya Pradesh Civil Services Rules, (hereinafter referred to as `the Rules '), and (ii) the order of repatriation was arbitrary and was the result of bias and mala fide attitude on the part of Smt. Nirmala Buch, Secretary, Panchayat and Rural Development Department. The High Court held that the order of repatriation had been passed in violation of rule 14 of the Rules and that although there was no material on record to support the allegation of any bias and mala fides on the part of Smt. Nirmala Buch the order of repatriation was the result of certain "wrong complaints" made by one Panbai who was a Member of the Legislative Assembly of the state of Madhya Pradesh. Rule 14 of the Rules is as follows: 307 "14. Reversion and re appointment: Permanent Government servants officiating in a higher grade of service may be reverted to the lower grade of service from which they were promoted if there are no vacancies in the former grade of service, and such reversion shall not be construed to be a reduction in rank: Provided that the order in which such reversion shall be made will be the reverse of the order in which officiating promotion was made except when administrative convenience renders it necessary to revert an officiating Government servant otherwise than in accordance with this proviso: Provided further that on the occurrence of a fresh vacancy the re appointment to the higher grade of service shall ordinarily be in order of relative seniority of the reverted Government servant. " The above rule deals with the question of reversion of a permanent Government servant from an officiating higher grade of service to the lower grade of service from which he had been promoted. This rule in terms does not apply to a case of deputation from one department to another department. Admittedly the Ist respondent had not been promoted from the post of Panchayat and Social Education Organiser which he held in the parent department to a higher post in the said department. He had been, in fact, posted on deputation as officiating Block Development Officer in the Panchayat and Rural Development Department. The High Court was, therefore, in error in holding that the impugned order of repatriation had been passed in violation of rule 14 of the Rules. It is, however, argued that even in the case of an officer who is deputed on a temporary basis to a post in another department the same procedure prescribed in rule 14 of the Rules should be followed. It is also submitted that there is no specific rule as to the procedure to be followed in the case of repatriation of an officer deputed from one department to another in force in the State of Madhya Pradesh. Reliance is, however, placed in this connection on the decision of this Court in K.H. Phadnis vs State of Maharashtra, which was also a case in which the question of repatriation of an officer, who had been posted on deputation in another department, to his parent department was under consideration. This Court has observed thus at page 123: 308 "The order of reversion simpliciter will not amount to a reduction in rank or a punishment. A Government servant holding a temporary post and having lien on his substantive post may be sent back to the substantive post in ordinary routine administration or because of exigencies of service. A person holding a temporary post may draw a salary higher than that of his substantive post and when he is reverted to his parent department the loss of salary cannot be said to have any penal consequence. Therefore though the Government has right to revert a Government servant from the temporary post to a substantive post, the matter has to be viewed as one of substance and all relevant factors are to be considered in ascertaining whether the order is a genuine one of `accident of service ' in which a person sent from the substantive post to a temporary post has to go back to the parent post without an aspersion against his character or integrity or whether the order amounts to a reduction in rank by way of punishment. Reversion by itself will not be a stigma. On the other hand, if there is evidence that the order of reversion is not `a pure accident of service ' but an order in the nature of punishment, Article 311 be attracted. " In the above case this Court came to the conclusion that the impugned order of repatriation was in fact in the nature of punishment and therefore this Court quashed it. C. Thiraviam Pillai vs State of Kerala and others, was a case relating to repatriation of an officer who was reverted to his parent department from the post which he held on deputation. The High Court of Kerala quashed the order or repatriation since in the counter affidavit filed on behalf of the State Government it had been admitted that the order impugned therein had been passed since there were local complaints about the work in the block and instances where the officer in question had misused his powers and acted irregularly had been cited. The Block Development Officer had to maintain very close contact with the public. The post required persons of broad outlook and service mindedness. The State Government felt that the continuance of such an officer would bring down the name of the Development Department in the eyes of the public and so in the interests of service and the department, Government considered that he should be reverted back to his parent department. It is thus seen that the above averment clearly established that the order of repatriation 309 had been passed on account of allegations made against the officer concerned and it carried a stigma. Moreover in the above case the relevant rule provided that persons selected for the post of Block Development Officers would be treated on deputation to the Development department for a period of five years, the Development Commissioner having the right to revert any of them to his parent department, if his work proved to be unsatisfactory and to extend the period of deputation beyond five years in exceptional cases. In the case before us no specific period had been mentioned as the period during which the Ist respondent would be on deputation either in the order sending him on deputation or in any relevant rule or Government order. The only question which remains to be considered is whether the impugned order is one which attached a stigma to the Ist respondent. The allegations made in this behalf are that one Panbai, MLA referred to above had when the petitioner was at Kurwai made complaint against the Ist respondent in connection with certain local elections. The said complaint was after enquiry found to be wrong. On the date on which the Ist respondent was repatriated he was not working in Kurwai block which was the block in which Smt. Panbai was interested. He was working at Udaipura block in a different district altogether. The respondents had filed counter affidavit denying that Smt. Nirmala Buch, the Secretary to the Government of Madhya Pradesh had any ill will against the Ist respondent. The High Court also came to the conclusion that there was no material on record to show that there was any bias or mala fide on the part of Smt. Nirmala Buch. Yet it proceeded to observe as follows: "Although there is no material on record to support the allegations of any bias and mala fide on the part of Smt. Nirmala Buch, the Secretary, Panchayat and Rural Development Department, but the wrong complaints of the said M.L.A. appear to be the only basis for passing the impugned order of reversion as well as the order of transfer of the petitioner who had incurred the displeasure of his superiors because of the said reports which were found to be incorrect." With respect to the High Court it has to be stated that having observed that there was no material to support the allegation of any bias and mala fide on the part of the Secretary to the Government it committed an error in assuming that the basis of impugned order of repatriation could only be the displeasure of his superiors which the Ist 310 respondent had incurred by reason of the wrong complaints of a Member of the Legislative Assembly. It is significant that the order is silent about the names of those superiors who were displeased on account of the allegations said to have been made by the Member of the Legislative Assembly. This part of the order of the High Court is based on mere surmise. The High Court overlooked that the allegations of bias and mala fides are easily made but when it comes to the question of proof of such allegations, very often there will be no material in support of them. This is one such case. If mere existence of some allegations against an officer which on inquiry had been found to be untrue is to be treated as the basis for quashing any order of transfer or repatriation made in respect of any officer then almost every such order of transfer or repatriation would have to be quashed because there would always be some complaint by some party or other against every officer. Unless the court is sure that the impugned order is really based upon such allegations it should not proceed to quash administrative orders which are made in the exigencies of the administration. The counter affidavit filed on behalf of the State Government before the High Court also shows that some other officers who had been posted on deputation like the Ist respondent also had been reverted to their parent department and again some of them had been posted back as Block Development Officers. Perhaps even in the case of the Ist respondent a similar order posting him back as Block Development Officer would have been passed by the State Government had he not filed the suit and then the writ petition making it difficult for the State Government to take a decision on the question of again posting him as a Block Development Officer during the pendency of the proceedings. The impugned order of repatriation passed in respect of the Ist respondent does not on the face of it show that there is any stigma attached to the Ist respondent by reason of the said order. We are clearly of the opinion that the allegations of bias and mala fides made against Smt. Nirmala Buch have remained unsubstantiated. The Ist respondent had no vested right to continue on deputation as Block Development Officer. On the material placed before us we do not find that the order of repatriation is arbitrary and violative of Article 14 of the Constitution. We, therefore, find it difficult to agree with the High Court. The order passed by the High Court is therefore liable to be set aside. It is quite possible that the Ist respondent may again be sent on deputation as Block Development Officer. That, however, is within the discretion of the State Government. 311 In view of what we have stated above we have not considered it A necessary to decide the question whether the Ist respondent could proceed with the writ petition after having withdrawn the suit which he had filed earlier in the Court of Civil Judge, Udaipura. In the result we set aside the judgment and order of the High Court and dismiss the writ petition filed by the Ist respondent. In the circumstances there will be no order as to costs. R.S.S. Appeal allowed.

Respondent Ashok Deshmukh, was a Panchayat and Social Education Organiser in the Social Welfare Department, Government of Madhya Pradesh, when he was temporarily posted as an officiating Block Development Officer in the Panchayat and Rural Development Department of the Government of Madhya Pradesh on 11th March, 1983. His services were returned back to his parent department on 29th June, 1984. Aggrieved by the order of repatriation, the respondent filed a suit in the Court of Civil Judge, Udaipura, and obtained a temporary injunction. The temporary injunction having been vacated, he filed a writ petition in the High Court. After the writ petition was admitted and stay order issued, the respondent withdrew the civil suit. Two principal contentions were urged before the High Court were; (1) that the order of repatriation was contrary to Rule 14 of the M.P. Civil Services Rules, and (2) that the order of repatriation was the result of bias and mala fide attitude on the part of the Secretary, Panchayat and Rural Development Department. The High Court held (1) that the order of repatriation had been passed in violation of Rule 14 of the Rules, and (2) that although there was no material on record to support the allegation of any bias and mala fide on the part of the Secretary, the order of repatriation was the result of certain `wrong complaints ' made against him. The High Court quashed the order of repatriation and directed the State Government to retain the respondent as officiating Block Development Officer so long as persons junior to him were retained. 303 Allowing the appeal, it was, ^ HELD:(1) Rule 14 dealt with the question of reversion of a permanent Government servant from the officiating higher grade to the lower grade, and did not apply to a case of deputation from one department to another. The High Court was, therefore, in error in holding that the impugned order of repatriation had been passed in violation of rule 14 of the Rules. [307D F] (2) The allegations of bias and mala fides made against the Secretary have remained unsubstantiated. Unless the Court is sure that the impugned order is really based upon allegations of bias and mala fides it should not proceed to quash administrative orders which are made in exigencies of the administration. [310F G; C D] (3) If mere existence of some allegations against an officer, which on enquiry had been found to be untrue, were to be treated as the basis for quashing any order of transfer or repatriation made in respect of any officer then almost every such order of transfer or repatriation would have to be quashed because there would always be some complaint by some party or other against every officer. [310C D] (4) The impugned order of repatriation did not on the face of it show that there was any stigma attached to the respondent by reason of the said order. [310F] (5) On the material placed before it, the Court did not find that the order of repatriation was arbitrary and violative of Article 14 of the Constitution. [310G] C. Thiraviam Pillai vs State of Kerala, [1976] 2 S.L.R. 395, referred to.

Criminal Appeal No. 415 of 1986. From the Judgment and Order dated 16.5. 1984 of the Allahabad High Court in Crl. Rev. No. 2330 of 1983. R.N. Trivedi, Additional Advocate General (U.P.) Mrs. section Dikshit and C.B. Singh for the Appellant. Ram Jethmalani, Rajinder Sachhar, and D.N. Mishra for the Respondents. The Judgment of the Court was delivered by SEN, J. This appeal by special leave is directed against the judgment and order of the High Court of Allahabad dated May 16, 1984 setting aside in its revisional jurisdiction an order of the Chief Judicial Magistrate, Gaziabad dated November 3, 1983 directing the issue of process against the respondents on a complaint filed by the appellant under section 44 of the Water (Prevention and Control of Pollu tion) Act, 1974. The issue involved is whether the Chair man, ViceChairman, Managing Director and members of the Board of Directors of Messrs Modi Industries Limited, the Company owning the industrial unit called Messrs Modi Dis tillery could be proceeded against on a complaint against the said industrial unit. A learned Single Judge (K.C. Agarwal, J.) following the decision of this Court in State (Delhi 801 Admn.) vs LK. Nangia & Anr., ; interpreting a similar provision contained in sub section (4) of section 17 of the had held that there was no sufficient ground against the respondents inasmuch as the allegations made in the complaint do not constitute an offence punishable under section 44 for the admitted contravention of sections 25(1) and 26 read with section 47 of the Act. The question essentially turns upon the rule of construction to be adopted in section 47. The facts of the case are these. Messrs Modi Industries Limited is an existing company under the . It is a large business organisation having diversified business activities. Prior to the commencement of the Act it had established an industrial unit called Messrs Modi Dis tillery at Modi Nagar, Gaziabad engaged in the business of manufacture and sale of industrial alcohol. During the process of manufacture of such industrial alcohol, the said industrial unit discharges its highly noxious and polluted trade effluents into the Kali River through the Kadrabad Drain which is a stream within the meaning of section 2(j) of the Act and thereby causes continuous pollution of the said stream without the consent of the Board and therefore it falls within the purview of section 26. Under the provisions of section 26, as amended, it has been made mandatory for every existing industry to obtain the consent of the Board for discharging its trade effluent into a stream or well or sewer or on land. The last date for submission of such application seeking the consent of the Board by an existing industry had been extended upto December 31, 1981. In ac cordance with the procedure laid down under sections 25(1) and 26 of the Act, the Company was required to submit an applica tion for consent of the Board in the prescribed form along with the prescribed consent fee and the particulars. Instead of the Company its industrial unit, namely, Messrs Modi Distillery on March 27, 1981 applied to the Board for grant of consent to discharge its trade effluents into the stream. The aforesaid application was scrutinised by the Board and found incomplete in many respects. The Board accordingly by its letter dated April 29, 1981 informed the said industrial unit with regard to the discrepancies and the particulars wanting. There was no response from the respondents nor did they rectify the discrepancies pointed out or furnish the particulars required. The Board accordingly by its letter dated July 30, 1981 refused to grant the consent prayed for in the public interest since the application was found incomplete in many respects and also because the said indus trial unit did not have proper arrangements for treatment of its highly polluted trade effluents. Thereafter, the Board by its letter dated June 30, 1982 issued a notice under section 20 of the Act 802 directing the Company to furnish certain information regard ing the particulars and names of the Managing Director, Directors and other persons responsible for the conduct of the Company, but the respondents did not furnish the infor mation called for. This was followed by two subsequent letters of the Board dated February 21, 1983 and June 9, 1983 drawing the attention of the respondents that they were deliberately violating the provisions of the Act and thereby rendering themselves liable to be punished under section 44 for contravention of the provisions of sections 25(1) and 26. On October 21, 1983 the Board lodged a complaint against the respondents under section 44 of the Act in the Court of the Chief Judicial Magistrate, Gaziabad. Unfortunately, the complaint was inartistically drafted. It was averred in paragraph 2 that Messrs Modi Distillery i.e. the industrial unit was a company within the meaning of section 47 of the Act, that it had been knowingly and wilfully discharging its highly noxious and polluted trade effluents into the Kali River which is a stream within the meaning of section 2(j) of the Act through the Kadrabad Drain and thereby causing continuous pollution of the said stream. There were eleven persons arrayed as ac cused. Instead of launching a prosecution against Messrs Modi Industries Limited, the Board impleaded its industrial unit Messrs Modi Distillery as respondent No. 1 while re spondents nos. ' 2 11 were the Chairman, Vice Chairman, Managing Director and members of the Board of Directors of Messrs Modi Industries Limited i.e. the Company owning the industrial unit. It appears that the respondents did not appear before the learned Chief Judicial Magistrate in response to the notice issued to them. The learned Magistrate after record ing the statement of S.M. Pandey, Legal Assistant of the Board directed the issue of process to the respondents. Aggrieved, respondents nos. 2, 3 and 4, namely, K.M. Modi, K.K. Modi and M.L. Modi, the Chairman, Vice Chairman and Managing Director respectively of Messrs Modi Industries Limited preferred a revision before the High Court under section 397 of the Code of Criminal Procedure, 1973. Two of the other accused, namely, S.C. Trikha and Raghunath Rai, the nominated members of the Board of Directors of the Company also filed an application before the High Court under section 482 of the Code for quashing the proceedings. As already stated, a learned Single Judge invoking the revisional jurisdiction of the High Court has quashed the proceedings on the ground that there could be no vicarious liability saddled on the Chairman, Vice Chairman, Managing Director and other members of the Board of Directors of the Company under section 47 of the Act unless there was a prosecution of the Company i.e. Messrs Modi Industries Limited. He 803 held that the complaint suffers from the serious legal infirmity and in the circumstances, to allow the proceedings to continue would amount to an abuse of the process of the Court. The question that arises in the appeal is whether the Chairman, Vice Chairman, Managing Director and members of the Board of Directors are liable to be proceeded against under section 47 of the Act in the absence of a prosecution of the Company owning the said industrial unit. section 47 insofar as material reads as follows: "47. Offences by companies (1) Where an offence under this Act has been committed by a company every person who at the time the offence was committed was in charge of, and was responsible to the company for the con duct, of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. Provided that nothing contained in this sub section shall render any such person liable to any punishment provided in this Act if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence. (2) Notwithstanding anything con tained in subsection (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of or, is attributable to any neglet on the part of, any director. manager, secretary or other officer of the company, such director, manag er, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. " On a plain reading of sub section (1) of section 47 of the Act, where an offence has been committed by a company, every person who at the time of the commission of the offence was in charge of and responsible to ' the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. Proviso to sub section (1) however engrafts an exception in the case of any such person if he were to prove that the offence was committed without his knowledge or that he exercised all due diligence to prevent the 804 commission of such offence. It would be noticed that sub section (1) of section 47 is much wider than sub s.(4) of section 17 of the which fell for consideration in I.K. Nangia 's case. Furthermore, proviso to sub section (1) shifts the burden on the delinquent officer or servant of the company responsible for the commission of the offence. The burden is on him to prove that he did not know of the offence or connived in it or that he had exercised all due diligence to prevent the commission of such offence. The non obstante clause in sub section (2) expressly provides that notwithstanding anything contained in sub section (1), where an offence under the Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or, is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence, and shall be liale to be proceeded against and punished accordingly. On a combined reading of the provisions contained in sub sections (1) and (2), we have no doubt whatever that the Chairman, Vice Chairman, Managing Director and members of the Board of Directors of Messrs Modi Industries Limited, the Company owning the industrial unit Messrs Modi Distill ery could be prosecuted as having been in charge of and responsible to the company, for the business of the indus trial unit Messrs Modi Distillery owned by it and could be deemed to be guilty of the offence with which they are charged. The learned Single Judge has failed to bear in mind that this situation has been brought about by the industrial unit viz. Messrs Modi Distillery of Messrs Modi Industries Limited because in spite of more than one notice being issued by the Board, the unit of Messrs Modi Distillery deliberately failed to furnish the information called for regarding the particulars and names of the Managing Direc tor, Directors and other persons responsible for the conduct of the Company. Having wilfully failed to furnish the requi site information to the Board, it is now not open to the Chairman, Vice Chairman, Managing Director and other members of the Board of Directors to seek the Court 's assistance to derive advantage from the lapse committed by their own industrial unit. The learned Single Judge has focussed his attention only on the technical flaw in the complaint and has failed to comprehend that the flaw had occurred due to the recalcitrant attitude of Messrs Modi Distillery and furthermore the infirmity is one which could be easily removed by having the matter remitted to the Chief Judicial Magistrate with a direction to call upon the appellant to make the formal amendments to the averments contained in paragraph 2 of the comp 805 laint so as to make the controlling company of the industri al unit figure as the concerned accused in the complaint. All that has to be done is the making of a formal applica tion for amendment by the appellant for leave to amend by substituting the name of Messrs Modi Industries Limited, the Company owning the industrial unit, in place of Messrs Modi Distillery. Although as a pure proposition of law in the abstract the learned Single Judge 's view that there can be no vicarious liability of the Chairman, Vice Chairman, Managing Director and members of the Board of Directors under sub section (1) or (2) of section 47 of the Act unless there was a prosecution against Messrs Modi Industries Limited, the Company owning the industrial trait, can be termed as cor rect, the objection raised by the petitioners before the High Court ought to have been viewed not in isolation but in the conspectus of facts and events and not in vacuum. We have already pointed out that the technical flaw in the complaint is attributable to the failure of the industrial unit to furnish the requisite information called for by the Board. Furthermore, the legal infirmity is of such a nature which could be easily cured. Another circumstance which brings out the narrow perspective of the learned Single Judge is his failure to appreciate the fact that the aver ment in paragraph 2 has to be construed in the light of the averments contained in paragraphs 17, 18 and 19 which are to the effect that the Chairman, Vice Chairman, Managing Direc tor and members of the Board of Directors were also liable for the alleged offence committed by the Company. It is regrettable that although Parliament enacted the to meet the urgent need for introducing a comprehensive legis lation with its established unitary agencies in the Centre and the States to provide for the prevention. abatement and control of pollution of rivers and streams, for maintaining or restoring wholesomeness of water courses and for control ling the existing and new discharges of domestic and indus trial wastes, which is a matter of grave national concern, the manner in which some of the Boards are functioning leaves much to be desired. This is an instance where due to the sheer negligence on the part of the legal advisors in drafting the complaint a large business house is allowed to escape the consequences of the breaches committed by it of the provisions of the Act with impunity, It was expected that the Board and its legal advisors should have drafted the complaint with greater circumspection not to leave any technical flaw which would invalidate the initiation of the prosecution allowing the respondents to escape the conse quences of the breaches committed by them of the provisions of the Act with impunity. As already stated, prior to the commencement 806 of the Act the Company owned an industrial unit styled as Messrs Modi Distillery which was discharging its trade effluents into the Kali River through the Kadrabad Drain and therefore the matter fell within the ambit of section 26 of the Act. section 26 provides that where immediately before the com mencement of the Act any person was discharging any sewage or trade effluent into a stream, the provisions of section 25 shall, so far as may be, apply to such person as they apply in relation to a person referred to in that section. section 25(1) creates an absolute prohibition against bringing into use any new or altered outlet for the discharge of sewage or trade ' effluent into a stream without the consent of the Board. On a combined reading of sections 25(1) and 26 it was mandatory for the Company viz. Messrs Modi Industries Limit ed to make an application to the Board under sub section (2) of section 25 read with section Z6 in the prescribed form containing the prescribed particulars for grant of consent for the dis charge of its trade effluents into the said stream, subject to such conditions as it may impose. Along with the com plaint the appellant has placed on record several documents showing that the rejection of the application was in the public interest as it was incomplete in many respects. These documents also reveal that the Company did not have proper arrangements for treatment of the highly polluted trade effluents discharged by it and although the appellant re peatedly by its letter required the Company to obtain the consent of the Board, the Company was intentionally and deliberately avoiding compliance of the requirements of sections 25(1) and 26 of the Act. The contravention of these provi sions is an offence punishable under section 44. The other ten persons arrayed by name as accused in the complaint are respondents nos. 2 11, the Chairman, Vice Chairman, Managing Director and members of the Board of Directors of Messrs Modi Industries Limited. It cannot be doubted that in such capacity they were in charge of and responsible for the conduct of the business of the Company and were therefore deemed to be guilty of the said offence and liable to be proceeded against and punished under section 47 of the Act. It would be a travesty of justice if the big business house of Messrs Modi Industries Limited is allowed to defeat the prosecution launched and avoid facing the trial on a techni cal flaw which is not incurable for their alleged deliberate and wilful breach of the provisions contained in sections 25(1) and 26 made punishable under section 44 read with section 47 of the Act. Faced with the difficulty of refuting the gravamen of the offence set out in the complaint, Shri Ram Jethmalani, learned counsel appearing for the respondents drew our attention to the counteraffidavit of Virendra Prasad, Manag er (Personnel & Administration), Modi Distillery dated January 13, 1986 and the two supplementary 807 affidavits dated August 25, 1986 and November 17, 1986 tending to show that Messrs Modi Industries Limited, the company owning the industrial unit, have taken effective steps to set up an effluents treatment plant by entering into an agreement dated December 23, 1985 with Messrs Chemi cal Consultants & Engineers, Ahmadnagar who would set it up in collaboration with Sulzer Bros. Limited, Switzerland by employment of the technical knowhow which would be able to recover methane gas upto 70% and also bring down BOD reduc tion upto 90%. Further, it is averred that the company sought and obtained the approval of the Board subject to a time schedule for erection and installation of the plant by the end of June 1987. It is also averred that since the Government of India has turned down the application of the respondents for subsidy for installation of the said plant insofar as the year 1985 86 was concerned, they are trying other sources of finance and that in the meanwhile pending the installation and commissioning of the plant based on the Sulzer 's process are treating the effluents by alternative methods in order to reduce the extent of BOD discharge. They are diluting the effluents by mixing fresh water to the extent of 13 to 15 times the amount of effluent discharged in order to reduce the extent of pollution. In view of the subsequent events the learned counsel submits that this was a fit case for dropping the proceedings. The averments made by the respondents in the various affidavits have been controverted by the affidavit in rejoinder sworn by Chandra Bhal Singh, Law Officer of the appellant Board showing that there is little or no progress in the matter of establish ment of the effluents treatment plant. We need not enter into this controversy. These are all matters to be dealt with by the learned Chief Judicial Magistrate. The result therefore is that the appeal succeeds and is allowed. The judgment and order passed by the High Court are set aside and that of the learned Chief Judicial Magistrate directing issue of process to the respondents are restored. The learned Magistrate shall proceed with the trial as expeditiously as possible in accordance with law. P.S.S. Appeal allowed.

The respondent distillery, an industrial unit of M/s. Modi Industries Ltd., at Modi Nagar manufacturing industrial alcohol has been discharging its highly noxious and polluted trade effluents into the river through a local drain. It applied to the Pollution Control Board under sections 25(1) and 26 of the Act on March 27, 1981 for consent of the Board to discharge its trade effluents into the stream. The Board found the application incomplete in many respects, and called upon the respondents to rectify the discrepancies. As there was no response from the respondents, the appellant Board refused to grant the consent prayed for in the public interest and thereafter issued notice under section 20 of the Act directing the Company to furnish certain information regard ing the particulars and names of the Managing Director, Directors and other persons responsible for the conduct of the Company. This was followed by various reminders. Finding no response from the respondents, the Board on October 21, 1983 lodged a complaint against the respondents under section 44 of the Act in the Court of the Chief Judicial Magistrate, Gaziabad. Instead of launching a prosecution against M/s. Modi Industries Ltd., the Board impleaded the industrial unit as respondent No. 1 and the Chairman. Vice Chairman, Managing Director and members of the Board of Directors of the Company as respondent Nos. 2 to 11. The Judicial Magistrate directed the issue of process. 799 The respondents preferred a revision under section 397 of the Code of Criminal Procedure, 1973 before the High Court in which an application was filed under section 482 of the Code for quashing the proceedings. The Single Judge of the High Court quashed the proceedings on the ground that there could be no vicarious liability saddled on the Chairman, Vice Chairman, Managing Director and other members of the Board of Direc tors of the Company under section 47 of the Act unless there was a prosecution of the Company. Allowing the appeal, HELD: A combined reading of the provisions contained in subss. (1) and (2) of section 47 of the makes it apparent that the officials of the Company owning the respondent industrial unit could be prosecuted as having been in charge of and responsible to the Company for the business of that unit and could be deemed to be guilty of the offence with which they were charged. [804DE] The industrial unit owned by the Company was discharging its trade effluents into the river prior to the commencement of the Act. It was, therefore, mandatory for the Company to make an application to the Board under section 25(2) read with section 26 of the Act for grant of consent for the discharge of its trade effluents into the stream. The application made by the industrial unit having been found incomplete in many re spects was rejected by the Board in public interest. There after the Company which did not have proper arrangements for treatment of the highly polluted trade effluents discharged by it, had been in spite of repeated letters from the Board intentionally and deliberately avoiding compliance with the requirements of sections 25(1) and 26 rendering themselves pun ishable under section 44 of the Act. The Chairman. ViceChairman, Managing Director and members of the Board of Directors of the Company in such capacity were incharge of and responsi ble for the conduct of the business of the Company and were, therefore, deemed to be guilty of the said offence and liable to be proceeded against and punished under section 47 of the Act. [805H 806F] The vicarious liability of these officials of the Compa ny is to be viewed not in isolation but in the conspectus of facts and events and not in vacuum. The technical flaw in the complaint lodged by the appellant Board had occurred due to the recalcitrant attitude of the industrial unit, which in spite of more than one notice being issued had deliber ately failed to furnish information called for regarding the particulars and 800 names of the Managing Director, Directors and other persons responsible for the conduct of the Company. Having wilfully failed to furnish the requisite information to the Board, it is not open to the respondents 2 to 11 to seek the Court 's assistance to derive advantage from the lapse committed by their own industrial unit. Furthermore, the legal infirmity is of such a nature which could be easily cured by having the matter remitted to the trial court with a direction to call upon the appellant to make the formal amendments to the averments in the complaint so as to make the controlling company of the industrial unit figure as the concerned accused. [805BC, 804G, EF, H 805A] The Board and its legal advisors should have drafted the complaint with greater circumspection not to leave any technical flaw which would invalidate the initiation of the prosecution allowing a large business house to escape the consequences of the breaches committed by it of the provi sions of the Act with impunity. [805GH]

No. 457 of 1972 (Under Article 32 of the Constitution of India) Soli J. Sorabji, section Rangarajan, Harish N. Salve, D .N. Mukharji, Ranjan Kukherjee, Udey K. Lalit, S.K. Nandi and section Parekh for the Petitioner. Dr. Shankar Ghosh, G.L. Sanghi, P. Chowdhary, C.S. Vaidyanathan, C.V. Subba Rao, for the Respondents. Mrs. A.K. Verma for the Intervener. The following Judgments of the Court were delivered: SABYASACHI MUKHARJI, J. I agree with Brother Venkata chaliah, that the contentions urged on behalf of the peti tioner in support of the challenge to the impugned legisla tions must fail and the writ petitions must be dismissed. I would, however, like to express my 553 views only on one aspect of the matter, which is common to this case as well as the writ petition No. 458/72, civil appeal No 4113/85 and writ petition No. 5(N)/74, i.e. the scope of judicial review of legislation where there is declaration in the legislation under article 31C of the Consti tution. In these writ petitions we are concerned with two legis lations, namely, the Indian Electricity (Assam Amendment Act, 1973, (Assam Act IX of 1973), and the Tinsukhia & Dibrugarh Electric Supply Undertakings (Acquisition) Act, 1973 (Act X of 1973). The main point which is significant in these writ petitions, is the extent and scope of judicial review of legislation where there is 'declaration under article 31 C of the Constitution, which enjoins that no law giving effect to the policy of the State towards securing all or any of the principles laid down, inter alia, namely, Arti cles 38, 39, 39A, 40, 41, 42, 43A, 44 to 48, 48A and 49 to 51 shall be deemed to be void on the ground that those are inconsistent or take away or abridge any of the rights conferred by Article 14 or 19, and further provides that no law containing a declaration that it is for giving effect to such a policy, shall be called in question in any court on the plea that it does not give effect to such a policy. The two legislations in question are covered by the declaration under Article 31C of the Constitution. The principal question which falls for consideration is, whether that declaration is justiciable and open to judicial review and the extent of that judicial review. Article 39(b) of the Constitution enjoins that the State in particular should direct its policy towards securing that the ownership and control of the material resources of the community are so distributed as to best subserve the common good and that the operation of the economic system does not result in concentration of wealth and means of production to the common detriment. See, in this connection, the observations of Ray J. as the learned Chief Justice then was, in Kesava nanda Bharati vs State of Kerala, at 45 1 452. Hence, in order to decide whether a Statute is within Article 31C, the Court, if necessary, may examine the nature and the character of legislation and the matter dealt with as to whether there is any nexus between the law and the principles mentioned in Article 39(b) and (c). On such an examination if it appears that there is no such nexus be tween the legislation and the objectives and the principles mentioned in Article 39(b) & (c), the legislation will not enjoy the protection of Article 31C. In order to see the real nature of the Statute, if need be, the court may also tear the veil. 554 Justice Jaganmohan Reddy in the same decision at page 530 of the report reiterated that a law not attracting Article 31C cannot be protected by a declaration by just mixing it with other laws really failing within Article 31 C with those that do not fall under that Article. Hence, in such a case the Court will always be competent to examine the true nature and character of the legislation in the particular instance and its design and the primary matter dealt with its object and scope. In this connection, reli ance was placed on the observations of the Privy Council in Charles Russel vs The Queen, [1882] VII AC 829 at 838 840. Justice Palekar in the same decision at page 63 1 also reiterated that if the court comes to the conclusion that the object of the legislation was merely a pretence and the real object was discrimination or something other than the object specified in Article 39(b) and (c), Article 31C would not be attracted and the validity of the Statute would have to be tested independently of Article 31C. Whenever a question is raised that the Parliament or the State legislature have abused their powers and inserted a declaration in a law for not giving effect to securing the Directive Principles specified in Article 39(b) & (c), the court can and must necessarily go into that question and decide. See the observations of Justice Mathew in Kesavanan da Bharati 's case (supra) at page 855 of the report. If the court comes to the conclusion that the declaration was merely a pretence and that the real purpose of the law is the accomplishment of some object other than to give effect to the policy of the State towards securing the Directive Principles as enjoined by Article 39(b) & (c), the declara tion would not debar the court from striking down any provi sion therein which violates Articles 14, 19 or 31. In other words, if a law passed ostensibly to give effect to the policy of the State is, in truth and substance, one for accomplishing an unauthorised object, the Court would be entitled to tear the veil created by the declaration and decide according to the nature of the law. Also see pages 851 & 856 of the report. Justice Beg, as the learned Chief Justice then was, at pages 884 885 of the report reiterated that a colourable piece of legislation with a different object altogether but merely dressed up as a law intended for giving effect to the specified principles would fail to pass the test laid down by the first part, and the declara tion by itself would not preclude a judicial examination of the nexus, so that the courts can still determine whether the law passed is really the one covered by the niche carved out by Article 31C or merely pretends to be so protected by parading under cover of the declaration. Justice Dwived at page 934 of the report said that the Court still retains power to determine whether the law has relevancy to the distribution of the ownership and 555 control of the material resources of the community and to the operation of the economic system. If the Court finds that the law has no such relevancy, it can declare the law void. The declaration cannot be utilised as a clog to pro tect law bearing no relationship with the objectives men tioned in the two clauses of Article 39. With respect, I am inclined to agree with the observa tions of Justice Chandrachud, as the learned Chief Justice then was, at page 996 of the said report that the declara tion under Article 31 C does not exclude the jurisdiction of the Court to determine whether the law is for giving effect to the policy of the State towards securing the principles specified in Article 39(b) & (c). Chief Justice Chandrachud in Minerva Mills Ltd. vs Union of India, ; at 261 observed that the clear intendment of Article 31C is that the power to enquire 'into the question whether there is a direct and reasonable nexus between the provisions of a law and a Directive Principle can not confer upon the courts the power to sit on judgment over the policy itself of the State. At the highest, courts can, under Article 31C, satisfy themselves as to identity of the law in the sense whether it bears a direct and reasona ble nexus with the directive principles. If the court is satisfied as to the existence of such nexus, the inevitable consequence provided for by Article 31C must follow. He recorded that all the 13 Judges in Kesavananda Bharati 's case (supra) agreed. The only question open to judicial review under Article 31 C is whether there is a direct and reasonable nexus between the impugned law and the provisions of Article 39(b) & (c). Reasonableness is evidently regard ing the nexus and not regarding the law. Justice Bhagwati, as the learned Chief Justice then was, reiterated at pages 337 338 of the report that if the Court finds that the law though passed seemingly for giving effect to a Directive Principle is, in pith and substance, one for accomplishing an unauthorised purpose unauthorised in the sense of not being covered by any Directive Principle, such law would not have the protection of the amended Article 31C, which does not give protection to a law which has merely some remote or tenuous connection with a Directive Principle. What is necessary is that there must be a real and substantial connection and the dominant object of the law must be to give effect to the Directive Principles. Also see the observations of this Court in Sanjeev Coke Mfg. Co. vs Bharat Coking Coal Ltd. & Anr., ; at 1020. 556 Looked at from this point of view, it cannot be said that the principles of colourable legislation would not be applicable. If it was demonstrated that there was no direct and reasonable nexus between these two impugned laws and the principles as enshrined under Article 3 l(b) & (c) of the Constitution, then that would have been colourable legisla tions and would have been bad on that score. It was contended on behalf of the petitioner by Mr. Sorabji as well as Mr Rangarajan that in order to bye pass 'the payment of compensation for acquisition of property of the petitioner in negotiations the device of the impugned Acts was envisaged. In that context, the substitution of the book value in place of market value was, therefore, depriva tion of property and is illusory and would amount to taking away of ' property without compensation. I do not and cannot agree. It is indisputed that the electric energy generated by the supplier petitioner compa nies constitutes material resources of the community within the scope and meaning of Article 39(b), and having regard to the true nature and the purpose of the legislations, reading the legislations entirely the object of the legislations have a direct and reasonable nexus with the objective of distributing the material resources so as to subserve the common good. The determination of value thereof and the substitution of the bookvalue in place of market value, are only methods for such acquisition and do not disclose the true nature and character of the legislation, but are inci dental provisions thereof. If that is the position then it is incorrect to say that what was acquired, was not the material resources but choses in action. The true nature and character of the legislations in. question was to acquire the material resources, namely, the electric energy for better supply and distribution. In that view of the matter the principles of the decision of the Division Bench of the Calcutta High Court in Bihar State Electricity Board & Ors. vs Patna Electricitv Supply Co. Ltd., would have no scope of application to this case. A Constitution Bench of this Court in State of Tamil Nadu & Ors. vs L. Abu Kavur Bai & Ors., has expressed the view that the Act giving effect to Article 39(b) & (c) is pro tected if a reasonable nexus is established. In that view of the matter, I agree having regard to the true nature and character of the legislations that the impugned legislations are not colourable legislations in the sense that there was no direct and reasonable nexus with Article 31(b) & (c) of the Constitution. 557 On the other aspects of the matter, I agree with re spect, with the conclusion indicated in the judgment of Justice Venkatachaliah. VENKATACHALIAH, J. 1. In these two writ petitions invok ing Article 32 of the Constitution of India, the Tinsukia Electric Supply Company Limited and the Dibrugarh Electric Supply Company Limited, which are licensees under the 19 10 for the supply of electricity within the areas of the municipal boards of Tinsukhia and Dibrugarh towns respectively, in the. State of Assam and the share holder Managing Directors of the two companies assail the constitutional validity of the Indian Electricity (Assam Amendment) Act, 1973, and of the Tinsukia and Dibrugarh Electric Supply Undertaking (Acquisition) Act, 1973. By the latter enactments, the undertakings of the two companies were sought to be acquired so as to vest them in the Govern ment with effect from 27.9. The petitioners also urge, in the petitions, a challenge to the validity of the Twentyfourth and Twenty fifth Amend ments to the Constitution. This part of the petition, in view of the subsequent pronouncements of this court on these amendments, does not survive. The petitioner companies are Public Limited Companies registered under the Indian Companies Act, 1913, and are existing companies under the with their registered offices at Tinsukhia and Dibrugarh respectively in the State of Assam. The two companies, Tinsukhia Electric Supply Company Ltd., and the Dibrugarh Electric Supply Company Ltd. hereinafter referred to respectively as the 'Tinsukhia Co. ' and 'Dibrugarh Co. ' were granted 'licences under the provisions of the ( 1910 Act for short) for supply of electricity within the respective licenced areas viz. of the Tinsukhia and Dibru garh Municipal Boards. The 'Dibrugarh Company ' was granted the 'Dibrugarh Electricity Licence, 1928 ' on terms and conditions particularised in the grant, incorporating, inter alia, an option to the State to purchase the undertaking on the expiration of 50 years from 13.2.1928 the date of com mencement of the licence and thereafter on the expiration of every subsequent period of twenty years. The Tinsukhia Company was similarly granted the 'Tinsuk hia Electricity Licence, 1954 ', incorporating, inter alia, a condition as to the option exercisable by the State of Assam to purchase the electricity undertaking of the licencee on the expiration of 20 years from 21.7. 1954, the date of commencement of the licence, and thereafter on 558 the expiration of every subsequent decennial period. However, by two Ordinances, namely, The Indian Elec tricity (Assam Amendment) Ordinance, 1972: (Assam Ordinance VII, 1972) and the Tinsukhia & Dibrugarh Electricity Supply Undertakings (Acquisition) ordinance, 1972, (Assam Ordinance VIII of 1972) promulgated by the Governor in exercise of his legislative powers under Article 2 13 of the Constitution, the Electricity Supply Undertakings of the two companies were acquired by, and stood vested in, the Government with effect from 23.30 hrs. on 27.9.1972. Possession and control of the two undertakings were, accordingly, taken over by the Government of Assam that day. The two ordinances were subse quently replaced by the two corresponding legislative enact ments viz., the Indian Electricity (Assam Amendment) Act, 1973, (Assam Act IX, 1973) and the Tinsukhia & Dibrugarh Electric Supply Undertakings (Acquisition) Act, 1973, (Assam Act, X of 1973). At the time of filing of the writ petitions the two Ordinances had not been replaced by the legislative meas ures. However, after the coming into force of the two legis lative enactments, with retrospective effect from:the date of promulgation of the earlier ordinances, petitioners sought, and were granted by an order of this Court dated 18.12.1973, leave to amend the petitions so as to direct the challenge against the enactments. An advertence, though brief, to the factual anteced ents leading upto to the promulgation of the Ordinances and to certain earlier steps taken by the State Government to acquire the said undertakings, first by negotiations, and later by exercise of the option to purchase, is necessary in order to put the grounds of challenge in their proper per spective. Respondent No. 4 i.e. the Assam State Electricity Board, it would appear, had been expressing its intention to take over the undertaking of the Tinsukia Co. by private negotia tions even from the year 1964. Pursuant to and in implemen tation of this proposal the Board had constituted a commit tee of 3 members for assessing the value of the assets of the Tinsukhia 's undertaking. On the valuation so made and the inventories so prepared, the Board, on 27.3.1970, in formed the Tinsukia Co. that the Board had approved the valuation of the assets of the undertaking at Rs.30,54,246, excluding, the value of the land, whose value was later estimated at Rs.2,40,000. By letter dated 4.3.1971, the Chairman of the Assam State Electricity Board 559 informed Tinsukia Co., that the company should immediately signify and communicate its acceptance of the proposal to transfer the undertaking to the Board at the valuation of Rs.33,00,000. The company, appears to have tarried and did not signify and communicate its immediate and unqualified acceptance of the offer; but appears to have had some coun ter proposal in mind and, in the expectation of pursuading the Board to its view, requested the Chairman of the Board to visit Tinsukia for holding further discussions in the matter of valuation of the Undertaking. Thereafter the Chairman along with the officers of the Board visited Tinsu kia sometime in June, 1971, and held discussion with the company. The company avers that pursuant to these discus sions, the Executive Engineer of the Board was asked by the Chairman to prepare a fresh inventory as on 31.10.1971 in collaboration with the company. However, the Secretary of the Board sent a communication dated 10.12.1971 to the company to the effect that as the company had not conveyed its concurrence to the offer con tained in the Board 's letter dated 25.3.1970 the said offer be treated as withdrawn. Thereafter, the Board issued the notice dated 15/23 May 1972 to the company conveying the Board 's intention to exercise its option of purchasing the undertaking under Section 6(1) of the 1910 Act read with clause 12(iv) of the licence on the expiration "the term of the licence" and, accordingly, required the company to sell the undertaking to the Board on the expiration of 21.9.1974 when the 20 year period of the licence would come to an end. In response to this notice, the company sent its communica tion dated 17.8.1972 seeking confirmation of its expectation that the purchase price for the statutory sale would be determined in accordance with the provisions of section 7A of the 1910 Act and that such price would also be tendered to the company on or before the date of taking over. Nothing further appears to have happened pursuant to this notice to purchase. But, as stated earlier, the two Ordinances were promulgated on 27.9.1972 for the compulsory acquisition of the undertaking of the company. So far as the Dibrugarh company is concerned, similar negotiations for purchase by private negotiations had been initiated and the Chief Engineer of the Board accompanied by the Finance and Accounts Member of the Board visited Dibru garh on 27.1.1965 for discussions as to the valuation of the undertaking. Nothing moved in the matter for some years. However, in the communication dated 3.8.1970 addressed by the Secretary to Government of Assam, Power (Electricity), Mines and Minerals Department, to the Secretary of the 560 Board, it was reiterated that Government had decided that the undertaking of the Dibrugarh Co. should be taken over by negotiation. While matters remained thus, the company 's undertaking was taken over on 27.9.1972 pursuant to the two ordinances promulgated by the Governor. We may briefly turn to the provisions of the two enactments which have since replaced the two Ordinances: The amendments made to Sections 5, 6 and 7A of the , by the Indian Electricity (Assam Amendment) Act, 1973, are substantial and far reach ing. Section 2 of the Amending Act amended Section 5 of the Principal Act by substituting the expression "the purchase price of the undertaking" in sub sec. (2) of Section 5 by the expression 'an amount '. Section 3 of the Amending Act which amended sub Sec. (7) of Section 6 of the Principal Act substituted the words 'the purchase price ' occurring in sub Sec. (7) of Section 6 by the words "an amount". The amendments brought about by Section 4 of the Amending Act to Section 7 A of the Principal Act were equally substantial. Section 7A of the Principal Act, ' it may be recalled, pro vided that where an undertaking of a licensee, not being a local authority, was sold under sub Sec. (1) of Section 5 the purchase price of the undertaking shah be the market value of the undertaking at the time of purchase, or where the undertaking had been delivered before the purchase under sub Sec. (3) of Sec. 5, at the time of delivery of the undertaking, and that if there was any difference of dispute regarding such purchase price, the same shall be determined by arbitration. But Section 4 of the Amending Act substitut ed an entirely different provision in the place of the old section 7 A. It substituted "book value" in place of "mar ket price". Sections 5(2), 6(7) and 7 A, of the Principal Act after their amendment read thus: "Section 5(2): Where an undertaking is sold under sub section (1) the purchaser shall pay to the licencee an amount in accord ance with the provisions of sub sections (1) and (2) of Section 7 A." Sub sec. (7) of Section 6, after the amend ment, reads: Section 6(7): Where an undertaking is purchased under this section, the purchaser shall pay to the license an amount determined in accordance with the provisions of sub sections (1), (2) and (3) of Section 7A. 561 Section 7A reads: "7 A. Determination of amount pay able. (1) where an undertaking of a licensee is sold under sub section (1) of Sec. 5 or purchased under Sec. 6, the amount payable for the undertaking shall be the book value of the undertaking at the time of purchase or where the undertaking has been delivered before the purchase under sub Section (3) of Sec. 5, at the time of delivery of the undertaking. (2) The book value of an undertaking for the purpose of sub section (1) shall be deemed to be the depreciated book value as shown in the audited balance sheet of the licensee under the law for the time being in force, of all lands, buildings, works, materi als and plant of the licensee, suitable to and used by him for the purpose of the undertak ing, other than (i) a generating station declared by the licensee not to form part of the undertaking for the purpose of purchase, and (ii) service lines or other capital works or any part thereof which have been construct ed at the expense of the consumers, but with out any addition in respect of compulsory purchase or of goodwill or any profit which may be or might have been made from the under taking or of any similar consideration. (3) Notwithstanding anything contained in any licence or any instrument, order agreement or law for the time being in force in respect of any additional sum by whatever name may it be called, payable to a licensee for compulsory purchase, the licensee shall be entitled only to a solatium of ten per centum of the book value as determined under sub sections (1) and (2) for compulsory purchase of his undertaking under Sec. (4) No provision of any Act for the time being in force including the other provi sions of this Act and of any rules made there under or of any instrument including licence have effect by virtue of any of such Acts or any rule made thereunder, shall, in so far as it is inconsistent with any of the provisions of this section, have any effect. " It is material to point out that sub section (3) of Section 1 of the Amending Act provides that the Amending Act shall be deemed to 562 have come into force on 27.9.1972, which was the date of promulgation of the earlier Ordinance. We may now notice some of the material provisions of the Acquisition Act i.e. Assam Act X of 1973. Section 1(3) provides that the Act shall be deemed to have come into force on 27.9.1972. Clauses (f), (h), (j) & (l) of the interpretation clause (Sec. 2) may be noticed: 2(f) 'Fixed Assets ' includes works, spare parts, stores, tools, motor and other vehicles, office equipment and furniture; 2(h): 'Licensee ' means the Tinsukia Electric Supply Company Ltd. and/or the Dibrugarh Electric Supply Company Private Ltd., as the case may be; 2(j): 'Undertaking ' means the Tinsukia Elec tric Supply Undertaking owned and managed by the Tinsukia Electric Supply Company Ltd., and/or the Dibrugarh Electric Supply Undertak ing owned and managed by the Dibrugarh Elec tric Supply Company Private Ltd., as the case may be; 2(1): 'Works ' includes electric supply lines and any lands, buildings, machinery or appara tus required to supply energy and to carry into effect the object of a licence granted under the Electricity Act; Section 3(2) provides: 3(2): Any notice given under any of the provisions of the Electricity Act or the Electricity Supply Act to the licensee for the purchase of the undertaking and in pursuance of which notice the undertaking has not been purchased before the commencement of this Act, shall lapse and be of no effect. Explanation: There shall be no obliga tion on the part of the Government or the Board to purchase any undertaking in pursuance of any notice given as aforesaid, nor shall the service of such notice ' be deemed to prevent the Government from taking any pro ceeding de novo in respect of the undertaking under this Act. Section 4 provides: 4. Vesting date. The Tinsukia and Dibrngarh Electric Sup 563 ply Undertakings shall be deemed to be trans ferred to and shall vest in the Government, on the 27th day of September, 1972, at 11.30 P.M. Section 5 provides for the transfer of the undertaking so acquired by Government to the Board. Section 6 provides for the gross amount pay able to the licensee. Gross amount payable to Licensee. (1) The gross amount payable to a licensee shall be the aggregate value of the amounts specified below: (i) the book value of all completed works in beneficial use pertaining to the undertaking and taken over by the Government (excluding works paid for by consumers) less depreciation calculated in accordance with Schedule I; (ii) the book value of all works in progress taken over by the Government, exclud ing works paid for by consumers or prospective consumers; (iii) the book value of all stores including spare parts taken over by the Gov ernment and in the case of used stores and spare parts, if taken over, such sums as may be decided upon by the Government; (iv) the book value of all other fixed assets in use on the vesting date and taken over by the Government less depreciation calculated in accordance with Schedule I; (v) the book value of all plants and equipments existing on the vesting date, if taken over by the Government, but no longer in use owing to wear and tear or to obsolescence, to the extent such value has not been written off in the books of the licensee less depreci ation calculated in accordance with Schedule I; (vi) the amount due from consumers in respect of every hire purchase agreement referred to in Sec. 7(i)(ii) less a sum which bears to the difference between the total amount of the instalments and the original cost of the material or equipment, the same proportion as the amount due bears to the total amount of the instalments; 564 (vii) any amount paid actually by the licensee in respect of every contract referred to in Section 7(i)(iii). Explanation The book value of any fixed asset means its original cost and shall com prise (i) the purchase price paid by the licensee for the asset, including the cost of delivery and all charges properly incurred in erecting and bringing the asset into benefi cial use as shown in the books of the under taking; (ii) the cost of supervision actually incurred but not exceeding fifteen per cent of the amount referred to in paragraph (i); Provided that before deciding the amounts under this subsection, the licensee shall be given an opportunity by the Govern ment of being heard, after giving him a notice of at least 15 days therefor. (2) In addition a sum equal to 10 per cent of the amounts assessed under Clauses (i) to (iv) of sub section (1) shall be paid to the licensee by the Government. (3) When any asset is acquired by the licensee after the expiry of the period to which the latest annual accounts relate, the book value of the asset shall be such as may be decided upon by the Government; Provided that before deciding the book value of any such asset, the licensee shall be given an opportunity by the Government of being heard after giving him a notice of at least 15 days therefor. Section 7 provides: 7. Vesting of undertakings. (1) The property, rights, liabilities and obligations specified below in respect of the undertaking shall vest in the Government of the vesting date; (i) all the fixed assets of the licensee and all the documents relating to the under taking; 565 (ii) all the rights, liabilities, and obligations of the licensee under hire pur chase agreements, if any, for the supply of materials or equipment made bona fide before the vesting date; (iii) all the rights, liabilities and obligations of the licensee under any other contract entered into bona fide before the vesting date, not being a contract relating to the borrowing or leading of money, or to the employment of staff. (2) All the assets specified in sub Section (1)(i) shall vest in the Government free from any debts, mortgages or similar obligations of the licensee or attaching to the undertaking; Provided that such debts, mortgages or obligations shall attach to the amount payable under this Act for the assets. (3) In the case of an undertaking which vests in the Government under this Act, the license granted to it under part II of the Electricity Act shall be deemed to have been terminated on the vesting date and all the rights, liabilities and obligations of the licensee under any agreement to supply elec tricity entered into before that date shall devolve or shall be deemed to have devolved on the Government; Provided that where any such agreement is not in conformity with the rates and condi tions of supply approved by the Government and in force on the vesting date, the agreement shall be voidable at the option of the Govern ment. (4) In respect of any undertaking to which Sec. 4 applies, it shall be lawful for the Government or their authorised representa tive on and. after the vesting date, after removing any obstruction that may be or might have been offered, to take possession of the entire undertaking, or as the case may be the fixed assets and of all documents relating to the undertaking which the Government may require for carrying it on. (5) All the liabilities and obliga tions, other than those vesting in the Govern ment under sub Sections (1) and (3), shall continue to be the liabilities and obligations of the licensee, after the vesting date. Explanation. All liabilities and obligations in respect of 566 staff, taxes, provident fund, employees ' state Insurance, Industrial disputes and all other matters, upto and including the vesting date, shall continue to be the liabilities and obligations of the licensee, after the vesting date. Section 9 provides: 9. Deductions from the gross amount. The Government shall be entitled to deduct the following sums from the gross amount payable under this Act to a licensee (a) the amount, if any, already paid in ad vance; (b) the amount if any, specified in Sec. 8; (c) the amount due, if any, 'including interest thereon, from the licensee to the Board, for energy supplied by the Board before the vesting date; (d) all amounts and arrears of interest, if any thereon, due from the licensee to the Government, (e) the amount, if any, equivalent to the loss sustained by the Government by reason of any property or rights belonging to the undertaking not having been handed over to the Government, the amount of such loss being deemed to be the amount by which the market value of such property or rights exceeds the amount payable therefor under this Act, to gether with any income which might have been realized by the Government, if the property or rights had been handed over on the vesting date; (f) the amount of all loans due from the licensee to any financial institutions consti tuted by or under the authority of the Govern ment and arrears, or interest, if any, there on; (g) all sums paid by consumers by way of security deposit and arrears of interest due thereon on the vesting date, in so far as they have not been paid over by the licensee to the Government, less the amounts which according to the books of the licensee are due from the consumers to the licensee for energy supplied by him before that date; (h) all advances from consumers and prospec tive consum 567 ers, and all sums which have been or ought to be set aside to the credit of the consumers ' fund, in so far as such advances or sums have not been paid over by the licensee to the Government; (i) the amounts remaining in Tariffs and Dividends Control Reserve, Contingencies Reserve and Development Reserve, in so far as such amounts have not been paid over by licen see to the Government; (j) the amount, if any, as specified in Ss. 11(2) and 11(3): (k) the amount, if any, relating to debts, mortgages or obligations as mentioned in proviso to sec. 7(2); Provided that before making any deduc tion under this section, the licensee shall be given a notice to show cause against such deduction, within a period of fifteen days from the date of receipt of such notice. Section 10 enables the Government to appoint, by order in writing, a person having adequate knowledge and experience in matters relating to accounts as Special Officer to assess the net amount payable under this Act, after making the deductions enumerated in section 9. Section 20 provides: 20. Arbitration. (1) Where any dispute arises in respect of any of the matters speci fied below, it shall be determined by an arbitrator appointed by the Government, who shall be a sitting or retired District or High Court Judge (a) whether any property belonging, or any right, liability or obligation attaching to the undertaking, vests in the Government; (b) whether any fixed asset forms part of the undertaking; (c) whether any contract or hire pur chase agreement or other contract referred to in SEC. 7(1)(ii) or (iii) has been entered into bona fide or not; (d) whether any agreement to supply electricity entered into by the licensee prior to the vesting date is of the nature referred to in proviso to section 7(3). 568 (2) Subject to the provisions of this section, the provisions of the (Central Act 10 of 1940) shall supply to all arbitrations under this Act. Section 23 of the Act incorporates a declaration to the effect that the legislation is for giving effect to the policy of the State to secure the principle of State Policy contained in Article 39(b) of the Constitution of India. The two legislations, one amending the provisions of Sections 5(2) 6(7) and 7 A of the , and the other providing for the acquisition of the two undertakings are challenged by the petitioner on several grounds, the principal attack, however, being that the legislations, brought forth, as they were, in the wake of the private negotiations and the exercise of the option to purchase, are not bona .fide, but constitute a mere colour able exercise of the legislative power and that, at all events the real objects of the two legislations have no direct and reasonable nexus to the objects envisaged in clause (b) of Article 39 of the Constitution and that a careful and critical discernment of the context in which the legislation was brought forth would lay bare before the judicial eye that what was sought to be acquired was not the "undertakings" of the two companies but really the differ ence between the "market value" of the undertakings which the State has agreed, under the private treaties, to pay and what, in any event, the State was obliged to pay under the provisions of Section 7A, as it then stood on the one hand and the "Book Value" of the undertaking, which the law seeks to substitute on the other. If the protective umbrella of Article 31 C is, thus, out of the way, the 'amount ' payable under the impugned law, it is urged, would be illusory even on the judicially accepted tests applied to Article 31(2) as it then stood. The validity of some of the specific provi sions of the acquisition law which excluded certain items from valuation and envisaged and authorised certain deduc tions in the amount are also assailed. These writ petitions were heard along with a batch of writ petitions, viz, WP Nos. 5, 14, and 15 of 1974, where the constitutionality of an analogous statute of the State of Tamil Nadu was assailed by the companies whose undertak ings were similarly sought to be acquired and civil appeal No. 243 of of 1985 and C.A. 4113 of 1985 arising out of the Judgment, dated 20.7.1984, of the High Court of Bombay striking down certain amendments to the , made by the Maharashtra State Legislature in the matter of statutory purchase of some of the private 569 electricity supply undertakings in the State of Maharashtra. The three batches of cases arising from Assam, Tamil Nadu and Maharashtra were heard together as there were certain aspects common to them. However, in view of the distinctiveness and particularities of the facts of the cases and the situational variations even in respect of the legal context in which questions arise for decision, the three batches of cases are disposed of by separate Judg ments. The present Judgment disposes of the challenge made to the Assam Legislation. We have heard Shri Soli J. Sorabji, learned Senior Advocate, and Shri Harish Salve, learned Advocate, for the petitioner in W.P. 457 of 1972 and Sri Rangarajan, learned Senior AdVocate for the petitioner in W.P. 458 of 1972 and Dr. Shankar Ghosh, learned Senior Advocate, for the State of Assam and Sri G.L. Sanghi, learned Senior Advocate for the Assam State Electricity Board and its authorities. On the contentions urged at the hearing, the points that fall for consideration in the writ petitions admit of being formulat ed thus: (a) That the declaration in Sec. 23 of Assam Act X 1973 is invalid as the impugned Act has no reasonable and direct nexus to the principles in Article 39(b) of the Constitu tion and is merely a cloak which the law is made to wear to undo the legitimate obliga tions arising out of the intended statutory sale of the undertakings and, accordingly, Article 31 C is not attracted. That, at all events, not every provision of a statute is entitled to the protection of Article 31 C but only those provisions which are basically and essentially necessary for giving effect to the principle in Article 39(b) and that, accordingly, the provisions in the impugned law relating to the determination of the amount do not attract Article 31 C. (b) That in effect and substance the law is not one for the acquisition electricity undertakings but is merely one to acquire a 'chose in action ' and to extinguish the legal rights of the Tinsukhia Co. for the difference between the "market price" of the undertakings which the State was obliged to pay under the intended statutory purchase and the "Book Value" to which the liability is sought to be limited under the impugned legislations. (c) That, if the immunity under Article 31 C for the legis 570 lations is not available, the 'amount ' payable in accordance with the provision of the ac quiring law is wholly "illusory" and is an attempt to take away a 'fortune for a far thing '. And accordingly, the law is ultra vires and violative of Article 31(2) of the Consti tution (as it then stood). Payment of "Book Value" of the assets acquired irrespective of their 'market value ' renders the 'amount ' unreal and illusory. (d) That the exclusion of "service lines", which are part of the assets of the licensee as from valuation, renders the law unconstitutional and ultra vires. (e) That the provision of Section 9(i) for the deduction of the 'Reserves ' from the "Amount", in addition to the takingover of the same in the form of 'fixed assets ' and the omission to value the unexpired period of licence are unreasonable and arbitrary. (f) That the continued liability of the petitioner licensee under Section 11(3) for payment to employees retrenched by Government after the vesting date and the provision for deduction of such sums from the "Amount" payable for the acquisition are arbitrary and unreasonable. (g) That while Section 7(5) makes all the liabilities of the licensee, other than those specifically referred to and expressly taken over by Government under the Act, as the continuing liabilities of the licensee, yet some of those liabilities referred to in clauses (c) (d) and (f) of Section 9, are yet made deductible from the "Amount", without the corresponding express obligation on the part of the Government to hold the sums so deducted in trust for, and for benefit of the concerned creditors and without statutory discharged to the petitioner in that behalf. This is unjust enrichment. (h) That there is no machinery envisaged by and set up under the 'Act ' to adjudicate upon and determine either the amounts deducti ble under clauses (c) (d) and (e) of Section 9 or the "loss" deductible under Section 8. This renders the provisions of the 'Act ' intracta ble and liable to be declared unworkable. 571 (i) That Section 20 limits arbitrabili ty only to matters enumerated in clauses (a) to (d) of that section, leaving many other disputes arising under the 'Act ' between the Government and the licensee without any ma chinery for their resolution, also rendering the 'Act ' unworkable. The contentions noticed at (a), (b) and (c) cover amongst them certain overlapping areas. The central attack, however, remains that Assam Act X of 1973 has no reasonable and direct nexus with the effectuation of the principles envisaged in clause (b) of Article 39 of the Constitution and that the relationship of the impugned legislation to the objects of Article 39(b), being merely remote and tenuous, the legislation is a colourable legislation. The contentions are, however, noticed distinctively to make due acknowledge ment for the shifts of emphasis in the course of the argu ments. In this case the legal and constitutional position has to be examined with reference to the provisions of the Constitution as they stood as in 1972. Article 31C was inserted by the 25th Amendment with effect from 20.4.1972 prior to its more comprehensive expansion to extend its protection to the laws giving effect to "All or any of the provisions laid down in Part IV ' brought about by the Con stitution (Fortysecond Amendment) 1976. Article 31C gave protection in respect of a law giving effect to the policy of the State towards securing the principles specified in clause (b) or clause (c) of Article 39. Then again, though Article 31 had not, by then, been deleted, its content had been cut down so much, so that even under a law providing for acquisition of property which did not have the protec tion of 31C the adequacy of the "Amount" determined was not justiciable and all that was necessary was that it should not be unreal or illusory. By then the Constitution had done away with the idea of a Just equivalent or full idemnifica tion principle and substituted therefore the idea of an "Amount" and rendered the question of the adequacy or the inadequacy of the amount non justiciable. The Indian Constitutional experiments with the 'right to property ' offer an interesting illustration of how differ ences in the interpretation of the fundamental law sometimes conceal or, perhaps, expose conflicts of economic idealog ics and philosophies. With the right to property conceived of as a fundamental fight at the inception of the Constitu tion, it found so strong an entrenchment that in its pris tine vigour it tended to be overly demanding and sought the sacrifice of too many social and economic goals at its alter and made 572 the economic cost of social and economic change unaffordably prohibitive and the fulfilment of the constitutional ethos of the promise of an egalitarian social order difficult. Inevitably the constitutional process of de escalation of this right in the constitutional scale of values commenced culminating, ultimately, in the deletion of this right from the fundamental rights part. Articles 31 A and 31 C were significant Constitutional milestones in the harnessing and socialisation of the concept of the right to property which, in its laissez faire trappings, became an unruly horse. Article 31 C in effect and substance is to urban property what Article 31 A is to agricultural property. The arguments in this case in regard to what, if at all, survives for judicial scrutiny in the matter of the Constitutional tests of the validity, under Article 31(2) of the 'amount ' if the law has the protection of Article 31C, were marked by a forensic resourcefulness aimed at a resus citation and re kindling of the relics and embers of old and hard fought but lost legal battles. Sri Rangarajan, learned Senior Advocate, relying upon the construction suggested by him of certain observations of Chandrachud, J. in the Keshavananda case and certain observations of Fazl Ali J. in State of Tamil Nadu vs Abu Kavur Bai, ; strenuously, and quite seriously, attempted the exercise that even if a law had the protection of Article 31C, yet the court would be required when the provision is challenged to go into the question of the "Amount" being illusory or the principles for its determina tion being arbitrary. Learned Counsel further propounded that despite Article 31 C, the burden of proving that the amount is not illusory and principles for its determination not arbitrary is on the State. We may excerpt the substance of the contention from the written submissions filed by Sri Rangarajan: " . . Therefore, where the law provides for compensation, fin spite of the same being protected by Article 31 C the Court can go into the question of the amount being illusory or the principles being arbitrary. Not merely that, the burden of providing that the amount is not illusory and the principles are not arbitrary, is on the State. " We shah later examine how far this contention is at all available in the light of the authoritative pronouncements of this Court on the effect of Article 31C and whether if a law has such protection, the plenitude of its constitutional immunity would not extend to all attacks based on Articles 14, 19 and 31 (as it then stood). 573 We may now examine the contentions seriatim. Contentions (a) and (b) admit of being dealt with together. Re: Contentions (a) and (b): Shri Soli J Sorabjee submitted that in the present case, notwithstanding the legislative declaration in Sec. 23 of Assam Act X of 1973, the question whether there is any real nexus between the legislation and the principles envisaged in Article 39(b) is justiciable and indeed the existence of such nexus or connection is a condition precedent for the attraction and applicability of Article 31 C. Learned Coun sel submitted that in order to decide whether a Statute is within Article 31 C or not, the Court has to examine the nature and character of the legislation and if upon such scrutiny it appears that there is no nexus between the legislation and the principles in Article 39(b) the legisla tion must be held to fall outside the protection of Article 31 C. Shri Sorabjee said, stripped of its veils and vest ments, the law, would show its real nature as one whose avowed nexus to Article 39(b) is merely a pretence and that its purpose is other than the objects envisaged in Article 39(b). The validity of the legislation, learned counsel says, would have to be examined independently of the immuni ty under Article 31C. The proposition that the legislative declaration of the nexus between the law and the principles in Article 39 is in conclusive and justiciable is well settled. Indeed that part of Article 31 C which sought to impart a Constitutional sanctity, conclusiveness and nonjusticiability to such legislative declarations was struck down in the Keshavanada case. The sequintor is that whenever any immunity is claimed for a law under Article 31 C, the Court has the power .to examine whether the provisions of the law are basically and essentially necessary for the effectuation of the principles envisaged in Article 39(b) and (c). The observations of Mathew, J. in Keshvananda case ( may be recalled: " . . Whenever a question is raised that the Parliament or State Legisla tures have abused their power and inserted a declaration in a law not for giving effect to the State Policy towards securing the direc tive principles specified in Article 39 B or 39 C, the Court must necessarily go into that question and decide it . . " (P. 855) 574 " . . If the Court comes to the conclusion that the declaration was merely a pretence and that the real purpose of the law is the accomplishment of some object other than to give effect to the policy of the State towards securing the directive principles in Article 39(b) and (c) the declaration would not be a bar to the court from striking down any provision therein which violates Article 14, 19 or 31. In other words, if a law passed ostensibly to give effect to the policy of the State is, in truth and substance, one for accomplishing an unauthorised object, the court would be entitled to tear the veil created by the declaration and decide accord ing to the real nature of the law . " (P. 855 56) Chandrachud, J. observed in the Keshavananda case: " 'Laws passed under Article 31 C can, in my opinion, be upheld only, and only if, there is a direct and reasonable nexus between the law and the directive policy of the State expressed in Article 39 B or C." (P. 996) To the same effect are the observations of the learned Chief Justice in Minerva Mills Ltd. vs UOL. ; " . . the Courts can, under Article 31 C, satisfy themselves as to the identity of the law in the sense whether it bears direct and reasonable nexus with a directive principle." "The only question open to judicial review under the unamended Article 31 C was whether there is a direct and reasonable nexus between the impugned law and the provisions of Article 39(b) and (c)" (P. 261) (Emphasis Supplied) In the same case, Bhagwati, J. observed: " . . The point that I wish to emphasis is that the amended Article 31 C does not give protection to a law which has merely some remote or tenuous connection with a directive principle." 575 " . . Even where the dominant object of a law is to give effect to a direc tive principle it is not every provision of the law which is entitled to claim protec tion . " (P. 338) " . . it is not every provision of a statute which has been enacted with the dominant object of giving effect to a direc tive principle, that it entitled to protec tion, but only those provisions of the statute which are basically and essentially necessary for giving effect to the directive principles are protected under the amended Article 31 C " . (P. 339) (Emphasis Supplied) 13. The proposition of Sri Sorabjee, in principle, is, therefore, unexceptionable; but the question remains wheth er, upon the application of the appropriate tests, the impugned statute fails to measure up to the requirements of the Constitution to earn the protection under Article 31 C. Learned counsel sought to contend that the Assam State Electricity Board having exercised the option of purchasing the undertaking of the Tinsukia Co., under Section 6(1) of 1910 Act by the statutory notice dated 23.5.1972 requiring the company to sell the undertaking to the Board on the expiration of the period of the licence, the question of any further need to acquire the undertaking for the purpose of effectuating the objects envisaged in article 39(b) of the Constitution by the expedience of a separate and independent legislation was, indeed, unreal or non existent. The real object, therefore, of the enactment of Assam Act X of 1973 it was urged, was not to enact a law for purposes of effec tuating the objects envisaged by Article 39(b) of the Con stitution which had already been accomplished by the exer cise of the option to purchase; but was only to deprive the petitioner of its legitimate entitlements under the statuto ry sale. What was sought to be acquired by the impugned law, it is contended, was not the undertaking but the difference between the 'Market price ' and the 'Book value ' which the impugned legislation envisaged. It is urged that the purpose of the impugned law is, therefore, something other than the effectuation of principles in Article 39(b). It is also urged that with the exercise of the option to purchase what remained to. be acquired and what really was sought to be acquired was a mere actionable claim or a chose in action. It is further urged that, at all events, since not all the provisions of a legislative enactment need necessarily qualify for protection of Article 31 C but only those provi sions that have a direct nexus with the principles of Arti cle 39(b), the 576 provisions in the impugned legislation touching the determi nation of the quantum of the "Amount" are not so protected as they are intended merely to inter dict and extinguish the vested rights of the Tinsukhia Co. under the intended statu tory sale. The object of the legislation, it was urged, was not the legitimate one of securing the objects envisaged in Article 39(b) but a less honourable and less sanctimonious one of depriving the petitioner of the benefit of the statu tory contract for the sale of the undertaking pursuant to and in terms of the statutory notice dated 23.5.1972. The court, so goes the argument, is entitled to pierce the apparent veil under which the acquiring legislation masquer ades as one for securing the object of Article 39(b). Dr. Shankar Ghosh and Sri G.L. Sanghi for the State of Assam and the Assam State Electricity Board,. the contest ing Respondents, however, say that the Assam Act X, 1973, is entitled to the protection of Article 31 C as, indisputably, Electrical energy is a material resource of the community and any legislative measure to nationalise the undertaking falls squarely within the ambit of Article 39(b). Any appeal by the petitioner to the doctrine of colourable legislation, they say, is wholly inapposite as, indeed, where, as here, legislative competence is undisputed, any speculation as to the motives of the legislative is impermissible. No mala fides could be attributed to the Legislature. Respondents further submit that on the question of even the possible 'illusory ' nature, let alone the adequacy, of the "Amount" could not be agitated if the law has the protection of Article 31 C. They, however, assert that 'Book value ' is a well accepted accountancy concept of value and could never be characterised as illusory, even if the law did not come under Article 31 C. The questions that arise for consideration are, sequen tially, whether the electrical energy generated and supplied by the petitioner companies is a "material resource of the community" within the meaning of Article 39(b); whether the impugned legislation has a reasonable and direct nexus to the objective of distributing this materials resource so as to subserve the common good and what are the appropriate tests to ascertain this nexus. The incidental questions that arise on certain specific contentions centre around the effect of the option to purchase the undertaking exercised by the Assam State Electricity Board in the case of Tinsukia Co. and whether immediately upon the exercise of the option the proprietory rights respecting the undertaking of the company get transformed into a mere "actionableclaim" or "chose in action", as contended for by the petitioners. 577 Apropos of the contention that, at all events, the provi sions pertaining to the "amount" could have no reasonable or direct nexus to the principles envisaged in Article 39(b), but are merely intended to extinguish the legitimate rights of the petitioner company to receive the price of the under taking under the 1910 Act, as the law then stood, pursuant to the option exercised by the 'Board ', it would, perhaps, be necessary to ascertain the composite elements that make for a law of nationalisation and whether provisions touching the quantification of the "amount" payable for the acquisi tion are not an essential and integral part of such law. On the contention urged by Shri Rangarajan as to what could be said to survive for consideration under Article 31(2), (as it then stood), if the law has the protection of Article 31 C the question that arises is whether anything at all survives for consideration under Article 31. The conten tion indeed, runs in the teeth of several pronouncements of this Court which lay down that when Article 31 C comes in, Articles 14, 19 and 31 (the last mentioned article as it then stood) go out. This we will consider under point (c). It is not disputed that the electricity generated and distributed by the undertakings of the petitioner compa nies constitute "material resources of the community" for the purpose and within the meaning of Article 39(b). In Sanjeev Coke Manufacturing Company vs Bharat Coking Coal Ltd., ; this Court, referring to what constitute "material resources of the community" and whether resources produced by, or at the command of, private, as distinguished from the State agencies, constitute such resources as the resources of the community, noticed the contention urged in that case thus: " . . The submission of Shri A.K. Sen was that neither a coal mine nor a coke oven plant owned by private parties was a 'material resources of the community '. Accord ing to the learned counsel they would become material resources of the community only after they were acquired by the State and not until then. In order to qualify as material re sources of the community the ownership of the resources must vest in the community i.e. the State . . A law providing for acquisition was not a law for distribution . " (P. 1022) 578 Repelling this argument which suggested a limited concept of "Material resources of the Community" the Court observed: " . . We are unable to appreciate the submission of Shri Sen: The expression 'material resources of the community ' means all things which are capable of producing wealth for the community. There is no warrant for interpreting the expression in so narrow a fashion as suggested by Shri Sen and confine it to public owned material resources, and exclude private owned material resources. The expression involves no dichotomy . " ( P. 1022 & 23) It can, therefore, hardly be gain said that the electri cal energy generated and distributed by the undertakings of the petitioner constitutes "material resources of the commu nity". This takes us to the question whether the provisions of the impugned Assam Act X 1973 have any reasonable and direct nexus to the principles in Article 39(b) of the Constitution. It is true that if such a relationship is merely remote and tenuous the protection under Article 31 C may not be available. The idea of distribution of the mate rial resources of the community in Article 39(b) is not necessarily limited to the idea of what is taken over for distribution amongst the intended beneficiaries. That is one of the modes of "distribution". Nationalisation is another mode. In State of Tamil Nadu vs L. Abu Kavur Bai, ; this Court had occasion to refer to this aspect. It was held: "In other words, the word 'distribu tion ' does not merely mean that property of one should be taken over and distributed to others like land reforms where the lands from the big landlords are taken away and given to landless laboureft, . . That is only one of the modes of distribution but not the only mode . " "By nationalising the transport as also the units the vehicles would be able to go the farthest comer of the State and pene trate as deep as possible . "This would undoubtedly be a distri bution for the common good of the people and would be clearly covered by clause (b) of Article 39. " 579 On an examination of the scheme of the impugned law the conclusion becomes inescapable that the legislative measure is one of nationalisation of the undertakings and the law is eligible for and entitled to the protection of Article 31 C. 16. It was then contended that not all the provisions of a law can and need be eligible for the protection of Article 31 C and that accordingly, in the present case the provi sions as to the quantification of the "amount", which were meant to achieve an oblique motive of interdicting and extinguishing the vested rights of the petitioner company to receive payment in accordance with the provisions of the 1910 Act, as they then stood, should not have the protection of Article 31 C. We are afraid this contention proceeds on an impermissible dichotomy of the components integral to the idea of nationalisation. The economic cost of social and economic reform is, perhaps, amongst the most vexed problems of social and economic change and constitute the core ele ment in Nationalisation. The need for constitutional immuni ties for such legislative efforts at social and economic change recognise the otherwise unaffordable economic burden of reforms. The observations of Mathew J. in Keshavananda case on the point are worth recalling: "If full compensation has to be paid, concentration of wealth in the form of immova ble or movable property will be transformed into concentration of wealth in the form of money and how is the objective underlined in Article 39(b) and (c) achieved by the trans formation? And will there be enough money in the coffers of the State to pay full compensa tion?" " . . I am unable to understand the purpose of substituting the word 'amount ' for the word 'compensation ' in the sub Article unless it be to deprive the Court of any yard stick or norm for determining the adequa cy of the amount and the relevancy of the principles fixed by law. I should have thought that this coupled with the express provision precluding the Court from going into the adequacy of the amount fixed or determined should put it beyond any doubt that fixation of the amount or determination of the princi ple for fixing it is a matter for the Parlia ment alone and that the Court has no say in the matter." (1973 Supp. SCR 1 at page 846) It is, therefore, not possible to divorce the economic considera 580 tions or components from the scheme of nationalisation with which the former are inextricably integrated. The financial cost of a scheme of nationalisation lies at its very heart and can not be isolated. Both the provisions relating to the vestiture of the undertakings in the State and those per taining to the quantification of the "Amount" are integral and inseparable parts of the integral scheme of nationalisa tion and do not admit of being considered as distinct provi sions independent of each other. The memorandum of the writ petition contains aver ments as to the efficiency and public utility of the serv ices rendered by the undertakings and that on the date of the take over the market value of the Tinsukhia and Dibru garh undertakings were Rs.55 lakhs and Rs.35 lakhs respec tively and that. the undertakings were discharging their obligations to the consumers efficiently and satisfactorily. The case of the petitioners is that there was no justifica tion at all for the nationalisation as the undertakings were efficient and fully catered to the needs of the consumers. It was also averted that it was the Government and the Board the had come in the way of the expansion envisaged by the undertakings by withholding the requisite permission for the installation of additional capacity for generation of elec tricity. The Respondents have sought elaborately to traverse these grounds and to justify the measure for nationalisa tion. We are afraid, the debate whether nationalisation is by itself to be considered as fulfilling a public purpose or whether the nationalisation should be shown to be justified by the actual effectuation of the avowed objectives of such nationalisation the choice between the pragmatic and the doctrinaire approaches is concluded and no longer avail able. In Akadasi Padhan vs State of Orissa and Ors. , ; this debate on the philosophy of nationalisa tion is concluded. was held: " . . Broadly speaking, this discussion discloses a difference in approach. To the socialist, nationalisation or State ownership is a matter of principle and its justification is the general notion of social welfare. To the rationalist, nationalisation or. State ownership is a matter of expediency dominated by considerations of economic effi ciency and increased output of production . . ". " . The amendment made by the Legislature in article 19(6) shows that according to the Legislature, a law 581 relating to the creation of State monopoly should be presumed to be in the interests of the general public . " " . . In other words, the theory underlying the amendment in so far as it relates to the concept of State monopoly, does not appear to be based on the pragmatic ap proach, but on the doctrinaire approach which socialism accepts . .". Indeed, in the United States of America after the hey days of the substantive due process, the Supreme Court in 1963 in Ferguson vs Skrupa, ; said: "We refuse to sit as a 'superlegis lature to weigh the wisdom of legislation ', and we emphatically refuse to go back to the time when courts used the Due Process Clause 'to strike down state laws, regulatory of business and industrial conditions, because they may be unwise, improvident, or out of harmony with a particular school of thought ' . . Whether the legislature takes for its textbook Adam Smith, Herbert Spencer, Lord Keynes, or some other is no concern of ours." (Emphasis Supplied) 18. Equally untenable is the contention based on the assumption that immediately upon the exercise of the option to purchase, the proprietory rights of the Tinsukhia Company in relation to the undertaking stood transformed into, and was crystalised in the form of, a mere actionable claim or a "chose in action" and that, therefore, what was sought to be acquired by the present legislative measure was merely a "chose in action". It was contended that no public purpose is achieved by the acquisition of a "chose in action". This needs examination of the legal character and incidents of the consequences that flow from the exercise of the option to purchase under the 19 10 Act. The contention presupposes that contemporaneous with the service of the notice on the licensee, the proprietory rights of the licensee in relation to the undertaking, proprio vigore, get transformed into a mere "chose in action". This consequence does not flow from the pro: visions of 1910 Act. In Fazilka Electric Supply Company Limited vs The Commissioner of Income Tax, Delhi, [1962] Supp. 3 SCR 496 this court, referring to the nature of the transaction emerging from the exercise of the option, said: 582 "It merely provides for an option of purchase to be exercised on the expiration of certain periods agreed to between the parties, and section 10 further provides that in an appropriate case Government may even forego the option. This section does not provide for a compulsory purchase or compulsory acquisi tion without reference to and independently of any agreement by the licencee. " (See Page 505). (Emphasis Supplied) In Gujarat Electricity Board vs Shantilal, ; referring to the legal conse quences that ensue by a mere exercise of the option, it was held: " . that the right to purchase the undertaking accrues only at the expiration of the period of licence but for exercising that right, the authority must make its elec tion within the period prescribed in sec. 7(4) and issue a notice as required by that sub section . . " (Emphasis Supplied) That the right, title and interest of the licensee in the undertaking does not get transferred to the Board or the State, as the case may be, immediately upon the mere exer cise of the option to purchase is further clear from what is implicit in the observa tions of this Court in Godra Electricity Company Limited and another vs The State of Gujarat and another; , at page 54. The proposition contended for by the Learned Additional Solicitor General in that case was noticed thus: "In support of the contention that when once the notice exercising the option to purchase the undertaking has been served, the licensee has no further right to carry on the business, the learned Additional Solicitor General placed reliance on the decision of this Court in Kalyan Singh vs State of U. P . . " This Court held that the exercise of the option would have no such effect on the licen see 's right to carry on his business until the undertaking was actually taken over and paid for. It was held: "A licensee cannot be told that he has no right to carry on the business unless a valid purchase is made at the expiry of the period . . " 583 " . Admittedly, the undertak ing belonged to the licencee and if delivery of the undertaking is to be taken by the State Electricity Board, the purchase price must be paid before the delivery or, there must be a provision for payment of interest on the purchase price for the period during which payment is withheld. Otherwise, the licence will not cease to have operation and the licensee wilt be entitled to carry on the business." (See Page 54). The contentions that immediately upon the exercise of the option, ipso facto, the relationship between the parties get transformed into one as between a Debtor and a Creditor and that the interest of the licensee in the undertaking becomes an "actionableright", or a "chose in action" and that no public purpose could be said to be served by the acquisition of a "chose in action" are all out of place in this case. It is not necessary, therefore, to go into the question whether a "chose in action" can at all be acquired. Certain observations of this Court in Madan Mohan Pathak vs Union of India and Ors., ; do suggest that "chose in action" could also be acquired. It will also not be necessary to go into the legal concept of a "chose in action" in Indian law and its distinctiveness from the principles in English law. Williams on "Personal property" refers to "chose in action" thus: " . . another important distinction exists among personal things. Such things are said to be in possession or in action; or they are called, in law French, choses in posses sion or choses in action. Choses in possession are movable goods, of which their owner has actual possession and enjoyment, and which he can deliver over to another upon a gift or sale; tangible things, as cattle, clothes, furniture, or the like . " "The term choses in action appears to have been applied to things, to recover or realise which, if wrongfully withheld, an action must have been brought; things, in respect of which a man had no actual posses sion or enjoyment, but a mere right enforce able by action. The most important personal things recoverable by action only were 584 money due from another, the benefit of a contract and compensation for a wrong; and .these have always been the most prominent choses in action, though not the only things to which the term has been applied . . "(see page 29 and 30) Indeed, in English law the difficulties in the precise definition of chose in action arise out of the fact that the meaning attributed to the expression has been expanded from time to time by judicial decisions and the principles pertaining to the concept did not develop on any logical or scientific basis. W.S. Holdsworth also refers to this diffi culty in apprehending the precise incidents of the concept of a "chose in action": "It is sometimes difficult to ascer tain the sense in which the legislature has used the term 'chose in action 'we have seen that Bankruptcy Act affords one illustration, and, as we can see from the case of Edwards vs Dicard the modifications introduced by the Courts have some times occasioned a similar difficulty. Some of these difficulties might be perhaps mitigated by a codifying Act, for which there is plenty of material. But, it is probable that a branch of the law which comes at the meeting place of the law of property and the law of obligation can never be any thing but difficult to formulate and apply." (Emphasis Supplied) (See: "The History of the treatment of chose inaction by the common law": Vol. 33 Harvard Law Review 997 at 1030). Petitioners, however, placed strong reliance upon a decision of the Calcutta High Court in Bihar State Electricity Board vs Patna Electricity Supply Co. Ltd., and in particular on the following observations of the Division Bench of the High Court in para 22: " . The purported acquisition of part of the debt or chose in action by Sections 2(ii) and 3 of the Bihar Act 7 of 1976 with retrospective effect is, therefore, without any public purpose. Sections 2(ii) and 3 also do not provide for payment of compensa tion. In the circumstances, it must be 585 held that Sections 2(ii) and 3 of the Bihar Act 7 of 1976 are ultra vires article 31(2) of the Constitution. " It is not necessary to consider the correctness of this pronouncement in view of the circumstance that even to the extent the decision goes it is distinguishable. On 5.1.1973, the Electricity Board exercised its option to purchase the undertaking. On 2.2.1974, the Board paid a sum of Rs.36,00,000 "on account" to the licensee. On 6.2.1974, possession was taken. On 2.2.1974, Ordinance 50 of 1974 was promulgated amending Section 7A of the 19 10 Act reducing the price payable under Section 7A to the book value of the assets. This Ordinance was renewed by two successive ordi nances No. 83 of 1974 and 123 of 1974. The last ordinance was replace by Bihar Act 15 of 1975. On 10.2.1976, the Indian 'Electricity (Bihar Amendment) Act 7 of 1976 was brought into force validating the substitution of Section 6 and 7A, made by Bihar Act 15 of 1975 with retrospective effect from 2.2.1974. The Validating Act sought to affect the rights and obligations of the parties retrospectively. The High Court was persuaded to the view that the purported acquisition, virtually, pertained to the debt or "chose inaction" and not the undertaking itself. It is, therefore, not necessary to consider the submissions of the learned counsel for the respondent that it does not lay down the law correctly in as much as the arguments based on Article 31 C were neither advanced nor considered in that case. It requires, therefore, to be held that the impugned legislation viz., Assam Act X, 1973, was broughtforth for securing the principles contained in Article 39(b) of the Constitution and is protected under Article 31 C. The amend ment made to the provisions of the , by Assam Act IX of 1973, amending the basis for quan tification of the amount payable in the case of a statutory purchase pursuant to the exercise of the option in terms of the licence would apply to and govern cases of statutory sales and would not assume any immateriality in this case as the Assam Act X of 1973 is itself as we have held a valid piece of legislation. We find, therefore, no substance in the contentions (a) and (b) urged by the petitioner. Re. contention (C): This pertains to the question whether the principles laid down in the Act for determination of the "amount" payable for the acquisition 586 are so arbitrary as to render the "amount" unreal and merely illusory. This contention would not, in law, be available to the petitioners inasmuch as the law providing for the acqui sition has the protection of Article 31 C of the Constitu tion. The arguments of Shri Soli J. Sorabjee in regard to the alleged "illusory" nature of the "amount" presupposes and proceeds on the premise that the impugned law does not have the protection of Article 31 C. Now that we have held that Article 31 C is attracted, the argument in regard to the alleged illusory nature of the amount does not survive at all. Shri Rangarajan, however, contended that notwith standing that a law has the protection of Article 31 C, the question would yet be justiciable under Article 31(2), as it then stood, if the "amount" is illusory or the principles for its determination arbitrary. To support this, somewhat difficult, proposition Shri Rangarajan relied upon certain observations of Chandrachud, J. in the Keshavananda case; whose import and importance, according to the learned coun sel, has not been fully and properly comprehended in subse quent cases. The passages relied upon are: " . But to say that an amount does not bear reasonable relationship with the market value is a different thing from saying that it bears no such relationship at all, none whatsoever. In the later case the payment becomes illusory and may come within the ambit of permissible challenge." (See para 2 137 at page 2051 of AIR 1973). " . . Courts would have the powers to question such a law if an amount fixed thereunder is illusory; if the princi ples, if any are stated, for determining the amount are wholly irrelevant for fixation of the amount; if the power of compulsory acqui sition or requisition is exercised for a collateral purpose; if the law offends Consti tutional safeguards other than the one con tained in Article 19(1)(f); or if the law is in the nature of a fraud on the Constitution ". (See: para 2138 at page 2051 of AIR 1973). These observations. Sri Rangarajan says, were intended to govern even a law which had the protection of Article 31 C. Shri Rangara jan also relied upon certain observations of Fazal Ali, J. in State of Tamil Nadu vs L. Abu Kaur Bai ; which say: "87. Thus, so far as this aspect of the matter is con 587 cerned, two conclusions broadly emerge: (1) that in view of the express provisions of Article 31 C which excludes article 31(2) also where a property is acquired in public interest for the avowed purpose of giving effect to the principles enshrined in article 39(b) and (c), no compensation is neces sary and article 31(2) is out of the harm 's way, and (2) that even if the law provides for compensation, the courts cannot go into the details or adequacy of the compensation and it is sufficient for the State to prove that the compensation was reasonable and not monstrous or illusory so as to shock the conscience of the court." (Emphasis of counsel) Sri Rangarajan would say that the observations empha sised would show that even if Article 31 C was attracted yet the State should show that compensation was reasonable and not illusory. We are afraid, these passages are quoted out of context and, if properly understood, were not intended to support the proposition now propounded by Shri Rangarajan. Indeed in the Keshavananda case itself Chandrachud J. referring to the effect of Article 31 C observed: ". In fact article 31 C is a logi cal extension of the principles underlying article 31(4) and (6) and article 31A. . . The true nature and char acter of article 31 C is that it identifies a class of legislation and exempts it from the operation of articles 14, 19 and 31 . . " (1973 supp. SCR 1 at 995) Khanna J. observed in that case: Both articles 31A and 31C deal with right to property. Article 31 A deals with certain kinds of property and its effect is, broadly speaking, to take those kinds of property from the persons who have rights in the said property. The objective of article 31C is to prevent concentration of wealth and means of production and to ensure the distri bution of ownership and control of the materi al resources of the community for the common good. Article 588 31C is thus essentially an extension of the principle which was accepted in article 31A . "(page 743) Beg, J said: "Article 31 C has two parts. The first part is directed at removing laws passed for giving effect to the policy of the State towards securing the principles specified in clause (b) or clause (c) of Article 39 of the Constitution from the vice of invalidity on the ground that any such law "is inconsistent with or takes away or abridges any of the rights conferred by Articles 14, 19 and 31 of the Constitution." . the effect of invalidity for alleged violations of Articles 14 or 19 or 31 would vanish so long as the law was really meant to give effect to the princi ples of Article 39(b) and (c) . " In State of Karnataka vs Ranganath Reddy, ; this Court had occasion to observe: " . . For the purpose of deciding the point which fails for consideration in these appeals, it will suffice to say that still the over whelming view of the majority of judges in Kesavandanda Bharati 's case is that the amount payable for the acquired property either fixed by the legislature or determined on the basis of the principles engrafted in the law of acquisition cannot be wholly arbitrary and illusory. When we say so we are not taking into account the effect of Article 31 C inserted in the Constitution by the 25th Amendment (leaving out the invalid part as declared by the majority)." (p. 653) (Emphasis Supplied) In Sanjeev Coke Manufacturing Co. vs Bharat Coking Coal Company Lt.; , this Court said: " . . To accept the submission of Shri Sen that a law rounded on discrimination is not entitled to the protection of Article 31 C, as such a law can never be said to be to further the Directive Principle affirmed in article 39(b), would indeed, be, to use a hack neyed phrase, to put the cart before the horse. If the law made to further the Direc tive Principle iS necessarily non discrimina tory or is based 589 on a reasonable classification, then such law does not need any protection such as that afforded by article 31 C. Such law would be valid on its own strength, with no aid from article 31 C. To make it a condition precedent that a law seeking the haven of article 31 C must be non discriminatory or based on reasonable classification is to make article 31 C meaning less . " (p.1019) "We are firmly of the opinion that where article 31 C comes in article 14 goes out . " (p. 1021) What applies to Article 14 would equally apply to Article 31 (as it then stood before its deletion by the Constitution Fortysecond (Amendment) Act, 1978). In State of Tamil Nadu vs L. Abu Kavur Bai, ; on which Shri Rangarajan relied, Fazal Ali J. categorily said: "It is manifest from a bare reading of the newly added article 31 C that any law effectuating the policy of the State in order to secure or comply with the directive princi ples specified in clauses (b) and (c) of article 39 would not be deemed to be void even if it is inconsistent with or violates Articles 14, 19 or 31 . . " (P. 332) In the same case Fazal Ali J. further said: " . If, once the conditions mentioned in Article 31C are fulfilled by the law, no question of compensation arises because the said Article expressly excludes not only Arti cles 14, and 19 but also 31 which, by virtue of the 25th amendment, had replaced the word 'amount ' for the word 'compensation ' in Arti cle 31(,2) . . " (p. 334) (Emphasis supplied) Sri Rangarajan cannot, therefore, draw any sustenance from Fazal Ali J. for his argument. Sri Rangarajan then placed reliance on the following observa 590 tions of Krishna Iyer J. in Gwalior Rayon vs UOL, " . the legislature is expected except in exceptional socio historical set ting, to provide just payment for the deprived persons. To exclude judicial review is not to block out the beneficient provisions of Arti cles 14, 19 and 31." (p. 695) But we see nothing in these observations which can lend support to justiciability of an alleged violation of Article 31 by a law protected under Article 31 C. Ideally, perhaps, it may not be just to deprive a recompence that is just and fair, in all cases. But that is not to say that even under a law which has the protection of 31 A or 31 C, the adequacy, or justness or fairness of the compensation would, yet, be justiciable. The contention of Shri Rangarajan in our opinion, is wholly unsupportable. Indeed, the purpose of Article 31 C is, amongst others, to exclude Article 31, as it then stood. The effect of accepting Sri Rangarajan 's contention would be to let in Article 31 by the backdoor, frustrating the very object of Article 31 C and to unsettle the law laid down in a series of authoritative pronouncements of this Court. The contention really, is not available to the petitioners at all. Even if the impugned law did not have the protection of Article 31 C, a hypothesis on which contention (c) is based, the adequacy or inadequacy of the amount is not justiciable. The limitations of the courts ' scrutiny explic it in Article 31(2), are referred to by Mathew J. in the Keshavananda case: " . the word 'amount ' conveys no idea of any norm. It supplies no yard stick. It furnishes no measuring rod. The neutral word 'amount ' was deliberately chosen for the purpose. I am unable to understand the purpose in substituting the word 'amount ' for the word 'compensation ' in the sub article unless it be to deprive the Court of any yard stick or norm for determining the adequacy of the amount and the relevancy of the principles fixed by law (para 1765) Referring to what might, yet, be open to judicial scrutiny, under 591 Article 31(b), Shelat and Grower, JJ observed in the Keshavananda case: "But still on the learned Solicitor General 's argument, the right to receive the amount continues to be a fundamen tal right. That cannot be denuded of its iden tity. The obligation to act on some principle while fixing the amount arises both from Article 31(2) and from the nature of the legislative power for, there can be no power which permits in a democratic system an arbi trary use of power." "But the norm or the principle of fixing or determining the 'amount ' will have to be disclosed to the Court. It will have to be satisfied that the 'amount ' has reasonable relationship with the value of the property acquired or requestioned and one or more of the relevant principles have been applied and further that the 'amount ' is neither illusory nor it has been fixed arbitrarily, nor at such a figure that it means virtual deprivation of the right under Article 31(2). The question of adequacy or inadequacy, however, cannot be gone into." Justice Chandrachud observed: "The specific obligation to pay an 'amount ' and in the alternative the use of the word 'principles ' for determination of that amount must mean that the amount fixed or determined to be paid cannot be illusory. If the right to property still finds a place in the Constitution, you cannot mock at the man and ridicule his right. You cannot tell him: 'I will take your fortune for a farthing '. All the same, the concept of "Book Value" is an accepted accountancy concept of value. It cannot be held to be illusory. In Eswari Khetan Sugar Mills vs State of U.P., ; at page 359 it has been held that even the concept of "written down value" which is more disadvantageous to the owner than the "Bookvalue" is not irrelevant: " . . This Court has in terms accepted that payment of compensation on the basis of written down value calculated accord ing to the income tax law for used 592 machinery is not irrelevant as a principle for determining compensation. That principle appears to have been adopted for valuing used machinery though the legislation fixes compen sation payable to each undertaking in round Sum . ." 28. Accordingly, even if the impugned law had no protec tion of Article 31 C and tests appropriate to and available are applied, in the circumstances of this case, it cannot be said that the principles envisaged in the impugned law lead to an "amount" which can be called unreal or illusory. Contention (c) is accordingly held and answered against the petitioners. Re: Contention (d): This point is again, available only if the impugned law is outside Article 31 C. The contention that "Service Lines" which are expressly excluded from the valuation do consti tute the property of the licensee and their exclusion from valuation would make the principles for determination of the 'amount ' arbitrary does not have much to commend it. Learned counsel for the petitioner placed reliance on the definition of 'works ' in Section 2(n) of the 1910 Act and on the pronouncement of this Court in Calcutta Electric Supply Corporation vs Commissioner of Wealth tax, ; The question in that case was whether in the computation of net wealth of the licensee, the "Service lines" should be included. That was a converse case where the licensee rely ing upon the statutory provisions of the Electricity Act contended that "Service lines" were not a part of his wealth. This Court negatived that contention for purposes of assessment to wealth tax. Learned counsel placed some store by this pronouncement to contend that the exclusion of this 'wealth ' from valuation is arbitrary. But, in our opinion, the pronouncement relied upon does not advance petitioners ' case on the point. While it is true that the expression 'works ' in Section 2(n) of the 1910 Act includes 'Service lines ', the reason why 'Service lines ' could justifiably be excluded from valuation for purposes of determination of the 'amount ' is indicated in page 166 the report: "It is true that in view of Sec. 7(A)(2) of the Electricity Act, in computing the market value of the undertaking sold under sub section (1) of section 5 of that Act the value of service lines which had been con structed at the expense 593 of the consumers will not be taken into con sideration. The reason for this provision is obvious. It will be the duty of the new licen see to not only maintain and repair those lines but also to replace them when they become unserviceable. " Under the law when a requisition is made by an intend ingconsumer for electrical energy, the licensee has an obligation tO lay down Service lines. But, according to the provisions the entire cost of service line is not required to be borne by the licensee. The licensee is entitled to call upon the consumer to pay part of the cost of service line which may in a given case amount to a substantial part in accordance with the provisions in the Schedule to the Electricity Supply Act. Dealing with a similar provision the Gujarat High Court in Dakor Umreth Electricity Company Ltd. vs State of Gujarat, ( 13 Gujarat Law Reporter 88 at page 106) held: " . The question is whether the exclusion of such service lines from the valuation can be said to have rendered the principle of compensation irrelevant or inap propriate. We do not think so . . The petitioner is not constituted .the owner of these service lines for all purposes. More over, even after the purchase, these service lines would continue to be utilised for sup plying electrical energy to the consumers who paid for them. It would be most inequitable in these circumstances to provide for payment of compensation to the petitioner for these service lines. There is no reason in logic or principle why the petitioner should be allowed to make unjust and undeserved profit from transfer of these service lines for which it has paid nothing and which are not the product of its own labour . . " This reasoning, if we may say so with respect, is sound and should be accepted. Contention (d) is, therefore, insub stantial and is answered against the petitioners. Re: Contention (e): The apprehensions of the petitioners on this point is that while under Section 9(1)(i) of the impugned Act X of 1973, Government 594 would be entitled to deduct from the 'amount ' such sums as remain in the "Tariffs and Devidend Control Reserve"; "Contingency Reserve" and the "Development Reserve", in so far as such amounts have not been paid over by the licensees to the Government, the provision, however, does not take into account and provide for cases where such reserves are invested in 'fixed assets ' and as such "fixed assets" vest in the Government under the Acquisition. There would, there fore, it is urged be, a duplication of the liability of the licensee on this score, in the sense that while the "Re serves" in the form of fixed assets vest in the Government, the licensee is still exposed to the liability for the deduction of the amount shown in the accounts. Section 9(1)(i) provides: "Deductions from the Gross amount: The Government shall be entitled to deduct the following sums from the gross amount payable under this Act to the licensee. (a) (to) (h) Omitted as unnecessary (i) The amounts remaining in tariffs and dividends control reserve, contingencies reserve and development reserve, in so far as such amounts have not been paid over by licen see to the Government; (j) (k) Omitted as unnecessary On a reasonable construction, the expressions 'amounts remaining ' and 'in so far as such amounts have not been paid overl ' necessarily exclude any such duplication of the ac countability of the licensee for these 'Reserves '. If any part of the reserves is invested in "fixed assets" and the reserves in the form of such "fixed assets" are takenover by the Government pursuant to the acquisition, what remains to be accounted for by the licensee is only the 'amounts re maining ' in the pertinent accounts. The liability of the licensee for deduction of the 'Reserves ' from the 'amount ' would arise only if the balance remaining in those accounts are not paid. Indeed, Dr. Shankar Ghosh, learned counsel for the State of Assam, submitted that this is the correct interpretation to be placed on Section 9(1)(i) of the Act. With this construction of the provision, the contention of the petitionercompany on this point, does not survive. 595 31. The other contention raised under this point is that the property of the licensees represented by the unexpired portion of the licence has not been taken into account in computing the amount payable for the acquisition. As already indicated, the law having the protection of Article 31C the contention is not available at all. Section 7(3) of the impugned Act provides: "In the case of an undertaking which vests in the Government under this Act, the licence granted to it under Part II of the Electricity Act shall be deemed to have been terminated on the vesting date and all the rights, liabilities and obligations of the licensee under any agreement to supply elec tricity entered into before that date shall devolve or shall be deemed to have devolved on the Government: Provided that where any such agree ment is not in conformity with the rates and conditions of supply approved by the Govern ment and in force on the vesting date, the agreement shall be voidable at the option of the Government." This provision is a part of a scheme of nationalisation and is protected by Article 31C. 32. Contention (e) is accordingly held and answered against the petitioners. Re: Contention (f): This contention pertains to the liability of the licen see under Section 11(3) of the Act in respect of the amounts payable to employees retrenched by the Government or the "Board ' as the case may be, within one year from the vest ing date after the take over. Section 11(3) provides that if the Board or the Government, as the case may be, retrenches any employee within a period of one year from the vesting date, the liability for the amounts payable to the re trenched employee shall be deducted from the 'amount '. This provision, it is contended, imposes a liability which is arbitrary. Dr. Shankar Ghosh submitted that this point is purely academic inasmuch as there has been no such case of retrenchment. Dr. Ghosh further submitted that the provision is not unreasonable because in the case of employees so 596 retrenched, the amounts payable would substantially relate to the period during which the employment subsisted under the licensee and that it is not unreasonable to take this circumstances into account in continuing the licensee 's liability which would, even otherwise, be substantially be that of the licensee. 'On a consideration of the matter, we are inclined to the view even if this question is justicia ble that the provision is not unreasonable or arbitrary as it envisages the continuance of a liability which was, otherwise, substantially that of the licensee. There is no merit in this contention (f) either. Re: Contention (g): The grievance of the petitioners on this aspect, we are afraid, proceeds on a total misconception of the effect of the statutory provisions. The contention, in substance, is that while certain liabilities of the licensee arising out of its Quondam business operations are not expressly taken over by the Government and are declared to be the subsisting and continuing liabilities of the licensee, however, Section 9(7) authorises the deduction of some of those very liabilities from the 'amount ' without a corre sponding statutory obligation on the part of the GOvernment, in turn, to pay the same to the creditors on whose account and for whose benefit the deductions are made and without providing an express statutory discharge to the petitioners in that behalf. There is no substance in this contention. The legisla tive intention is plain and manifest. Though some of the liabilities arising out of the conduct of the licensees ' business prior to vesting are not taken over by Government, some of those liabilities are, yet, authorised to be deduct ed from the amount. The purpose of this provision is too obvious to require any statutory declaration of the obliga tions that arise in law and are attendant upon these sums coming to the hands of and retained by the Government. Quite obviously, the provision is not intended for an unjust enrichment in the hands of Government. The purpose is obvi ously to facilitate recovery of certain types of debts owing to public institutions etc., and the deduction is for the benefit of those creditor institutionS. Government would, plainly, be under a legal obligation to pay the sums so deducted to the concerned creditors. The provisions of the Statute must be read along, and in consonance, with the general principles of law which import such obligations on the part of the Government and an implied corresponding discharge to the petitioners to the extent of such deduc tions in their liabilities. There is a resulting, statuto ry trust in the hands of the Gov 597 ernment to pay the sums so deducted to the respective credi tors, even in the absence of express provisions in this behalf in the Statute the general principles of law operate. As a matter of construction it requires to be held that these obligations and consequences follow. There is really no justifiable grievance on this score. Contention (g) is, accordingly, held and answered against the petitioners. Re: Contentions (h) and (i): These two contentions pertain to the machinery envisaged by and set up under the impugned law for resolution of disputes on questions essential for the determination of the amount in accordance with the provisions of the Act. The contention of the petitioners, in substance, is that there is no machinery set up under the Act to determine the amounts under Section 9(c), (d) and (e) and to assess the loss referred to in Section 8. The Other contention on the point is that the arbitra tion clause is a limited one and is confined only to dis putes in four areas specifically enumerated in clauses (a) to (d) of sub section (1) of Section 20 of the Act. These lacunae in the Statute, it is contended, render the scheme of the Act for the determination of the 'Amount ' unreasonable and the scheme of the 'Act ' in relation to the determination of the 'Gross Amount ', the deductions to be made therefrom and the assessment of the 'amount ' payable for the acquisition, unworkable. The Courts strongly lean against any construction which tends to reduce a Statute to a futility. The provision of a Statute must be so construed as to make it effective and operative, on the principle "ut res majis valeat quam periat". It is, no doubt, true that if a Statute is abso lutely vague and its language wholly intractable and abso lutely meaningless, the Statute could be declared void for vagueness. This is not in judicial review by testing the law for arbitrariness or unreasonableness under Article 14; but what a Court of construction, dealing with the language of a Statute, does in order to ascertain from, and accord to, the Statute the meaning and purpose which the legislature in tended for it. In Manchester Ship Canal Co. vs Manchester Racecourse Co., Farwell J. said: "Unless the words were so absolutely senseless that I could do nothing at all with them, I should be bound to find 598 some meaning and not to declare them void for uncertainty." (See page 360 and 361) In Fawcett Properties vs Buckingham Coun try Council, Lord Denning approving the dictum of Farwell, J. said: "But when a Statute has some mean ing, even though it is obscure, or several meanings, even though it is little to choose between them, the Courts have to say what meaning the Statute to bear rather than reject it as a nullity." (Vide page 516) It is, therefore, the Court 's duty to make what it can of the Statute, knowing that the Statutes are meant to be operative and not inept and that nothing short of impossibility should allow a Court to declare a Statute unworkable. In Whitney vs Inland Revenue Commissioner, Lord Dunedin said: "A Statute is designed to be worka ble, and the interpretation thereof by a Court should be to secure that object, unless cru cial omission or clear direction makes that end unattainable." (vide page 52) 37. On consideration of the Statute on hand, it is not possible to subscribe to the view that the impugned law has not envisaged any machinery for the due ascertainment of the sums referred to in clauses (c), (d) and (e) of Section 9 which require, on such ascertainment and quantification, to be deducted from the gross amount. Section 10 enjoins upon the Government to appoint a person having adequate knowledge and experience in matters reling to accounts "to assess the net amount payable under this Act by the Government to the licensee after making the deductions mentioned in Section 9". Sub Section (2) of Section 10 provides that the Special Officer may call for the assistance of such Officer and staff of the Government or the Board or the undertaking as he may deem fit "in assessing the net amountpayable". These provisions, contemplate the determination by the Special Officer, who is constituted as a statutory authority under the Act, of the net amount payable. The functions of the Special Officer include an examination of the correctness of all the determinations made by the Government in the matter of the deductions, except where Government is statutorily specially constituted as an appellate authority in respect of certain matters under the Act. The Proviso to Sections 8 and 9 envisages prior notice to be 599 issued to the licensee by the Government to show cause against any deduction proposed to be made under Section 8 or 9, as the case may be, within the period specified in the Provisos. Even after the Government so makes such determina tion of the amounts which, according to it, are deductible from the gross amount, such determination would not be final. The assessment of the net amount payable to the licensee will have to be made by the "Special Officer". It is reasonable to construe that the decision of the Govern ment both under Sections 8 and 9 arrived at, even after giving an opportunity to the licensee of being heard, would not be final, but the final determination will have to be made by the "Special Officer" appointed under Section 10 of the Act. Section 10(1) and (2) of the Act must be so con strued as to enable the "Special Officer" to take into account the determinations respecting the deduction under Section 9 and 10 of the Act made by the Government and take a decision of his own in the matter. The power to "assess" the net amount by necessary implication takes within its sweep the power to examine the validity of the determination made by the Government in the matter of deductions from the gross amount. This power to determine and assess the 'net amount ' payable by necessary implication cover matters envisaged in Sections 8 and 9. Though only Section 9 is specifically referred to in sub section (1) of section 10, the language of sub section (1) and (2) which enable the Special Officer to "assess" the net amount paybale would, by necessary implication, attract the power to decide as to the validity and correctness of the deduction to be made under Section 8 as well. So construed, the provisions of Section 10 would furnish a reasonably adequate machinery for the assessment of the "net amount" payable to licensee. So far as Arbitration is concerned, even after the decision of the "Special Officer", there is the further Arbitral forum to decide disputes in respect of the specific areas in which disputes are rendered arbitrable under Sec tion 20. In view of these circumstances, we think the grievance of the petitioners on these points questions are not sub stantial. The points (h) and (i) are also, accordingly, held and answered against the petitioners. In the result, for the foregoing reasons all the contentions urged by the petitioners in support of their challenge to the impugned legislations fail. The Writ peti tions are, accordingly, dismissed; but in the circumstances, there will be no order as to costs. G.N. Petitions dis missed.

The petitioners Public Limited Companies were grant ed licences under the provisions of the for supply of electricity within the respective licensed areas of Tinsukhia and Dibrugarh Municipal Boards. The Dihrugarh Company was granted licence in 1928 on certain terms and conditions with an option to the State to purchase the under. taking on the expiry of 50 years and thereafter on the expiry of every subsequent period of twenty years. So also, the Tinsukhia company was granted licence in 1954 on certain terms and conditions with an option to the State Government to purchase the undertaking on the expiry of 20 years and thereafter on the expiry of every 20 years. The State Government negotiated with the companies for pur 545 chasing them. The negotiations were going on for several years. On 27.9.1972 the Governor promulgated two ordinances for the compulsory acquisition of the undertakings of the two companies. Subsequentiy, the ordinances were replaced by the Indian Electricity (Assam Amendment) Act, 1973 and the Tinsukhia & Dibrugarh Electric Supply Undertakings (Acquisi tion) Act, 1973. The two legislations, one amending the provisions of Section 5(2), 6(7) and 7 A of the and the other providing for the acquisition of the two undertakings viz. the Tlnsukhia and Dibrugarh Electric Supply Undertaking (Acquisition) Act, '1973 were Challenged in this Court by the writ petitioners on several grounds. It was contended that in view of the private negotiations and the exercise of the option to purchase, the legislations were not bona fide, but constituted a mere colourable exer cise of legislative power and that the real objects of the two legislations have no direct and reasonable nexus to the objects envisaged in Article 39(b) of the Constitution. It was also contended that what was sought to be acquired was not the undertakings of the two companies, but the differ ence between the market value of the undertakings agreed to by the State Government and the Book value of the undertak ings which the law has substituted by virtue of the amend ments made in the . The Article 31 C protection given to the legislations, and some of the specific provisions of the acquisition law which excluded certain items from the computation of compensation and authorised certain deductions in the amount of compensation have also been challenged. On behalf of the Respondents, it was contended that electrical energy has been a material source of the communi ty and any legislative measure to nationalise the undertak ing fell squarely within the ambit of Article 39(b) and was entitled to Article 31 C protection. It was also asserted that book value has been a well accepted concept of valua tion in accountancy and it cannot be characterised as illu sory even if the legislations did not enjoy the protection of Article 31 C. Dismissing the writ petitions, HELD: [R.S. Pathak. CJ, M.N. Venkatachaliah, section Natara jan and section Ranganathan, J J per Venkatachaliah, J.] 1.1. The proposition that the legislative declaration of the nexus between the law and the principles in Article 39 is inconclusive and justiciable is well settled. The sequen tor is that whenever any immunity 546 is claimed for a law under Article 31 C, the Court has the power to examine whether the provisions of the law are basically and essentially necessary for the effectuation of the principles envisaged in Article 39(b) and (c). It can, hardly be gain said that the electrical energy generated and distributed by the undertakings of the petitioners constitutes "material resources of the communi ty". The idea of distribution of the material resources of the community in Article 39(b) is not necessarily limited to the idea of what is taken over for distribution amongst the intended beneficiaries. That is one of the modes of "distri bution". Nationalisation is another mode. The economic cost of social and economic reform is, perhaps, amongst the most vexed problems of social and economic change and constitute the core element in Nationalisation. The need for constitu tional immunities for such legislative efforts at social and economic change recognise the otherwise unaffordable econom ic burden of reforms. It is not possible to divorce the economic considerations or components from the scheme of nationalisation with which the former are inextricably integrated. The financial cost of a scheme of nationalisa tion lies at its very heart and cannot be isolated. Both the provisions relating to the vestiture of the undertakings in the State and those pertaining to the quantification of the "Amount" are integral and inseparable parts of the integral scheme of nationalisation and do not ambit of being consid ered as distinct provisions independent of each other. The debate whether nationalisation is by itself to be considered as fulfilling a public purpose or whether the nationalisa tion should be shown to be justified effectuation of the avowed objectives of such nationalisation the choice be tween the pragmatic and the doctrinaire approaches is concluded and no longer available. [578C. D, E, 579C, D, H, 580A, B, E] 1.3. The right, title and interest of the licensee in the undertaking does not get transferred to the Board or the State, as the case may be, immediately upon the mere exer cise of the option to purchase. The exercise of the option would have no such effect on the licensee 's right to carry on his business until the undertaking was actually taken over and paid for. The contentions that immediately upon the exercise of the option, ipso facto, the relationship between the parties get transformed into one as between a Debtor and a Creditor and that the interest of the licensee in the undertaking becomes an "actionable right", or a 'chosein action" and that no public purpose could be said to be served by the acquisition of a "chose in action" are all out of place in the instant case. [582E, 583C] 547 1.4. The acquisition legislation was brought forth for securing the principles contained in Article 39(b) of the Constitution and is protected under Article 31 C. The Assam amendment made to the provisions of the , amending the basis for quantification of the amount payable in the case of a statutory purchase pursuant to the exercise of the option in terms of the licence would apply to and govern cases of statutory sales and would not assume any immateriality in the instant case. [585E, F] Kesavananda Bharati vs State of Kerala; [1973] Suppl. SCR 1; Minerva Mills Ltd. vs Union of India, ; ; Sanjeev Coke Mfg. Co. vs Bharat Coking COal Ltd., ; ; State of Tamil Nadu vs L. Abu Kavar Bai; , ; Akadasi Padhart vs State of Orissa and Ors., ; ; Godra Electricity Co. Ltd. and Anr. vs The State of Gujarat and Anr., ; and Madan Mohan Pathak vs Union of India and Ors., , relied on. Fergusan vs Skrupa, ; ; Fazilka Electric Supply Co. Ltd. vs The Commissioner of Income Tax, Delhi, [1962] Suppl. 3 SCR 496 and Gujarat Electricity Board vs Shantilal; , , referred to. Bihar State Electricity Board vs Patna Electricity Supply Co. Ltd., ; distinguished. "History of the treatment of choses in action by the common law" by W.S. Holdsworth Vol. 33 Harvard law Review referred to. 2. It may not be just to deprive a recompence that is just and fair, in all cases. But that. is not to say that even ,under a law which has the protection of article 31 A or 31 C, the adequacy, or justness or fairness of the compensa tion would, yet, be justiciable. Article 31 C is in effect and substance is to 'urban property ' of what Article 31 A is to 'agricultural property '. All the same, the concept of "Book Value" is an accepted accountancy concept of value. It cannot be held to be illusory. Even if the impugned law had no protection of Article 31 C and tests appropriate to and available are applied, in the circumstances of the present case, it cannot be said that the principles envisaged in the acquisition law lead to an "amount" which can be called unreal or illusory. [590C, 592B] 548 Eswari Khetan Sugar Mills vs State of U.P., ; ; relied on. Gwalior Rayon vs Union of India, ; 671; referred to. Under the law when a requisition is made by an in tending consumer for electrical energy, the licensee has an obligation to lay down service lines. But, according to the provisions the entire cost of service line is not required to be borne by the licensee. The licensee is entitled to call upon the consumer to pay part of the cost of service line which may in a given case amount to a substantial part in accordance with the provisions in the Schedule to the Electricity Supply Act. While it is true that the ex pression 'works ' in Section 2(h) of the Indian Railways Act, 1910 includes 'Service lines ', the reason why 'Service lines ' could justifiably be excluded from valuation for purposes of determination of the 'amount ', is that the new licensee is to repair and maintain them. [593B, C; 592F, G] Dakor Umreth Electricity Co. Ltd. vs State of Gujarat, ; ; approved. On a reasonable construction, the expressions 'amounts remaining ' and 'in so far as such amounts have not been paid over ' necessarily exclude any such duplication of the accountability of the licensee for these 'Reserves '. If any part of the reserves is invested in "fixed assets" and the reserves in the form of such "fixed assets" are taken over by the Government pursuant to the acquisition, what remains to he accounted for by the licensee is only the 'amounts remaining ' in the pertinent accounts. The liability of the licensee for deduction of the 'Reserves ' from the 'amount ' would arise only if the balance remaining in those accounts are not paid. [594F, G] 5. As regards the liability of the licensee under Sec tion 11(3) of the Acquisition Act in respect of the amounts payable to employees retrenched by the Government or the 'Board ' as the case may be, within one year from the vesting date after the take over even if this question is justicia ble it is not unreasonable or arbitrary as it envisages the continuance of a liability which was, otherwise, sub stantially that of the licensee. [595F, G, H, 596A, B] 6. Though some of the liabilities arising out of the conduct of the licensees ' business prior to vesting are not taken over by Government, some of those liabilities are, yet, authorised to be deducted from the 549 amount. The purpose of this provision is too obvious to require any statutory declaration or the obligations that arise in law and are attandant upon these sums coming to the hands of and retained by the Government. Quite obviously, the provision is not intended for an unjust enrichment in the hands of Government. The purpose is obviously to facili tate recovery of certain types of debts owed to public institutions etc., and the deduction is for the benefit of those creditor institutions. The Government would, plainly, be under a legal obligation to pay the sums so deducted, to the concerned creditors. The provisions of the Statute must be read along, and in consonance, with the general princi ples of law which import such obligations on the part of the Government and an implied corresponding discharge to the petitioners to the extent of such deductions in their li abilities. There is a resulting statutory trust in the hands of the Government to pay the sums so deducted to the respec tive creditors, even in the absence of express provisions in this behalf in the Statute, the general principles of law operate. As a matter of construction it requires to be held that these obligations and consequences follow. [596E, F, G, H, 597A] 7. The Courts strongly lean against any construction which tends to reduce a Statute to a futility. The provision of a Statute must be so construed as to make it effective and operative, on the principle "but res majis valeat quam periat". It is, no doubt, true that if a Statute is abso lutely vague and its language wholly intractable and abso lutely meaningless, the Statute could be declared void for vagueness. This is not in judicial review by testing the law for arbitrariness or unreasonableness under Article 14; but what a Court of construction, dealing with the language of a Statute, does in order to ascertain from, and accord to, the Statute the meaning and purpose which the legislature in tended for it. It is, therefore, the Court 's duty to make what it can of the Statute, knowing that the statutes are meant to be operative and not inept and that nothing short of impossibility should allow a Court to declare a Statute unworkable. [597F, G, 598C] Manchester Ship Canal Co. vs Manchester Race Course Co., and Fawcet Properties vs Buckingham County Council, [1960] 3 AII.E.R. 503, referred to. Section 10 of the Acquisition Act enjoins upon the Government to appoint a person having adequate knowledge anti experience in matters relating to accounts "to assess the net amount payable under the Act by the Government to the licensee after making the deductions mentioned in sec tion 9". Proviso to Sections 8 and 9 envisages prior 550 notice to be issued to the licensee by the Government to show cause against any deduction proposed to be made under Section 8 or 9, as the case may be, within the period speci fied in the provisos. Even after the Government so makes such determination of the amounts which, according to it, are deductible from the gross amount, such determination would not be final. The assessment of the net amount payable to the licensee will have to be made by the "Special Offi cer". It is reasonable to construe that the decision of the Government both under Sections 8 and 9 arrived at, even after giving an opportunity to the lincensee of being heard, would not be final, but the final determination will have to be made by the "Special Officer" appointed under section 10 of the Act. Section 10(1) and (2) of the Act must be so construed as to enable the "Special Officer" to take into account the determination respecting the deduction under Sections 9 and 10 of the ACt made by the Government and take the decision of his own in the matter. The power to "assess" the net amount by necessary implication takes within its sweep the power to examine the validity of the determination made by the Government .in the matter of deduction from the gross amount. This power to determine and assess the 'net amount ' payable by necessary implication cover matters envisaged in Sections 8 and 9. Though only Section 9 is specifically referred to in sub sections (1) and (2) of section 10, the language of sub sections (1) and (2) which enable the Special Officer to "assess" the net amount pay able would by necessary implication, attract the power to decide as to the validity and correctness of the deduction to be made under Section 8 as well. So construed. the provi sions of Section 10 would furnish a reasonably adequate machinery for the assessment of the "net amount" payable to the licensee. [598E H; 599A E] 9. So far as Arbitration is concerned, even after the decision of the "Special Officer", there is the further arbitral forum to decide disputes in respect of the specific areas in which disputes are rendered arbitrable under Sec tion 20. There is a provision for appointment of a sitting or retired District or High Court Judge as arbitrator under the said section. Hence it cannot be said that there is no proper machinery for resolving the disputes between the Government and the licensee rendering the Acquisition Act unworkable. [599F, G] Per Mukharji, J. (Concurring) 1. Article 39(b) of the Constitution enjoins that the State in particular should direct its policy towards secur ing that the ownership and control of the material resources of the community are so distri 551 buted as to best subserve the common good and that the operation of the economic system does not result in concen tration of wealth and means of production to the common detriment. In order to decide whether a Statute is within Article 31 C, the Court, if necessary, may examine the nature and the character of the legislation and the matter dealt with as to whether there is any nexus between the law and the principles mentioned in Article 39(b) and (c). On such an examination if it appears that there is no such nexus between the legislation and the objectives and the principles mentioned in Article 39(b) and (c), the legisla tion will not enjoy the protection of Article 31 C. In order to see the real nature of the Statute, if need be, the Court may also tear the veil. [553E H] Kesavananda Bharati vs State of Kerala, [1973] Suppl. SCR 1; relied on. Charles Russel vs The Queen, [1882] VII AC 829; referred to. Whenever a question is raised that the Parliament or the State Legislature have abused their powers and inserted a declaration in a law for not giving effect to securing the Directive Principles specified in Article 39(b) and (c), the Court can and must necessarily go into that question and decide. If the Court comes to the conclusion that the decla ration was merely a pretence and that real purpose of the law is the accomplishment of some object other than to give effect to the policy of the State towards securing the Directive Principles as enjoined by Article 39(b) and (c), the declaration would not debar the Court from striking down any provision therein which violates Articles 14, 19 or 31. In other words, if a law passed ostensibly to give effect to the policy of the State is, in truth and substance, one for accomplishing an unauthorised object, the Court would be entitled to tear the veil created by the declaration and decide according to the nature of the law. The only question open to judicial review under_Article 31 C is whether there is a direct and reasonable nexus between the impugned law and the provisions of Article 39(b) and (c). Reasonableness is evidently regarding the nexus and not regarding the law. [554D, E, F, 555B, C] Kesavananda Bharati vs State of Kerala, [1973] Suppl. SCR 1; Minerva Mills Ltd. vs Union of India, ; and Sanjeer Coke Mfg. Co. vs Bharat Coking Coal Ltd. & Anr. , ; , relied on. It is indisputed that the electric energy generated by the petitioner companies constitutes material resources of the community 552 within the scope and meaning of Article 39(b), and having regard to the true nature and the purpose of the legisla tions, reading the legislations entirely, the legislations have a direct and reasonable nexus with time objective of distributing the material resources so as to subserve the common good. The determination of value thereof and the substitution of the book value in place of market value, are only methods for such acquisition and do not disclose the true nature and character of the legislation, but are inci dental provisions thereof. if that is the position then it is incorrect to say that what was acquired, was not the material resources but chose in action. The true nature and character of the legislations in question was to acquire the material resources, namely, the electric energy for better supply and distribution. [556D, E, F] State of Tamil Nadu & Ors. vs L. Abu Kavur Bai & Ors., , relied on. Bihar State Electricity Board & Ors. vs Patna Electrici ty Supply Co. Ltd., distinguished. Having regard to the true nature and character of the legislations in question the legislations are not colourable legislations in the sense that there was no direct and reasonable nexus with Article 31(b) and (c) of the Constitu tion. [556H]

Appeals Nos. 378 and 379 of 1962. Appeals by special leave from the judgment and order dated January 18, 1961 of the Bombay High Court in Miscellaneous petition No. 255 of 1960. C. K. Daphtary, Solicitor General of India, B. R. L. lyengar and R. H. Dhebar, for the appellants in C. A. No. 378/62 and respondents in C. A. No. 379/62. A.S. R. Chari, M. K. Ranmmurthi, D. P. Singh, and section C: Agarwala, for the respondent in C. A. No. 378/62 and Appellant in C. A. No. 379162. 791 1962. October 30. The judgment of the Court was delivered by GAJENDRAGADKAR, J. The respondent E.X. Joseph is in the service of the Government of India in the Audit and accounts Department at Bombay. He was she Secretary of the Civil Accounts Association which consists of non gazetted staff of the Accountant General 's Office. The said Association was affiliated to the All India Non Gazetted Audit and Accounts Association. The latter Association had been recognized by the Government of India in December, 1956. In May, 1959, the Government withdrew recognition of the said Association. In spite of the withdrawal of the recognition of the said Association, the respondent continued to be its Secretary General and refused to dissociate himself from the activities of the said Association, though called upon to do so. As a result of his activities, on or about June 3, 1960, he was served with a charge she sheet for having deliberately committed breach of Rule 4(b) of the Central Civil Services (Conduct) Rules, 1955 (hereinafter called the Rules). Appellant No. 1 0. K. Ghosh, Accountant General, Maharashtra, who held the enquiry, found the respondent guilty of the charges levelled against him. Accordingly, a notice to show cause why he should not be removed from service was served on the respondent. On July 25, 1960, appellant No. 1 served a memo on the respondent intimating to him that it was proposed to hold an enquiry against him for having deliberately contravened the provisions of Rule 4(A) of the Rules in so far as he participated actively in various demonstrations organised in connection with the strike of Central Government employees and had taken active part in the preparations made for the said strike. On August 8, 1960, the respondent filed a I writ petition on the original side of the Bombay 792 High Court under article 226 of the Constitution and prayed that a writ of certiorari should be issued to quash the charge sheets issued against him by appellant No. 1 in respect of the alleged contravention of Rules 4 (B) and 4 (A) and a writ of prohibition should be issued prohibiting a appellant No. 1 from proceeding further with the departmental proceedings against the respondent. In his petition, the respondent asked for other incidental reliefs. The main ground on which the respondent challenged the validity of the departmental proceedings initiated against him was that Rules 4(A) and 4(B) were void in so far as they contravened the fundamental rights guaranteed to the respondent under article 19(1) (a), (b), (c) and (g). This contention was resisted by appellant No. 1 and appellant No. 2, the Union of India, who had been impleaded as respondents to the said petition. It was urged on their behalf that the impugned Rules were valid and so, the claim for a writ of certiorari or writ of prohibition was not justified. The writ petition was heard by a Division Bench of the Bombay High Court. On January 18, 1961, the High Court rejected the petition in so far as the respondent had claimed writs in regard to the enquiry for breach of Rule 4(A); the Court held that the said Rule was valid and so, the departmental proceedings initiated against the respon dent in respect of the breach of the said Rule could not be successfully impeached. In respect of the proceedings under Rule 4(B), however, the High Court held that the said Rule was invalid and so, the departmental proceedings in respect of the breach of the said Rule have been quashed. It is against this decision that the appellants, the A.G. and the Union of India, have come to this Court by Appeal No. 378/1962; whereas E. X.Joseph the respondent, has preferred Appeal No. 379/1962: Both the appeals have been brought to this Court by special leave. 793 The appellants contend that the High Court was in error in holding that Rule 4(B) was invalid, whereas the respondent urges that Rule 4(A) was invalid and the decision of the High Court to the contrary is erroneous in law. Before dealing with the contentions of the parties, it is necessary to set out the two impugned Rules. These Rules form part of a body of Rules framed in 1955 under article 309, of the Constitution. Rule 4 A provides that no Government servant shall participate in any demonstration or resort to any form of strike in connection with any matter pertaining to his condition of service,. whereas Rule 4 B lays down that no Government servant shall join or continue to be a member of any Service Association of Government servants : (a) which has not, within a period of six months from its formation, obtained the recognition of the Government under the Rules prescribed in that behalf, or (b) recognition in respect of which has been refused or withdrawn by the Government under the said Rules. The case against the respondent is that he has contravened both these Rules. The question about the validity of Rule 4 A has been the subject matter of a recent decision of this Court in Kameshwar Prasad vs The State of Bihar (1). At the hearing of the said appeal, the appellants and the respondent had intervened and were heard by the Court. In that case, this Court has held that Rule 4 A in the form in which it now stands prohibiting any form. of demonstration is violative of the Government servants ' rights under article 19(1)(a) & (b) and should, therefore, be struck down. In striking down the Rule in this limited way, this Court made it clear that in so far as the said Rule prohibits a strike, it cannot be struck down for the reason that there is no fundamental right to resort to a strike. In other words, if the Rule was (1) [1962] Supp. 3 S.C.R. 369. 794 invoked against a Government servant on the ground that be had resorted to any form of strike specified by Rule 4 A, the Government servant would not be able to contend that the Rule was invalid in that behalf. In view of this decision, we must hold that the High Court was in error in coming to the conclusion that Rule 4 A was valid as a whole. That takes us to the question about the validity of Rule 4 B. The High Court has held that the impugned Rule contravenes the fundamental right guaranteed to the respondent by article 19 (1) (c). The respondent along with other Central Government servants is entitled to form Associations or Unions and in so far as this right is prejudicially Rule, the said Rule is invalid. The learned Solicitor General contends that in deciding the question about the validity of the Rule, we will have to take into account the provision of clause (4) in article 19. This clause provides that article 19(1) (c) will not affect the operation of any existing law in so far as it imposes, in the interests of public order or morality, reasonable restrictions on the exercise of the right conferred by the said sub clause. The argument is that the impugned Rule does nothing more than imposing a reasonable restriction on the exercise of the right which is alleged to have been contravened and, therefore, the provision of the rule is saved by clause (4). This argument raises the problem of construction of clause (4). Can it be said that the Rule imposes a reasonable restriction in the interests of public order ? There can be no doubt that Government servants can be subjected to rules which are intended to maintain discipline amongst their ranks and to lead to an efficient discharge of their duties Discipline amount Government employees and their efficiency may,in a sense, be said to be related to public order. But in considering the scope of clause (4), it has to be borne in mind that the rule must be 795 in the interests of public order and must amount to a reasonable restriction. The words "public order" occur even in clause (2), which refers, inter alia, to security of the State and public order. There can be no doubt that the said words must have the same meaning in both clauses (2) and (4). So far as clause (2) is concerned, security of the State having been expressly and specifically provided for, public ' order cannot include the security of State, though in its widest sense it may be capable of including the said concept. Therefore, in clause (2), public order is virtually synonymous with public peace, safety and tranquility. The denotation of the said words cannot be any wider in clause (4). That is one consideration which it is necessary to bear in mind. When clause (4) refers to the restriction imposed in the interests of public order, it is necessary to enquire as to what is the effect of the words "in the interests of". This clause again cannot be interpreted to mean that even if the connection between the restriction and the public order is remote and indirect, the restriction can be said to be in the interests of public order. A restriction can be said to be in the interests of public order only if the connection between the restriction and the public order is proximate and direct. Indirect or far fetched or unreal connection between the restriction and public order would not fall within the purview of the expression "in the interests of public order. " This interpretation is strengthened by the other requirement of clause (4) that. , by itself, the restriction ought to be reasonable. It Would be difficult to hold that a restriction which does not directly relate to public order can be said to be reasonable on the ground that its connection with public order is remote or far fetched. That is another consideration which is relevant. Therefore, reading the two requirements of clause (4), it follows that the impugned restriction can, be said to satisfy as the test of clause (4) only if its. connection with public order is shown to be rationally proximate and direct, 796 That is the view taken by this Court in The Superintendent Central Prison, Fatehgarh vs Dr. Ram Manohar Lohia, (1). In the words of Patan jali Sastri .T., in Rex vs Basudev,(2) "the connection contemplated between the restriction and public order must be real and proximate, not far fetched or problematical. " It is in the light of this legal position that the validity of the impugned rule must be determined. It is not dispute that the fundamental rights guaranteed by article 19 can be claimed by Government servants. article 33 which confers power on the parliament to modify the rights in their application to the Armed Forces, clearly brings out the fact that all citizens, including Government servants, are entitled to claim the rights guaranteed by article 19. Thus, the validity of the impugned rule has to be judged on the basis that the respondent and his co employees are entitled to form Associations or Unions. It is clear that Rule 4 B imposes a restriction on this right. It virtually compels a Government servant to withdraw his membership of the Service Association of Government Servants as soon as recognition accorded to the said Association is withdrawn or if, after the Association is formed, no recognition is accorded to it within six months. In other words, the right to form an Association is conditioned by the existence of the recognition of the said Association by the Government. If the Association obtains the recognition and continues to enjoy it, Government servants can become members of the said Association ; if the Association does not secure recognition from the Government or recognition granted to it is withdrawn, Government servants must cease to be the members of the said Association. That is the plain effect of the impugned rule. Can this restriction be. said to be in the interests of public order and can it be said, to be a reasonable restriction ? In our opinion, the only answer to these questions would be in the negative. It is difficult to see any direct or proximate (1) ; [1949] S.C.R. 657,661. 797 or reasonable connection between the recognition by the Government of the Association and the discipline amongst, and the efficiency of, the members of the said Association. Similarly, it is difficult to see any connection between recognition and public order. A reference to Rule 5 of the Recognition of Service Association Rules recently made in 1959 would clearly show that there is no necessary Connection between recognition or its withdrawal and public order. Rule 5 enumerates different conditions by clauses (a) to (1) which every Service Association must comply with; and Rule 7 provides that if a Service Association recognised under the said Rules has failed to comply with the conditions set out in Rule 4, 5, or 6, its recognition may be withdrawn. One of the conditiOn imposed by Rule 5(1) is that communications addressed by the Service Association or by any office bearer on its behalf to the Government or a Government authority shall not contain any disrespectful or improper language. Similarly, Rule 5(g) provides that the previous permission of the Government shall be taken before the Service Association seeks affiliation with any other Union, Service Association or Federation; and Rule 5 (h) prohibits the Service Association from starting or publishing any periodical, magazine or bulletin without the previous approval of the Government. It is not easy to see any rational, direct or proximate connection between the observance of these conditions and public order. Therefore, even without examining the validity of all the conditions laid down by rule 4, 5 or 6, it is not difficult to hold that the granting or withdrawing of recognition may be based on considerations some of which have no connection whatever either with the efficiency or discipline amongst the Services or with public order. It might perhaps have been a different matter if the recognition or its withdrawal had been based on grounds which have a direct, proximate and rational connection with public order. That however 798 cannot be said about each one of the conditions prescribed by rule 4, 5 or 6. Therefore, it is quite possible that recognition may be refused or withdrawn on grounds which are wholly unconnected with public J. order and it is in such a set up that the right to form Associations guaranteed by article 19(1)(c) is made subject to the rigorous restriction that the Association in question must secure and continue to enjoy recognition from the Government. We are therefore, satisfied that the restriction thus imposed would make the guaranteed right under article 19(1)(c) ineffective and even illusory. That is why we see no reason to differ from the conclusion of the High Court that the impugned Rule 4 B is, ' invalid. In the result, appeal No. 378/1962 fails and is dismissed. In regard to appeal No. 379/1962, though we have partly reversed the conclusion of the High Court in respect of the validity of the whole of Rule 4 A. it appears that the departmental proceedings initiated against the respondent in respect of,the alleged breach of rule 4 A have to be quashed, because the alleged contravention of the said Rule on which the said proceedings are based is contravention of that part of Rule 4 A which has been held to be invalid by this Court. The material charge against the respondent in that behalf is that he had deliberately contravene the provisions of Rule 4 A in so far as he has participated actively in the various demonstrations organised in connection with the strike of Central Government employees and took part in the preparations made for the said strike. It will be noticed that the result of the decision of this Court in Kameshwar Prasad 's(1) case is that in so far 'as the rule prohibits any form of demonstration, it is invalid. It is not invalid in so far as it may prohibit participation in strikes. The charge against the respondent is not that he participated in any strike ; the charge is that he participated in the various demonstrations ; and that is a charge based upon that part of (1) [1962] Supp. 3 S.C.R. 369. 799 the rule which prohibits demonstrations altogether. It is true that the demonstrations in which he is alleged to have participated actively were organised in connection with the strike ; but that does not mean either in fact or in law that he participated in the strike itself. Similarly, the charge that he took active part in the preparations made for the said strike, also does not mean in fact or in law that he participated in the strike. If he joined demonstrations organised in connection with the strikes, or if he took part in the preparations for the strike, it cannot be said that he took part in the strike as such, and so, the charge cannot be reasonably construed to mean that his conduct amounted to a contravention of the rule which prohibits strikes. Therefore, though Rule 4 A is partly, and not wholly, invalid as held by this Court in the case of Kameshwar Prasad(1), the particular charge against the respondent being on the basis of that part of the rule which is invalid, it must follow that the departmental proceedings based on that charge are also invalid. That is why appeal No. 379/1962 must be allowed and the departmental proceedings instituted against the respondent for the alleged contravention by him of rules 4 A and 4 B must be quashed. There would be no order as to costs. Appeal 378/62 dismissed. Appeal 379/62 allowed. (1) [1962] Supp. 3 S.C.R. 369.

The respondent, A Central Government servant, who was the Secretary of the Civil Accounts Association of non Gazetted Staff, was departmentally proceeded against under rr. 4(A) and 4(B) of the Central Civil Services (Conduct) Rules, 1955, for participating in demonstrations in preparation of a general strike of Central Government employees and for refusing to dissociate from the Association after the Government had withdrawn its recognition of it. He impugned, the validity of the said rules on the ground that they infringed his fundamental rights under article 19 of the Constitution. The High Court held that r. 4(A) was wholly valid but quashed the proceeding under r. 4(B) which it held to be invalid. Rule 4(A) provided that no Government servant shall participate in any demonstration or resort to any form of strike in connection with any matter pertaining to his conditions of service and r. 4(B) provided that no Government servant shall join or continue to be a member of any services Association which the 790 Government did not recognise or in respect of which recognition had been refused or withdrawn by it. Held, that in view of the decision of this Court that r. 4(A) of the Central Civil Services (Conduct) Rules, 1955, in so far as it prohibited any form of demonstration was violative of the Government servants ' fundamental rights under article 19(1) (a) and (b), the High Court was in error in holding that the rule was wholly valid. Kameshwar Parsad vs The State of Bihar, [1962] supp. 3 S.C.R. 369, referred to. Participation in demonstration organised for a strike and taking active part in preparation for it cannot, either in law or fact, mean participation in the strike. The respondent could not, therefore, be said to have taken part in a strike as such and the proceeding against him under section 4(A) being based on that part of it which was invalid must also be invalid. It was clear that r. 4(B) of the said Rules imposed res triction on the undoubted ' right of the Government Servants under article 19 which were neither reasonable nor in the interest of public order tinder article 19(4). The rules clearly showed that in the granting or withdrawing, of recognition, the Government right be actuated by considerations other than those of efficiency or discipline amongst the services or public order. The restriction imposed by r.4 (B), therefore, infringed article 19(1) (c) and must be held to be invalid. The Super tenant, Central Prison, Fatehgarh vs Dr. Ram Manohar Lohia, ; and Rex vs Basudev, , referred to.

il Appeal No. 329 of 1962. Appeal from the judgment and decree dated September 26. 1957 of the High Court in Appeal from Original Decree No. 253 of 1949. 656 Sarjoo Prasad and R.C. Prasad, for the appellants. A.V. Viswanatha Sastri and D. Goburdhun. for respondents nos. 1 to 4 and 6. The Judgment of the Court was delivered by Sarkar, J. This appeal arises out of a suit brought by the appellants in 1947 for a declaration that the defendants first party had acquired no right or title to a property under certain deeds and that the deeds were inoperative and void. The suit was decreed by the trial Court but on appeal by the defendants first party to the High Court at Patna that decree was set aside. The High Court having granted a certificate of fitness, the appellants have brought the present appeal. The defendants first party have alone contested the appeal and will be referred to as the respondents. The High Court held that as the appellants were not in possession of the property at the date of the suit as found by the learned trial Judge and the respondents were, their suit must fail under the proviso to s.42 of the Specific Relief Act as the appellants had failed to ask for the further relief of recovery of possession from the respondents. In this view of the matter the High Court did not consider the merits of the case. The fact however was that at the date of the suit the property was under attachment by a magistrate under powers conferred by section 145 of the Code of Criminal Procedure and was not in the possession of any party. This fact was not noticed by the High Court but the reason why it escaped the High Court 's attention does not appear on the record. The only point argued in this appeal was whether in view of the attachment, the appellants could have in their suit asked for the relief for delivery of possession to them. If they could not, the suit would not be hit by the proviso to section 42. The parties seem not to dispute that in the case of an attachment under section 146 of the Code as it stood before its amendment in 1955, a suit for a simple declaration of title without a prayer for delivery of possession is competent. The respondents contend that the position in the case of an attachment under section 145 of the Code is different, and in such a case the magistrate holds possession for the party who is ultimately found by him to have been in possession when the first order under the section was made. It was said that a suit for declaration of title pending such an attachment is incompetent under the proviso to section 42 unless recovery of possession is also asked for. It appears that the attachment under section 145 in the present case is still continuing and no decision has yet been given in the proceeding 's resulting in the attachment. In our view, in a suit for declaration of title to property filed when it stands attached under section 145 of the Code, it is not necessary to ask for the further relief of delivery of possession. The fact 657 if it be so, that in the case of such an attachment, the magistrate holds possession on behalf of the party whom he ultimately finds to have been in possession is, in our opinion, irrelevant. On the question however whether the magistrate actually does so or not, it is unnecessary to express any opinion in the present case. The authoritie 's clearly show that where the defendant is not in possession and not in a position to deliver possession to the plaintiff it is not necessary for the plaintiff in a suit for a declaration of title to property to claim possession: see Sunder Singh Mallah Singh Sanatan Dharm High School, Trust vs Managing Committee, Sunder Singh Mallah Singh Rajput High School.(1) Now it is obvious that in the present case, the respondents were not in possession after the attachment and were not in a position to deliver possession to the appellants. The magistrate was in possession, for whomsoever, it does not matter, and he was not of course a party to the suit. It is pertinent to observe that in Nawab Humayun Begam vs Nawab Shah Mohammad Khan(2) it has been held that the further relief contemplated by the proviso to section 42 of the Specific Relief Act is relief against the defendant only. We may add that in K. Sundaresa lyer vs Sarvajana Sowkiabil Virdhi Nidhi Ltd.(3), it was held that it was not necessary to ask for possession when property was in custodia legis. There is no doubt that property under attachment under section 145 of the Code is in custodia legis. These cases clearly establish that it was not necessary for the appellants to have asked for possession. In Dukkan Ram vs Ram Nanda Singh(1) a contrary view appears to have been taken. The reason given for this view is that the declaratory decree in favour of the plaintiff would not be binding on the magistrate and he was free inspite of it to find that possession at the relevant time was with the defendant and deliver possession to him. With great respect to the learned Judge deciding that case, the question is not whether a declaratory decree would be binding on the magistrate or not. The fact that it may not be binding would not affect the competence of the suit. The suit for a declaration without a claim for the relief for possession would still be competent in the view taken in the cases earlier referred to, which is, that it is not necessary to ask for the relief of delivery of possession where the defendant is not in possession and is not able to deliver possession, which, it is not disputed, is the case when the property is under attachment under section 145 of the Code. We think that Dukkan Ram 's(4) case had not been correctly decided. We may add that no other case taking that view was brought to our notice. (1) (1937) L.R. 65 I.A. 106. (2) A.I.R. 1943 P.C. 94. (3) I.L.R. (4) A.I.R. 1961 Pat. 658 For these reasons, we hold that the suit out of which this appeal has arisen was competent. We, therefore, allow the appeal but as the merits of the case had not been gone into by the High Court, the matter must go back to that Court for decision on the merits. The appellant will get the costs here and below. Appeal allowed and case remanded.

There was dispute about the property in suit between theappellants and the respondents. The property was attached by the Magistrate under section 145 of the Criminal Procedure Code. Subsequently the appellants filed a suit for declaration of their title to the property but made no prayer for the cansequential relief of possession. The suit was decreed by the trial court but the High Court set aside the decree on the ground that the suit was bad under section 42 of the Specific Relief Act for failure to sue for possession. Appeal to this Court was filed with certificate of fitness. HELD: In a suit for declaration of title to property, filed when it stands attached under section 145 of the Criminal Procedure Code, it is not necessary to ask for the further relief of delivery of possession. The fact, if it be so, that in the case of such an attachment the Magistrate holds possession on behalf of the party whom he ultimately finds to have been in possession, is irrelevant. [656H 657B] Moreover the further relief contemplated by the proviso to section 42 of the Specific Relief Act is relief against the defendant only. In the present case the Magistrate was in possession and he was not a party to the suit. [657C D] Further it is not necessary to ask for possession when the property is in custodia legis. There is no doubt that property under attachment under section 145 of the Code is in custodia legis. [657E3 Sunder Singh Mallah Singh Sanatan Dharam High School, Trust vs Managing Committee, Sunder Singh M.allah Singh Rajput High School, (2937)L.R. 65 I.A. 10,6 and Nawab Humayun Begum vs Nawab Shah Mohammad Khan, A.I.R. 1943 P.C. 94, relied on. K. Sundarama Iyer vs Sarvajana Sowkiabil Virdhi Nidhi Ltd. I.L.R. , approved. Dukhan Ram vs Ram Nanda Singh, A.I.R. 1961 Pat. 425, disapproved.

ivil Appeal No. 2027 of 1974. From the Judgment and Order dated 8.10.1973 of the Gujarat High Court in Gift Tax Reference No. 3 of 1971. Wazir Singh, K.C. Dua and Ms. A. Subhashini for the Appellants. The Judgment of the Court was delivered by RANGANATH MISRA, J. This appeal is by certificate under a Deed of Partnership dated 12.11.1958, a Firm by name M/s Chhotalal Vedilal came into existence with three partners, Chhotalal Mohanlal 1044 (the assessee). Gunvantilal Chhotalal and Pravinchandra Vedilal. These three partners had 7 annas, 4 annas and 5 annas share respectively in the firm. This position contin ued until on 9.11. 1961 relevant to assessment year 1963 64 with which this appeal is concerned, a change took place in the constitution of the firm. Under the new deed, Pravin chandra Vedilal retired; no change took place in respect of Gunvantilal Chhotalal; one Ramniklal Chhotalal became a partner with 4 annas share. The share of the assessee Chhotalal Mohanlal was reduced to 4 annas; for the remaining 4 annas two minor sons of Chhotalal being Kiritkumar and Deepak Kumar were admitted to the benefits only of the firm Kiritkumar having 12 percent and Deepak Kumar having 13 per cent. No alteration was, however, made regarding the share capital standing in the name of the assessee. The Gift Tax Officer came to the conclusion that the assessee had deprived himself of 19 per cent share in the profits and had gifted away 19 per cent share in the good will of the firm in favour of his two minor sons. He valued the goodwill and treated 19 per cent thereof as taxable gift. The Appellate Assistant Commissioner before whom the assessee appealed adopted a different stand. According to him, the gift was not of a share of the goodwill but in respect of the right to receive future profits. He valued that right and since the amount Was higher than what the Income tax Officer had estimated, following the requirements of law he enhanced the quantum. In further appeal by the assessee the Tribunal held that in the circumstances of the case there could be no gift of goodwill. As appears from the statement of the case, the Revenue did not seek to support the order of the Incometax Officer but pleaded for sustain ing the order of the Appellate Assistant Commissioner. The Tribunal further found that the right to receive future profits could not be subject matter of a gift as the trans fer did not relate to existing property. According to it, the situation did not give rise to any gift which could be made liable to tax under the Act. The following question relevant for the purpose of the appeal was referred to the High Court for its opinion at the instance of the Revenue: "Whether on the facts and in the circumstances of the case, the benefit of partnership given to minors Kirit Kumar Chhotalal and Deepak Kumar Chhotalal was a gift under the Gift Tax Act, 1958?" The High Court answered the question against the Revenue and up 1045 held the view of the Tribunal. This appeal has, therefore, been carried by the Revenue. In spite of service of notice of appeal the respondent has not appeared. Counsel appearing in support of the appeal has contended that the order of the Gift Tax Officer was right and the Appellate Assistant Commissioner, the Tribunal and the High Court had gone wrong in holding that the ar rangement under the deed of 9.11.1961 did not give rise to a taxable event under the Act, so far as the assessee was concerned. "Gift" is defined in section 2(xii) of the Act: " 'Gift ' means the transfer by one person to another of any existing movable or immovable property made voluntarily and without consid eration in money or money 's worth, and in cludes the transfer of any property deemed to be a gift under section 4. " In support of the appeal, learned counsel further relies upon decisions of different High Courts to which we shall presently refer. Before doing so it would be appropriate to indicate that in Khushal Khemgar Shah & Ors. vs Khorsheed Banu Dadiba Boatwalla & Anr., ; this Court has held that goodwill of a firm is an asset, In Commission er of Gift Tax vs Nani Gopal Mondal, after referring to a number of authorities of this Court and different High Courts a Division Bench of the Calcutta High Court concluded thus: "From the cases cited above, it appears that goodwill of a partnership business is a property of the firm in which a partner is entitled to a share. Although the above cases are under the Estate Duty Act, yet the princi ple laid down in the said cases regarding the nature of goodwill of a firm and the right of a partner in respect thereof is applicable to the instant case. In this connection, it may be mentioned that according to section 14 of the Indian Partnership Act, property of a firm includes goodwill of the business. Further, according to section 29(2), if a partner transfers his interest and the transferring partner ceases to be a partner, the transferee is entitled as against the remaining partners to receive the share of the assets of the firm to which the transferring partner is entitled to. It further appears that under proviso to section 53 of the Indian Partnership Act, 1046 in case of dissolution, a partner or his representative may buy the goodwill of the firm and under section 55(1) of the Act, in settling the accounts of a firm after dissolu tion, the goodwill shall, subject to contract between the parties, be included in the assets and it may be sold either separately or along with other properties of the firm . Upon transfer, the share or interest in the property of the firm of the transferring partner including the goodwill becomes the share or interest of the transferee. In the instant case, Nani Gopal Mondal by the deed of gift transferred his share or interest in the firm which included his share of goodwill also. Hence, for the purpose of payment of gift tax, the value of one third share of the assessee in the goodwill shall also be taken in account." In M.K. Kuppuraj vs Commissioner of Gift Tax, the Madras High Court was called upon to deal with a case of this type where minors were admitted to the benefits of partnership firm and the assessee 's interest in the firm suffered the detriment by relinquishment of a portion of his interest. The High Court found that relinquishment of 8 per cent profit was in favour of the minors who were admitted without any consideration. It held that the transaction constituted a gift by the assessee in favour of the minors. The ratio in Sirehmal Nawalkha vs Commissioner of Income Tax, as also in Commissioner of Gift Tax, Bombay vs Premji Trikamji Jobanputra, ' 17 support the stand of the Revenue that the transaction constitutes a 'gift '. Once goodwill is taken to be property and with the admission of the two minors to the benefits of partnership in respect of a fixed share, the right to the money value of the goodwill stands transferred, the transaction does con stitute a gift under the Act. Since there has been no dis pute about valuation of the goodwill as made by the Gift Tax Officer, with the conclusion that there has been a gift in respect of a part of the goodwill, the answer to the ques tion referred has to be in the affirmative, that is, it constitutes a gift under the Act. The appeal is allowed and the conclusion of the High Court is reversed. Since the respondent has not appeared, there will be no order for costs. A.P.J. Appeal allowed.

Under a deed of partnership dated 12.11.1958, a firm by the name M/s. Chhotalal Vedilal came into existence with Chhotalal Mohanlal (the assessee), Gunvantilal Chhotalal and Pravinchandra Vedilal, as partners, each having 7 annas, 4 annas and 5 annas share respectively in the firm. This position continued until on 9.11.1961 when a change took place in the constitution of the firm. Under the new deed, Pravinchandra Vedilal retired. One Ramniklal Chhotalal became a partner with 4 annas share. The share of the asses see, Chhotalal Mohanlal was reduced. For the remaining 4 annas, two minor sons of the assessee were admitted to the benefits only of the firm. In the assessment year 1963 64, the Gift Tax Officer concluded that the assessee had deprived himself of 19% share In the profits and had gifted away 19% share in the goodwill of the firm in favour of his two minor sons. He valued the .goodwill and treated 19% thereof as taxable gift. In the appeal before the Appellate Assistant Commission er the assessee took the stand that the gift was not of a share of the goodwill but in respect of the right to receive future profits. He valued that right and since the amount was higher than what the Income Tax Officer has estimated, he enhanced the quantum. In further appeal by the assessee the Tribunal held that in the circumstances of the case there could be no gift of goodwill and found that the right to receive future profits could not be subject matter of a gift as the transfer did not relate to existing property and the situation did not give rise to any gift which could be made liable to tax under the Act. In the Reference the High Court upheld the view of the Tribunal. 1043 In the appeal to this Court on behalf of the Revenue, it was contended that the order of the Gift Tax Officer was right and the Appellate Assistant Commissioner, the Tribunal and the High Court had gone wrong in holding that the ar rangement under the deed of 9.11.1961 did not give rise to a taxable event under the Act. Allowing the appeal, HELD: 1. Goodwill of a firm is an asset. [1045E] Khushal Khemgar Shah & Ors. vs Khorshed Banu Dadiba Boatwalla & Anr., ; , followed. Once goodwill is taken to be property and with the admission of the two minors to the benefits of partnership in respect of a fixed share, the right to the money value of the goodwill stands transferred, the transaction does con stitute a gift under the Gift Tax Act, 1958. [1046F] 3. Since there has been no dispute about valuation of the goodwill as made by the Gift Tax Officer, with the conclusion that there has been a gift in respect of a part of the goodwill the transfer of the benefit of the partner ship constitutes a gift under the Act. [1046F G] Commissioner of Gift Tax vs Nani Gopal Mondal, ; M.K. Kuppuraj vs Commissioner of Gift Tax, ; Sirehmal Nawalkha vs Commissioner of Income Tax, and Commissioner of Gift Tax, Bombay vs Premji Trikamji Jobanputra, , approved.

iminal Appeals Nos. 67, 136 and 172 of 1959 and 82 and 83 of 1962. Appeals by special leave from the judgment and order dated November 3, 1958 in Criminal Appeals Nos. 196, 256 and 363 of 1958. B. B. Tawakley and section C. Mazumdar, for the appellant (in Cr. A. No. 67159). section C. Mazumdar, for the appellant (in Cr. A. No. 136/59). T. section Venakataraman, for the appellant (in Cr. A. No. 172/59). 381 N. N. Keshwani, for the appellant (in Cr. A. No. 82/62). C. B. Agarwala, K. L. Misra, Advocate General, U. P. Mangala Prasad Baghari, Shanti Sarup Khanduja, Malik Arjun Das and Ganpat Rai, for the appellant (in Cr. A. No. 83/62). N. section Bindra, D. R. Prem and R. H. Dhebar, for the respondent in all the Appeals. March 18. The judgment of the Court was delivered by SUBBA RAO J. These appeals by special leave arise out of two judgments of the High Court of Bombay, one that of Vyas and Kotval JJ., dated March 31, 1958, and the other that of Shah and Shelat JJ., dated November 3, 1958, in what, for convenience of reference,, may be described as the Empire Conspiracy Case. At the outset it would be convenient to state briefly the case of the prosecution. One Lala Shankarlal, a political leader and Vice President of the Forward Bloc and a highly competent commercial magnate, and his nominees held the controlling block of shares of the Tropical Insurance Company Limited, hereinafter called the "Tropical", and he was the Chairman and Managing Director of the said company. He had also controlling voice in another company called the Delhi Swadeshi Cooperative Stores Ltd. The said Delhi Stores held a large number of shares of the Tropical. In or about the middle of 1948, Sardar Sardul Singh Caveeshar, who was controlling the People 's Insurance Co. Ltd. and other concerns in Lahore, and Kaul, a practising barrister, came to Delhi. During that year the former was the President of the Forward Bloc and Shankarlal was its Vice President. Shankerlal, 382 Caveeshar and Kaul conceived the idea of purchasing the controlling block of 63,000 shares of the Jupiter Insurance Company Ltd., hereinafter referred to as the " 'Jupiter", a prosperous company, in the name of the Tropical from the Khaitan Group which was holding the said Jupiter shares. But the financial position of the Tropical did not permit the said purchase and so they thought of a fraudulent device of purchasing the said Jupiter shares out of the funds of the Jupiter itself. Under an agreement entered into with the Khaitan Group, the out of the 63,000 shares of the Jupiter was fixed at Rs. 33,39,000/ , and the purchasers agreed to pay Rs. 5,00,000/ in advance as " 'black money" and the balance of Rs. 28,39,000/ , representing the actual price on paper, within January 20, 1949, i. e., after the purchasers got control of the Jupiter. After the purchase, Shankarlal Group took charge of the Jupiter as its Directors after following the necessary formalities, sold the securities of the Jupiter for the required amount,and paid the balance of the purchase money to the Khaitan Group within the prescribed time. In order to cover up this fraud various manipulations were made in the relevant account books of the Jupiter. There would be an audit before the end of the year and there was every likelihood of detection of their fraud. It, therefore, became necessary for them to evolve a scheme which would bring in money to cover the said fraud perpetuated by the Directors of the. Jupiter in the acquisition of its 63,000 controlling shares. For that purpose, Shankarlal and his group conceived the idea of purchasing the controlling interest in another insurance company so that the funds of that company might be utilized to cover up the Jupiter fraud. With that object, in or about September 1949, Shankarlal and 9 of his friends entered into a conspiracy to lift the funds of the Empire of India Life Assurance Company Ltd., hereinafter referred to as the "Empire", to cover up the Jupiter 383 fraud. This they intended to do by purchasing the controlling shares of the Empire, by some of them becoming its Directors and Secretary, and by utilizing the funds of the Empire to cover up the defalcations made in the Jupiter. The following were the members of the conspiracy : (1) Shankarlal, (2) Kaul, (3) Metha, (4) Jhaveri and (5) Doshi all Directors of the Jupiter and (6) Guha, the Secretary of the Jupiter, (7) Ramsharan, the Secretary of the Tropical, (8) Caveeshar, the Managing Director of the People 's Insurance Co., (9) Damodar Swarup, a political worker who was later on appointed as the Managing Director of the Empire. (10) Subhedar, another political worker, (11) Sayana, a businessman of Bombay, and (12) Bhagwan Swarup, the nephew of Shankarlal and a retired Assistant Commissioner of Income tax of the Patiala State. After forming the conspiracy, the controlling shares of the Empire were purchased in the name of Damodar Swarup for an approximate sum of Rs. 43,00,000/ . For that purpose securities of the Jupiter of the value of Rs. 48,75,000/ were withdrawn by the Directors of the Jupiter without a re solution of the Board of Directors to that effect and endorsed in the name of Damodar Swarup again without any resolution of the Board of Directors to that effect. Damodar Swarup deposited the said securities in the Punjab National Bank Ltd., and opened a Cash credit account in the said Bank in his own name. He also executed two promissory notes to the said Bank for a sum of Rs. 10,00,000/ and Rs. 43,00,000/ respectively. Having opened the said account, Damodar Swarup drew from the said account by means of cheques a sum of Rs. 43,00,000/ and paid the same towards the purchase of the said Empire shares. Out of the said shares of the Empire, qualifying shares of twenty were transferred in each of the names of Damodar Swarup, Subhedar and Sayana, and by necessary resolutions Damodar Swarup became the Managing 384 Director and Chairman of the Empire and the other two, its Directors, and Bhagwan Swarup was appointed its Secretary. The conspirators having thus taken control of the Empire through some of them, lifted large amounts of the Empire to the tune of Rs. 62,49,700/ by bogus sale and loans, and with the said amount they not only recouped the amounts paid out of the Jupiter for the purchase of its controlling shares and also the large amounts paid for the purchase of the controlling shares of the Empire. After the conspiracy was discovered, in due course the following ten of the said conspirators, i. e., all the conspirators excluding Shankarlal and another, who died pending the investigation, were brought to trial before the Court of the Sessions judge for Greater Bombay under section 120 B of the Indian Penal Code and also each one of them separately under section 409, read with section 109, of the said Code : (1) Kaul,(2) Metha, (3) Jhaveri, (4) Guha, (5) Ramsbaran,(6) Caveeshar, (7) Damodar Swarup, (8) Subhedar, (9) Sayana, and (10) Bhagwan Swarup. The gravemen of the charge against them was that they, along with Shankarlal and Doshi, both of them deceased, entered into a criminal conspiracy at Bombay and elsewhere between or about the period from September 20, 1950 to December 31, 1950 to commit or cause to be committed criminal breach of trust in respect of Government securities or proceeds thereof or the funds of the Empire of India Life Assurance Co. Ltd., Bombay, by acquiring its management and control and dominion over the said property in the way of business as Directors, Agents or Attorneys of the said Company. The details of the other charges need not be given as the accused were acquitted in respect thereof. Learned Sessions judge made an elaborate enquiry, considered the innumerable documents filed and the oral evidence adduced in the case and came to the conclusion that Accused 1, 2, 4, 5, 6 and 10 385 were guilty of the offence under section 120 B, read with section 409 of the Indian Penal Code and sentenced them to various term of imprisonment. Accused 6, i. e., Caveeshar, was sentenced to suffer rigorous imprisonment for 5 years, and accused 10, i. e., Bhagwan Swarup, to rigorous imprisonment for a period of 5 ears and also to pay a fine of Rs. 2,000/ and in default to suffer rigorous imprisonment for a further period of six months. He acquitted accused 3, 7, 8 and 9. The State preferred an appeal to the High Court against that part of the '. judgment of the learned Sessions judge acquitting some of the accused; and the convicted accused filed appeals against their convictions. The appeal filed by Caveeshar, Accused 6, was dismissed in limine by the High Court. The appeals filed by 'the other convicted accused against their convictions were dismissed and the appeal by the State against the acquittal of some of the accused was allowed by the High Court. Accused 7 was sentenced to 5 years ' rigorous imprisonment, accused 8 to 3 years ' rigorous imprisonment and accused 9 to 3 years rigorous imprisonment. Accused 6, 7, 8, 9 and 10 have, by special leave, preferred these appeals against their convictions and sentences. We are not concerned with the other accused as some of them died and others did not choose to file appeals. At the outset it may be stated that none of the learned counsel appearing for the accused questioned the factum of conspiracy; nor did they canvass the correctness of the findings of the Courts below that the funds of the Empire were utilized to cover up the fraud committed in the Jupiter, but on behalf of each of the appellants a serious attempt was made to exculpate him from the offence. But, as the defalcations made in the finances of the Jupiter and the 386 mode adopted to lift the funds of the Empire and transfer them to the coffers of the Jupiter will have some impact on the question of the culpability of the appellants, we shall briefly notice the modus operandi of the scheme of conspiracy and the financial adjustments made pursuant thereto. We have already referred to the fact that Shankarlal Group purchased the controlling shares of the Jupiter from Khaitan Group and that as a consideration for the said purchase the former agreed to pay the latter Rs. 5,00,000/ as "black money" and pay the balance of about Rs. 28,39,000/ on or before January ' IO, 1949. After Shankarlal Group became the Directors of the Jupiter, they paid the said amount from and out of the funds of the Jupiter. To cover up that fraud, on January 11, 1949, the Directors passed a resolution granting a loan of Rs. 25,15,000/ to Accused 6, on the basis of an application made by him, on equitable mortgage of his properties in Delhi : (see exhibit Z 22). They passed another resolution sanctioning the purchase of plots of the Delhi Stores, a concern of Shankarlal, for a sum of Rs. 2,60,000/ . It is in evidence that Accused 6 had no property in Delhi and that the said plots were not owned by the Delhi Stores. The said loan and the sale price of the plots covered by the said resolutions were really intended for drawing the money of the Jupiter for paying the Khaitan Group before January 20,194 9. But some shareholders got scent of the alleged fraud and issued notices; and the Directors were also afraid of detection of their fraud by the auditors during their inspection at the close of the year 1949. It, therefore, became necessary to show in the accounts of the Jupiter that the loan alleged to have been advanced to Accused 6 was paid off. For this purpose the Directors brought into existence the following four transanctions : (1) a loan of Rs. 5,00,000/ advanced to Raghavji on November 5, 1949; (2) a loan of 387 Rs. 5,30,000/ to Misri Devi on December 12, 1949; (3) a fresh loan of Rs. 5,30,000/ to Caveeshar, Accused 6 on November 5, 1949; and (4) a transactions of purchase of 54,000 shares of the Tropical for Rs. 14,00,000/ on May 25, 1949 and December 20, 1949. These four ficticious transa ction were brought about to show the discharge of the loan advanced to Caveeshar, Accused 6. Further manipulations were made in the accounts showing that parts of the loans due from Raghavji, Misri Devi and Caveeshar and also the price of the Tropical shares were paid by Caveeshar. These paper entries did not satisfy the auditors and they insisted upon further scrutiny. It is the case of the prosecution that Shankarlal and his co conspirators following their usual pattern conceived the idea of getting the controlling interest of the Empire, which had a reserve of Rs. 9 crores. Jupiter securities worth about Rs. 45,00,000/ were endorsed in favour of Accused 7, who in his turn endorsed them in favour of the Punjab National Bank Ltd., for the purpose of opening a cash credit account therein. On October 5, 1950, under exhibit Z 9, the controlling shares of the Empire were purchased from Ramsharan Group and the consideration therefor was paid from and out of the money raised on the Jupiter securities. The Directors of the Jupiter had to make good to the Company not only the amounts paid out of the jupiter funds to purchase the controlling shares of the Jupiter, in regard to which various manipulations were made in the Jupiter accounts, but also about Rs. 45,00,000/worth of securities transferred in the name of Damodar Swarup. Having purchased the controlling shares of the Empire, Shankarlal and his colleagues got their nominees. , namely, Accused 7, 8 and 9 as Directors and Accused 10 as the Secre tary of the Empire. On November 27, 1950, a resolution of the Directors of the Empire sanctioned the purchase of Rs. 20,00,000/ worth of Government 388 Securities alleged to belong to the Jupiter. Though the securities were not delivered, two bearer cheques dated October 26, 1950 and October 27, 1950 for Rs. 15,00,000/ and Rs. 5,00,000/ respectively were made out and cashed and the said moneys were utilized to cancel the loan alleged to have been advanced to Raghavji and for the purchase of the Tropical shares for Rs. 1,4,00,000/ . But the conspirators had still to make good the securities transferred in favour of Accused 7 and other amounts. The Directors again sanctioned 12 loans, the first six on November 27, 1950 totalling Rs. 28,20,000/ and the other six on December 18, 1950 totalling Rs. 42,80,000/ admittedly to fictitious loanees. 12 bearer cheques for an aggregate of Rs. 71,00,000/ were issued by Accused 10 between December 19 and 23, 1950. This amount was utilized for getting 5 drafts for different amounts in favour of Accused 1 and 2, the Directors of the Jupiter, Accused 4, its Secretary, and Accused 5, the Secretary of the Tropical (see exhibit Z 230). The said drafts were sent to Bombay and one of the said drafts was utilized for paying off the loan of Misri Devi and the other Drafts for Rs. 57,00,000/ were paid into the Jupiter account in the Punjab National Bank Ltd., Bombay. This amount was utilized to cover up the loss incurred by the Jupiter by reason of its securities worth about Rs. 45,00,000/ assigned in favour of Accused 7 and also by reason of the securities worth Rs. 20,00,000/ alleged to have been sold to the Empire on November 27, 1950. It is, therefore, manifest, and indeed it is not disputed before us now, that Shankarlal and his co conspirators, whoever they may be, had conspired together and lifted large amounts of the Empire and put them into the Jupiter coffers to cover up the loss caused to it by their fraud. Therefore in these appeals we proceed on the basis that there was a conspiracy as aforesaid and the only question for consideration is whether all or some of the appellants were parties to it. 389 Before dealing with the individual cases, as some argument was made in regard to the nature of the evidence that should be adduced to sustain the case of conspiracy, it will be convenient to make at this stage some observations thereon. Section 120 A of the Indian Penal Code defines the offence of criminal conspiracy thus "When two or more persons agree to do, or cause to be done an illegal act, or an act which is not illegal by illegal means, such an agreement is designated a criminal conspiracy. " The essence of conspiracy is, therefore, that there should be an agreement between persons to do one or other of the acts described in the section. The said agreement may be proved by direct evidence or may be inferred from acts and conduct of the parties. There is no difference between the mode of proof of the offence of conspiracy and that of any other offence : it can be established by direct evidence or by circumstantial evidence. But section 10 of the Evidence Act introduces the doctrine of agency and if the conditions laid down therein are satisfied, the acts done by one are admissible against the co conspirators. The said section reads : "Where there is reasonable ground to believe that two or more persons have conspired together to commit an offence or an actionable wrong, anything said, done or written by any one of such persons in reference to their common intention, after the time when such intention was first entertained by any one of them, is a relevant fact as against each of the persons believed to be so conspiring as well for the purpose of proving the existence of the conspiracy as for the purpose of showing that any such person was a party to it." This section, as the opening words indicate, will come into play only when the Court is satisfied that 390 there is reasonable ground to believe that two or more persons have conspired together to commit an offence or an actionable wrong, that is to say, there should be a prima facie evidence that a person was a party to the conspiracy before his acts can be used against his co conspirators. Once such a reasonable ground exists, anything said, done or written by one of the conspirators in reference to the common intention, after the said intention was entertained, is relevant against the others, not only for the purpose of proving the existence of the conspiracy but also for proving that the other person was a party to it. The evidentiary value of the said acts is limited by two circumstances, namely, that the acts shall be in reference to their common intention and in respect of a period after such intention was entertained by any one of them. The expression " 'in reference to their common intention" is very comprehensive and it appears to have been designedly used to give it a wider scope than the words "in furtherance of" in the English law ; with the result, anything said, done or written by a coconspirator, after the conspiracy was formed, will be evidence against the other before he entered the field of conspiracy or after he left it. Another important limitation implicit in the language is indicated by the expressed scope of its relevancy. Anything so said, done or written is a relevant fact only "as against each of the persons believed to be so conspiring as well for the purpose of proving the existence of the conspiracy as for the purpose of showing that any such person was a party to it. It can only be used for the purpose of proving the existence of the conspiracy or that the other person was a party to it. It cannot be used in favour of the other party or for the purpose of showing that such a person was not a party to the conspiracy. In short, the section can be analysed as follows : (1) There shall be a prima facie evidence affording a reasonable ground for a Court to believe that two or more persons are 391 members of a conspiracy ; (2) if the said condition is fulfilled, anything said, done or written by any one of them in reference to their common intention will be evidence against the other; (3) anything said, done or written by him should have been said, done or written by him after the intention was formed by any one of them ; (4) it would also be relevant for the said purpose against another who entered the conspiracy whether it was said, done or written before he entered the conspiracy or after he left it ; and (5) it can only be used against a co conspirator and not in his favour; With this background let us now take the evidence against each of the appellants and the contentions raised for or against him. But it must be stated that it is not possible to separate each of the accused in the matter of consideration of the evidence, for in a case of conspiracy necessarily there will be common evidence covering the acts of all the accused. We may, therefore, in dealing with some of the accused, consider also the evidence that will be germane against the other accused. We shall first take the case of Accused 6, Caveeshar, who is the appellant in Criminal Appeal No. 82 of 1962. So far as this appellant is concerned the learned Sessions judge found that he was a member of the conspiracy and the High Court confirmed that finding. It is the Practice,, of this Court not to interfere with concurrent findings of fact even in regular appeals and particularly so in appeals under article 136 of the Constitution. We would, therefore, approach the appeal of this accused from that perspective. Learned counsel for this appellant argued before us that the said accused was convicted by the Sessions judge for being a member of the conspiracy in the Jupiter case in respect of his acts pertaining 392 to that conspiracy and therefore he could not be convicted over again in the present case on the basis of the facts on which the earlier conviction was founded; in other words, it is said that he was convicted in the present trial for the same offence in respect of which he had already been convicted in the Jupiter case and such a conviction would infringe his fundamental right under article 20 (2) of the Constitution, and in support of this contention reference was made to certain decisions of the Supreme Court of the United States of America. The said Article reads : "No person shall be prosecuted and punished for the same offence more than once." The previous case in which this accused was convicted was in regard to a conspiracy to commit criminal breach of trust in respect of the funds of the Jupiter and that case was finally disposed of by this Court in Sardul Singh Caveeshar vs State of Bombay (1). Therein it was found that Caveeshar was a party to the conspiracy and also a party to the fraudulent transactions entered into by the Jupiter in his favour. The present case relates to a different conspiracy altogether. The conspiracy in question was to lift the funds of the Empire, though its object was to cover up the fraud committed in respect of the Jupiter. Therefore. , it may be that the defalcations made in Jupiter may afford a motive for the new conspiracy, but the two offences are distinct ones. Some accused may be common to both of them some of the facts proved to establish the Jupiter conspiracy may also have to be proved to support the motive for the second conspiracy. The question is whether that in itself would be sufficient to make the two conspiracies the one and the same offence. Learned counsel suggests that the question raised involves the interpretation of a provision of the Constitution and therefore the appeal of this accused (1) [1958] section C. R. 161. 393 will have to be referred to a Bench consisting of not less than 5 judges. Under article 145 (3) of the Constitution only a case involving a substantial question of law as to the interpretation of the Constitution shall be heard by a Bench comprising not less than 5 Judges. This Court held in State of Jammu & Kashmir vs Thakur Ganga Singh (1), that a substantial question of interpretation of a provision of the Constitution cannot arise when the law on the subject has been finally and effectively decided by this Court. Two decisions of this Court have construed the provisions of article 20 (2) of the Constitution in the context of the expression "same offence." In Leo Roy Frey vs The Superintendent, District Jail, Amritsar (2), proceedings were taken against certain persons in the first instance before the customs authorities under section 167 (8) of the Sea Customs Act and heavy personal penalties were imposed on them. thereafter, they were charged for an offence under section 120 B of the Indian Penal Code. This Court held that an offence under section 120 B is not the same offence as that under the Sea Customs Act. Das C. J., speaking for the Court, observed : "The offence of a conspiracy to commit a crime is a different offence from the crime that is the object of the conspiracy because the conspiracy precedes the commission of the crime and is complete before the crime is attempted or completed, equally the crime attempted or completed does not require the element of conspiracy as one of its ingredients. They are,therefore, quite separate offences." This Court again considered the scope of the words " 'same offence" in The State of Bombay vs ,section L. Apte (3). There the respondents were both convicted and sentenced by the Magistrate under section 409 of the Indian Penal Code and section 105 of the Insurance Act. Dealing with the argument that the (1) [1960] 2 S.C.R.346. (2) ; , 827, (3)[1961] 3.S.C.R.,107,114. 394 allegations of fact were the same, Rajagopala Ayyangar J., rejecting the contention, observed on behalf of the Court : "To operate as a bar the second prosecution and the consequential punishment thereunder, must be for `the e same offence '. The crucial requirement, therefore, for attracting the Article is that the offences arc the same i. e., they should be identical. If, however, the two offences are distinct, then notwithstanding that the allegations of fact in the two complaints might be substantially similar, the benefit of the ban cannot be invoked. It is, therefore, necessary to analyse and compare not the allegations in the two complaints but the ingredients of the two offences and see whether their identity is made out." This decision lays down that the test to ascertain whether two offences are the same is not the identity of the allegations but the identity of the ingredients of the offences. In view of the said decisions of this Court, the American decisions cited at the Bar do not call for consideration. As the question raised has already been decided by this Court, what remains is only the application of the principle laid down to the facts of the present case. cannot, therefore, hold that the question raised involves a substantial question of law as to the interpretation of the Constitution within the meaning of article 145 (3) of the Constitution. In the present case, applying the test laid down by this Court, the two conspiracies are not the same offence : the Jupiter conspiracy came to an ' end when its funds were misappropriated. The Empire conspiracy was hatched subsequently, though its 'Object had an intimate connection with the Jupiter in that the fraud of the Empire was concei. ved and executed to cover up the fraud of the 395 Jupiter. The two conspiracies are distinct offences. It cannot even be said that some of the ingredients of both the conspiracies are the same. The facts constituting the Jupiter conspiracy are not the ingredients of the offence of the Empire conspiracy,, but only afford a motive for the latter offence. Motive is not an ingredient of an offence. The proof of motive helps a Court in coming to a correct conclusion when there is no direct evidence. Where there is direct evidence for implicating an accused in an offence, the absence of proof of motive is not material. The ingredients of both the offences are totally different and they do not form the same offence within the meaning of article 20 (2) of the Constitution and, therefore, that Article has no relevance to the present case. The next question is whether this appellant was a party to the Empire conspiracy. He was a close associate of Shankarlal in the political field, he being the President of the Forward Bloc and Shankarlal being its Vice President. That is how they were drawn together. There is also evidence that out of the 63,000 shares of the Jupiter that were purchased in August, 1949 by Shankarlal Group, 4475 shares were allotted to this appellant. It is, therefore, clear that Accused 6 though ex facie he was neither a Director nor an office bearer in the Jupiter, had heavy stakes in it. We have already noticed that after the purchase of the said shares from and out of the Jupiter funds, a bogus loan in the name of Accused 6 for a sum of Rs. 25,15,000/ was shown in the Jupiter accounts and later on it was substituted by other manipulations. [His Lordship then proceeded to consider the evidence.] x x x x x x x x Both the Courts on the basis of the aforesaid evidence came to the conclusion that Accused 6 was 396 a member of the conspiracy and we cannot say that there is no evidence on which the Courts could have come to the conclusion to which they did. there are no permissible grounds for upsetting this finding under article 136 of the Constitution. As regards the sentence passed against this accused, the Sessions Judge sentenced him to undergo rigorous imprisonment for a period of 5 years, whereas he sentenced Accused 7, 8 and 9 to undergo rigorous imprisonment for a period of 3 years only. We do not see any justification for this distinction between the said accused in the matter of punishment. Accused6 had already been convicted and sentenced in the Jupiter case; and on the evidence it does not appear that he had taken a major part in the Empire conspiracy, though he was certainly in it. In the circumstances, we think that a sentence of 3 years ' rigorous imprisonment would equally suffice in his case. We, therefore, modify the sentence passed on him and sentence him to undergo rigorous imprisonment for 3 years. Subject to the aforesaid modification, the appeal preferred by Caveeshar, Accused 6, is dismissed. We shall now proceed to consider the appeal preferred by Damodar Swarup, Accused 7 i. e., Criminal Appeal No. 83 of 1962. Accused 7 was the Managing Director and Chairman of the Empire during the period of the conspiracy. On October 17, 1950 he was elected the Chairman of the Board of Directors of the Empire and appointed as Managing Director on a salary of Rs. 2,000/per month for a period of one year. He was removed from the post of Managing Director at the meeting of the Board of Directors held on March 12, 1951. The misappropriation of the funds of the Empire, which is the subject matter of the conspiracy, were committed during the period of his Managing Directorship i. e., between 397 September 20 and December 31, 1950. The prosecution case is that Accused 7 was a party to the conspiracy, whereas the defence version is that he was a benamidar for Shankarlal, that he took part in the proceedings of the Board of Directors bona fide, believing that there was nothing wrong, that the resolutions were implemented by Accused 10 under the directions of Shankarlal and that the moment he had a suspicion that there was some fraud, he took immediate and effective steps not only to prevent the rot but also to investigate and find out the real culprits. The question is which version is true. It would be useful to have a correct appreciation of the evidence to know the antecedents of Accused 7. [His Lordship then proceeded to consider the evidence.] x x x x x x Learned counsel for Accused 7 contends that the following two important circumstances in this case established that Accused 7 was a victim of circumstances and that he was innocent : (1) Two prominent publicmen of this country with whom the accused worked gave evidence that he was a man of integrity; and (2) the accused took active steps to unravel the fraud and to bring to book every guilty person; if he was a conspirator, the argument proceeds, it was incon ceivable that he would have taken such steps, for it would have certainly recoiled on him. We shall consider these two aspects now. [His Lordship then proceeded to consider the evidence.] x x x x The question is what is the evidentiary value of good character of an accused in a criminal case. The relevant provisions are section 53 and the Explanation to section 55 of the evidence Act. They read : Section 53. In criminal proceedings the fact 398 that the person accused is of a good character is relevant. Explaination to 8. In sections 52, 53, 54 and 55, the word "character" includes both reputation and disposition; but except as provided in section 54, evidence may be given only of general reputation and general disposition, and not of particular acts by which reputation, or disposition were shown. It is clear from the said provisions that the evidence of general reputation and general disposition is relevant in a criminal proceeding. Under the Indian Evidence Act, unlike in England, evidence can be given both of general character and general disposition. Disposition means the inherent qualities of a person; reputation means the general credit of the person amongst the public. There is a real distinc tion between reputation and disposition. A man may be reputed to be a good man, but in reality he may have a bad disposition. The value of evidence as regards disposition of a person depends not only upon the witness 's perspicacity but also on his opportunities to observe the person as well as the said person 's cleverness to hide his real traits. But a disposition of a man may be made up of many traits, some good and some bad, and only evidence in regard to a particular trait with which the witness is familiar would be of some use. Wigmore puts the proposition in the following manner : "Whether, when admitted, it should be given weight except in a doubtful case, or whether it may suffice of itself to create a doubt, is a mere question of the weight of evidence, with which the rules of admissibility have no concerned But, in any case, the character evidence is a very weak evidence : it cannot outweigh the positive 399 evidence in regard to the guilt of a person. It may be useful in doubtful cases to tilt the balance in favour of the accused or it may also afford a background for appreciating his reactions in a given situation. It must give place to acceptable positive evidence. The opinion expressed by the witnesses does credit to the accused, but, in our view, in the face of the positive evidence we have already considered, it cannot turn the scale in his favour. Learned counsel strongly relied upon the subsequent conduct of Accused 7 in support of his innocence. [His Lordship then proceeded to consider the evidence relating to subsequent Conduct and Considered as follows] x x x x x x x x We, therefore, hold that Accuscd 7 was a party to the conspiracy and that the High Court has rightly convicted him under section 120 B of the Indian Penal Code. As regards the sentence passed on Accused 7, having regard to the evidence in this case, we think that this accused must be given a comparatively less punishment than his co conspirators, for, though he took part in the conspiracy, at any rate from the end of December, 1950, for one reason or other, he took necessary proceedings to bring to light the fraud. We, therefore, think that it would meet the ends of justice if the accused was sentenced to rigorous imprisonment for a period of two years. We accordingly modify the sentence passed on him by the High Court and, subject to the aforesaid modification, we dismiss the appeal preferred by him. Next we come to Criminal Appeal No. 136 of 1959 preferred by Subhedar, Accused 8. The defence of this accused is that he acted throughout in good faith and under the guidance of Accused 7, the Managing Director of the Empire, and that he did not know that any fraud was perpetrated in the Empire. Before joining the Empire he was an 400 insurance agent and, therefore, it cannot be said that he was a stranger to the insurance business and he may be assumed to know how it would be conducted. On October 16, 1950 twenty qualifying shares of the Empire from among the shares purchased in the name of Accused 7 were transferred in his favour and thereafter at the meeting held on that day he was co opted as a Director. He is also, therefore, one of the persons brought in by Shankarlal and made a Director for his own purpose. [His Lordship then proceeded to consider the evidence] x x x x x x We have no doubt that the aforesaid circumstances lead to only one reasonable conclusion that this accused became a Director of the Empire as a member of the conspiracy and helped to put through all the transactions necessary to transfer funds from one Company to the other. He was rightly convicted by the High Court. We do not see any reason to interfere with the sentence passed against him. In the result Criminal Appeal No. 136 of 1959 is dismissed. Criminal Appeal No. 172 of 1959 is preferred by Sayana, Accused 9. He was a building contractor before he was appointed a Director of the Empire. His defence is also that he bona fide acted without knowledge of the conspiracy or the fraud. He was also one of the Directors inducted into the Company by the transfer of qualifying shares from and out of the shares purchased in the name of Accused 7. He was co opted as a Director on October 17, 1950 under exhibit Z 206C. Though he was not present at the meeting of November 27, 1950, he was present at the meeting of December 18, 1950 and, therefore, with the knowledge that six loans amounting to Rs. 28,80,000/ were advanced without scrutiny of the securities, he was a party in sanctioning another six loans totalling to Rs. 42,80,000/ . He as also a party to the resolution of January 30, 1951 401 sanctioning a bogus loan to the chief of Bagarian. He was a party to the resolution dated February 9, 1951 when the said loan was confirmed and to the resolution authorizing Accused 9 to operate singly the accounts of the Company. Evidence considered [omitted] x x x x It is, therefore, clear that he was a creature of Shankarlal, that he was a party to the diversion of the funds of the Empire to the Jupiter and that when Accused 7, for his own reasons, was taking steps to stop the rot, he, along with Accused 8, obstructed him from doing so and wholly supported Accused 10. The only reasonable hypothesis on the evidence is that he was a party to the conspiracy. It is said by learned counsel appearing for this accused that his subsequent conduct would not indicate any obstructive attitude on his part but would indicate only his desire to maintain the status quo till the matters improved. This is a lame explanation, for he, along with the other Directors, opposed every attempt of the scrutiny of the Company 's affairs and this can only be because they were conscious of their part in the fraud. In this context another argument of learned counsel for Accused 8 and 9 may be noticed. It is said that the High Court treated the Directors as trustees and proceeded to approach the case from that standpoint inferring criminality from their inaction. Even assuming that they were not trustees in the technical sense of the term, they certainly stood in a fiduciary relationship with the shareholders. The High Court 's finding is not based upon any technical relationship between the parties, but on the facts found. On the facts, including those relating to the conduct of the accused, the High Court drew a reasonable inference of guilt of the accused. There is sufficient evidence on which the High Court 402 could have reasonably convicted Accused 8 and 9 and in the circumstances, we do not see any case had been made out in an appeal under article 136 of the Constitution to merit our interference. In the result Criminal Appeal No. 172 of 1959 is dismissed. Finally we come to Criminal Appeal No. 67 of 1959 preferred by Bhagwan Swarup, Accused 10. The defence of this accused is that he acted throughout on the directions of Accused 7, 8 and 9, and that as Secretary of the Company, he was bound to follow their directions. This accused is the nephew of Shankarlal. He is an M. A., LL. B. He held the office of Assistant Commissioner of Income tax in Patiala State. He is the person who carried out the resolutions of the Board of Directors of the Empire through intricate channels to enable the large amounts misappropriated to reach the Jupiter Company. It is suggested that he was not well disposed of towards Shankarlal and therefore he could not have any knowledge of Shankarlal 's fraudulent motives behind the purchase of the controlling shares of the Empire. If Shankarlal did not like him lie would not have put him in the key position in the Empire. Indeed, the will of Shankarlal shows that this accused got the best legacy under it. He was the connecting thread passing through the web of conspiracy from beginning to end. Evidence Considered [omitted] x x x x x x x x Learned counsel appearing for this accused Could only argue that the accused was a subordinate of the Directors and that he had followed only loyally the directions given by the Managing Director without any knowledge of the conspiracy. This argument is an oversimplification of the part taken by Accused 10 in this huge fraud. Both the Courts below have 403 held, on the aforesaid circumstances and other evidence; that Accused 10 was an active participant in the conspiracy. In our view, there is ample material to justify it. In the result Criminal Appeal No. 67 of 1959 is dismissed. Cr. A. No. 82 of 1962 dismissed. Sentence modified. A. No. 83 of 1962 dismissed. Sentence modified. A. No. 136 of 1959 dismissed. Cr. A. No. 172 of 1959 dismissed. Cr. A. No. 67 of 1959 dismissed.

Double Jeopardy Applicability of rule Law finally and authoritatively decided by Supreme Court as to interpretation of the constitution If a substantial question of law Constitution of India, Arta. 20 (2), 145 (3). After the discovery of the conspiracy, ten conspirators including the appellants were put to trial before the Sessions judge under section 120 B of the Indian Penal Code and also each one of them separately under section 409 read with section 109 of the said Code. The charge was that they, alongwith one Shankar Lal and Doshi, both of them deceased entered into a criminal conspiracy at Bombay and elsewhere between or about the period from September 20, 1950 to December 31, 1950, to commit or cause to be committed criminal breach of trust in respect of Government securities or proceeds thereof or the funds of the Empire of India Life Assurance Co. Ltd., Bombay, acquiring its management and control and dominion over the said property in the way of business as Directors, Agents or attorneys of the said company. The learned Sessions Judge convicted six accused persons under section 120 B, read with section 409 of the Indian Penal Code and sentenced them to various terms of imprisonment. The rest four accused persons were acquitted. Against the acquittal State preferred an appeal to the High Court and the convicted accused persons also filed appeals against their convictions. Government appeal was allowed and the appeals of the convicted accused persons were dismissed by the High Court. These appeals by special leave have been preferred only by five accused persons against their conviction and sentences. In these appeals, the Court pro ceeded on the basis as it was manifest and indeed not disputed 379 that there was a conspiracy and the only question for con sideration was whether all or some of the appellants were parties to it. Held, that the essence of conspiracy is that there should be an agreement between persons to do one or other of the acts described in the section. The said agreement may be proved by direct evidence or may be inferred from acts and conduct of the parties. But section 10 of the Evidence Act intro. duces the doctrine of agency and if the conditions laid down therein are satisfied, the acts done by one are admissible against the co conspirators. The section can be analysed as follows : (1) There shall be a prima facie evidence affording a reasonable ground for a court to believe that two or more persons are members of a conspiracy; (2) if the said condition is fulfilled, anything said, done or written by any one of them in reference to their common intention will be evidence against the other; (3) anything said, done or written by him after the intention was formed by any one of them; (4) if it would also be relevant for the said purpose against another who entered the conspiracy whether it was said, done or written before he entered the conspiracy or after he left it; and (5) it can only be used against a co conspirator and not in his favour. Held, that so far as the appellant in criminal appeal No. 82/62 is concerned, applying the test laid down by this Court, the two conspiracies are not the same offence. The ingredients of both the offences are totally different and they do not form the same offence within the meaning of article 20 (2) of the Constitution and, therefore, that Article has no relevance to the present case. Further, there are no permissible grounds for upsetting the concurrent findings of both the courts below that the appellant was a member of the conspiracy. Leo Boy Prey vs The Superintendent, District Jail, Amritsar, ; and The State of Bombay vs section L. Apte, ; , relied on. Sardul Singh Caveeshar vs State of Bombay, [1958] S.C.R. 161, referred to. As the question raised regarding interpretation of article 20 (2) of the constitution has already been decided by this Court, it cannot be held that the question raised involves a substantial question of law as to the interpretation of the Constitution within the meaning of article 145 (3) of the Constitution. State of Jammu & Kashmir vs Thakur Ganga Singh, [1960] 2 section C. R. 346 relied on. 380 Held, that from the relevant provisions of section 53 and the Explanation to section 55 of the Evidence Act. , it is clear that the evidence of general reputation and general disposition is relevant in a criminal proceeding. Under the Indian Evidence Act, unlike in England, evidence can be given both of general character and general disposition. Disposition means the inherent qualities of a person; reputation means the general credit of the person amongst the public. There is a real distinction between reputation and disposition. A man may be reputed to be a good man, but in reality be may have a bad disposition. The value of evidence as regards disposition of a person depends not only upon the witness 's perspicacity but also on his opportunities to observe the person as well as the said person 's cleverness to hide his real traits. But a disposition of a man may be made up of many traits, some good and some bad, and only evidence in regard to a particular trait with which the witness is familiar would be of some use. But, in any case, the character evidence is a very week evidence; it cannot out weight the positive evidence in regard to the guilt of a person. It may be useful in doubtful cases to tilt the balance in favour of the accused or it may also afford a background for appreciating his reactions in a given situation. It must give place to acceptable positive evidence. The opinion expressed by the witnesses does credit to the accused, but, in the face of the positive evidence it cannot turn the scale in his favour.

vil Appeal No. 3 160 of 1983. From the Judgment and Order dated 17.11.1981 of the Madras High Court in Second Appeals Nos. 650 and 874 of 1981. V.M. Tarkunde, Ms. section Khanna, Jagmohan Khanna and A.S. Khan for the Appellants. 521 T.S. Krishnamurthy, K.R. Choudhary, S.M. Amiad Nainar and section Thananjayan for the Respondents. The Judgment of the Court was delivered by KASLIWAL, J. This Civil Appeal by the plaintiffs is directed against the Judgment of High Court of Judicature at Madras in Second Appeal Nos. 650 & 894 dated 17th November, 1981. Mohd. Zainulabdeen and Yasin Bi filed a suit for decla ration that they were entitled to be in enjoyment and pos session of Saint Syed Moosa Shah Khadiri Dargah in Madras for a period of 27 days in all in the months of February, March, June, July, October & November and to restrain the defendants from interfering with the plaintiffs aforesaid right and management in the Dargah. The case of the plain tiffs as set up in the plaint was that the Dargah in ques tion was being managed by the members of the family of one Sayed Mohideen Sahib. Sayed Mohideen had two sons Sayed Ismail Sahib and Sayed Gulam Dastagir Sahib. As per Judgment in C.S. 116 of 1909 the right of management was divided between the two sons each taking six months for himself. According to this arrangement the branch of Sayed Ismail Sahib used to remain in management for the months of Janu ary, April, May, August, September and December and the branch of Gulam Dastagir Sahib for the other six months, namely, February, March, June, July October and November. The present suit relates to the controversy between the decendants of the branch of Gulam Dastagir Sahib. According to the plaintiffs after the death of Sayed Gulam Dastagir the right and management of the Dargah according to Muslim Law devolved on his two sons and one daughter, namely, Sayed Gaffar Sahib, Sayed Mohideen and Fathima Bee in proportion of 2:2:1 respectively. The plaintiffs alleged that thus Fathima Bee had 1/5 share in 6 months i.e. 36 days. Fathima Bee left surviving one son and two daughters. The plaintiffs who are one son and one daughter of Fathima Bee as such are entitled to 3/4 share i.e. 27 days, as another daughter Zahurunnissa was not interested in claiming her right has been impleaded as defendant No. 2. After the death of Fathi ma Bee, the plaintiffs being her son and daughter associated themselves in the management of the Dargah with their mater nal uncles and the sons of the maternal uncles and were getting share of the income of the Dargah. According to the plaintiffs this arrangement was going on for several years eversince the death of Fathima Bee in 1957. However on account of some dissensions, the first defendant Sayed Mohideen (since deceased) and another defendant being the son of another 522 deceased maternal uncle were preventing the plaintiffs from exercising their right and enjoying the income of the Dar gah. The plaintiffs served a notice on 23.3.1972 calling upon the defendants to recognize the right of management of the plaintiffs in the Dargah. The defendants sent a reply on 22.4.1972 stating that the plaintiffs claiming through female were not entitled to any right in the management or share in the offerings in the Dargah and even if they were entitled to any right or claim the same was barred by limi tation. Sayed Mohideen (since deceased) defendant No. 1 in the suit filed a written statement and took the plea that his father Sayed Gulam Dastagir was a Mujawar and was receiving the offerings by right of inheritence. Sayed Ismail being cousin brother of Sayed Gulam Dastagir as such he was also a Mujawar along with Sayed Gulam Dastagir Sahib. Fathima Bee the daughter of Sayed Gulam Dastagir had no right of Mujawar as the right was given only to the male members and not to the females. Fathima Bee as such was not entitled to claim any right of Mujawar. The widows of Sayed Gulam Dastagir also could not claim any right of Mujawar thus neither Wazir Bee widow of Sayed Ismail nor Mohideen Bi the widow of Sayed Gulam Dastagir could take upon the management of the Dargah as they were female members. According to the defendants no female members got the right of direct management of the Dargah and the Judgment in Suit No. 116 of 1909 also nega tived the right of any management by Wazir Bee and Mohideen Bi. It was admitted that though Fathima Bee was alive but she was not a party to the aforesaid suit. It was however pleaded that claim of Fathima Bee was not recognized in the above suit. It was further alleged in the written statement that Fathima Bee never participated in the management of the Dargah. According to Muslim Law females were excluded from performing the duties of the offices of Peshimam Khatib and Mujawar. It was further alleged that Fathima Bee never enjoyed the right to the Hundial Collection of the Dargah and even if she had got any right, the same was lost as she did not claim any right till her death. Fathima Bee never asserted any right during her life time nor received any share in the offerings. Her right, if any, was extinguished within 12 years after the death of her father Sayed Gulam Dastagir. It was further alleged that as Fathima Bee had no right or claim of share in the Mujawarship and was also ousted from the enjoyment of any share in the Hundial Col lections, the plaintiffs who were claiming through Fathima Bee were also not entitled to any relief. Defendants Nos. 2 to 6 adopted the written statement filed by the first de fendant. So far as the defendants Nos. 7, 8 & 10 were con cerned, they filed a written statement taking the plea that the 523 family members were recognized as sharers in the management of the Dargah and they were also sharing the income. It was further alleged that even the answering defendants were paying such share to their sister Ahamadunnissa (lOth de fendant) in the Hundial collection of the Dargah. The 7th defendant (Anser Bi) filed a suit No. 75 18 of 1971 in the Court of 4th Assistant City Civil Court and her right to manage was recognised for 9 days in a year. Hence it was false to state that the females were not entitled to claim management. It may be mentioned at this stage that defendant No. 1 Sayed Mohideen died during the pendency of the suit and defendants Nos. 12 to 19 were added as his legal repre sentatives. The Trial Court decreed the suit and in the operative part held that the plaintiffs were entitled to manage the Dargah for 27 days in February (viz. from February 1 to February 27). The defendants Nos. 3 to 6 and 12 to 19 filed appeals aggrieved against the Judgment of the Trial Court while 7th defendant in the suit filed cross objections in respect of a particular portion of the decree. Learned City Civil Court, Madras affirmed the Judgment and decree of the Trial Court except some modifications in the relief as mentioned below. "The Plaintiffs are entitled to the reliefs of declaration that they are entitled to be in management of the Suit Dargah for a period of 27 days in a year during the months of Febru ary March, June July and October November each year and that the said 27 days shall be Febru ary 1 to 6, June 1 to 6 and October 1 to 6 for the first plaintiff and 9 days from July 1 to 9 for the second plaintiff and that the plain tiffs are entitled to the relief of possession of the said right to be in management of the Dargah and to be in enjoyment of the Hundial income during the said period. The cross objections of the 7th defendant is dismissed. " Different sets of defendants filed second appeals Nos. 650 & 894 of 1981, and both these second appeals were dis posed of by the High Court by order dated 17th November, 1981. The High Court allowed the second appeals and while setting aside the Judgments and decrees of the Courts below dismissed the suit filed by the plaintiffs. The High Court took the view that the Courts below proceeded upon an erro neous assumption as if it was the duty of the defendants to prove by what hostile assertions of title and possession ouster has been established. 524 In the view of the learned Judge by allowing inaction, more so when it was coupled with sharing of profits in not claim ing the profits at any point of time, there would arise a clear presumption of ouster. The High court laid great emphasis on the circumstances that Fathima Bee till her death in 1957 did not care to make a demand of her right or share at any point of time. It was further observed that after the decree in Civil Suit No. 116 of 1909, it was only male heirs who were exercising their rights. The High Court in this regard further referred to the statement of P.W. 1 himself and drew the conclusion that after the death of his mother nobody was employed as an agent. Only at the time when he consulted the Vakil he came to know that his mother had 36 days share in the Mujawarship. Before that he did not do anything concerning the share of the Hundial collections. The demand was from 1960 to 1972. But nothing was paid. He knew that he had rights even before. The High Court on the basis of the above evidence of P.W. 1 observed that it was clear that the mother of P.W. 1 was aware of the filing of Civil Suit No. 116 of 1909. Irrespective of that, in so far as there was absolutely no evidence whatsoever to show at any point of time till her death in 1957 that Fathima Bee ever made a demand or asked for a share of the Hundial collections as such it should be held that her rights had become barred. The High Court in these circumstances held that if really the rights of Fathima Bee had become barred by her not exercising the rights, the plaintiffs themselves can have no independent right to claim. It may be mentioned at the outset that there is no controversy now as regards the period of 27 days falling to the share of the plaintiffs and on the question that females are also entitled in the right and management of Dargah according to Muslim Law. Thus the only controversy now left to be determined is whether the High Court was right in holding that the rights of Fathima Bee had become barred by limitation by ouster and as such the plaintiffs who were also claiming through Fathima Bee had lost their right by ouster? It would first be necessary to make it clear as to what is the impact of the decree dated 11.8.1910 passed in Civil Suit No. 116 of 1909, so far as the present litigation is concerned. A perusal of the Judgment in the above case goes to show that Sayed Moosa Sahib and Wazir Bi filed a suit against Sayed Gaffar Sahib, Sayed Mohideen Sahib and Mohi deen Bi for a declaration that the plaintiffs and the de fendants were entitled to perform the duties of Mujawar of the Dargah in turns and they were entitled to collect and receive the offerings, gifts and other emoluments of the Dargah as well as the collec 525 tion of the hundi box in the Dargah and appropriate the same in two equal moities and to settle a scheme for managing the ' said Dargah so as to equalize the amount of income and emoluments to be collected and appropriated by both the parties during their respective turns. In the said case a decree was passed that the 1st plaintiff and the 1st & 2nd Defendants were entitled to perform the duties of Mujawar of the Dargah in question in turns. A scheme was also drawn for collecting and receiving the offerings, gifts and other emoluments of the said Dargah as well as the collections of the hundi box and apportion the same in two equal moities and that Sayed Moosa Sahib, the 1st plaintiff was entitled to one half and Sayed Gaffer Sahib and Sayed Mohideen, the 1st and 2nd defendants were entitled to the other half of the collections, offerings, gifts and other emoluments. A great capital has been raised on the basis of the above decree by the learned counsel for the defendant respondents that no share was given to the female members in the above decree, namely, to Wazir Bi and Mohideen Bi and from this it was clear that the females were totally excluded from the right or claim of any share in the management or offerings in the Dargah. We do not find much substance in the above contention. In the above judgment the controversy whether females were entitled to any right or management of the offerings in the Dargah was neither raised for decided. Fathima Bee though alive but was not a party in the aforesaid litigation and any judgment given in that suit cannot be held as res judi cata or binding on Fathima Bee or the present plaintiffs. Mr. Krishnamurthy Aiyer, learned counsel for the defen dantrespondents contended that he was not arguing that the aforesaid judgment and decree were res judicata or binding on Fathima Bee, but his submission was that it should be taken as a circumstances in proving ouster of Fathima Bee from the fight or management of the Dargah or any claim in the offerings. In our view as already mentioned such judg ment cannot be considered as an ouster of Fathima Bee cou pled with other circumstances which clearly show that there was no ouster in the facts of the present case. It is an admitted case of the parties that Sayed Gulam Dastagir Sahib had a fight of management in the Dargah in question for six months (180 days) in the months of Febru ary March, June July and October November. Gulam Dastagir had one daughter Fathima Bee and two sons and as such Fathi ma Bee got 1/5th share and which came to 36 days out of aforesaid 180 days. Thus Fathima Bee was a co sharer in the right of management and possession of the Dargah as well as the 526 offerings and hundial collection. Now, before considering the question of ouster of Fathima Bee, it would be important to consider the pleadings of the defendants in this regard. Learned counsel for the defendant respondents in this regard have drawn our attention to paragraph 19 of the written statement filed by 1st defendant Sayed Mohideen. Para 19 of the written statement reads as under: "Neither Fathima Bee till her death nor the plaintiffs from her death till now had posses sion or management of the Dargah, None of them had at any time received a share in the hundi al collection or offerings. Further there has been expressed denial of Fathima Bee 's title at the time of the judgment of the High Court in 1909, if she did not have a title according to Muslim Personal Law that title was denied, and she was expressly ousted out from the enjoyment of any share in the hundial collec tions. From her death till now the plaintiffs have not received any share in the hundial collections". A perusal of the above pleading show that the defendants are claiming ouster on the basis of expressed denial of Fathima Bee 's title at the time of the judgment of the High Court in 1909 and another ground taken is that neither Fathima Bee nor the plaintiffs had at any time received a share in the hundial collection or offerings nor had posses sion or management of the Dargah. The defendants are totally mistaken in taking the ground that there was any expressed denial of Fathima Bee 's title in that litigation. At the risk of repetition it may be stated that neither Fathima Bee was a party in that suit nor any such question was raised or decided that females were not entitled to any share in the management or offerings of Dargah. Thus there was no ques tion of any expressed denial of Fathima Bee 's title in that litigation. It appears that the defendants were carrying a mistaken impression all along that females under the Muslim Law were not entitled to any right of management or posses sion in a Dargah and on that account they were pleading an ouster of Fathima Bee as well as the plaintiffs. Such plead ing cannot be considered as an ouster in fact of a co sharer from a joint right. It is well settled that where one co heir pleads adverse possession against another co heir then it is not enough to show that one out of them is in sole possession and enjoyment of the profits of the properties. The possession of one co heir is considered in law, as possession of all the co heirs. The co heir in possession cannot render his possession adverse to the other co heir not in possession merely by any secret hostile animus on his own part in derogation of 527 the other co heir 's title. Thus it is a settled rule of law as between co heirs there must be evidence of open assertion of hostile title, coupled with exclusive possession and enjoyment by one of them to the knowledge of the other so as to construe ouster. Thus in order to make out a case of ouster against Fathima Bee or the plaintiffs, it was neces sary for the defendants to plead that they had asserted hostile title coupled with exclusive possession and enjoy ment to the knowledge of Fathima Bee. The written statement filed by the defendants in the present case is totally lacking in the above particulars and thus apart from the want of evidence, there is no proper pleading of ouster in the present case. Thus it is clear that neither in the written statement nor in reply to the notice of the plain tiffs any stand was taken that the right of Fathima Bee or plaintiffs was specifically denied on any particular occa sion so as to put them on notice that from that date the possession of the defendants would be adverse to the inter est or rights of the plaintiffs of Fathima Bee. We are supported in the above view by a decision of this Court in P. Lakshmi vs L. Lakskmi Reddy, ; It is further proved from the evidence led by the plain tiffs that Fathima Bee was being looked after by her broth ers and she was in fact being paid portions of the income from the Dargah and on that account she was satisfied in allowing the brothers to enjoy the office of Mujawar on her behalf also. The 13th defendant who has been examined as D.W. 1 has admitted that Fathima Bee was living and was being looked after by Sayed Gaffar and who had arranged for and met the expenses of the marriage of the two plaintiffs. This clearly goes to show that relations between Fathima Bee and her brothers were cordial and as such there was no question of any knowledge to Fathima Bee that she was being ousted from her right or share in the Dargah. No evidence has been led by the defendants to show that such right was openly denied by the brothers which would be considered as an ouster. The First Appellate Court had considered all these aspects in detail after discussing the entire evidence placed on record and had clearly recorded the finding that there was no proof of ouster in the present case. The High Court in our view committed a serious error in reversing the above finding and in taking a wrong approach in holding ouster on the basis of judgment and decree given in Suit No. 116 of 1909 and on the ground that Fathima Bee had not made a demand or asked for her share of the hundial collections at any point of time till her death in 1957. Mr. Krishnamurthy Aiyer, learned counsel for defendants Nos. 528 12 to 19 submitted that according to decree given by First Appellate Court the period of 27 days from February 1 6, June 1 6 and October 1 6 for First plaintiff and 9 days from July 1 9, for the second plaintiff acts onerous to his defendants 12 to 19 and it must be fixed in a manner which may be equitable to all the parties. The appellants and their counsel Shri Tarkunde on the other hand submitted that their share of 27 days may be fixed jointly and so far as their own proportion of 18 and 9 days is concerned they will make their arrangement inter se. After hearing learned coun sel for the parties and considering the entire facts and circumstances of the case, we uphold the decree passed by the First Appellate Court with the following modification in the arrangement of days in the management of the Dargah in question. The plaintiffs would be entitled to such management from 17th. to 30th June and 1st to 13th July and in the next year from 18th to 30th June and 1st to 14th July. This arrange ment would continue by rotation of each year. To be more precise the plaintiffs would be entitled to have the manage ment of the suit Dargah from 17th to 30th June and 1st to 13th July in the year 1990 and 18th to 30th June and 1st to 14th July in the year 1991 and they shall continue to follow such cycle by rotation every year. For the reasons stated above, we set aside the judgment and decree of the High Court dated 17th Nov. 1987 and re store that of the Trial Court as affirmed by the First Appellate Court with modifications as stated earlier. Parties to bear their own costs.

Mohd. Zainulabdeen and Yasin By filed a suit for decla ration that they were entitled to be in enjoyment and pos session of Saint Syeed Moosa Shah Khadiri Dargah in Madras for 27 days and to restrain the defendants from interfering with tile plaintiffs ' aforesaid right and management in the Dargah. In reply the defendant No. 1 alleged that in the manage ment of the Dargah, female members had no right nor could they claim the right of Mujawar. It was also alleged that Fathima Bee through whom the Plaintiffs were claiming never enjoyed the right to Hundial collection of the Dargah and share in the Mujawarship and even if she had any right the same was lost as she did not claim any right till her death and therefore the Plaintiffs were also not entitled to any relief. Defendants 7, 8 and 10 however in their written statements admitted family members to be sharer in the income and management of the Dargah and they also admitted that they were paying such share to their sister Ahamadun nissa (10th defendant) in the Hundial collections and that the City Civil Court in suit No. 7518 of 1971 had also recognised the right of 7th defendant Anser Bi to management of the Dargah for 9 days in a year. Thus it was false to contend that the females were not entitled to claim manage ment. The trial court decreed the suit of the Plaintiffs and held that they were entitled to manage the Dargah 1or 27 days in a year. Defendants 3 to 6 and 12 to 19 filed appeals against the judgment of the trial court. The City Civil Judge, however, affirmed the judgment of the Trial Court with some modifications in the relief. Different sets of defendant filed two second appeals before the High Court and both were disposed of by the High Court by its judgment and Order dated 17th November, 1981 whereby it reversed the 520 judgments and decrees of the courts below and dismissed the suit filed by the Plaintiffs. This Court came to the conclusion that there is no controversy as regards the period of 27 days falling to the share of the Plaintiffs and the right of the females to the management of the Dargah according to Muslim law. As regards the question of right of Fathima Bee having become barred by limitation by ouster and that as such the Plaintiffs too had lost that right, this Court, while setting aside the Judg ment and Decree of the High Court and restoring that of the Trial Court as modified by the First Appellate Court, HELD: It iS well settled that where one co heir pleads adverse possession against another co heir it is not enough to show that one out of them was in sole possession and enjoyment of the profits of the properties. The possession of one co heir is considered in law as possession of all the co heirs. The co heir in possession cannot render his pos session adverse to the other co heirs not in possession merely by any secret hostile animus on his own part in derogation of the other co heirs title. [526G H; 527A] It is a settled rule of law as between co heirs that there must be evidence of open assertion of hostile title coupled with exclusive possession and enjoyment by one of them to the knowledge of the other so as to construe ouster. [527A] The High Court in the instant case committed a serious error in reversing the finding of the lower Appellate Court and in taking a wrong approach in holding ouster on the basis of the judgment and decree given in Suit No. 116 of 1909 and on the ground that Fathima Bee had not made a demand or asked for her share of the hundial collections at any point of time till her death in 1957. [527G] P. Lakshmi vs L. Lakshmi Reddy; , , referred to.

Civil Appeals Nos. 374 375 & 457 462 of 1976. (From the Judgment and order dated 12 3 76 of the Guja rat High Court in S.C.A. Nos. 1784/73 and 650/74, 1125, 1118, 1123, 1124, 1835, 1836/74 respectively.) A.K. Sen, S.J. Sorabjee, M.V. Chinubhai and B.R. Agarwa la, for the appellants in CAs 374 375/76. S.J. Sorabjee, Mrs. Chinubhai, S.H. Sanjanwala, P. H. Parekh and Miss Manju Jetley, for the appellants in CAs 457 462/76. J.M. Thakere, Adv. General, J. P. Nanavati and M.N. Shroff, for respondent No. 1 in all the appeals. The Judgment of the Court was delivered by BEG, J. The eight Civil Appeals before us by certifi cates of fitness of the cases for appeals to this Court raise common questions involving the interpretation of Articles 31A and 3lB of the Constitution of Indian relation to the Gujarat Agricultural Land Ceiling Act XXVII of 1961 (herein after referred to as 'the Act '). The preamble of the Act says that it was enacted because: "xxx it is expedient in the public interest to make a uniform provision for the whole of the State of Gujarat in respect of restrictions upon holding agricultural land in excess of certain limits and it is also expedient for so securing the 105 distribution of agricultural land as best to sub serve the common good to provide for the acquisi tion of surplus agricultural land for the allotment thereof to persons who are in need of lands for agriculture (including cooperative farming socie ties, landless persons, agricultural labourers and small holders) or for the allotment of such surplus agricultural lands the integrity of which is main tained in compact blocks to a department of Govern ment or to cooperative farming societies or corpo rations owned or controlled by the State, for ensuring the full and efficient use thereof and to provide for other consequential and incidental matters hereinafter appearing?" The part of section 6 of the Act with which we are especially concerned provides: "6(1) Notwithstanding anything contained in any law for the time being in force or in any agreement, usage or decree or order of a Court, with effect from the appointed day, no person shall, subject to the provisions of sub sections (2), (3), (3A) and (3B) be entitled to hold, wheth er as owner or tenant or partly as owner and partly as tenant land in excess of the ceiling area. (2) Where an individual, who holds land, is a member of a family, not being a joint family which consists of the individual and his spouse (or more than one spouse) and their minor sons and minor unmarried daughters, irrespective of whether the family also includes any major son, and land is also separately held by such individual 's spouse or minor children, then the land held by the individu al and the said members of the individual 's family, excluding major sons, if any shall be grouped together for the purposes of this Act and the provisions of this Act shall apply to the total land so grouped together as if such land had been held by one person. (3) xxx xxx xxx (3A) xxx xxx xxx (3B) Where a family or a joint family con sist of more than five members comprising a person and other members belonging to all or any of the following categories, namely : (i) Minor son, (ii) widow of a pre deceased son, (iii) minor son or unmarried daughter of a pre deceased son, where his or her mother is dead, Such family shall be entitled to hold land in excess of the ceiling area to the extent of one fifth of the ceiling area for each member in excess of five, so however that the total holding of the family does not exceed twice the ceiling area; and, 9 1003 SCI 176 106 in such a case, in relation to the holding of such family, such area shall be deemed to be the ceiling area: Provided that if any land is held separately also by any member of such family, the land so held separately by such member shall be grouped together with the land to such family for the purpose of determining the total holding of such family: Provided further that where. in consequence of any member of such family holding any land in any other part of India outside the State, the ceiling area in relation to the family is reduced as pro vided in sub section (3A), the one fifth of the ceiling area as aforesaid shall be calculated with reference to the ceiling area as would have been applicable had no such land been held by such member in any other part of India. (3C) Where a family or a joint family irre spective of the number of members includes a major son, then each major son shall be deemed to be a separate person for the purposes of sub section ( 1 ) ". In accordance with the provisions of Sections 4 and 5 of the Act, classes of land, nature of irrigation facilities provided there, and the ceiling area for each particular class of land in each locality were specified in Schedule I. This is found classified in nine local areas. The range of ceiling limit varies from 10 acres to 54 acres, according to the irrigation facilities and quality of land, the ceiling for less productive and less advantageously situated land being higher. The question which has been raised before us is whether, apart from variations in the ceiling area imposed by stat ute, there can be a depriviation of rights of individuals holding property separately, in exercise of their separate individual rights, by grouping them as members of one family so as to compel them to take only one unit of land ' in such a way that their total holding does not exceed the ceiling limit which is the same for both individuals as well as families as defined by the Act with some allowances for large families. This raises a further question: What is the unit for which this ceiling is prescribed? It is evident that Section 6 conceives of each "person" holding land as a single unit whose holding must not exceed the ceiling limit. Section 2, sub section (21) says: " 'person ' includes a joint family;". Thus, the term "person" is not, strictly speaking, defined in the Act. Section 2, sub section (21) only clarifies that the term "person" will "include" a joint family also. It certainly does not exclude an indi vidual from being a person in the eyes of law. This has been done apparently to make it clear that, in addition to individuals, as natural persons, families, as conceived of by other provisions, can also be and are per sons. This elucidation of the term "person" is in keeping with Section 3 (42) of the , which lays down: " 'person ' shall include any company or association or body of individuals, whether incor porated or not". 107 We have referred to the Central 10 of 1897 and not to the State , which also contains a similar clarification, because Article 367 of our Constitu tion provides that the definitions contained in the Central Act "apply for the interpretation of the Constitution". The argument which has been ad vanced before us is that the concept of the term "person", having been fixed by the Central , this concept and no other must be used for interpreting the second proviso to Article 31A of the Constitution which lays down: "Provided further that where any law makes any provision for the acquisition by the State of any estate and where any land comprised therein is held by a person under his personal cultivation, it shall not be lawful for the State to acquire any portion of such land as is within the ceiling limit applicable to him under any law for the time being in force or any building or structure standing thereon or appurtenant thereto, unless the law relating to the acquisition of such land, building or structure, provides for payment of compensation at a rate which shall not be less than the market value thereof". As no argument based on Articles 14 and 19 is open to the appellant, the Act under consideration having been included in the 9th Schedule to the Constitution, the ground now taken is that Section 6, subsection (2) of the Act, set out above, contains a colourable device for getting round the limitations on legislative power imposed by the second proviso to Article 31A(1) of the Constitution. It is urged that this is done by adopting an unnatural and legally untenable concept of a "person" which transpires from an analysis of Section 6 of the Act. It is true that, but for the provisions of Section 6, sub.s.(2) of the Act, the term "person", which includes individuals, as natural persons, as well as groups or bodies of individuals, as artificial persons, such as a family is, the entitlement to the ceiling area would be possessed by every person, whether artificial or natural. In other words, if Section 6(2) of the Act was not there, each indi vidual member of a family would have been entitled to hold land upto the ceiling limit if it was his or her legally separate property. This follows from the obivous meaning of the term "person" as well as the inclusive definitions given both in the Act under consideration and in the . Spouses and minor children, as natural persons, have not been debarred from holding their separate rights to land by the provisions of the Act. It is not the object of the Act to do that. The object of the Act, as set out above, is two fold: firstly, to limit the ceiling area of each holder; and, secondly, to acquire what falls beyond the ceiling limit so that the State may distribute it to more needy persons. It is not disputed that compensation is provided for acquisition of what exceeds the ceiling area in every case. As was held by this Court in H.H. Kesavananda Bharati Sripadagalavaru vs State of Kerala,(1) the amount of compen sation fixed can not be questioned. Therefore, no [1973] Supp. S.C.R. 1. 108 provision of the Act could be or is challenged on the ground that the required compensation is not prescribed for an acquisition under it as required by Article 31(2) of the ' Constitution or is inadequate. Article 3lB of the Constitu tion seems to us to provide a complete answer to any attack directed against the provisions of an Act based upon an alleged violation of any of the rights conferred by the provisions of Part III of the Constitution. It reads: "3lB. Without prejudice to the generality of the provisions contained in Article 31B, none of the Acts and Regulations specified in the Ninth Schedule nor any of the provisions thereof shall be deemed to be void, or ever to have become void, on the ground that such Act, Regulation or provision is inconsistent with, or takes away or abridges any of the rights conferred by, and provisions of this part, and notwithstanding any judgment, decree or order of any court or tribunal to the contrary, each of the said Acts and Regulation 's shall, subject to the power of any competent Legislature to repeal 'Or amend ' it, continue in Force". Learned Counsel for the petitioners concede that, in view of the decision of this Court in H.H. Kesavananda. Bharti 's case (supra) and other cases referred to there, it is not possible to assail the provisions. of Section 6 of the Act on the ground that they take away or abridge any right. conferred by Part III of the Constitution on individuals, But, what they urge is that the second proviso to Article 31A(1)does not confer any right upon any person but only imposes, a limit upon the Legislative compe tence to that the inclusion of the Act in the 9th Schedule will not validate a provision which a legislature was not competent it all to enact. Such a provision, it was submit ted, will not be protected by Article 3lB of the Constitu tion. The contention is that Article 3lB does not protect a provision from invalidity on the ground of legislative incompetence of the legislature enacting it. We do not think that the ease before us raises any question of legislative competence of the nature which could arise if a State Legislature had tried to trespass upon the exclusive domain of Union Legislation. What has been urged is simply that the second proviso to Article 31 (1) disables the State Legislature from acquiring any land below the ceiling limit without providing for compensation for such acquisition at the full market value. The proviso certainly protects, and, indeed, confers certain rights upon individuals to an amount of compensation. That is its direct effect. The argument on behalf of the appellant, as we under stand it is that, although, an alteration of the ceiling limit for each "person" directly by prescribing its stauto ry limit is permissible, yet, if it is not done directly by changing the ceiling limit for each person but by introduc ing a concept of "person", contrary to the concept in the provisions of the second proviso to Article 31 A( 1 ), it becomes a prohibited colourable device for getting round the second proviso to Article 31A(1). It is urged that the effect of the amended Section 6 of the 109 Act is to change the ceiling limit for some persons only by altering the legal and constitutional concept of a person. We do not find any fixed concept of "person" anywhere. No .doubt the concept is wide so that it could be contended that it should not be narrowed down or confined, But does Section 6 (2) do that? Section 6 (2) does not either disable a husband or wife from owning or holding their separate properties separately. It does not merge or de stroy their separate legal personailties. It requires their separate holdings to be grouped together as though they were held by one person only for the purpose of determining the ceiling limit for each member of a family. It may indirect ly have the effect of disabling a member 'of a family from holding land upto the prescribed ceiling limit for a person holding as an individual. In other words, the result is that such a member of a family will have to be content with a holding less than that of an unmarried individual. It has the effect of making it clear that what have to be grouped together are the separate properties of individuals belong ing to families other than what are "joint families", in law. It takes in and applies to members of families other than undivided Hindu families. It means that married per sons and their minor children will have to be viewed as though they hold one lot together even though they retain their separate legal personalities and remain competent owners of their separate holdings. It does not affect either their legal status or competence. It does reduce their individual holdings. But, we do not find any prohibi tion enacted by the second proviso to Article 31A(1) against different ceiling limits prescribed for various individuals or classes of individuals differently situated. Nor does the second proviso to Article 31A(1) prescribe any particular or direct more of imposing different ceilings on individu als differently circumstanced. A glance at the provisions of Section 20 of the Act shows that separate rights to properties grouped together for purposes of computation only do not vanish. On the other hand, each holder of such separate rights above the ceiling ,limit is permitted to select the property he or she wishes to continue to hold in such a way "that the lands selected for such continuance shall be in the same propor tion in which lands held by each spouse before furnishing the relevant statement were under sub section (1) of Section 10. The reduction in their holdings would, therefore, be proportionate to the areas of lands held separately but ' brought together only for the purposes of determining the: ceiling limit for the family. The whole object of the proc ess prescribed seems to be that families, as contemplated by the Act, should be units for merely determination of ceil ings for each member of a family. Appellants relied on Kunjukutty Sahib etc. vs State of Kerala & Anr.(1) where it was held by this Court (at p. 314): "It was not disputed that the ceiling limit fixed by the amended Act was within the competence of the legislature to fix; nor was it contended that the ceiling fixed by the original unamended Act by itself debarred the legislature from further (1) [1973] 1 S.C.R.326 @ 341. 110 reducing the ceiling limit so fixed. Prior to the amendment undoubtedly no land within the personal cultivation of the holder under the unamended Act within the ceiling limit fixed thereby could be acquired without payment of compensation according to the market value, but once ceiling limit was changed by the amended Act the second Proviso to article 31A (1) must be held to refer only to the new ceiling limit fixed by the amended Act. The ceiling limit originally fixed ceased to exist for future the moment it was replaced by the amended Act. The prohibition contained in the second proviso oper ates only within the ceiling limit fixed under the existing law, at the given time. It is true that the new ceiling limit was fixed contemporaneously with the acquisition of the land in excess of that ceiling limit. But it was not contended that a law so fixing the ceiling limit and acquiring the land in excess would offend any provision of the Consti tution". Pritam Singh vs State of Punjab & Ors.(1) was also cited on behalf of the appellants. Here the contention, amongst others, was repelled that, by adding land transferred to certain relations to that held by a person under his person al cultivation, for the purpose of determining his ceiling area and the surplus left, under the provisions of the Pepsu Tenancy and Agricultural Lands Act, 1955, as amended by a subsequent Act, rights guaranteed by the second proviso to Article 31A(1) were contravened. This case certainly does not lay down that the ceiling limit applicable to each individual must be uniform or that it must be contained in a single statutory provision directly dealing with ceiling limits. It follows that the ceiling limit may vary from individual to individual. These varying limits may result from the combined effect of several provisions. The pre scription of different ceiling limits for different individ uals, differently circumstanced, could be enacted directly by a single provision dealing with individual celling lim its, or, alternatively, it could be the consequence of several provisions dealing with differing sets of circum stances. No law known to us has ever laid down that the intention of the law makers on a particular subject must necessarily transpire from a single statutory provision or statutory provisions dealing directly with a particular aspect. To read any such limit into the 2nd proviso to Article 31A(1) of the Constitution would be to accept a novel restriction on legislative competence. We have no doubt that no such restriction could be found in the 2nd proviso to Article 31 A ( 1 ) of the Constitution. It was urged that Article 31A(1) and 3lB of the Consti tution operate in different fields of legislation. Whereas Article 3 IA( 1 ) cures certain possible invalidities in ordinary legislation, arising from its. inconsistencies with Articles 14 or 19 or 31 of the Constitution, Article 3lB cures a wider range of infirmities arising from conflict with any of the provisions of Part III of the Constitution and necessitates a constitutional amendment so as to protect an impugned legislation by its inclusion in the 9th Schedule to the Constitution. Legislation protected (1) [1967] 2 S.C.R.p. 111 by Article 31A of the Constitution would fall under appro priate legislative entries in the 7th Schedule. But, to secure the protection of Article 3lB of the Constitution, resort to the provisions of Article 368 of the Constitution is imperative. These differences do not mean that legisla tion falling under any part of Article 31A(1) of the Consti tution, including the provisos, cannot receive also the protection contemplated by Article 3lB of the Constitution. There is nothing in our Constitution to bar any statute from receiving a dual protection, so to speak, of both Article 31A(1) and 3lB of the Constitution if the conditions of each are satisfied. It is clear to us that the proviso to Article 31A(1) of the Constitution confers certain rights upon individuals and protects them from constitutionally illegal invasion. We are, therefore, unable to accept the argument advanced on behalf of the appellants that the "protective umbrella" of Article 3lB does not shield the impugned provisions ,against an attack based upon the limits imposed by the second provi so to Article 31A(1) on legislative power. The argument overlooks certain obvious answers: firstly, that limits on legislative powers, imposed by Part III of the Constitution, do have the direct result of protecting individual rights; and, secondly, that no part of the second proviso to Article 31 (1) of the Constitution was, as already pointed out above, infringed by the impugned provisions; and, thirdly, even if one were to assume, for the sake of argument, that rights conferred on individuals 'by the 2nd proviso to Article 31 (1), were infringed in any way, pro. visions of Article 3lB of the Constitution are enough to repel an attack based upon such an alleged infringement. Both Arti cle 31A(1) and 3lB are intended to operate as protections against consequences of what could otherwise be breaches of the Constitution. Consequently, we have to and do dismiss these appeals. But, in the circumstances of the case, the parties will bear their own costs. P.H.P. Appeals dis missed.

The appellants challenged the constitutional validity of the Gujarat Agricultural Land Ceiling Act 1961 by filing writ petitions in the High Court of Gujarat. The Preamble of the Act state that the Act was enacted for Securing the distribution of agricultural land as best to sub serve the common good. Section 6(1) of the Act provides that no person shall hold either as owner or tenant land in excess of the ceiling area. Section 6(2) provides that where an individu al who holds land as a member of a family, not being a joint family, then the spouse. and the children excluding major sons shall be grouped together for the purposes of the Act and the provisions of the Act shall apply to the total land so grouped together as if such land had been held by one person. The ceiling area is fixed depending on the classes of land, nature of irrigation facilities and productivity. The said statute has been put in the 9th Schedule by the Parliament. The Gujarat High Court dismissed the writ petitions filed by the appellants but granted certificate of fitness under article 133(1) of the Constitution to the appel lant. The appellants contended that (1).Second proviso to article 31A of the Constitution provides that where any law makes provision for the acquisition by the State of any estate which is held by a person under his personal cultivation, it shall not be lawful for the State to. acquire any portion of such land as is within the ceiling limit applicable to him under any law for the time being in force unless the law provides for payment of compensation at a rate which is not less than the market value. Apart from variations in the ceiling area imposed by a statute, there cannot be a depri vation of rights of individuals holding property separately in exercise of their separate individual rights by grouping them as members of one family. (2) The concept 017 "person" adopted by the statute is unnatural and legally untenable. The concept of the term 'person ' having been fixed by the Central General Clause Act, this concept and no other must be used for interpreting second proviso to article 31A of the Constitution. (3) The second proviso to article 31A(1) does not confer any right upon any person but only imposes a limit upon legislative competence so that the inclusion of the Act in the ' 9th Schedule will not validate a provision which the Legislature was ' not competent at all to enact. HELD: The term 'person ' is not defined in the. Section 2(21 ) merely states that person includes a joint family Under s 3(42) of the , a person is defined as. including any company or association or body of individuals whether incorporated or not. In the absence of section 6(2) each individual member of a family would have been entitled to hold land upto the ceiling limit if it was his or her legally separate property. The Act does not debar spouses and minor children from holding their sepa rate. rights to land. There is no fixed concept of 'person ' any where. Section 6(2) does not either disable a husband or a wife from holding their separate properties separately. It does not merge or destroy their separate legal personali ties. It 104 merely requires their separate holdings to be grouped to gether as through they were held by one person only for the purpose of determining the ceiling limit Each, holder of such separate rights above the ceiling limit is permitted to select the property he or she wishes to continue to hold in such a way that the lands selected for such continuance shall be in the same proportion in which lands were held by each spouse. The reduction in their holding will, there fore, be proportionate to the areas ' of lands held separate ly. But, they are grouped together only for the purpose of determining the ceiling limit for the fan, and, as a result of a specific provision to that effect. It is not denied by the appellants that the ceiling limit could have been low ered by the statute. Article 31A does not prohibit the legislature from fixing ceiling limits for various individu als or the classes of individuals differently situated, nor does the second proviso to article 31A(1) prescribe any partic ular or direct mode of imposing different ceilings for individuals differently circumstanced. [106 G H, 109 A E] Pritam Singh vs State of Punjab & Ors. ; distinguished. (2) Article 3lB provides a complete answer to any attack directed against the provisions of the Act based upon viola tion of any of the rights conferred by the provisions of Part III of ' the Constitution. To read any limit into the second proviso to article 31A(1) that there can be only single ceiling limit for all persons would be to accept a novel restriction on legislative competence. There is nothing in the Constitution to bar any statute from receiving a dual protection. In the. present case, the statute in question is fully protected by article 3lB. Since the second proviso to Article 31A confers certain rights up.on individuals, the protective umbrella of article 3lB shields the impugned provi sion against any attack based upon the alleged violation of such rights as well. [110 G H, 111 A C] (3) There is no question of legislative competence. in the present case. The proviso protects and confers certain rights upon individuals to an amount of compensation. That is the direct effect. [111 B C]

Appeal No. 944 of 1966. Appeal by special leave from the judgment and order, dated March 30, 1 '965 of the Bombay High Court in Special Civil Application No. 5 of 1964. M.C. Chagla and 1. N. Shrog, for the appellant. Ganpat Rai and R. Mahalingier, for respondent No. 1. The judgment of the Court was delivered by Dua, J. Pundalikrao Laxmanrao Suryawanshi plaintiff (respondent No. 1 in this Court) instituted arbitration proceedings in the Court of the Registrar 's Nominee against the Jalgaon District Central Co operative Bank Ltd., Jalgaon (appellant in this Court) for the recovery of a sum of Rs. 7,605/ as the balance of gratuity with interest at 6 per cent due from 18 8 1962. The claim having been resisted, the same was disallowed on May 16, 1963. An appeal presented to the Maharashtra State Co operative Tribunal under section 97 of the Maharashtra Co operative Societies Act against the award of the Registrar 's Nominee was dismissed and the said award was confirmed. The Bombay High Court was thereupon approached by respondent No. 1 under Article 227 of the Constitution and the High Court allowing the application on July 17, 1965 set aside the orders made by the Co operative Tribunal and by the Registrars Nominee and directed the appellant Bank to pay to respondent No, 1 Rs. 7,605/ together with interest at 4 per cent per annum from June 19, 1963 up to date, The present appeal by special leave is directed against the order of the Bombay High Court. Shri M.C. Chagla, the learned counsel for the appellant, concentrated his challenge to the impugned order on the ground that on July 19, 1962, when respondent No. 1 retired from service of the appellant Bank, there were no valid rules in force entitling him to the amount of gratuity claimed by him. It was not disputed before us that respondent No. 1 had retired on July ' 19, 1962 after 32 years of service. On retirement, he was paid a sum of Rs. 5,070/ by way of gratuity, but his claim in the present proceedings is for a further sum of Rs. 7,605/ . 194 Gratuity Fund Rules were sanctioned by the Board of Directors of the appellant Bank on August 17, 1957. They were framed under the Bank 's bye laws. These rules (thereafter called old rules) were forwarded to the Registrar of Co operative Societies for approval and they were approved with some modifications except Rules 6, 10 and 15 which were kept under consideration. The principal argument pressed before us by Shri Chagla was that Rules 6 and to having not been approved by the Registrar, all the old rules must be deemed to have remained inoperative because these two rules form the real substratum of the scheme embodied in those rules Without these two rules, the remaining rules, according to the argument, cannot effectively operate. We are unable to accept this submission. It would be useful at this stage to reproduce old Rules 6,7, 9,10,15 and 16 which alone are suggested on behalf of the appellant to be relevant. These Rules shall be deemed to have come into force (i.e. in respect of an employee retiring, resigning and/or having terminated his services) from the 1st July, 1953. Every employee who has completed at least five years service shall be granted gratuity at the rate specified herein. In case of retirement, resignation or termination of services gratuity shall be granted: (a) After five years but before completion of 10 years services : half month 's salary for each completed year of service. (b) After 10 years but before completion of 16 years service : 'three fourth of a month 's salary for each completed year of service. (c) After 15 years service three fourth of a month 's salary for each completed year of service, subject to the minimum of fifteen salaries. Payment of the claims on account of the Gratuity payable under these Rules, shall be made within one month from the retirement, resignation, death or the termination of service. The Bank shall contribute on 30th June, very year, or as soon as possible thereafter, but not later 195 than 30th September of the year, an amount not less than the amount contributed by the Bank as contribution to the Provident Fund. 11 to 14. The provisions under sec. 41 of the Bombay Co operative Societies Act (Bombay Act V11 of 1925) as amended upto date shall be applicable to the administration of the 'Gratuity Fund ' created under these Rules. The Board of Directors shall have. powers, subject to the approval of the Registrar Co operative Societies Bombay State, Poona, to alter, add to, or repeal these rules from time to time, provided however that no such alteration, addition or repeal shall have any retrospective effect against the interest of the employee, in the employment of the Bank on that date. " According to the appellant 's learned counsel, the Registrar having withheld approval of Rule 6, the last sentence of which provides that every employee who has completed at least 5 years ' service, shall be granted gratuity at the rate specified in the rules, there is no rule which imposes an obligation on the appellant Bank to pay gratuity. This argument, in our opinion, ignores the express language of Rule 7 which, in unequivocal terms, requires gratuity to be granted in case of retirement, resignation or termination of service according to the rate specified therein. Clause (a) of this rule contains a provision similar in effect to what the last sentence of Rule 6 directs. Rule 9 also imposes an imperative obligation for the payment of gratuity under these rules within one month from the retirement, resignation, death or termination of service of the employee concerned. Rule 10, which provides for contribution of the Bank towards the Gratuity Fund, was no doubt also kept under consideration and not approved by the Joint Registrar, but this too, in our view, does not render the remaining rules ineffective; nor does this fact by itself absolve the Bank of the obligation imposed on it by Rules 7, 8 and 9. The contention that without there being a Gratuity Fund, the Bank cannot lawfully pay gratuity assumes that the Bank hag no other resources out of which its liabilities under the Rules in question can be discharged an assumption which is not easy to upheld. Once the Gratuity Fund Rules imposing an obligation on the Bank to pay gratuity to its employees are approved by the Registrar, then this obligation, in our opinion, cannot be rendered nugatory merely because there is no separate Gratuity Fund. Rule 15 which provides for the applicability of section 41 of the Bombay Co operative Societies Act VII of 1925 to the "administration of 196 the Gratuity Fund" created under the rules in question, does not touch the question of the enforcement of these rules, and indeed even on behalf of the appellant, no attempt has been made to rely on Rule 15 for this purpose. The appellant 's counsel next relied on the new rules which were approved by the Joint Registrar of Co operative Societies and were made retrospective in their operation so. as to be enforceable with effect from July 1, 1953. It was, however, conceded by Shri Chagla and, in our opinion, rightly, that the new rules could not detract from or prejudicially affect the vested rights created under the old rules. Indeed old Rule 16, it may be recalled, prohibits the retrospective operation of the new rules with the object of protecting the interests of the employees. The submission that the old rules have neither been repealed, nor altered, as contemplated by Rule 16, and that the Registrar has merely withdrawn his approval to the old rules and enforced the new ones, does not advance the appellant 's case. The effect of old rule 16, in our opinion, cannot be negatived by describing the process as mere withdrawal of the approval of the old rules and enforcement of the new ones, for in real substance the process seems to us to be covered by Rule 16. The appeal accordingly fails with no order as to costs. G.C. Appeal dismissed.

Respondent No. 1 retired from the service of the appellant bank on July 19, 19 '62 after 32 years of service. Under the Bank 's bye laws Gratuity Fund Rules were sanctioned by the Board of Directors on August 17, 1957. These rules were forwarded to the Registrar of Cooperative Societies for approval and they were 'approved with some modification except Rules 6, 10 and 15. On his retirement Respondent No. 1 was paid a sum of Rs. 5,070/ as gratuity. He instituted arbitration proceedings in the Court of the Registrar 's Nominee for a further sum of Rs. 7,605/as balance of gratuity payable to him with interest at 6 per cent. The claim was disallowed and an appeal before the Maharashtra State Cooperative Tribunal 'also failed. The High Court however in a petition under article 227 of the Constitution allowed the respondent 's claim. The Bank appealed to this Court. It was urged on behalf of the appellant (i) that Rule 6, the last sentence of which provides for the grant of gratuity and RuIe 10 which provides for contributions by the Bank to the Gratuity Fund not having been approved by the Registrar, there remained no basis for the claim of gratuity by respondent No. 1; (ii) that the old rules had neither been repealed nor altered and the effect of retrospective operation of the new rules was that the Registrar had withdrawn his approval to the old rules and enforced the new ones. HELD: (i) The argument that r. 6 not having been approved there was no rule under Which the obligation to pay gratuity arose ignored the express language of r. 7 which, in unequivocal terms requires gratuity to be granted in case of retirement. resignation or termination of services according to the rate specified therein. Clause (a) of this rule contains a provision similar in effect to what the last sentence of r. 6 directs. Rule 9 also imposes an imperative obligation for the payment of gratuity under these rules within one month from the retirement. resignation, death or termination of service of the employee concerned. [195 D F] (ii) The non approval of r. 10 by the Registrar also could not make the other rules ineffective and could not absolve the Bank of the obligation imposed on it by rr. 7, 8 and 9. Once the Gratuity Fund Rules imposing an obligation on the Bank to pay gratuity to its employees are approved by the Registrar, then this obligation cannot be rendered nugatory merely because there is no separate Gratuity Fund. [195] 193 It was conceded that the new rules could not detract from or prejudicially affect the vested rights created under the old ' rules. Old Rule 16 expressly prohibits the retrospective operation of the new rules with the object of protecting the interests of the employees. The effect of old r. 16 cannot be negatived by describing the process as mere withdrawal of the approval of the old rules and enforcement of the new ones. [196 B D]

Civil Appeal No. 1223 of 1977. Appeal by special leave from the judgment and order dated the 22nd April, 1976 of the Andhra Pradesh High Court in W.A. No. 581 of 1971. K.K.Venugopal and A. Subba Rao for the Appellant. P. Ram Reddy, G.S. Narayana and G.N. Rao for Respondent No. 1. H.S. Gururaj Rao and section Markandeya for Respondents Nos. 2, 5, 8, 14 and 21. 71 The Judgment of the Court was delivered by GUPTA J. The vires of rule 3(d) of the Andhra Pradesh Police Service Rules, 1966 is in question in this appeal preferred by special leave. The rule was challenged as invalid by respondent Nos. 1 to 23 by filing a writ petition in the Andhra Pradesh High Court. A single Judge of the High Court dismissed the petition, his decision was reversed by a Division Bench on appeal declaring "rule 3(d) is discriminatory and violative of the principles of equality in article 16 of the Constitution of India." Rule 5(1) of the Andhra Pradesh Civil Services (Classification, Control and Appeal) Rules, 1963, framed in exercise of the powers conferred by the proviso to article 309 of the Constitution of India, classifies the civil services of the State into (a) the State Services, and (b) the Subordinate Services. The State services are the superior class. The Andhra Pradesh Police Service is one of the State services. The subordinate services include, among others, the Andhra Pradesh Police Subordinate Service. The Andhra Pradesh Police Service Rules, 1966, described as Special Rules for Andhra Pradesh Police were also made in exercise of the powers conferred by the proviso to article 309 of the Constitution. Rule 2 of the 1966 Police Service Rules sets out the three categories of officers constituting the service, namely: category I composed of Commandants, Andhra Pradesh Special Police; category 2 which includes Deputy Superintendents of Police and Assistant Commissioners of Police, other than those in category 3; and category 3 comprising Deputy Superintendents of Police in various capacities including Assistant Commandants, Andhra Pradesh Special Police. Rule 3 of the Andhra Pradesh Police Service Rules, 1966 lays down the method and conditions for appointment to posts in the different categories. We are concerned in this appeal with Deputy Superintendents of Police belonging to categories 2 and 3 of the rules. Appointment as Deputy Superintendent of Police in category 2 is made by (a) direct recruitment, or (b) 'recruitment by transfer ' from Andhra Pradesh Police Subordinate Service, or (c) appointment from category 3 of this service with the concurrence of the Public Service Commission provided that the number of such appointments does not exceed two in a calendar year. Rule 3 (15) of the Andhra Pradesh State and Subordinate Services Rules, 1962, also framed under proviso to article 309 of the constitution, defines the expression "recruited by transfer"; from the definition it is clear that such recruitments are really by way of promotion. It is further prescribed by the 1966 72 rules that officers appointed as Deputy Superintendents of Police from Category 3 to category 2 must pass certain tests and undergo further training and probation. It is also required that they must complete 8 years of service as Deputy Superintendent of Police in category 3 and shall be below 40 years of age. The impugned rule 3(d) of the Andhra Pradesh Police Service Rules, 1966 states: "The seniority of the Deputy Superintendents of Police, Category 2 appointed from the posts of Deputy Superintendents of Police, Category 3 shall be fixed in that category giving them credit for their entire service in the posts of the Deputy Superintendents of Police, Category 3". Rules 3(d) thus gives a Deputy Superintendent of Police appointed to category 2 from category 3 the benefit of past service in the State Service for the purpose of seniority as against a member of the Subordinate Service appointed Deputy Superintendent of Police in category 2 by promotion, or a new recruit appointed to the same post directly. The writ petition out of which this appeal arises was made by some of the Deputy Superintendents of Police in category 2 who were either recruited directly or "recruited by transfer" to the said posts before the 1966 Andhra Pradesh Police Service Rules came into force Respondents Nos. 2, 3 and 4 in the writ petition are Deputy Superintendents of Police appointed from category 3 to category 2 under the 1966 rules; they were working as Assistant Commandants in category 3 before appointment to Category 2. The appellant before us was impleaded as the third respondent in the writ petition. The validity of rule 3(d) of the Andhra Pradesh Police Service Rules is questioned on the ground that the appointment of a Deputy Superintendent of Police from category 3 to category 2 is really by way of promotion and validly the seniority in category 2 of an officer so promoted can be reckoned only from the date of his appointment to that category. To support the contention that such an appointment is by way of promotion the following features are pointed out from the 1966 rules: (ii) not more than two persons can be appointed Deputy Superintendents of Police from category 3 to category 2 every year; (ii) the officers have to complete 8 years of service in category 3 before they can be appointed to category 2; (iii) these officers have to undergo training and probation for two years. According to the writ petitioners who are respondents Nos. 1 to 23 in this Court these features conclusively prove that the appointment of a Deputy Superintendent of Police to category 2 from category 3 is by way of promotion. These are also 73 the features that weighed with the Division Bench of the High Court in holding that rule 3(d) was invalid. This is what the Division Bench observed: "Having regard to the rule of eligibility and qualifications of service of eight years in the category 3, the tests prescribed, the probation of two years. the training. are all indicative and, in our view, decisive that category 3 personnel are not equivalent to category 2 personnel. We are further of the view, category 3 personnel attain the same status only on appointment to category 2. " There appears to be no dispute on the following points: (1) categories 2 and 3 carry equal pay; (2) qualifications for direct recruits to both categories are the same; (3) promotion to either category is from the post of Inspector of Police which is a subordinate service, and the Inspectors of Police in the respective branches from whom promotions to the two categories are made also enjoy the same scale of pay. The duties of the Deputy Superintendents of Police of category 2 and category 3 are however of a different nature. The Deputy Superintendents of Police of Category 2 are normally concerned with the prevention, detection and investigation of crime and maintenance of law and order. They constitute the principal police service of the State. Assistant Commandants, Andhra Pradesh Special Police, are also designated as Deputy Superintendents of Police in category 3. They are primarily a striking force employed also for maintaining law and order, but they are not concerned with the routine duties of the principal police service. The promotional avenues for the officers of the two categories are also not the same. Officers belonging to category 2 of the Andhra Pradesh Police Service are eligible to be promoted as Commandants, Home Guards, and Assistant Superintendent of Police. They are also eligible to be considered for appointment to the Indian Police Service. Officers of category 3 are eligible to be promoted as Commandants, Home Guards, but not as Assistant Superintendents of Police, nor are they eligible to be considered for appointment to the Indian Police Service. It appears from the counter affidavit filed on behalf of the 74 State of Andhra Pradesh in the High Court which is based on Government Order No. 1513 dated November 28, 1961 that the limited chances of promotion open before officers of category 3 gave rise to discontent among them, and to prevent stagnation and avoid frustration among officers belonging to that category, government decided to throw open avenues of promotion of the officers of category 3 which were available to the officers belonging to category 2; however, the opportunity made available was a limited one in the sense that only to Deputy Superintendents of Police from category 3 were to be appointed as Deputy Superintendents of Police, category 2, in a year. Rule 3 (a) of the Andhra Pradesh Police Service Rules, 1966 provides that Deputy Superintendents of Police in category 2 may be appointed by (a) direct recruitment, or (b) recruitment by transfer from Inspectors of Police, class I, in the Andhra Pradesh Police Subordinate Service, which is really a promotion for them, or (c) appointment from category 3 which is a State service. The validity of the rule 3 (a) has not been challenged. It is to be noted that rule 3 (a) itself treats appointment from category 3 as distinct from either direct recruitment or promotion. It was contended on behalf of the appellant that if appointment to category 2 from category 3 was not direct recruitment or promotion, it could only be by way of transfer. The point was urged also in the High Court. On behalf of the appellant reference was made to fundamental rule 15 which authorises the transfer of a government servant from one post to another provided that the post to which he is transferred does not carry less pay. Rule 33 (c) of the Andhra Pradesh State and Subordinate Services Rules, 1962 says: "The transfer of a person from one class or category of a service to another class or category carrying the same pay scale of pay shall not be treated as first appointment to the latter for purposes of seniority; and the seniority of a person so transferred shall be determined with reference to the date of his first appointment to the class or category from which he was transferred. " The rule adds: Where any difficultly or doubt arises in applying this Sub rule, seniority shall be determined by the appointing authority." 75 Of course rule 3 of the Andhra Pradesh Police Service Rules not states specifically that appointments to category 2 from category 3 shall be considered as transfer making rule 33 (c) of the Andhra Pradesh State and Subordinate Services Rules applicable. The answer of the respondents is that such appointments could not be treated as transfer because category 2 and category 3 are not of equal status. There is however no rule saying that services in category 3 are inferior to those in category 2; both are State Services. The learned single Judge of the High Court explains in his judgment why the fact that the Deputy Superintendents of Police in category 3 have to pass tests and undergo training and probation for appointment to category 2 does not warrant the conclusion that such appointment are by way of promotion: "Since the higher posts of Additional Superintendents of Police, Posts in the Indian Police Service etc., involve what may be called the ordinary police duties with which the members of the Andhra Pradesh Special Police are not likely to be familiar, the Government has further prescribed that officers appointed from category 3 to category 2 must pass certain tests and undergo further training and probation. It is important to realise that the appointment of some outstanding officers from category 3 to category 2 is designed to achieve the two fold object of providing avenues of promotion for such outstanding officers and injecting new but proven blood, as it were, into category 2. If this twin object is realised it becomes evident that appointment to category 2 from category 3 cannot be considered to be a promotion. " In our view the explanation given by the single Judge is sound. We find no basis for the claim that category 3 is inferior to category 2 in status. We do not however think it necessary to decide whatever appointments to category 2 from category 3 amount to transfer attracting rule 33 (c) of the Andhra Pradesh State and Subordinate Services Rules. Under Rule 3 (a) of the Andhra Pradesh Police Service Rules, 1966 appointment from category 3 is one method of recruitment to category 2 and the only question is whether giving credit to such appointees for past service in another category in the State Service is justified. We have mentioned above the points of similarity in matters of recruitment and promotion to the two respective categories. It has been noticed also that they carry the same scale of 76 pay. Whether or not some credit should be given for past service in such circumstances is a matter of policy resting with government. We do not find anything arbitrary or absurd in what rule 3 (d) prescribes, and that being so, the court cannot examine the matter and come to its own conclusion about what should be the length of past service for which credit should be given. In Tamil Nadu Education Department Ministerial and General Subordinate Service Association vs State of Tamil Nadu and another.(1) this Court considering a similar contention that the length of service taken into consideration for fixing seniority had worked hardship on some of the employees, took the view that in such matters the court can only take an "overall view and should not attempt "a meticulous dissection" of the matter. Once the principle is found to be rational", it was observed, a few "instances of hardship cannot be a ground to invalidate the order or the policy. this is an area where, absent arbitrariness and irrationality, the court has to adopt a hands off policy". There is nothing irrational in giving the Deputy Superintendents of Police appointed to category 2 from category 3 credit for past services rendered by them in category 2 from 3 which is also a State Service as category 2. The main ground on which the length of the past service for which credit has been given is questioned in this case is not that it was not rational but that category 3 being inferior in status to category 2, no credit could at all be given for past service in category 3. We found no basis to support the claim of superiority for category 2 and in the facts of the case we do not think that the length of past service for which credit has been given is improper. Accordingly we allow this appeal, set aside the decision of the Division Bench and restore that of the learned single Judge dismissing the writ petition. The parties will bear their respective costs. S.R. Appeal allowed.

Rule 5 (1) of the Andhra Pradesh Civil Services (Classification, Control and Appeal) Rules, 1963 classifies the Civil Services of the State into (a) State Services, and (b) Subordinate Services. The Andhra Pradesh Police Service is one of the State services. Rule 2 of the Andhra Pradesh Police Service Rules, 1966 framed under Article 309 of the Constitution sets out three categories of officers constituting the State Service, namely; category l composed of commandants, Andhra Pradesh Special Police; category II which includes Deputy Superintendents of police and Assistant Commissioners of Police other than in category III and category III comprising Deputy Superintendents of Police in various capacities including Assistant Commandants, Andhra Pradesh Special Police. Rule 3 lays down the method and conditions for appointment to posts in the different categories. Appointment as Deputy Superintendent of Police in category II is made by (a) direct recruitment, or (b) recruitment by transfer from Andhra Pradesh Police Subordinate Service, or (c) appointment from category III of this service with the concurrence of the Public Service Commission provided that the number of such appointments does not exceed two in a calendar year. Under Rule 3 (d), "the seniority of the Deputy Superintendents of Police, category II appointed from the posts of Deputy Superintendents of the Police, category III shall be fixed in that category giving them credit for their entire service in the post of the Deputy Superintendents of Police. " Rule 3 (d) thus gives a Deputy Superintendent of Police appointed to category II from category III the benefit of past service in the State Service for the purpose of seniority as against the Subordinate Service appointed Deputy Superintendent of Police in category II by promotion or a new recruit appointed to the same post directly. Some of the Deputy Superintendents of Police in category II who were either recruited directly or "recruited by transfer" to the said posts before the 1966 Andhra Pradesh Police Service Rules came into force challenged the validity of the vires of Rules 3 (d) on the ground that the appointment of a Deputy Superintendent of Police from category III to category II is really by way of promotion and validly the seniority in category II of an officer so promoted can be reckoned only from the date of his appointment to that category II. The writ petition was dismissed by learned Single Judge. In appeal the Division Bench of the High 70 Court held Rule 3 (d) invalid, taking the view that category III personnel are not equivalent to category II personnel and that the former attains the same status only on appointment to category II. Hence this appeal by respondent No. 3 in the writ petition who is a Deputy Superintendent of Police appointed from category III to category II under the 1966 rules. Allowing the appeal, the Court ^ HELD: 1. Rule 3 (d) of the Andhra Pradesh Police Service Rules, 1966 is valid. There is nothing arbitrary or absurd in what Rule 3(d) prescribes as regards the credit regarding the length of the past service for which credit is to be given for the purpose of seniority. Whether or not some credit should be given for past service in such circumstances is a matter of policy resting with Government. That being so, in the absence of anything arbitrary or absurd in the provision, the Court cannot examine the matter and come to its own conclusion about what should be the length of past service in which credit should be given. [75G 76B] Tamil Nadu Education Department Ministerial and General Subordinate Service Association vs State of Tamil Nadu and another. ; , followed. There is no basis to support a claim of superiority for category II in the facts of the case. Rule 3 (a) itself which has not been challenged, treats appointment from category III as distinct from either direct recruitment or promotion. There is no dispute on the following points: (i) categories II and III carry equal pay; (ii) qualifications for direct recruits to both categories are the same; (iii) promotion to either category is from the post of Inspector of Police which is a Subordinate Service and the Inspectors of Police in their respective branches from whom promotions to the two categories are made also enjoy the same scale of pay. The mere fact that there are some differences regarding the duties of the Deputy Superintendents of Police of category II and category III and their promotional avenues do not alter the position. [76E, 74D, 73C G]

on (CRL.) No. 1061 of 1982. (Under Article 32 of the Constitution of India). M.A. Krishna Moorthy, A.S. Pundir, Din Dayal Sharma, Ms. Sangeeta Aggarwal, C.V. Subba Rao and Gopal Subramaniam for the appearing parties. The following Order of the Court was delivered: Pursuant to our order of May 10, 1991, this matter was called on 11th July, 1991, when parties and both the Commis sioners were heard. The report from the Executive Chairman of the U.P. State Legal Aid and Advice Board has been re ceived and looked into. The proceeding has been pending in this Court for almost nine years. In spite of all possible orders and directions made from time to time no substantial progress has yet been made. The land records have got to be prepared; the forest land has to be identified and final action under the Forest Act has to be taken. The exercise involved in this process is undoubtedly massive but that by itself would not justify a protracted proceeding. When we made our order in May, 1991, we had a feeling that before the rains started there would be substantial progress. The rainy season has come though rains are belat ed. In these two months, however, there has been no progress. Mr. R.P. Pandey, one of the Commissioners has been staying at Allahabad and he does not find it convenient to shift to the site. As we indicated earlier, the matter has reached a stage where presence of all the officers and the Commissioners at the site has become almost indispensable Mr. Pandey has informed the Court that he would find it difficult to shift to the site. We do not think much of his services can be utilised if he is allowed to stay at Allaha bad. It would, therefore, be 404 necessary to substitute him by appointing some other judi cial officer as Commissioner. Mr. Pandey had done good work during the period he was supervising the process. We would suggest to the Secretary to the Commission appointed by us to make a report to us as to in what way Mr. Pandey can be compensated for the work done. In place of Mr. R .P. Pandey we direct Shri Prem Singh, retired District Judge of the State to be appointed as one of the Commissioners. The Registry shall cake steps to intimate him of the assignment at his Varanasi address. At the hearing of the matter, on 11th July grievance was made that several directions out of the order of 10th May, 1991 had not been complied with. Mr. Yogeshwar Prasad, Senior Advocate for the State of Uttar Pradesh assured us in Court that immediate steps would be taken to comply with all the directions excepting the requirement of depositing of Rs.20 lakhs with the Secretary of the Commission. We have considered his stand in regard to the direction for deposit ing Rs.20 lakhs and are prepared to modify the amount of Rs.20 lakhs to Rs.5 lakhs in view of the assurance that more of funds can come on requisition without loss of time. That amount may be kept in deposit with the Secretary in the imprest account within two weeks hence. The State of Uttar Pradesh shall file an affidavit that all the directions made on 10th May as modified now have been complied with within three weeks from today in the Registry of this Court. Some time back, the Chief Secretary had set up a small Committee at Lucknow for monitoring the work. We suggest to the Chief Secretary that he may revive the Committee which on account of the intervening disturbances of law and order followed by the general elections had perhaps been abandoned so that coordinated activity may be possible. We request Mr. Justice Loomba, Executive Chairman of U.P. State Legal Aid and Advice Board to continue to super vise the work which he has been doing already so that the monitoring at the spot can 'appropriately be cross checked He is requested to send monthly reports to the Court. The matter may be placed again five weeks hence. Petition disposed of with interim directions.

Under Section 20 of the Forest Act, 1927 certain areas were declared as reserve forest. On behalf of the inhabi tants of the areas, the petitioner filed the present Writ Petition challenging their eviction from the said areas. From time to time this Court had been passing interim orders and directions. This Court also appointed Commissioners for the purpose of preparation of land records, identification of forest land and the final action to be taken under the Forest Act. Reviewing the progress made so far and passing interim directions, this Court, HELD: 1. The exercise involved in the process of prepar ing the records, identification of forest land and final action under the Forest Act, is undoubtedly massive but that by itself would not justify a protracted proceeding. [403E] 2. Mr. R.P. Pandey, one of the Commissioners has been staying at Allahabad and he does not find it convenient to shift to the site. The matter has reached a stage where presence of all the officers and the Commissioners at the site has become almost indispensable. Not much of his serv ices can be utilised if he is allowed to stay at Allahabad. It would, therefore, be necessary to substitute him by appointing some other judicial officer as Commissioner. In his place, Shri Prem Singh, retired District Judge would be appointed as one of the Commissioners. The Registry shall take steps to intimate him of the assignment at his V arana si address. [403G H; 404A B] 3. With regard to the direction for depositing Rs.20 lakhs it is modified as Rs.5 lakhs in view of the assurance that more funds can come on requisition without loss of time. [404D] 403 4. The Chief Secretary may revive the Committee set up to monitor the work. [404E F] 5. The Executive Chairman of U.P. State Legal Aid and Advice Board would continue to supervise the work and send monthly reports to the Court. [404F G]

Appeals Nos. 33 and 34 of 1959. Appeal by special leave from the order dated May 29,1957, of the Central Government Ministry of Finance, New Delhi in Appeal Cases Nos. 24 and 33 of 1957. A. V. Viswanatha Sastri and Ganpat Rai, for the appellants. B. P. Maheshwari, for the respondents. M. C. Setalvad, Attorney General for India, B. B. L. Iyengar and T. M. Sen, for Union of India. April 25. The Judgment of section K. Das, Kapur, Shah and Venkatarama Ayyar, JJ., was delivered by Shah, J. Hidayatullah, J. delivered a separate Judgment. SHAH, J. M/s.Harinagar Sugar Mills Ltd. is a public limited company incorporated under the Indian Companies Act, 1913 (7 of 1913). Article 47B of the Articles of Association of the company invests the 44 342 directors of the company with absolute discretion to refuse to register any transfer of shares. That Article is in the following terms: "The directors may in their absolute discretion and without giving any reason refuse to register any transfer of any shares whether such shares be fully paid or not. If the directors refuse to register the transfer of any shares, they shall within two months, after the date on which the transfer was lodged with the company, send to the transferees and the transferor notice of the refusal. " One Banarasi Prasad Jhunjhunwala is the holder of a block of 9500 fully paid up shares of the company. In January, 1953, he executed transfers in respect of 2500 out of those shares in favour of his son Shyam Sunder and in respect of 2100 shares in favour of his daughter in law Savitadevi and lodged the transfers with the company for registration of the shares in the names of the transferees. The directors of the company by resolution dated August 1, 1953, in purported exercise of the powers under Article 47B of the Articles of Association, declined to register the shares in the names of the transferees. Petitions were then filed by Banarasi Prasad and the transferees in the High Court of Judicature at Bombay for orders under section 38 of the Indian Companies Act, 1913 for rectification of the register of the company maintaining that the refusal by the board of directors to register the transfer of the shares was "mala fide, arbitrary and capricious" and that the directors had acted with improper and ulterior motives. The High Court rejected these petitions holding that in summary proceedings under section 38, controversial questions of law and fact could not be tried and that the proper remedy of the transferees, if so advised, was to file suits for relief in the civil court. Requests were again made by the transferees to the company by letters dated February 29, 1956 to register the transfers made by Banarasi Prasad in 1953. The directors of the company in their meeting of March 15, 1956 reiterated their earlier resolution not to register the shares trans ferred in the names of the transferees. Against this 343 action of the company, appeals were preferred to the Central Government under section 111 el.(3) of the Indian , which had since been brought into operation on April 1, 1956. K. R. P. Ayyangar, Joint Secretary, Ministry of Finance, who heard the appeals declined to order registration of transfers, because in his view, the questions raised in the appeals could, as suggested by the High Court of Bombay, be decided only in a civil suit. Thereafter, Banarasi Prasad transferred a block of 100 shares to his son Shyam Sunder and another block of 100 shares to his daughter in law Savitadevi, and the transferees requested the company by letters dated November 21, 1956, to register the transfers. In the meeting dated January 12, 1957, the directors of the company resolved not to register the transfers and informed the transferees accordingly. Against this resolution, separate appeals were preferred by Shyam Sunder and Savitadevi under section 111 el.(3) of the Indian to the Central Government. It was submitted in para 4 of the petitions of appeal that the refusal to register the transfer of shares was without "any reason, arbitrary and untenable". The company filed representations submitting that the refusal was bona fide and was not "without any reason, arbitrary and untenable" as alleged. Shyam Sunder and Savitadevi filed rejoinders to the representations submitting that they had never alleged that refusal to transfer the shares "was capricious or mala fide" and that all they had alleged was that the "refusal was without any reason, arbitrary and untenable". By separate orders dated May 29, 1957, the Deputy Secretary to the Government of India, Ministry of Finance set aside the resolution passed by the board of directors in exercise of the powers conferred by sub sections(5) and (6) of section Ill of the Indian , and directed that the company do register the transfers. In so directing, the Deputy Secretary gave no reasons. Against the orders passed by the Deputy Secretary, with special leave under article 136 of the Constitution, these two appeals are preferred by the company. Two questions fall to be determined in these appeals, (1) whether the Central Government exercising appellate powers under section 111 of the before its amendment by Act 65 of 1960 is a tribunal exercising judicial functions and is subject to the appellate jurisdiction of this court under article 136 of the Constitution, and (2) whether the Central Government acted in excess of its jurisdiction or otherwise acted illegally in directing the company to register the transfer of shares in favour of Shyam Sunder and Savitadevi. Article 136 of the Constitution, by the first clause provides: "Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India". The Central Government exercising powers under section Ill of the is not a court; that is common ground. The Attorney General intervening on behalf of the Union of India submits that the Central Government merely exercises administrative authority in dealing with an appeal under section 111 of the Indian and is not required to act judicially. He submits that the authority of the directors of the company which is in terms absolute, and is not required to be exercised judicially, when exercised by the Central Government under section 111 does not become judicial, and subject to appeal to this court. But the mere fact that the directors of the company are invested with absolute discretion to refuse to register the shares will not make the jurisdiction of the appellate authority administrative. In a recent case decided by this court Shivji Nathu bhai vs The, Union of India (1), it was held that the Central Government exercising power of review under r. 54 of the Mineral Concession Rules, 1949 against an (1) ; 345 administrative order of the State Government granting a mining lease was subject to the appellate jurisdiction of this court, because the power to review was judicial and not administrative. In that case, the action of the State Government granting the mining lease was undoubtedly an administrative act, but r. 54 of the Mineral Concession Rules, 1949 granted a right of review at the instance of an aggrieved party to the Central Government, and authorised it to cancel the order of the State Government or to revise it in such manner as it deemed just and proper. The exercise of this power was held by this court to be quasi judicial. Before it was amended by section 27 of Act 65 of 1960, section III of the Indian Companies Act, 1956 omitting parts not material provided: (1) Nothing in sections 108, 109 and 110 shall prejudice any power of the company under its articles to refuse to register the transfer of, or the transmission by operation of law of the right to, any shares or interest of a member in, or debentures of, the company. (2) If, in pursuance of any such power, a company refuses to register any such transfer or transmission of right, it shall, within two months from the date on which the instrument or transfer, or the intimation of such transmission, as the case may be, was delivered to the company, send notice of the refusal to the transferee and the transferor or to the person giving intimation of such transmission, as the case may be. (3) The transferor or transferee, or the person who gave intimation of the transmission by operation of law, as the case may be, may, where the company is a public company or a private company which is a subsidiary of a public company, appeal to the Central Government against any refusal of the company to register the transfer or transmission, or against any failure on its part within the period referred to in sub section (2) either to register the transfer or transmission or to send notice of its refusal to register the same. (4). . . . . . . . . (5) The Central Government shall, after causing reasonable notice to be given to the company and 346 also to the transferor and the transferee or as the case may require, to the person giving intimation of the transmission by operation of law and the previous owner, if any, and giving them a reasonable opportunity to make their representations, if any, in writing by order, direct either that the transfer or transmission shall be registered by the company or that it need not be registered by it: and in the former case, the company shall give effect to the decision forthwith. (6) The Central Government may, in its order aforesaid give such incidental and consequential directions as to the payments of costs or otherwise as it thinks fit. (7) All proceedings in appeals under sub section (3) or in relation thereto shall be confidential and no suit, pro secution or other legal proceeding shall lie in respect of any allegation made in such proceedings, whether orally or otherwise. (8) In the case of a private company which is not a subsidiary of a public company, where the right to any shares or interest of a member in, or debentures of, the company, is transmitted by a sale thereof held by a court or other public authority, the provisions of sub sections (3) to (7) shall apply as if the company were a public company: Provided that the Central Government may, in lieu of an order under sub section (5) pass an order directing the company to register the transmission of the right unless any member or members of the company specified in the order acquire the right aforesaid within such time as may be allowed for the purpose by the order, on payment to the purchaser of the price paid by him therefor or such other sum as the Central Government may determine to be a reasonable compensation for the right in all the circumstances of the case. Against the refusal by a company to register the transfer or transmission of a right to the shares, an appeal lies to the Central Government. The Government, after giving notice of the appeal and hearing the parties concerned may order that the shares be registered if it thinks that course is in the circumstances proper. The Central Government may 347 by the proviso to sub section (8) in lieu of an order under sub section (5), directing a private company to register,, transmission of shares sold by a court or public authority, order that any member or members of the company specified in the order do acquire the right on payment to the purchaser of the price paid by him, or such other sum as the Central Government determine to be reasonable compensation. In exercise of the powers under section 642, rules called "The Companies (Appeals to the Central Government) Rules, 1957" have been framed by the Central Government. By cl. (3) of the rules, the form of the petition of appeal is prescribed. Clause (4) provides that the memorandum of appeal shall be accompanied by an affidavit and documentary evidence if any in support of the statements made therein including a copy of the letter written by the appellant to the company for the purpose of registration of the shares. Clause (5) pres cribes the mode of service of notice of appeal to the company and el.(6) authorises the Central Government before considering the appeal to require the appellant or the company to produce within a specified period such further documentary or other evidence as it considers necessary. Clause (7) enables the parties to make representations if any in writing accompanied by affidavits and documentary evidence. Clause (8) authorises the Central Government after considering the representations made and after making such further enquiries as it considers necessary to pass such orders as it thinks fit under sub section(5) of section 111 of the Act. By the appendix to the rules, the form in which notice is to be given to the company is prescribed. Paragraph 2 of the form states that the company shall be called upon to make its representations in writing against, the appeal and be informed that if no representation is received, the appeal will be determined according to law. There was no provision similar to section Ill of the Indian , in the Act of 1913, nor is our attention invited to any provision in the English on which our Act is largely based, to a similar provision. Prior to 1956, if transfer of 348 shares was not registered by the directors of a company, action under the of 1913 could only be taken under section 38 of the Indian Companies Act, 1913 by petition for rectification of the share register. As we will presently point out, the power to refuse to register a transfer granted by the Articles of Association, if challenged in a petition for rectification of register was to be presumed to have been exercised reasonably, bona fide and for the benefit of the company, and unless otherwise provided by the Articles, the directors were not obliged to disclose reasons on which they acted. The power had to be exercised for the benefit of the company and bona fide, but a heavy onus lay upon those challenging the resolution of the directors to displace the presumption of bona fide exercise of the power. The discretion to refuse to register transfers was not liable to be controlled unless the directors "acted oppressively, capriciously or corruptly, or in some way mala fide" (Re Bell Brothers Ltd. ex parte Hodgson) (1). Power to refuse to register transfer of shares, without assigning any reasons, or in their absolute and uncontrolled discretion, is often found in the Articles of Association, and exercising jurisdiction under section 38 of the Indian Companies Act, 1913, the court may not draw unfavourable inferences from the refusal to disclose reasons in support of their resolution. The power given to the court under section 38 is now confirmed with slight modification by section 155 of the Indian . Under that section, the court may rectify the register of shareholders if the name of any person is without sufficient cause entered in or omitted from the register of members of a company, or default is made, or unnecessary delay has taken place in entering on the register the fact of any person having ceased to be a member. The court is in exercising this jurisdiction competent to decide any question relating to the title of the person claiming to have his name registered and generally to decide all questions which may be necessary or expedient to decide for the rectification. A person aggrieved by the refusal to (1) 349 register transfer of shares has, since the enactment of the , therefore two remedies for seeking relief under the , (1) to apply to the court for rectification of the register under section 155, and (2) to appeal against the resolution refusing to register the transfers under section 111. It is common ground that in the exercise of the power under section 155, the court has to act judicially: to adjudicate upon the right exercised by the directors in the light of the powers conferred upon them by the Articles of Association. The respondents however submit and they are supported by the Union of India that the authority of the Central Government under section Ill is nevertheless purely administrative. But in an appeal under section 111 el.(3) there is a lis or dispute between the contesting parties relating to their civil rights, and the Central Government is invested with the power to determine that dispute according to law, i.e., it has to consider and decide the proposal and the objections in the light of the evidence, and not on grounds of policy or expediency. The extent of the power which may be exercised by the Central Government is not delimited by express enactment, but the power is not on that account unrestricted. The power in appeal to order registration of transfers has to be exercised subject to the limitations similar to those imposed upon the exercise of the power of the court in a petition for that relief under section 155: the restrictions which inhere the exercise of the power of the court also apply to the exercise of the appellate power by the Central Government, i.e., the Central Government has to decide whether in exercising their power, the directors are acting oppressively, capriciously or corruptly, or in some way mala fide. The decision has manifestly to stand those objective tests, and has not merely to be founded on the subjective satisfaction of the authority deciding the question. The authority cannot proceed to decide the question posed for its determination on grounds of expediency: the statute empowers the Central Government to decide the disputes arising out of the claims made by the transferor or transferee which claim is opposed by the company, 45 350 and by rendering a decision upon the respective con tentions, the rights of the contesting parties are directly affected. Prima facie, the exercise of such authority would be judicial. It is immaterial that the statute which confers the power upon the Central Government does not expressly set out the extent of the power: but the very nature of the jurisdiction requires that it is to be exercised subject to the limitations which apply to the court under section 155. The proviso to sub section(8) of section III clearly indicates that in circumstances specified therein reasonable compensation may be awarded in lieu of the shares. This compensation which is to be reasonable has to be ascertained by the Central Government; and reasonable compensation cannot be ascertained except by the application of some objective standards of what is just having regard to all the circumstances of the case. In The Province of Bombay vs Kusaldas section Advani(1), this court considered the distinction between decisions quasi judicial and administrative or ministerial for the purpose of ascertaining whether they are subject to the jurisdiction to issue a writ of certiorari. Fazl Ali, J. at p. 642 observed: "The word "decision" in common parlance is more or less a neutral expression and it can be used with reference to purely executive acts as well as judicial orders. The mere fact that an executive authority has to decide something does not make the decision judicial. It is the manner in which the decision has to be arrived at which makes the difference, and the real test is: Is there any duty to decide judicially?" The court also approved of the following test suggested in The King vs London County Council (2) by Scrutton L.J.: "It is not necessary that it should be a court in the sense in which this court is a court; it is enough if it is exercising, after hearing evidence, judicial functions in the sense that it has to decide on evidence between a proposal and an opposition; and it is not necessary to be strictly a court; if it is a tribunal which has to (1) T. (2) , 233.351 decide rights after hearing evidence and opposition, it is amenable to the writ of certiorari. " In The Bharat Bank Ltd., Delhi vs Employees of the Bharat Bank Ltd., Delhi (1), the question whether an adjudication by an industrial tribunal functioning under the Industrial Disputes Act was subject to the jurisdiction of this court under article 136 of the Constitution fell to be determined:, Mahajan J. in that case observed: "There can be no doubt that varieties of administrative tribunals and domestic tribunals are known to exist in this country as well as in other countries of the world but the real question to decide in each case is as to the extent of judicial power of the State exercised by them. Tribunals which do not derive authority from the sovereign power cannot fall within the ambit of article 136. The condition precedent for bringing a tribunal within the ambit of article 136 is that it should be constituted by the State. Again a tribunal would be outside the ambit of article 136 if it is not invested with any part of the judicial functions of the State but discharges purely administrative or executive duties. Tribunals however which are found invested with certain functions of a Court of Justice and have some of its trappings also would fall within the ambit of article 136 and would be subject to the appellate control of this Court whenever it is found necessary to exercise that control in the interests of justice. " It was also observed by Fazl Ali J. at p. 463 that a body which is required to act judicially and which exercises judicial power of the State does not cease to be one exercising judicial or quasi judicial functions merely because it is not expressly required to be guided by any recognised substantive law in deciding the disputes which come before it. The authority of the Central Government entertaining an appeal under section 111(3) being an alternative remedy to an aggrieved party to a petition under section 155 the investiture of authority is in the exercise of the judicial power of the State. Clause (7) of section III (1) ; 352 declares the proceedings in appeal to be confidential, but that does not dispense with a judicial approach to the evidence. Under section 54 of the Indian Income tax Act, (which is analogous) all particulars contained in any statement made, return furnished or accounts or documents produced under the provisions of the Act or in any evidence given, or affidavit or deposition made, in the course of any proceedings under the Act are to be treated as confidential; but that does not make the decision of the taxing authorities merely executive. As the dispute between the parties relates to the civil rights and the Act provides for a right of appeal and makes detailed provisions about hearing and disposal according to law, it is impossible to avoid the inference that a duty is imposed upon the Central Government in deciding the appeal to act judicially. The Attorney General contended that even if the Central Government was required by the provisions of the Act and the rules to act judicially, the Central Government still not being a tribunal, this court has no power to entertain an appeal against its order or decision. But the proceedings before the Central Government have all the trappings of a judicial tribunal. Pleadings have to be filed, evidence in support of the case of each party has to be furnished and the disputes have to be decided according to law after con sidering the representations made by the parties. If it be granted that the Central Government exercises judicial power of the State to adjudicate upon rights of the parties in civil matters when there is a lis between the contesting parties, the conclusion is inevitable that it acts as a tribunal and not as an executive body. We therefore over rule the preliminary objection raised on behalf of the Union of India and by the respondents as to the maintainability of the appeals. The Memorandum and Articles of Association of a company when registered bind the company and the members of the company to the same extent as if they respectively had been signed by the company and each member, and contained covenants on its and 353 his part to observe all the provisions of the Memorandum and of the Articles. Clause 47B of the Articles of Association which invests the director with discretion to refuse to register shares is therefore an incident of the contract binding upon the transferor, and registration of transfer or transmission cannot therefore be insisted upon as a matter of right. The conditions subject to which a party can maintain a petition for an order for rectification of the register of shareholders have been settled by a long course of decisions. Two of those may be noticed. In In re Gresham Life Assurance Society Ex parte Penney (1), the deed of settlement of a life insurance company provided that any shareholder shall be at liberty to transfer his shares to any other person who was already a shareholder, or who should be approved by the board of directors, and that no person not being already a shareholder or the executor of a shareholder, should be entitled to become the transferee of any share unless approved by the board. One J. R. De Paiva who was the holder of ten shares of the company sold them to W. J. Penney and lodged the transfer with the shares for registration at the company 's office. The directors in exercise of the powers conferred upon them by the deed of settlement refused to register the shares. In a joint summons taken out by Paiva and Penney under section 35 of the Companies Act, 1862, the Master of the Rolls directed the transfer to be registered, the directors of the company having failed to submit any reasonable ground or objection to the purchaser. In the view of the Master of the Rolls, it was for the court to judge whether the objection was reasonable and that objection must be disclosed to the court. Against this order, the company approached the Court of Appeal. James L. J. in dealing with the contention raised by the appellant observed that the directors were in a fiduciary position both towards the company and towards every shareholder and that it was easy to conceive of cases in which the court may interfere with any violation of the fiduciary duty so (1) (1872) Law Rep. 8 Ch. 354 reposed in the directors. It was observed by James L. J.: "But in order to interfere upon that ground it must be made out that the directors have been acting from some improper motive, or arbitrarily and capriciously. That must be alleged and proved, and the person who has a right to allege and prove it is the shareholder who seeks to be removed from the list of shareholders and to substitute another person for himself . this Court would have jurisdiction to deal with it as a corrupt breach of trust; but if there is no such corrupt or arbitrary conduct as between the directors and the person who is seeking to transfer his shares, it does not appear to me that this court has any jurisdiction whatever to sit as a Court of Appeal from the deliberate decision of the board of directors, to whom, by the constitution of the company, the question of determining the eligibility or non eligibility of new members is committed. If the directors had been minded, and the Court was satisfied that they were minded, whether they expressed it or not, positively to prevent a shareholder from parting with his shares, unless upon complying with some condition which they chose to impose, the Court would probably, in exercise of its duty as between the cestui que trust and the trustees, interfere to redress the mischief, either by compelling the transfer or giving damages, or in some mode or other to redress the mischief which the shareholder would have had a just right to complain of. " It was also observed by James L.J.: " I am of opinion that we cannot sit as a Court of Appeal from the conclusion which the directors have arrived at if we are satisfied that the directors have done that which alone they could be compelled by mandamus to do, to take the matter into their consideration". Mellish L.J. observed: "But it is further contended that in order to secure the existing shareholder against being deprived of the right to sell his shares, the directors are 355 bound to give their reason why they reject the transferee, and if they reject him without giving a reason that is a ground from which the Court ought to infer that they were acting arbitrarily. I cannot agree with that. It appears to me that it is very important that directors should be able to exercise the power in a perfectly uncontrollable manner for the benefit of the shareholders; but it is impossible that they could fairly and properly exercise it if they were compelled to give the reason why they rejected a particular individual. I am therefore of opinion that in order to preserve to the company the right which is given by the articles a shareholder is not to be put upon the register if the board of directors do not assent to him, and it is absolutely necessary that they should not be bound to give their reasons although I perfectly agree that if it can be shown affirmatively that they are exercising their power capriciously and wantonly, that may be a ground for the Court interfering". A similar view was also expressed in In re, Smith and Fawcett Ltd. (1) where the Court of Appeal held that where the directors of the company had uncontrolled and absolute discretion to refuse to register any transfer of shares, while such powers are of a fiduciary nature and must be, exercised in the interest of the company, the petition for registration of transfer should be dismissed unless there is something to show that they had been otherwise exercised. Rectification of the register under section 155 can therefore be granted only if the transferor establishes that the directors had, in refusing to register the shares in the names of a transferee, acted oppressively, capriciously or corruptly, or in some way mala fide and not in the interest of the company. Such a plea has, in a petition for rectification, to be expressly raised and affirmatively proved by evidence. Normally, the court would presume that where the directors have refused to register the transfer of shares when they have been invested with absolute discretion to refuse registration, that the exercise of the power was bona fide. When (1) 356 the new Companies Act was enacted, it was well settled that the discretionary power conferred by the articles of association to refuse to register would be presumed to be properly exercised and it was for the aggrieved transferor to show affirmatively that it had been exercised mala fide and not in the interest of the company. Before the Committee appointed by the Government of India under the Chairmanship of Mr. C. H. Bhabha representation was made by several bodies that this power which was intended to be exercised for the benefit of the company was being misused and the Committee with a view to afford some reasonable safeguards against such misuse of the power recommended that a right of appeal should be provided against refusal to register transfer of shares. The Legislature, it appears, ,accepted this suggestion and provided a right of appeal. But the power to entertain the appeal is not unrestricted: being an alternative to the right to approach the civil court, it must be subject to the same limitations which are implicit in the exercise of the power by the civil court under section 155. The Central Government may therefore exercise the power to order that the transfer which the directors have in their discretion refused, be registered if it is satisfied that the exercise of the discretion is mala fide, arbitrary or capricious and that it is in the interest of the company that the transfer should be registered. Relying upon el.(7) of section 111 which provided that the proceedings in appeals under sub section(3) or in relation thereto shall be confidential, it was urged that the authority hearing the appeal is not obliged to set out reasons in support of its conclusion and it must be assumed that in disposing of the appeal, the authority acted properly and directed registration of shares. But the provision that the proceedings are to be treated as confidential is made with a view to facilitate a free disclosure of evidence before the Central Government which disclosure may not, in the light of publicity which attaches to proceedings in the ordinary courts, be possible in a petition under section 155 of the 357 Companies Act. The mere fact that the proceedings are to be treated as confidential does not dispense with a judicial approach nor does it obviate the disclosure of sufficient grounds and evidence in support of the order. In the present case, the position is somewhat un satisfactory. The directors passed a resolution declining to register the shares and informed the transferor and the transferees of that resolution. The transferees in their petition stated that the refusal to register transfer was without any reason, arbitrary and untenable and in the grounds of appeal they stated that they did not know of any reasons in sup port of the refusal and reserved liberty to reply thereto if any such reasons were given. The company in reply merely asserted that the refusal was not without any reason or arbitrary or untenable. The transferees in their rejoinder made a curious statement of which it is difficult to appreciate the import that they had "nowhere stated in the memoranda of appeals that the refusal to transfer shares was capricious or mala fide" and all that they "had stated was that the refusal was without any reason, arbitrary or untenable". The Deputy Secretary who decided the appeals chose to give no reasons in support of his orders. There is nothing on the record to show that he was satisfied that the action of the directors in refusing to register the shares "was arbitrary and untenable" as alleged. If the Central Government acts as a tribunal exercising judicial powers and the exercise of that power is subject to the jurisdiction of this court under article 136 of the Constitution, we fail to see how the power of this court can be effectively exercised if reasons are not given by the Central Government in support of its order. In the petition under section 38 of the Indian Companies Act, 1913, the Bombay High Court declined to order rectification on a summary proceeding and relegated the parties to a suit and a similar order was passed by the Joint Secretary, Ministry of Finance. These proceedings were brought to the notice of the Deputy Secretary who heard the appeals. Whether 46 358 in spite of the opinion recorded by the High Court and by the Joint Secretary, Ministry of Finance in respect of another block out of shares previously attempted to be transferred, there were adequate grounds for directing registration, is a matter on which we are unable to express any opinion. All the documents which were produced before the Deputy Secretary are not printed in the record before us and we were told at the bar that there were several other documents which the Deputy Secretary took into con sideration. In the absence of anything to show that the Central Government exercised its restricted power in hearing an appeal under section 111(3) and passed the orders under appeal in the light of the restrictions imposed by article 47B of the articles of association and in the interest of the company, we are unable to decide whether the Central Government did not transgress the limits of their power. We are however of the view that there has been no proper trial of the appeals, no reasons having been given in support of the orders by the Deputy Secretary who heard the appeals. In the circumstances, we quash the orders passed by the Central Government and direct that the appeals be re heard and disposed of according to law. Costs of these appeals will be costs in the appeals before the Central Government. HIDAYATULLAH, J. I have had the advantage of reading the judgment just delivered by my brother, Shah, J. In view of the strong objection to the competence of the appeals under article 136 by the respondents, to whom liberty was reserved by the order granting special leave, I have found it necessary to express my views. The facts have been stated in detail by my learned brother, and I shall not repeat them in full. Very shortly stated, the facts are that the second respondent, Banarsi Prasad Jhunjhunwala, transferred 2500 shares to his son, and 2100 shares to his daughter in law, in the appellant Company in 1953. The appellant Company declined to register these transfers. Proceedings for rectification of the Register under section 38 of the Indian Companies Act, 1913, followed 359 in the High Court of Bombay, but the High Court referred the disputants to the Civil Court. In the petition before the High Court, the respondents had charged the Directors of the appellant Company with bad faith and arbitrary dealing. The respondents renewed their requests for registration, but they were again declined, and appeals were filed before the Central, Government under section 111(3) of the , which had come into force from April 1, 1956. These appeals were heard by Mr. K. R. P. Aiyengar, Joint Secretary, Ministry of Finance, who dismissed them, holding that only a suit was the appropriate remedy. Banarsidas Prasad then made a fresh transfer of 100 shares each to his son and daughter in law, and requests for registration of these shares were made. The appellant Company again declined to register the shares, but gave no reaons. Under cl. 47 B of the Articles of Association of the appellant Company, it is provided: "The Directors may in their absolute discretion and without giving any reason refuse to register any transfer of any shares whether such shares be fully paid or not. If the Directors refuse to register the transfer of any shares, they shall, within two months after the date on which the transfer was lodged with the company, send to the trans feree and the transferor notice of the refusal. " The appellant Company was prima facie within its rights when it did not state any reasons for declining to register the shares in question. Appeals were again taken to the Central Government under section 111(3). It was alleged that the refusal to register the shares without giving any reasons was "arbitrary and untenable". In accordance with the provisions of the section, representations were filed by the appellant Company and rejoinders by the opposite party. The transferees made it clear that they did not charge the appellant Company with "capricious or mala flee conduct" but only with arbitrary any reasons. The appeals 360 succeeded, and the shares were ordered to be registered. The Deputy Secretary, who heard and decided the appeals, gave no reasons for his decision. Against his order, the present appeals have been filed with special leave. The preliminary objection is that the appeals are incompetent, because the Central Government, which heard them, is not a tribunal muchless a Court, and the action of the Central Government is purely administrative. It is, therefore, submitted that article 136 does not apply, because special leave can only be granted in respect of a determination by a Court or a tribunal, which the Central Government is not. This is not the only provision of law, under which the Central or State Governments have been empowered to hear appeals, revisions or reviews, and it is thus necessary to find out the exact status of the Central Government when it hears and decides appeals, etc., for the application of article 136. Article 136(1) reads as follows: "Notwithstanding anything in this Chapter, the Supreme Court may in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any Court or tribunal in the territory of India. " The orders which the Central Government passes, certainly fall within the words "determination" and "order". The proceeding before the Central Government also falls within the wide words "any cause or matter". The only question is whether the Central Government, when it hears and decides an appeal, can be said to be acting as a Court or tribunal. That the Central Government is not a Court was assumed at the hearing. But to ascertain what falls within the expression "Court or tribunal", one has to begin with "Courts". The word "Court" is not defined in the . It is not defined in the Civil Procedure Code. The definition in the Indian Evidence Act is not exhaustive, and is for the purposes of that Act. In the Now English Dictionary (Vol. II, pp. 1090, 1091), the meaning given is: 361 "an assembly of judges or other persons legally appointed and acting as a tribunal to hear and determine any cause, civil, ecclesiastical, military or naval. " All tribunals are not Courts, though all Courts are tribunals. The word "Courts" is used to designate those tribunals which are set up in an organised State for the administration of justice. By administration of justice is meant the exercise of judicial power of the State to maintain and uphold rights and to punish "wrongs". Whenever there is an infringement of a right or an injury, the Courts are there to restore the vinculum juris, which is disturbed. Judicial power, according to Griffith, C. J. in Huddart, Parker & Co. Proprietary Ltd. vs Moorehead (1) means: "the power which every sovereign authority must of necessity have to decide controversies between its subjects, or between itself and its subjects, whether the rights relate to life, liberty or property. The exercise of this power does not begin until some tribunal which has power to give a binding and authoritative decision (whether subject to appeal or not) is called upon to take action. " When rights are infringed or invaded, the aggrieved party can go and commence a querela before the ordinary Civil Courts. These Courts which are instrumentalities of Government, are invested with the judicial power of the State, and their authority is derived from the Constitution or some Act of legislature constituting them. Their number is ordinarily fixed and they are ordinarily permanent, and can try any suit or cause within their jurisdiction. Their numbers may be increased or decreased, but they are almost always permanent and go under the compendious name of "Courts of Civil Judicature". There can thus be no doubt that the Central Government does not come within this class. With the growth of civilisation and the problems of modern life, a large number of administrative tribunals have come into existence. These tribunals have the authority of law to pronounce upon valuable (1) ; , 357.362 rights; they act in a judicial manner and even on evidence on oath, but they are not part of the ordinary Courts of Civil Judicature. They share the exercise of the judicial power of the State, but they are brought into existence to implement some administrative policy or to determine controversies arising out of some administrative law. They are very similar to Courts, but are not Courts. When the Constitution speaks of 'Courts ' in article 136, 227 or 228 or in Art,% 233 to 237 or in the Lists, it contemplates Courts of Civil Judicature but not tribunals other than such Courts. This is the reason for using both the expressions in articles 136 and 227. By "Courts" is meant Courts of Civil Judicature and by "tribunals", those bodies of men who are appointed to decide controversies arising under certain special laws. Among the powers of the State is included the power to decide such controversies. This is undoubtedly one of the attributes of the State, and is aptly called the judicial power of the State. In the exercise of this power, a clear division is thus noticeable. Broadly speaking, certain special matters go before tribunals, and the residue goes before the ordinary Courts of Civil Judicature. Their procedures may differ, but the functions are not essentially different. What distinguishes them has never been success fully established. Lord Stamp said that the real distinction is that Courts have "an air of detachment". But this is more a matter of age and tradition and is not of the essence. Many tribunals, in recent years, have acquitted themselves so well and with such detachment as to make this test insufficient. Lord Sankey, L.C. in Shell Company of Australia vs Federal Commissioner of Taxation (1) observed: "The authorities are clear to show that there are tribunals with many of the trappings of a Court, which, nevertheless, are not Courts in the strict sense of exercising judicial power. In that connection it may be useful to enumerate some negative propositions on this subject: 1. A tribunal is not necessarily a Court in this strict sense because it gives a final decision. Nor because it hears (1) [1931] A.C.275.363 witnesses on oath. Nor because two or more contending parties appear before it between whom it,, has to decide. Nor because it gives decisions which affect the rights of subjects. Nor because there is an appeal to a Court. Nor because it is a body to which a matter is referred by another body. See Rex vs Electricity Commissioners In my opinion, a Court in 'the strict sense is a tribunal which is a part of the ordinary hierarchy of Courts of Civil Judicature maintained by the State under its constitution to exercise the judicial power of the State. These Courts perform all the judicial functions of the State except those that are excluded by law from their jurisdiction. The word "judicial", be it noted, is itself capable of two meanings. They were admirably stated by Lopes, L.J. in Royal Aquarium and Summer and Winter Garden Society vs Parkinson (2), in these words: "The word 'judicial ' has two meanings. It may refer to the discharge of duties exercisable by a judge or by justices in court, or to administrative duties which need not be performed in court, but in respect of which it is necessary to bring to bear a judicial mind that is, a mind to determine what is fair and just in respect of the matters under con sideration. " That an officer is required to decide matters before him "judicially" in the second sense does not make him a Court or even a tribunal, because that only establishes that he is following a standard of conduct, and is free from bias or interest. Courts and tribunals act "judicially" in both senses, and in the term "Court" are included the ordinary and permanent tribunals and in the term "tribunal" are included all others, which are not so included. Now, the matter would have been simple, if the had designated a person or persons whether by name or by office for the purpose of hearing an appeal under section 111. It would then have been clear that though such person or persons were not "Courts" in the sense explained, they were clearly (1) (2) , 452, 364 "tribunals". The Act says that an appeal shall lie to the Central Government. We are, therefore, faced with the question whether the Central Government can be said to be a tribunal. Reliance is placed upon a recent decision of this Court in Shivji Nathubai vs The Union of India (1), where it was held that the Central Government in exercising power of review under the Mineral Concession Rules, 1949, was subject to the appellate jurisdiction conferred by article 136. In that case which came to this Court on appeal from the High Court 's order under article 226, it was held on the authority of Province of Bombay vs Kushaldas section Advani (1) and Rex vs Electricity Commissioners (3) that the action of the Central Government was quasi judicial and not administrative. It was then observed: "It is in the circumstances apparent that as soon as r. 52 gives a right to an aggrieved party to apply for review a lis is created between him and the party in whose favour the grant has been made. Unless therefore there is anything in the statute to the contrary it will be the duty of the authority to act judicially and its decision would be a quasi judicial act. " This observation only establishes that the decision is a quasi judicial one, but it does not say that the Central Government can be regarded as a tribunal. In my opinion, these are very different matters, and now that the question has been raised, it should be decided. The function that the Central Government performs under the Act and the Rules is to hear an appeal against the action of the Directors. For that purpose, a memorandum of appeal setting out the grounds has to be filed, and the Company, on notice, is required to make representations, if any, and so also the other side, and both sides are allowed to tender evidence to support their representations. The Central Government by its order then directs that the shares be registered or need not be registered. The Central Government is also empowered to include in its orders, directions as to payment of costs or otherwise. The (1) ; (2) ; (3) 365 function of the Central Government is curial and not executive. There is provision for a hearing and a decision on evidence, and that is indubitably a curial function. Now, in its functions Government often reaches decisions, but all decisions of Government cannot be regarded as those of a tribunal. Resolutions of Government may affect rights of parties, and yet, they may not be in the exercise of judicial power. Resolutions of Government may be amenable to writs under articles 32 and 226 in appropriate cases, but may not be subject to a direct appeal under article 136 as the decisions of a tribunal. The position, however, changes when Government embarks upon curial functions, and proceeds to exercise judicial power and decide disputes. In these circumstances, it is legitimate to regard the officer who deals with the matter and even Government itself as a tribunal. The officer who decides, may even be anonymous; but the decision is one of a tribunal, whether expressed in his name or in the name of ' the Central Government. The word "tribunal" is a word of wide import, and the words "Court" and "tribunal" embrace within them the exercise of judicial power in all its forms. The decision of Government thus falls within the powers of this Court under article 136. It is next argued by the learned Attorney General that there is no law to interpret or to apply in these cases. He argues that since there are no legal standards for judging the correctness or otherwise of the order of the Central Government and the decision being purely discretionary, it is neither judicial nor quasi judicial but merely administrative, and that no appeal can arise from the nature of things. Such a line was taken before the Committee on Ministers ' Powers by Lord Hewart, and the argument reminds one of what he then said that such decisions are purely discretionary and the exercise of such arbitrary power is "neither law nor justice or at all". Sir Maurice Gwyer also was of the opinion that an appeal could not be taken to Court against a Minister 's 47 366 decision even on the ground of miscarriage of justice, because that, in his opinion, was "putting a duty on the Court" which was "not the concern of the Court". This argument takes me to the heart of the controversy, and before I give my decision, I wish to say a few preliminary things. Article 47 B gives to the Directors a right to refuse to register shares in their absolute discretion, without giving reasons. In In re Gresham Life Assurance Society, Ex Parte Penney James, L.J. observed: "No doubt the directors are in a fiduciary position both towards the company and towards every shareholder in it. It is very easy to conceive cases such as those cases to which we have been referred, in which this Court would interfere with any violation of the fiduciary duty so reposed in the directors. But in order to interfere upon that ground it must be made out that the directors have been acting from some improper motive, or arbitrarily and capriciously. That must be alleged and proved, and the person who has a right to allege and prove it is the shareholder who seeks to be removed from the list of shareholders and to substitute another person for himself. But if it is said that wherever any shareholder has proposed to transfer his shares to some new member, the Court has a right to say to the directors, 'We will presume that your motives are arbitrary and capricious, or that your conduct is corrupt, unless you choose to tell us what your reasons were, and submit those reasons to our decision ', it would appear to me entirely altering the whole constitution of the company as provided by the articles." That shows that the Directors are presumed to have acted honestly in the interests of the company and a case has to be made out against them. I shall only quote from another case, which summarises the position very aptly. In In re Hannan 's King (Browning) Gold Mining Company (Limited) (2), Lindley, M.R. is reported to have decided the case thus: "Their Lordships did not sit there as a Court of (1) (1872) Law Rep. 8 Ch.(2) , 367 honour; the question was whether the applicants had made out that the transferee was being improperly kept off the register. There was no evidence of that . The Court ought, as a matter of honesty between man to man., to presume that the directors were acting within their powers unless the contrary was proved; but that was not proved by casting unfounded aspersions upon them." Thus, the matter comes to this that the Directors have a presumption in their favour and the opposite party must prove that there was want of good faith. The right of appeal which is given under the , allows the Central Government to judge this issue. For that purpose, parties are required, if they desire, to make representations and to put in evidence. But to enable the parties to have a free say, the proceedings are made confidential by law, and there is protection against action, both civil and criminal. The appeal is disposed of on the basis of the representations and the evidence. A decision of a tribunal on a dispute inter partes, in the light of pleadings and evidence, is essentially a judicial one, and this Court ought to be able, on the same material, to decide in an appeal whether the decision given was correct. If no substantive law is applicable, there are questions of evidence, of burden and adequacy of proof and of the application of the principles of justice, equity and good conscience to guide the Court. Once it is held that the decision is that of a tribunal and subject to appeal, it is manifest that an appeal may lie, unless there be some other reason. The difficulty which arises in these cases is whether it was not the intention of the law that the decision of the Central Government was to be final. The law makes all allegations and counter allegations confidential. If Courts cannot compel disclosure of these allegations and the veil of secrecy drawn by law is not rent, then it appears to me that a further appeal can hardly be efficacious. In this view, in my opinion, this Court should not grant special leave in such cases. The situation which arises is not very different from what arose before the Judicial Committee in Moses vs 368 Parker, Ex Parte Moses (1). The headnote adequately gives the facts, and may be quoted: "By Tasmanian Act No. 10 of 1858, section 5, disputes concerning lands yet ungranted by the Crown are referred to the Supreme Court, whose decision is to be final; and by section 8 the Court is directed to be guided by equity and good conscience only, and by the best evidence procurable, even if not required or admissible in ordinary cases, and not to be bound by strict rules of law or equity or by any legal forms: Held: that the Crown 's prerogative to grant special leave to appeal is inapplicable to a decision so authorised." In dealing with the case, Lord Hobhouse observed at p. 248: "The Supreme Court has rightly observed that Her Majesty 's prerogative is not taken away by the Act of 1858, but intimates a doubt whether it ever came into existence. Their Lordships think that this doubt is well founded. They cannot look upon the decision of the Supreme Court as a judicial decision admitting of appeal. The Court has been substituted for the commissioners to report to the governor. The difference is that their report is to be binding on him. Probably it was thought that the status and training of the judges made them the most proper depositaries of that power. But that does not make their action a judicial action in the sense that it can be tested and altered by appeal. It is no more judicial than was the action of the commissioners and the governor. The Court is to be guided by equity and good conscience and the best evidence. So were the commissioners. So every public officer ought to be. But they are expressly exonerated from all rules of law and equity, and all legal forms. How then can the propriety of their decision be tested on appeal? What are the canons by which this Board is to be guided in advising Her Majesty whether the Supreme Court is right or wrong? It seems almost (1) 369 impossible that decisions can be varied except by reference to some rule; whereas the Court making them is free from rules. If appeals were allowed, the certain result would be to establish some system of rules; and that is the very thing from which the Tasmanian Legislature has desired to leave the Supreme Court free and unfettered in each case. If it were clear that appeals ought to be allowed, such difficulties would doubtless be met somehow. But there are strong arguments to show that the matter is not of an appealable nature." See also The ' berge vs Laudry (1). The exercise of the powers under article 136 is a counterpart of the royal prerogative to hear appeals in any cause or matter decided by Courts or tribunals. But where the Articles of Association of a company give absolute discretion to the Directors and empower them to withhold their reasons, the appeal taken to the Central Government would involve decision on such material, which the parties place before it. If the allegations are made confidential by law and the Central Government in giving its decision cannot make them public, it is manifest that the decision, to borrow Lord Hobhouse 's language, "is not of an appealable nature". Whether the right to hear appeals generally against decisions of the Central Government acting as a tribunal be within article 136, in my opinion and I say it with great respect special leave to appeal should not be granted in such cases, unless this Court is able to rend the veil of secrecy cast by the law without rending the law itself. The argument is that the allegations are confidential only so far as the public are concerned but not confidential where Courts are concerned. The question is not that but one of practice of this Court. This Court should intervene only when practicable, and that can only arise if the parties agree not to treat the allegations as confidential. That, however, does not end the present appeals. Special leave has been granted, and I have held that the appeals are competent, even though such cases (1) 370 often may not be fit for appeal. In this case, there is no claim that any allegation was confidential. In fact, the appellants before the Central Government made it clear that they did not charge the Directors with "capricious or mala fide conduct" but only with arbitrary refusal, without stating any reasons. The appellant Company in its representation set out the history of previous refusals and the decisions of the High Court of Bombay and the Central Government, and made it clear that the action was taken in the interest of the Company. There are indications in the representation to show that on the previous occasion when these claimants were referred by the High Court and by Mr. K. R. P. Aiyengar, Joint Secretary, to the Civil Court, they did not go to Court to establish that the action was mala fide and capricious. Before the Central Government, they dropped that allegation, and confined the case to one of refusal without giving any reasons, and that was the plain issue before the Central Government. There was no evidence for the Central Government to consider, and the Articles of Association give the Directors an absolute discretion to refuse to register shares without giving any reasons, and, on the authorities quoted earlier, the Directors must be presumed to have acted honestly. There was thus no reason for the Central Government to reverse the decision of the Directors, and the fact that no reasons have been given when nothing was confidential, leads to the only inference that there was none to give. In my opinion, these appeals must succeed. I would, therefore, set aside the order of the Central Government, and allow the appeals with costs here and before the Central Government, if an order to that effect was passed by the Central Government. Before parting with the case, I may say that the Report of the Amendment Committee had recommended amendment of section 111, and it has been amended, inter alia, by the addition of sub section (5A), which reads: "Before making an order under sub section (5) on an appeal against any refusal of the company to 371 register any transfer or transmission, the Central Government may require the company to disclose to it the reasons for such refusal, and on the failure or refusal of the company to disclose such reasons, that Government may, notwithstanding anything contained in the articles of the company, presume that the disclosure, if made, would be unfavourable to the company." That would stop the blind man 's buff under the unamended law! By COURT. In view of the majority judgment of the Court, we quash the orders passed by the Central Government and direct that the appeals be reheard and disposed of according to law. Costs of these appeals will be costs in the appeals before the Central Government.

One B who held a large number of shares in the appellant company, transferred two blocks of 100 shares each to his son and daughter in law. The transferees applied to the company to register the transfers. Purporting to act under article 47B of the Articles of Association of the company the directors of the company resolved not to register the transfers. Against this resolution the transferees preferred appeals to the Central Government under section III(3) of the . The Central Government, without giving any reasons for its decision, set aside the resolution of the directors and directed the company to register the transfers. The company obtained special leave to appeal against the decision of the Central Government under article 136 of the Constitution and appealed to the Supreme Court on the ground that the Central Government acted in excess of its jurisdiction or otherwise acted illegally in directing the company to register the transfers. The respondents raised a preliminary objection that the Central Government exercising appellate powers under section III of the Act (before its amendment in 1960) was not a tribunal exercising judicial functions and was not subject to the appellate jurisdiction of the Supreme Court under article 136. Held, that the appeal was competent to the Supreme Court by special leave against the decision of the Central Government under section III (3) Of the . The Central Government, when exercising powers under section III was a tribunal within the meaning of article 136 and was required to act judicially. A person aggrieved by the refusal to register transfer of shares had two remedies under the Act, viz., (1) to apply to the court for rectification of the register under section 155 or (2) to prefer an appeal under section III. The power of the Court under section 155, which has necessarily to be exercised judicially, and the power of the Central Government under section III have to be exercised subject to the same restrictions. In both cases it has to be 340 decided whether the directors have acted oppressively, capriciously corruptly or malafide. The decision has manifestly to stand those objective tests and has not merely to be founded on the subjective satisfaction of the authority. In an appeal under section III(3) there is a lis or dispute between the contesting parties relating to their civil rights, and the Central Government has to determine the dispute according to law in the light of the evidence and not on grounds of policy or expediency. There was thus a duty imposed on the Central Government to act judicially. The proviso to sub section (8) of section III which provided for the award of reasonable compensation in lieu of the shares in certain circumstances also fortifies that view. Shivji Nathubhai vs The Union of India, ; , Re Bell Brothers Ltd. Ex Parte Hodgson, , The Province of Bombay vs Kusaldas section Advani, [1950] S.C.R. 621, The King vs London County Council, and The Bharat Bank Ltd., Delhi vs Employees of the Bharat Bank Ltd., Delhi, ; , referred to. In an appeal under section 111(3) of the Act the Central Govern ment has to determine whether the exercise of the discretion by the directors refusing to register the transfer is malafide, arbitrary or capricious and whether it is in the interest of the company. The decision of the Central Government is subject to appeal to the Supreme Court under article 136; the Supreme Court cannot effectively exercise its power if the Central Government gives no reasons in support of its order. The mere fact that the proceedings before the Central Government are to be treated as confidential does not dispense with a judicial approach, nor does it obviate the disclosure of sufficient grounds and evidence in support of the order. In the present case no reasons have been given in Support of the orders and the appeals have to be remanded to the Central Government for rehearing. In re Gresham Life Assurance Society, Ex Parte Penney, (1 872) Law Rep. 8 Ch. 446 and In re Smith and Fawcett, Ltd., L. R. , referred to. Per Hidayatullah, J. The appeal to the Supreme Court under article 136 was competent. The Act and the Rules showed that the function of the Central Government under section 11(3) was curial and not executive; there was provision for filing a memorandum of appeal setting out the grounds, for the company making representations against the appeal, for tendering evidence and award of costs. There was provision for a hearing and a decision on evidence. The Central Government acted as a tribunal within the meaning of article 136. Huddart, Parker & Co. Pyoprietar Ltd. vs Moorehead, (108) ; , Shell Company of Australia vs Federal Commissioner of Taxation, , Rex vs Electricity Commissioners, Royal Aquarium and Summer and Winter Garden 341 Society vs Parkinson, , Shivji Nathubai vs The Union of India; , and Province of Bombay vs Kushaldas section Advani, ; , referred to. But special leave should not ordinarily be granted in such cases. The directors were not required to give reasons for their decision and there was a presumption that they had acted properly and in the interest of the company. In the appeal under section 111 of the Act all allegations and counter allegations were confidential and the Central Government could not make them public in its decision. An appeal against such a decision could rarely be effective. In the present case the appeal under section III(3) was confined to the ground that the refusal to register was without giving any reasons; there was no question of confidential allegations and there was no evidence to consider. The Articles of Association gave the directors absolute discretion to refuse to register the transfers without giving any reasons and there was a presumption that the directors had acted honestly. There was thus no reason for the Central Government to reverse the decision of the directors. In re Gresham Life Assurance Society; Ex Parte Penney, (1872) Law Rep. 8 Ch. 446, In re Hannan 's King (Browning) Gold Mining Company Limited, and Moses vs Parkar Ex parte Moses, , referred to.

il Appeal No. 1870 of 1968. (From the Judgment and Decree dated 6 3 1967 of the Bombay High Court (Nagpur Bench) in Appeal No. 101/59.) I. N. Shroff and H.S. Parihar, for the appellant. S.B. Wad and M.N. Shroff, for respondent No. 1. 556 A. section Bobde, G.L. Sanghi, V.K. Sanghi, Miss Rama Gupta and M.S. Gupta, for respondent No. 2. The Judgment of the Court was delivered by C.J. This appeal is by certificate from the judgment dated 6 March, 1967 of the High Court of Bombay. The appellant is the State of Madhya Pradesh. The first respondent is the State of Maharashtra. The second respondent is the plaintiff decree holder. They will be referred to, for short, as Madhya Pradesh, Maharashtra and the plaintiff. , The trial court passed a decree in favour of the plain tiff. It was declared that the order dated 9 January, 1954 of the suspension of the plaintiff as well as the. order of removal of the plaintiff from service passed on 2 February 1956 is illegal, void and inoperative. The further declara tion was that the: plaintiff shall be deemed to be continu ing in service from 16 September, 1943. A sum of Rs. 64, 588 2 0 was decreed in favour of the plaintiff and Bombay the predecessor of Maharashtra was ordered to. pay the same with interest. Both Madhya Pradesh and Maharashtra were ordered to pay costs to the plaintiff. Maharashtra preferred an appeal against the decree. Madhya Pradesh preferred objections against the order of costs. The High Court confirmed the decree and the declara tions. The High Court however modified the decree and held Madhya Pradesh liable. The claim of the plaintiff against Maharashtra was dismissed. The plaintiff was appointed Assistant Medical Officer in 1938. In 1939 he was appointed officiating Assistant Surgeon. He was posted at Elichpur (now Achalpur). In 1942 he was transferred to Hoshangabad. In 1943 he ap plied for medical leave for four months. The Civil Surgeon recommended leave for six weeks. The plaintiff again ap plied for leave in the month of August, 1943. The leave was sanctioned by the Civil Surgeon. The plaintiff then requested the Civil Surgeon in anticipation of sanction of leave by the Government for relief because he was not keep ing good health. The Civil Surgeon then reported to the Government that the plaintiff absented himself from duty from 10 August, 1943 without leave. The Government sanc tioned leave for six weeks. On 28 September, 1943 the plaintiff was suspended by an order with effect from 16 September, 1943. The plaintiff was served with a notice dated 30 September, 1943 to show cause why he: should not be dismissed from service. Four charges Were levelled against the plaintiff. First, that he refused to come to duty at the time of epi demic in August, 1943; Second, that he left his station without permission. Third, that he refused to attend the Departmental enquiry when ordered to do so. Fourth, that he wilfully and deliberately acted in total disregard of orders and absented himself from duty though he was declared to be fit to. resume duty. 557 The Enquiry Officer by report dated 22 February, 1945 gave his findings that the first charge was not proved; that the second charge was proved but mitigated and the third and the fourth charges were technically proved. On 21 June, 1945 the plaintiff was asked to show cause why he. should not be dismissed or reduced in rank. On 18 August, 1945 the Government of Central Provinces and Berar intimated to the plaintiff that the Government accepted the report of the Enquiry Officer and proposed to remove the plaintiff from service with effect from the date of the passing of the final order. By order dated 7 November, 1945 the Provincial Government passed an order removing the plaintiff from service with effect from that date. On 10 May, 1945 the plaintiff filed an appeal to the Governor but it was dismissed. On 6 January, 1949 the plaintiff filed a suit in the court of the Second Additional District Judge, Nagpur. By judgment dated 31 August, 1953 the District Judge held that the suspension order and the order of dismissal were illegal and declared the plaintiff to. be deemed to. continue in service. The plaintiff was thereafter reinstated in service aS Assistant Surgeon on 12 December, 1953. He was posted at Rays Hospital, Nagpur on 15 September, 1953. On 13 January, 1954 the plaintiff was again suspended from service under order dated 9 January, 1954. The plain tiff handed over charge on 13 January, 1954. On 1 February 1954 the plaintiff was served with a notice dated 29 Janu ary, 1954 to show cause why he should not be removed from service. The former report of the Enquiry Officer dated 22 February, 1945 was also given to the plaintiff. On 2 February, 1956 the plaintiff was removed from service. He appealed to the Governor. The appeal was dismissed. On 6 October, 1956 the plaintiff filed this suit in the court of the Joint Civil Judge, Nagpur against Madhya Pra desh and Maharashtra. The plaintiff asked for a declaration that the order dated 9 January, 1954 suspending the plain tiff as well as the order dated 2 February, 1956 is illegal. The plaintiff asked for a declaration that he is deemed to continue in service. He claimed recovery of Rs. 64,588 2 0 as arrears of salary. The plaintiff in his suit alleged that both Maharashtra and Madhya Pradesh are "liable to make good the plaintiff 's claim the liability for which is not exclusive but joint and several". The alternative case. of the plaintiff in the suit was that "if it will be held that the State of Maha rashtra and not the State of Madhya Pradesh is liable or viceversa the plaintiff will claim the decree ' against such State as would be liable". The Civil Judge passed the. decree on 25 April 1959 ' declaring: the order dated 9 January, 1954 suspending the plaintiff as well as the order dated 2 February, 1956 remov ing the plaintiff from service as illegal, void and inopera tive. The decree further stated that the 558 plaintiff was deemed to continue in service from 16 Septem ber, 1943. The Civil Judge passed a decree against the State of Bombay with the direction to pay Rs. 64,588 2 0 with 'interest at 6 per cent. Both Maharashtra and Madhya Pradesh went up in appeal. The Division Bench of the Bombay High Court placed the matter before a larger Bench and referred these two ques tions for the decision of the Larger Bench. (1) Whether in the events that have happened which of these two States of Maharashtra and Madhya Pradesh can be compelled to take the plaintiff in service. (2) Whether both or only one of the two States can be made liable for the payment of ar rears of salary of the plaintiff, if so, which State is liable. The larger Bench of the Bombay High Court said that the State of Madhya Pradesh is constituted after the States Reorganisation Act referred to as the Act came into. force on 1 November, 1956 is the principal successor State of the former State of Madhya Pradesh. The High Court further said that the State of Maharashtra is the successor State of the former Madhya Pradesh inasmuch as certain territo ries, namely, Vidharbha which formed part of the former St. ate of Madhya Pradesh became: a part of the new State of Maharashtra. The High Court then referred to. clause (B) of section 88 of the Act and said that Maharashtra would be liable for the claim of the plaintiff only if the cause of action has arisen in its entirety within the territories which formed part of Maharashtra, otherwise initial liabil ity for the plaintiff 's claim will be on the principal successor State Madhya Pradesh under section 88(c) of the Act. The larger Bench therefore referred the matter to the Division Bench to consider the question whether the cause of action for the plaintiff 's claim arose in its entirety within the territories which formed part of the Maharashtra. The High Court held that under section 88(c) of the Act Madhya Pradesh is responsible for the claim of the plain tiff. The High Court further held that the plaintiff was appointed under conditions of service Prescribed for him and accepted by him, and, therefore, the plaintiffs claim for arrears of salary would be governed by section 87 of the Act and not by section 88 of the Act. The High Court said that the plaintiffs claim for arrears of salary and allowance was based on contract, either express or implied, on the basis of the terms. of appointment and the conditions of service prescribed by the Government and accepted by the plaintiff. The High Court also said that at the time of the plaintiff 's appointment in 1939 the plaintiff 's services were available for the then entire Province of Central Provinces and Berar and not only for those districts which formed part of Madhya Pradesh. Therefore, the High Court said that section 87(b) of the Act would not apply. Under the residuary clause of section 87(c) of the Act Madhya Pradesh would be liable as the principal successor State because the purpose of the contract were as from the appointed day not exclusively purposes of any of the two successor States. Madhya Pradesh raised three contentions. First, the plaintiff did not claim salary and allowances for the period subsequent to 15 September, 1943 in the. suit filed by the. plaintiff in 1949 and was 559 therefore by reason of the provisions contained in Order 2 Rule 2 of the Code of Civil Procedure precluded from claim ing the salary and allowances for the period of 16 Septem ber, 1943 to 31 August, 1953 in the second suit which was filed on 6 October, 1956. Second, the plaintiff 's claim in the second suit for salary and allowances prior to 6 October 1953 would be barred by the reason of Article 102 of the Limitation Act 1908. Third, the liability, if any, would be under section 88(b) of the Act of Maharashtra which succeeded the State of Madhya Pradesh on 1 November, 1956 in so far as Nagpur District of the then existing State of Madhya Pradesh was concerned. Reference was made to section 8(1) (c) of the Act for the purpose. Further it is said by the appellant that on or after 1 November, 1956 the plain tiff could continue the suit only against the State of Bombay later known as State of Maharashtra and not against the State of Madhya Pradesh as constituted on or after 1 November, 1956. Maharashtra contended that the liability was of Madhya Pradesh because of the provisions contained in section 88(c) of the Act. It was said on behalf of Maharashtra that the plaintiff had been appointed to service in Central Prov inces and Berar which became the principal successor State of Madhya Pradesh. The order of removal was also by the existing State which became the principal successor State of Madhya Pradesh. In order to appreciate the rival contentions reference is necessary to two sections of the Act. Section 87 speaks of liability in the case of contracts. 'Broadly stated, the provisions of section 87 of the Act are that where before the appointed day "1 November 1956" an existing State has made any contract in the exercise of 'its executive power for any purposes of the State, that contract shah be deemed to have been made in the exercise of the executive power (a) if there be only one successor States of the State; and (b) if there be two or more successor States and the purposes of the contract are,as from the appointed day, exclusively purposes of any one of them of that State; and (c) if there be two or more successor States and the purposes of the contract are,contract are, as from that day, not exclusively purposes of any one of them. of the principal successor State: and all rights and liabilities which have accrued or may accrue, under any such contract shall, to the extent to which they would have been rights or liabilities of the existing State be rights or liabilities of the successor State or the principal succes sor State. The proviso to section 87 of the Act is that where the liability attaches under clause (c) the initial allocation of rights and liabilities made by this sub section shall be subject to such financial adjustment as may be agreed upon between all the successor States concerned, or in default of such agreement, as the central Government may by order direct. Section 88 of the Act provides that where before the appointed day, an existing State is subject to any liability in respect of an actionable wrong other than breach of contract, that liability shall (a) if there be only one successor State, be a liability of that State; (b) if 560 there be two or more successor ' States and the cause of action arose wholly within the territories which as from that day are the territories of one of them, be a liability of that successor State, and (c) in any other case, be initially a liability of the principal successor State, but subject to such financial adjustment as may be agreed upon between 'all the successor States concerned, of in default of such agreement, as the Central Government may by order direct. The claim for declaration that the order of suspension as welt as the order of dismissal was void is in respect of an actionable wrong other than breach of contract. In order to. determine as to which of the two States would be liable e under section 88 of the '. 1956 Act it has to be found out whether the cause of action arose wholly within the territories of one of the States or arose partly in the territories of one State and partly in the territo ries of the1 other. The departmental enquiry which was alleged to be illegal was held at Hoshangabad which has all along been a part of the State of Madhya Pradesh only. final orders which were challenged in the suit were passed at Nagpur which became part of the State of Bombay and later on known as Maharashtra. The plaintiff 's cause of action comprises of every fact which is necessary to be proved. The plaintiff based his claim with regard to de partmental enquiry which was held at Hoshangabad and also with regard to impugned order passed at Nagpur. The appel lant State is the principal successor State of the former State of Madhya Pradesh. Maharashtra was one of the succes sor States, like Madhya Pradesh. Section 88(a) of the 1956 Act in the present case has no .application because it speaks of only one successor State. Section 88(b) of the 1956 Act refers to the State. where the cause of action wholly arose within the territories of either of the. successor States. In the present case, it cannot be said that the cause of action arose wholly within the successor State of Maharashtra. Therefore, the residuary 'provision contained in section 88(c) of the 1956 Act applies and the liability is of the principal successor State, namely, Madhya Pradesh. The High Court was right in arriving at the conclusion that Madhya Pradesh is liable. The plaintiff 's suit in 1949 was only for setting aside the impugned orders. The plaintiff did not ask for relief for arrears of salary for the obvious reason that the plain tiff in the 1949 suit asked fox ' setting aside of the im pugned orders and an order that the plaintiff was deemed to be continuing in service. The plaintiff proceeded on the existing law as it stood by reason of the decision in High Commissioner for India vs 1. M. Lall(1). The Judicial Committee in that case held that a civil servant was not entitled to. sue the State for recovering arrears of salary and pay. Counsel for Madhya Pradesh relied on the decision in Province of Punjab vs Pandit Tara Chand (2) which held that a public servant had a right to bring a suit for ar rears .of pay. The decision of the Judicial Committee in Lall 's case (supra) takes a contrary view to the decision of the Federal Court in Pandit (1) 75 I.A. 225. (2) 561 Tara Chand 's case (supra). It it true that the decision of the Federal Court in Pandit Tara Chand 's case (supra) was not brought to the notice of the Privy Council. Under section 208 of the Government of India Act 1935 the law declared by the Judgment of the Privy Council had to be followed by all the Courts including the Federal Court. Therefore, the earlier decision of the Federal Court though not expressly overruled by the Judicial Committee must be deemed to have overruled by implication by the decision of the Judicial Committee in Lall 's case (supra). This Court in State of Bihar vs Abdul Majid(1) stated that a Government servant could ask for arrears of salary. Counsel for Madhya Pradesh said that the decision of this Court in Abdul Majid 's case (supra) declared what the exist ing law has been, and, therefore, the plaintiff could not contend that it was not open to him to ask for arrears of salary in the 1949 suit. It is in that background that Madhya Pradesh contends that the plaintiff not having asked for relief under Order 2 Rule 2 of the Code of Civil Proce dure would not be entitled to claim salary in the 1956 suit. The contention of Madhya Pradesh cannot be accepted. The plaintiff will be barred under Order 2 Rule 2 of the Code of Civil Procedure only when he omits to sue for or relinquishes the claim in a suit with knowledge that he has a right to. sue for that relief. It will not be correct to say that while the decision of the Judicial Committee in Lall 's case (supra) was holding the field the plaintiff could be said to know that he was yet entitled to make a claim for arrears of salary. On the contrary, it will be correct to say that he knew that he was not entitled to make such a claim. If at the date of the former suit the plain tiff is not aware of the right on which he insists in the latter suit the plaintiff cannot be said to be disentitled to the relief in the latter suit. The reason is that at the date of the former suit the plaintiff is not aware of the right on which he insists in the subsequent suit. A right which a litigant does not know that he possesses or a right which is not in existence at the time of the first suit can hardly be regarded as a "portion of his claim" within the meaning of Order 2 Rule 2 of the Code of Civil Procedure. See Amant Bibi vs Imdad Husain(2). The crux of the matter is presence or lack of awareness of the right at the time of first suit. This Court in Om Prakash Gupta vs State of Uttar Pradesh(2) considered the prayer for refund of court fees on a claim which was abandoned. The plaintiff in that case asked for a declaration that the order of dismissal was void and also asked for arrears of salary or in the alternative damages for wrongful dismissal. In view of the decision in Lall 's case (supra) the plaint in that casewas amended by deleting the claim for arrears of salary and also for damages. The plaintiff thereupon praved for refund of the court fees which had been paid on arrears of salary for damages. Both the trial Court (1) (2) 15 I.A. 106, 112. (3) ; 562 and the High Court rejected the claim for refund of court fees. This Court also upheld the same view. The reason given by this Court was that at the time the suit was insti tuted the law as it then stood permitted such a claim to be made. The decision of the Privy Council made it clear that no such claim could be made. The decision of the Privy Council clarifying the position was held by this Court not to be a ground for refund of court fee which was paid in accordance with law as it then stood. The appellant Madhya Pradesh is, therefore, not right in contending that the plaintiff is barred by provisions con tained in Order 2 Rule 2 of the Code of Civil Procedure from asking for arrears of salary in the 1956 suit. The plain tiff could not have asked for " arrears of salary on the law as it then stood. The plaintiff did not know of or possess any such right. The plaintiff, therefore, cannot be said to have omitted to sue for any right. Another reason why the bar under Order 2 Rule 2 of the Code of Civil Procedure cannot operate is that the plain tiff 's cause of action in the 1956 suit is totally different from the cause of action in the 1949 suit. See Pavana Reena Saminathan vs Palaniappa(1). This Court in Jai Chand Sawhney vs Union of India (2) held that in a suit for setting aside the order of dismissal and for arrears of salary a claim for salary for the period prior to three years of the suit would be barred. The reason given is that when the order of dismissal is set aside the Government servant is deemed to be in service throughout the period during which the order of dismissal remains operative. Once an order of dismissal is declared bad it is held to be bad from the date of dismissal and salary would be due from the date when the dismissal order was bad. The same view has been taken by this Court in Sakal Dean Sahai Srivastava vs Union of India(3). In that case the plaintiff filed a suit on 27 November, 1962 for a declara tion that from 1 July, 1949 the date of illegal reversion up to 30 September, 1959 the date of his retirement he was a railway employee. Relying on the decision of this Court in Jai Chand Sawhney 's case and Sakal Deep 's case (supra) counsel for Madhya Pradesh contended that the plaintiff would not be entitled to more than three years ' salary. The present case is not one of setting aside an order of dismissal simpliciter. When the plaintiff filed a suit in 1949 he could not ask for arrears of salary. Pursuant to the decree dated 30 August, 1953 in his favour he was reinstated on 12 December, 1953. Three features are to be borne in mind in appreciating the plaintiff 's case from the point of view of limitation. First the plaintiff became entitled to salary for the period 16 September, 1943 up to the date of rein statement on 12 December, 1953, only when pursuant to the decree dated 30 August, 1953 there was actual reinstatement of the plaintiff on 12 December, 1953. Second, the plain tiff was (1) I.A. 142. (2) (3) ; 563 again suspended on 19 January, 1954 and was dismissed on 23 February 1956. The Madhya Pradesh Government on 5 March, 1954 decided that during the period of first suspension till his reinstatement on 12 December, 1953 he was not entitled to salary. Again on 29 January, 1956 the Madhya Pradesh Government decided under Fundamental Rule 54(iii) that during the period of suspension from 16 September 1943 to 12 December 1953 and again from 19 January 1954 to 23 February 1956 he would not be entitled to any payment of allowances. On these facts two consequences arise in the present appeal. First, since the plaintiff was under suspension from 16 September, 1943 till 12 December, 1953 when he was rein stated and again suspended from 19 January, 1954 till 23 February, 1956 when he was dismissed, his suit on 6 October, 1956 is within a period of three years from the date of his reinstatement on 12 December, 1953. Second, during the period of suspension he was not entitled to salary under Fundamental Rule 53. Further decision to that effect was taken by the Madhya Pradesh Government on 28 January, 1956 under Fundamental Rule 54. Therefore, the plaintiff 's cause of action for salary for the period of suspension did not accrue until he was reinstated on 12 December, 1953. The plaintiff 's salary accrued only when he was reinstated as a result of the decree setting aside the orders of sus pension and of dismissal. The rulings of this Court in Jai Chand Sawhney 's case (supra) and Sakal Deep 's case (supra) do. not apply to the present appeal because there was no aspect of any suspen sion order remaining operative until the fact of rein statement pursuant to the decree. The plaintiff 's cause of action for arrears of salary is this. When the plaintiff was reinstated on 12 December, 1953 pursuant to the decree dated 30 August, 1953 the plain tiff became entitled to salary which was suspended during the period of suspension. _ The plaintiff was again suspend ed from 19 January, 1954 and he was dismissed from service on 23 February, 1956. Therefore, when the plaintiff filed the suit on 6 October, 1956 his entire claim for salary is founded first on his reinstatement on 12 December, 1953 pursuant to the decree and second on the order of suspen sion dated 19 January, 1954 and the order of dismissal on 23 February 1956 which the plaintiff challenged as illegal. The original order of suspension on 16 September, 1943 as welt as the original dismissal dated 7 November, 1945 was declared to be illegal by the decree dated 30 August, 1953. Therefore, when the plaintiff was reinstated on 12 December, 1953 it is then that the plaintiff 's claim for salary accrued due. This salary was again suspended from 19 January, 1954. Dismissal on 23 February, 1956 was at a time when the plaintiff was still under suspension. The order of suspension does not put an end to his service. Suspension merely suspends the claim to salary. During suspension there is suspension allowance. See Khem Chand vs Union of 2 112 SCI/77 564 India(1) where this Court said that the real effect of the order of suspension is that though he continues to be a member of the service he is not permitted to work and is paid only subsistence allowance which is less than his salary. Under Fundamental Rule 52 'the pay and allowance of a Government servant who is dismissed or removed from service, cease from the date. of his dismissal or remov al. Therefore, there would be no question of salary accruing or accruing due so long as orders of suspension and dismiss al stand. The High Court was correct in the conclusion that the plaintiff 's claim for salary accrued due only on the order of dismissal dated 23 February, 1956 being set aside. For the foregoing reasons the appeal is dismissed. There will be costs only to the plaintiff respondent to be paid by the State of Madhya Pradesh. M .R. Appeal dismissed.

Dismissing the appeal, the Court, HELD: (1) A litigant will be barred under Order 2 Rule 2 of the C.P.C. only when he omits to sue for or relinquishes the claim in a suit with knowledge that he has a right to sue for that relief. A right which he does not know that he possesses or a right which is not in existence at the time of the first suit is not a "portion of his claim" within the meaning of Order 2 Rule 2 of the C.P.C. The crux of the matter is presence or lack of awareness of the right at the time of first suit. [561D E, 562 B] Amant Bibi vs Imdad Hussain 15 I.A. 106 at 112, applied. Om Prakash Gupta vs State of Uttar Pradesh ; , distinguished. High Commissioner for India vs I. M. Lall 75 I.A. 225; Province of Punjab vs Pandit Tara Chand ; State of Bihar vs Abdul Majid , referred to. The bar under Order 2 Rule 2 of the C P.C. cannot oper ate when the litigant 's cause of action in an earlier suit is totally different from the cause. of action in a later suit. [562 C] Pawana Reena Saminathan vs Palaniappa 41 I.A.142, applied. (2) During the period of suspension the plaintiff was not entitled to salary under Fundamental Rule 53. The cause of action for his salary for such period did not accrue until he was reinstated as a result of the decree setting aside the orders of suspension and of dismissal. [563C D] Jai Chand Sawhney vs Union of India, and Sakal Dean Sahai Srivastava vs Union of India, ; , distinguished. (3) Under Fundamental Rule 52 the pay and allowance of a Government servant who is dismissed or removed from service, cease from the date of his dismissal or removal. Therefore, there would be no question of salary accruing or accruing due so long as orders of suspension and dismissal stand. [564 B C] Khem Chand vs Union of India, [1963] Supp 1 S.C.R. 229, followed.

ivil Appeal No. 257 of 1962. Appeal from the judgment and decree dated February 19, 1957 of the Allahabad High Court in section A. F. No. 4 of 1952. section T. Desai, and J. P. Goyal, for the appellants. G. section Pathak, B. Dutta, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for respondent No. 2. The Judgment of the Court was delivered by Shah J. Respondents I to 3 in this appeal presented a petition before the Insolvency Judge, Kanpur for an order adjudicating the second appellant Kotwaleshwar Prasad insolvent. In their petition they alleged that Kotwaleshwar had in the course of business dealings with them borrowed Rs. 15,000 on September 28, 1935 from respondents I and 3 and had executed a promissory note agreeing to repay the amount, and that he had borrowed Rs. 3,500, on January 9, 1936 and Rs. 4,000 on April 7, 1936 from respondent 2, and executed similar promissory notes, that he had failed to repay the amounts due by him and with a view to defeat or delay his creditors secluded himself so as to deprive his creditors of the means of communicating with him, and had thereby committed an act of insolvency. The Insolvency Judge by order dated October 8, 1937 adjudicated Kotwaleshwar insolvent and appointed the first appellant the Official Receiver, Kanpur, as receiver of his estate with powers under section 80 of the Provincial Insolvency Act, 1920 hereinafter called 'the Act '. The Receiver proceeded in exercise of the powers under section 33 read with section 80 of the Act to frame a schedule of debts. The claims set up by the respondents were challenged by Kotwaleshwar and a creditor named Abdul Sayed, but the Official Receiver included the claims of the respondents in the schedule of debts, for in his view Kotwaleshwar had admitted the claims on October 8, 1937 before the Insolvency Court. In appeal under section 68 to the Insolvency Judge the matter was remanded to the Official Receiver with directions to hold a fresh enquiry into the debts due to the respondents. The Official Receiver then held a further enquiry and rejected the claims of the respondents I to 3. He held that it was not proved that Kotwaleshwar had received consideration for the three promissory notes. In the view of the Official Receiver the documentary evidence produced by Kotwaleshwar and the respondents established that the promissory notes were executed by Kotwai 256 eshwar under the influence of respondents I to 3 and their servant Amir Hassan and that the evidence including the books of account of respondents 1 to 3 in support of the advance of consideration under the promissory notes was unreliable. In appeal against the order of the Official Receiver, the Insolvency Judge, Kanpur directed that the names of respondents I to 3 be included in the schedule of creditors. In the view of the Insolvency Judge the presumption of consideration arising under section 118 of the Negotiable Instruments Act supported the rest of the evidence which was directed to establish the genuineness of the signatures and the endorsements of execution on the promissory notes by Kotwaleshwar and on the receipts executed by him and that the Kachi Rokar of the respondents were adequately corr borated by the evidence of the creditors, their witness Abdul Rashid and others and that Kotwaleshwar had failed to discharge the burden which lay heavily on him to establish want of consideration. Against the order of the Insolvency Judge an appeal was preferred to the District Court, Kanpur. During the pendency of the appeal respondents 1 and 3 were declared evacuees under the Administration of Evacuee Property Act and the Assistant Custodian of Evacuee Property in whom their property had vested was impleaded as a party respondent. In the view of the District Court the testimony of witnesses of the respondents in support of the plea of payment of consideration was unreliable and that the admission made by Kotwaleshwar before the Insolvency Judge on October 8, 1937 was procured by the exercise of undue influence and that the books of account relied upon by the respondents and the oral evidence in support thereof were unreliable. The District Judge observed that the presumption under section 118 of the Negotiable Instruments Act in respect of the promissory notes did arise, but it stood in the circumstances of the case weakened and the burden shifted to respondents I to 3, to prove affirmatively that the sums covered by the three promissory notes were in fact paid to the insolvent and that they failed to discharge the burden. Against the order passed by the District Judge, a second appeal being No. 4 of 1952 was preferred under section 75 (I.) proviso 2 of the to the High Court of Allahabad. The Division Bench hearing the appeal referred the following two questions to a Full Bench. These questions were (1) Whether the presumption mentioned in cl. (a) of section 118, can be 257 invoked in insolvency proceedings where an alleged debt against the insolvent is called in question by the official receiver or by a creditor or by the insolvent ? (2) If it can be invoked, would circumstances tending to make it doubtful that consideration passed under the n egotiable instrument even though coupled with a denial on the part of the maker of the instrument, suffice to deprive the creditor of the benefit of the presumption and require him to prove by evidence that consideration did actually pass ? A Full Bench of the High Court by majority having recorded an affirmative answer on the first question, the second appeal was placed for hearing before a Division Bench of the High Court. The Division Bench observed that the District Court had recorded certain findings and from those findings it had inferred as a matter of law that the statutory presumption under section 118 of the stood rebutted. The High Court then observed : "The correctness, or otherwise, of the preliminary inference must need (sic) be considered first. Scrutiny of that inference should however be prefaced with the observation that it is open to question not only because the various findings, or at least the material ones, described as circumstances by the court below, whereon that inference was based suffer from one or the other of the legal defects pointed out above, but also because the inference drawn by that court as a result of its view that the statutory presumption stood rebutted was a finding on a question of law and not on a question of fact. That inference, or finding, of the court below was that the onus of proving consideration had shifted on to the creditors. . .A finding which has to draw on a rule of law for the recording of it or for the ascertainment of its truth is a finding on a question of law, any other a finding on a question of fact. The finding that onus has shifted has to draw on the rules of pleading and proof, of procedure and evidence, for the recording of it as well as for the ascertainment of its truth. It is therefore a finding on a question of law." The Court then held that in the case before it "not only had the insolvent failed to displace, or even to weaken, the presumption in favour of the creditors under section 118 of the Negotiable Instru 258 ments Act, but the consideration stood fully established, even if there was no initial presumption in favour of the creditors, by the evidence adduced by them and by the insolvent 's own admission. " With special leave, this appeal is preferred by the Official Receiver and Kotwaleshwar. The District Court found on the evidence that the insolvent 's father died in 1933 leaving considerable properties, that the insolvent was at the time of his father 's death a young man about 20 years of age, inexperienced and open to all the temptations of early life, that the insolvent "got mixed up" with Amir Hassan and others and "they initiated him into the mysteries of wine and women", that although the promissory notes were not executed ",under the influence of drink" there were grounds for holding that he was under the influence of Amir Hassan when he signed them, that it was significant that the three promissory notes were executed in quick succession and at that time the insolvent was already indebted to other creditors to the extent of Rs. 6,000 that the respondents had no previous business relations with the insolvent, that although the creditors knew that the insolvent 's share in the property left by his father was only Rs. 28,000 to Rs. 30,000 and that he was joint in estate with his brother, no kind of security was taken from the insolvent, nor was any enquiry made whether the said property was encumbered or not, that respondent 3 Abdul Wahid admitted that about 21 months after the execution of the promissory note dated September 28, 1935 he came to know that the insolvent was executing "bogus and fictitious promissory notes" in favour of his friends to defraud his real creditors, and therefore it was incredible that further sums should have been advanced under the two subsequent promissory notes of the aggregate value of Rs. 7,500, that the insolvent was "fairly well off for his ordinary needs" and there was no apparent reason why he should have borrowed those considerable sums of money, that the respondents did not have sufficient funds or resources with them to advance either the amounts covered by the three promissory notes or those under the prior promissory notes of September 4, 1935 and September 15, 1935, that the thumb impression of the insolvent had been taken in addition to his signatures on the promissory note, and that his signatures were also obtained on the Rokar Bahi, that the oral evidence produced by the respondents in proof of the payment of consideration did not inspire confidence, that the admission of the insolvent dated October 8, 1937 on the foot of which the order of adjudication was passed appeared to have been made in suspicious circumstances and it was an erroneous admission and therefore did not bind the insolvent and that the Bahi 259 Khatas of the creditors were of a suspicious character. AR these findings were findings of fact. The District Court inferred from the facts found that the statutory presumption under section 118 of the had been weakened and the burden which lay upon the insolvent was discharged and it was not open to the High Court exercising jurisdiction under section 75(1) proviso 1, nor even under proviso 2, of the Provincial Insolvency Act to set aside the judgment of the District Court, for it is well settled that the question whether a statutory presumption is rebutted by the rest of the evidence is a question of fact : Wali Mohammad vs Mohammad Bakhsh (1). This would be sufficient to dispose of the appeal. But the question whether the Official Receiver is bound to give effect to the statutory presumption in respect of a negotiable instrument arising under section 118 of the when the negotiable instrument is sought to be relied upon by a creditor in the course of the insolvency proceeding in proof of the debts to be entered in the schedule of creditors, has been fully argued before us and as the High Court has overruled an earlier decision of that Court: Ram Lal Tandon vs Kashi Charan (2), and as the question is of some importance, we deem it necessary to express our opinion on that question. Section 33 of the Provincial Insolvency Act by the first subsection provides : "When an order of adjudication has been made under this Act, all persons alleging themselves to be creditors of the insolvent in respect of debts provable under this Act shall tender proof of their respective debts by producing evidence of the amount and particulars thereof, and the Court shall, by order, determine the persons who have proved themselves to be creditors of the insolvent in respect of such debts, and the amount of such debts, respectively, and shall frame a schedule of such persons and debts : The Act imposes a duty upon the court to frame a schedule of creditors and of the debts due to them which are provable under the Act. For that purpose the court has to hold an enquiry into the debts due by the insolvent which are provable. A proceeding under section 33 of the Provincial Insolvency Act is not a proceeding between the insolvent and the proving creditor. (1) L.R. 57 I.A. 86, 92. (2) A.I.R. 1928 All. 260 The proceeding is between the creditors represented by the official receiver and the insolvent. When a creditor, seeking to prove a debt relying upon a negotiable instrument, or other evidence makes a claim for inclusion of the debt due to him, the court, or where he is authorised the receiver of the estate of the insolvent, has to be satisfied about the existence of the debt, the amount due, its particulars and that it is provable in insolvency. Section 33 does not indicate the quantum of proof which may be regarded as sufficient to prove a debt. A court may accept in proof of a debt a registered letter to the court and an affidavit verifying the debt (see section 49 of the Act). That however is a matter of procedure, and does not lay down as to what is sufficient to prove the debt. In each case it is for the court or the receiver (Subject of course to review in the manner provided by the Act) to consider whether the debt of which the creditor claims inclusion is proved. The decision of the question must of necessity depend upon the circumstances and the evidence led to prove the debt. In the present case the High Court by majority took the view that in a proceeding under section 33 when the promissory note is brought before the Court by the promisee, a presumption that the promissory note was made for consideration arises under section II 8 of the and unless that presumption is rebutted by the promissory by other creditors or by the receiver that the amount for which the promissory note is executed must be included in the schedule. In so holding the High Court pri marily relied upon absence of any reference to the nature of the proceeding in which the presumptions are required to be raised in relation to negotiable instruments. It,,must be noticed in the first instance that presumption under section 118 of the is a presumption of consideration : it does not in all cases prove the quantum of debt due by the insolvent at the date of insolvency. The Insolvency Court has, it must be remembered, to ascertain whether a debt is due by the insolvent, whether the debt is provable in insolvency, and the quantum of the debt due at the material date. In making this enquiry in its three aspects even the judgment of a court against the debtor may not be regarded as binding upon the Court. In Ex Parte Lennox(1), it was held that a judgment which the judgment debtor cannot set aside, may still be subjected to investigation by the court of Bankruptcy to enquire whether the debt on which the judgment was founded was a good debt, and if the Court be satisfied that it was not, the Court may refuse to make a receiving (1) [1885]16 Q.B.D. 315, 261 order in respect of the debt. The principle of that case was extended in In Re. Fraser Ex Parte Central Bank of London(1). It was held in that case that "upon the hearing of a creditor 's petition for a receiving order against a judgment debtor, the Court of Bankruptcy has power, at the instance of the debtor himself, to go behind the judgment and to inquire into the validity of the debt, even though the debtor has previously applied in the action to set aside the judgment, and his application has been refused, and the refusal affirmed by the Court of Appeal. " Lord Esher, M. R., observed at pp. 636 637 "The decision (Ex parte Lennox) is based upon the highest ground viz., that in making a receiving order, the Court is not dealing simply between the petitioning creditor and the debtor, but it is interfering with the rights of his other creditors, who, if the order is made, will not be able to sue the debtor for their debts, and that the Court ought not to exercise this extraordinary power unless it is satisfied that there is a good debt due to the petitioning creditor. The existence of the judgment is no doubt prima facie evidence of a debt; but still the Court of Bankruptcy is entitled to enquire whether there really is a debt due to the petitioning creditor. " A debt to be entered in the schedule must therefore be a real debt. A judgment against a debtor which is sought to be relied upon in proving a debt does not necessarily establish the existence of a real debt for the judgment may have gone by default, it may have gone by consent or it may have been procured for any other reason. In a proceeding relating to proof of debts the question which arises being not one between the insolvent and the proving creditor alone, the rights of other creditors of the insolvent have of necessity to be considered. Even if for some reason the debtor himself is estopped from denying the debt there will be no estoppel against the Insolvency Court. The Court therefore in each case has jurisdiction to investigate whether there is a real debt: whether production of a judgment or a negotiable instrument or other evidence may be regarded as sufficient to regard the debt as proved is a matter for the Insolvency Court to decide. The question is not to be adjudged in the light of any estoppel which may operate against the insolvent or of any presumption. The Court in a given case may rely merely upon a judgment or a negotiable or other instrument, and admit the debt to the schedule not because there is an estoppel 1. [1892] 2 Q . B.D. 633. L2Sup./64 4 262 against the Receiver or the other creditors, or presumption of 1aw in favour of the evidence produced, but because in its view in the light of the circumstances no further enquiry beyond proof of the judgment or negotiable instrument or other document evidencing the debt and proof of non satisfaction of the debt since the date thereof is sufficient. The Court has power, however, to insist upon proof of the debt apart from the judgment or the negotiable or other instrument. The reason is that the Insolvency Court with a view to effectively distribute the estate of the insolvent among the creditors is entitled to go behind outward forms of transactions and to ascertain the truth of the debts sought to be proved, and the estoppel to which the insolvent may have subjected himself will not prevail against the Receiver. Whether the power should be exercised in the case of a judgment debt in a given case depends upon the discretion of the Court which has to be exercised on sound judicial principles. It is true that the Court ordinarily; does not go behind a judgment against the debtor, on a bare suggestion by the debtor that the debt which is merged in the judgment did not exist or was bad. There must undoubtedly be circumstances prima facie justifying an enquiry There must appear something that the judgment was procured by fraud or collusion, or that there has been miscarriage of justice But a mere irregularity or error in form will not be a sufficient reason for going behind the judgment. When a debt secured by a promissory note is sought to be proved, the Insolvency Court must enquire into the reality, and the quantum of consideration. What shape this enquiry may take will depend upon the circumstances of the case. In a given case the Insolvency Court may regard an affidavit setting out the particulars ,of the debt, and affirming execution of the promissory note by the insolvent, and asserting non satisfaction of the debt, as sufficient In other cases, the Court may enter upon a fuller enquiry which the circumstances of the case may demand. But in all cases of proof of debts under section 33 the burden is upon the creditor. That burden may be discharged by the affidavit of the creditor viewed in the light of a presumption which the Court may raise under section 114 of the Evidence Act, that a bill of exchange accepted or endorsed, was for good consideration. If that be the true effect of. section 33 of the Provincial Insolvency Act, and we think both on principle and authority that is the true effect, of necessity the presumption under section 118 of the that every negotiable instrument was made or drawn for consideration cannot avail against the Receiver of the estate of the insolvent 263 It is true that section 118 of the , unlike section 119 to section 122 which occur in Ch. XIII, does not refer to a proceeding in suit where the various presumptions directed have to be raised. The section is undoubtedly in terms general. But there is no reason to suppose that it was intended to apply to a proceeding which is not in the nature of a civil dispute between the parties to the negotiable instrument or their privies. The is intended to codify the law merchant relating to 'dealings concerning negotiable instruments. The presumptions which are raised under section 118 do undoubtedly set out special rules of evidence relating to negotiable instruments, but in our opinion the nature of the presumptions from their very nature operate in favour of or against the parties to the negotiable instrument or their privies and cannot generally apply to persons who do not claim under the parties to the instrument. In Anumolus Narayana Rao vs Chattaraju Venkatappayya(1) it was observed by Varadachariar J., that a suit on a promissory note instituted against an undivided son of a Hindu promisor governed by the Mitakshara law after the latter 's death cannot be regarded as one against the heirs or representatives of the promisor, because it only seeks to enforce the Hindu law theory of pious obligation of the sons in respect of the property which the sons have taken by survivorship. The pious obligation can arise only on the assumption of the existence of a debt due by the father and in such a case the onus of proving the existence of the debt must prima facie be laid on the creditor who can call in aid the presumption permissible under the general law of evidence, namely, section 114 of the Indian Evidence Act and not the presumption under section 118 (a) of the . The learned Judge observed "Though this section is not, like sections 119 to 122, limited in terms to a suit upon the instrument, it seems only reasonable to hold that the special rules of evidence laid down in section 118 must have been intended to apply only as between the parties to the instrument or those claiming under them. In other cases the presumption can only be in the terms enacted in section 114 of the Evidence Act (vide illus. c) which by the use of the expression 'may presume leaves it to the Court to apply the presumption or not according to circumstances." (1) I.L.R. 264 Section 114 of the Indian Evidence Act authorises the Court to presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business in their relation to the facts of the particular case. Under the third illustration of section 114 the Court may presume that a bill of exchange accepted or endorsed was accepted for good consideration. But the section provides, that the, Court shall also have regard to other material facts in considering whether the maxim does or does not apply in the particular case before it. It is therefore open to the Court to consider in its proper setting, the fact that the drawer of a bill of exchange was a man of business, and the acceptor was a young and ignorant person completely under the former 's influence. This is one illustrative fact which the Court may consider in raising the presumption. There may be other circumstances which may also justify the Court in declining to raise the presumption. Mr. Pathak for the respondents urged that the Indian Evidence Act was enacted in 1872 and the having been enacted in 1881, and as the two provisions conflict or overlap, section 118 of the must supersede section 114 of the Evidence Act. We are unable to accept that contention. Undoubtedly section 114 of the Evidence Act is a general provision which enables the Court to presume, though not obliged to do so, that a bill of exchange or a promissory note were founded on a good consideration. Section 118 of the , however, enacts a special rule of evidence which operates between parties to the instrument or persons claiming under them in a suit or proceeding relating to the bill of exchange and does not affect the rule contained in section 114 of the Evidence Act, in cases not falling within section 11 8 the . In our view the High Court was in error in holding that a statutory presumption of consideration arose in favour of the respondents in the proceedings under section 33 for settlement of the schedule of creditors, and the Receiver exercising power under section 80 of the Act was bound to admit the debts in the schedule if the insolvent or the other creditors failed to displace that presumption The appeal must therefore be allowed, the order of the High Court set aside, and the order of the District Court restored, with costs in this Court.

The second appellant, who had executed promissory notes in favour of the respondents was adjudicated an insolvent on a petition by them. The Official Receiver in exercise of the powers under sections 33 and 80 of the Provincial Insolvency Act (5 of 1920) and under directions of the Insolvency Judge, inquired into the claims of the respondents and rejected them. On appeal, the Insolvency Judge directed the inclusion of their names in the schedule of creditors. The appeal to the District Court against the order of the Insolvency Judge was allowed. In second appeal to the High Court, it was held, that the inference drawn by the District Court from its findings was a matter of law and that therefore the High Court had jurisdiction under section 75(1), to interfere with the order of the District Court. Relying upon the presumption in favour of creditors in section 118 of the Negotiable Instruments Act (26 of 1881), the High Court set aside the judgment of the District Court. The Official Receiver and the insolvent appealed to the Supreme Court. HELD : The appeal should be allowed. Since all the findings of the District Court were findings of fact and the question whether a statutory presumption was rebutted by the rest of the evidence was also a question of fact, the High Court had no jurisdiction to set aside the judgment of the District Court. [259A C]. Wali Mohammad V. Mohammad Bakhsh, (1930) L.R. 57 I.A. 86. approved. Section 118 of the Negotiable Instruments Act, enacts a special rule of evidence which operates only between parties to the instrument or persons claiming under them in a suit or proceeding relating to the negotiable instrument. The section does not affect section 114 of the Evidence Act, and in cases not falling within section 118 of the Negotiable Instruments Act the Court may or may not presume that a promissory note was founded on good consideration. Therefore, in a proceeding relating to proof of debts, the question being not one between the insolvent and the proving creditor alone, and since the rights of other creditors of the insolvent have of necessity to be considered, the Court has jurisdiction to investigate whether there is a real debt. Even if for some reason the debtor himself is estopped from denying the debt, there could be no estopped against the Insolvency Court. There is thus no statutory presumption of consideration in favour of the creditors under promissory notes in proceedings under section 33 of the Provincial Insolvency Act for settlement of the schedule of creditors, and the Receiver exercising powers under section 80 of that Act is not bound to admit the debts in the schedule merely because the insolvent or the creditors have failed to displace such a presumption. [261F 262C; 264E G]. Case law reviewed.

Civil Appeal No. 1199 of 1978. Appeal by Special Leave from the Judgment and order dated 6 3 1978 of the Madhya Pradesh High Court in M.P. No. 109/78. G. B. Pai and section section Khanduja for the Appellant. section K. Gambhir for Respondents 1 and 2 G. L. Sanghi, R. K. Jain and R. Ramachandran for Respondent No. 3 The following Judgments were delivered: DESAI, J. This appeal by special leave is directed against the order date 27th December 1977 made by the State of Madhya Pradesh granting a licence for a quasi permanent cinema to respondent No. 3 Prem Narayan son of Ganpatlal Chouksey, proprietor, Chitra Talkies, Lalbagh, Burhanpur (M.P.) against which a petition under 795 Article 226 of the Constitution by the petitioners was dismissed in limine by a speaking order by the High Court of Madhya Pradesh at Jabalpur on 6th March 1978. Third respondent made an application on 5th December 1975 for grant of a licence for a temporary cinema and the District Magistrate having jurisdiction issued a no objection certificate vide his order dated 10th February 1976 for a period of six months. This licence was renewed upto 30th June 1976 and there was a further renewal up to 30th September 1976. A subsequent application for renewal was turned down by the Distt. Magistrate by his order dated 29th June 1977 on the ground that Paras Talkies with permanent cinema licence which was closed, has now been functioning in the locality and, therefore, a renewal of the licence for a temporary cinema in the same locality would not be proper. Respondent 3 carried the matter in appeal to the State Government which by its order dated 27th December 1977 granted a licence for a quasi permanent cinema under the M.P. Cinemas Regulation Rules to the third respondent Present petitioners filed a petition under Article 226 questioning the validity of the aforementioned order of the State Government conceding, inter alia, that they were the residents of the locality and that they had objected to the grant/renewal of licence on the ground that there is a mosque a madrasa and a temple in the vicinity or the place where the cinema house is to be constructed, and even though their objections were upheld by the licensing authority, the District Magistrate, they were not heard in the appeal preferred by the third respondent and, therefore the order of the first respondent State of Madhya Pradesh suffers, inter alia, from the vice of violation of the principles of natural justice. The High Court was of the opinion that District Magistrate was not influenced by the fact that there was a mosque, and a temple in the vicinity of the place where the proposed cinema house was to be constructed but he was influenced by an extraneous consideration that a cinema having a permanent cinema licence having been re opened in the locality there was no need for a cinema house with a 'temporary ' licence and that it being a matter left to the subjective satisfaction of the State Government, the State Government on being satisfied that there was no impediment to the grant of such a licence, was perfectly justified in granting the same and, therefore, it is not a fit case for the interference of the High Court. The appellants thereupon filed this appeal by special leave. Mr. G. B. Pai, learned counsel who appeared for the petitioners, contended that if before the grant of a quasi permanent cinema 796 licence to the third respondent the appellants filed their objections which were taken into consideration by the Distt. Magistrate, the licensing authority, and if the Distt. Magistrate was impressed by the objections and, therefore, turned down the request for 'temporary cinema licence, in an appeal against this order preferred by the third respondent, the appellants as objectors should have been heard and the decision arrived at by the State Government appeal at their back was violative of the principles of natural justice and the order granting licence for quasi permanent cinema by the State Government is invalid. Before we examine the contention canvassed on behalf of the appellants it is necessary to glance at the relevant provisions of M.P Cinemas (Regulation) Act, 1952 ( 'Act ' for short). Section 3 imposes a restriction on exhibition by means of cinematograph at any place other than a licensed place under the Act in compliance with the restrictions or conditions imposed by such licence. Section 4 nominates the Distt. Magistrate as the licensing authority. Section 5 provides for conditions subject to which licence may be granted. Sub section (3) of section 5 provides for an appeal at the instance of a person aggrieved by the decision of a licensing authority refusing to grant a licence under the Act to the State Government within the prescribed time. Section 6 confers power on the State Government or the local authority to suspend exhibition of films. Section 7 prescribes penalties for breach of the provisions of the Act. Section 8 confers power to revoke a licence under certain circumstances. Two things emerge from the Act. Firstly, that the detailed provisions for the grant of a licence at three distinct stages by the licensing authority in the process of licensing a cinema house, viz., (i) no objection certificate for the site on which the cinema house is to be constructed; (ii) licence for the building conforming to the rules where films are to be exhibited; and (iii) licence for exhibition of films, are made in the rules and there is no reference to any of the three licences in the Act. Secondly, appeal is provided against the order of a licensing authority only at the instance of a person aggrieved by the decision of the licensing authority refusing to grant a licence. The Act does not confer any right of appeal on a person who might have raised objections before the licensing authority against the grant of a no objection certificate or a licence, as the case may be. This last aspect is very relevant because the entire submission is based on a contention that the appellants who had objected to the grant of a no objection certificate to the third respondent and had succeeded in persuading the licensing authority to refuse the grant of no objection certificate to the third respondent, yet in the appeal preferred by the 797 third respondent under sub section (3) of section 5 the State Government did not give any opportunity to the successful objectors and decided the appeal at their back and thus the decision was rendered in violation of the principles of natural justice. Next a reference to the relevant rules of M.P. Cinema (Regulation) Rules, 1972 ( 'Rules ' for short), is necessary. Rule 3(2) provides that any person desirous of erecting a cinema or converting existing premises into a cinema shall first make public his intention to do so by exhibiting a notice in the prescribed form on a board on the proposed site in such position that it can be plainly seen from the public thoroughfare upon which the site of such proposed cinema abuts. This rule also prescribes the size of the board, the language in which the notice is to be published, etc. Sub rule (3) of rule 3 provides that such a person shall also give a similar notice in writing to the licensing authority, viz., the Distt. Magistrate and make an application to him for the grant of a no objection certificate specifying therein whether the application is in respect of a permanent cinema or a touring cinema. Rule 4 provides that on receipt of notice as envisaged by Rule 3, the licensing authority shall, at the cost of the applicant, notify the public such intention in such manner by publication in newspapers or otherwise that may deem fit for the purpose of inviting objections. It is also obligatory for the licensing authority to issue a notification inviting objections specifying therein the period within which the objections shall be lodged. Rule 5 provides that the licensing authority shall on the expiry of the period for receipt of the objections, submit a report to Government in the prescribed form along with his recommendation whether a no objection certificate shall be granted or not. Sub rule (2) of rule 5 provides that Government may, on consideration o. the report of the licensing authority, grant permission for the issue of no objection certificate to the applicant or may refuse to grant the same. Rule 6 provides that without prejudice to the right of the licensing authority to refuse or to grant a cinema licence under rules 101 and 102 ', the licensing authority may, with the previous permission of the government, grant a certificate to the applicant that there is no objection to the location of the cinema at the site notified by the applicant under rule 3. Sub rule (2) of rule 6 provides that such a no objection certificate shall be valid for a period of two years from the date of issue in the case of permanent cinemas and six months in the case of touring cinemas. Chapter VII of the Rules provides for cinema licence. Rule 100 provides that an application for a cinema licence shall be accompanied, amongst others, by a copy of the no objection certificate issued under rule 6. Rule 101 confers power on the licensing authority 798 to grant a cinema licence on being satisfied that all the relevant rules have been complied with and the licence may be granted on such terms and conditions and subject to such restrictions as the licensing authority may determine. There is a proviso to rule 101 which reads as under: "Provided that a touring cinema licence shall not be beyond the district of issue and ordinarily touring cinema licences shall not be granted for places where there is already a permanent or a quasi permanent cinema, but the licensing authority may in its discretion permit a touring cinema to operate at a place where there is already a permanent or quasi permanent cinema on occasions such as fairs and melas or when the touring cinema exhibits films of a kind different from those exhibited by non touring cinemas such as educational films or where it caters for a different public". In view of the proviso, it would not be correct to say that District Magistrate was influenced by an extraneous consideration, namely, re opening of Paras Cinema with a permanent cinema licence while rejecting the application of third respondent for renewal of his licence by the order dated 29th June 1977. Rule 104 provides that a 15 permanent cinema may be licenced for any period not exceeding one year and a quasi permanent cinema or a touring cinema may be licenced for any period not exceeding six months. A perusal of the relevant provisions of the Act and the Rules extracted above will show that there are various stages through which an application for a cinema licence has to be processed. It also transpires that the Rules envisage issuance of a licence for a permanent cinema and quasi permanent cinema as well as a touring cinema. Cinema in this context has been defined to mean any place wherein an exhibition by means of cinematograph is given. Rule 3 envisages construction of a cinema house and as a first step, selection of a site where the cinema house is to be located. Selection of the site and its clearance by the licensing authority by the issuance of a no objection certificate is an important step to be taken in the direction of finally constructing a cinema house and obtaining a licence for the same. In the facts of this case the application is for a quasi permanent cinema licence. When any person desires to erect a cinema meaning thereby a place where an exhibition by means of cinematograph is to be given, he must apply for a no objection 799 certificate in respect of the site where the cinema house is to be constructed. When such an application is received, it is to be advertised in the manner prescribed inviting the public to file objections. After considering the objections the licensing authority has to decide whether to grant or refuse the no objection certificate. This scheme emerges from the combined reading of rules 3, 5 and 6. Chapter III in the Rules prescribes rules in respect of the building to be used as a cinema house. But before one proceeds to construct the cinema, obtaining of a no objection certificate relevant to the site on which cinema to be constructed is a sine qua non. The grievance of the appellants is that when their objections were invited before issuance of a no objection certificate and they filed the same, the Distt. Magistrate as the licensing authority was persuaded to accept the objections and reject the application for a no objection certificate and thereafter when under section 5(3) of the Act respondent preferred ar. appeal against the refusal to grant the no objection certificate, the appeal was decided at the back of those who had not only filed objections but whose objections had prevailed with the licensing authority and, therefore, the order granting the no objection certificate is violative of the principles of natural justice. There is a two fold fallacy in this submission. Respondent 3 has been granted a quasi permanent cinema licence by the State Government allowing his appeal against the order of the E Distt. Magistrate refusing such a licence. The order impugned by the third respondent in the appeal before the State Government is Annexure 'E ' dated 29th June 1977. A perusal of this particular order would show that initial application for no objection certificate was made by the third respondent on 5th December 1975. An advertisement was issued in 'Nai Duniya ' dated 5th January 1976 by the licensing authority that an application for a temporary cinema licence akin to quasi permanent cinema licence has been received and that any one who desires that no objection certificate should not he given may file his objections. After considering those objections no objection certificate was granted by order dated 10th February G. 1976. No exception appears to have been taken to this order granting no objection certificate. English rendering of the order raised some doubt whether a no objection certificate was granted or a quasi permanent cinema licence was granted. Original file was called. Simultaneously, a certified copy of the original order in Hindi was shown to us at the hearing of the appeal which clearly H. shows that a no objection certificate was granted limited to the duration of six months. Thereafter a quasi permanent cinema licence 800 was granted. This licence was renewed twice over up to and inclusive of 30th September 1976. Subsequently by the impugned order dated 29th June 1977 this licence was not renewed. Let it again be made clear that the application was for a quasi permanent cinema licence. This order refusing to renew quasi permanent cinema licence was challenged by the third respondent before the State Government and which appeal was allowed giving rise to the petition by the appellants. When an application for no objection certificate is made, objections have to be invited in the prescribed manner. There can conceivably be hundreds of objections. There is no question of then giving a personal hearing to each objector. If after taking into consideration the objections. a no objection certificate is granted, there ends the matter subject, of course, to any properly constituted legal proceedings, conceivably a writ petition under Article 226. But sub section (3) of section 5 of the Act is unambiguous when it provides for an appeal only at the instance of a person aggrieved by the decision of the licensing authority refusing licence. A fortiori, every objector to renewal is not entitled to file an appeal if licence is granted rejecting his objections. Nor in an appeal by the aggrieved person within the meaning of section 5(3) every objector to the grant of no objection certificate is entitled to be joined as a party respondent or that each objector is entitled to notice of hearing of the appeal. however, the grievance of the appellants it without merits because initially when no objection certificate was applied for they did not object and one who has not objected cannot subsequently make a grievance [see Jashbhai Motibhai Desai vs Roshan Kumar, Haji Bashir Ahmed & others(1)]. The second fallacy is that rules 3 to 6 envisage an advertisement of an application for a no objection certificate and inviting objections 'hereto and disposal of such an application. There is, however, nothing in the Act or the rules which requires the licensing authority to invite objections before grant of a quasi permanent cinema licence. The right to object is at the initial stage when a no objection certificate is applied for by the intending applicant for such a certificate. But there is no provision for inviting objections when the application is for a permanent or quasi permanent cinema licence or a touring cinema licence. There is no provision in the Act or Rules which requires advertisement of such an application inviting objections and 801 consideration of the objections before grant of a cinema licence. In A this case the application which was turned down by the Distt. Magistrate was one for renewal of a quasi permanent cinema licence. The application for a no objection certificate and granting of the same had passed muster long before on 10th February 1976 and appellants had not raised any objection to the grant of no objection certificate. When the present appellants objected to the renewal of a quasi permanent cinema licence it was not the stage for grant of a no objection certificate but it was the stage of renewal of quasi permanent licence subsequent to the stage of granting of a no objection certificate, when there was no statutory obligation on the licensing authority to invite objections nor were the appellants entitled to file objections and nor were they entitled to be heard. A right to notice by reason of any rule of natural justice, which a party may establish, must depend for its existence upon proof of an interest which is bound to be injured by not hearing the party claiming to be entitled to a notice and to be heard before an order is passed. If the duty to give notice and to hear the party is not mandatory, the actual order passed on a matter must be shown to have injuriously affected the interest of the party which was given no notice of the matter [see Cosmosteels Private Ltd. vs Jairam Das Gupta & Ors. There was no statutory or mandatory duty to hear the appellants. There fore, there is no substance in the grievance that before granting renewal of such licence the State Government in the appeal filed by the third respondent had not heard them and that such a decision was rendered in violation of the principles of natural justice. Mr. Sanghi, learned counsel for the respondents, wanted to contend that the appellants are not acting bona fide in vindication of their own rights but they are a fence or a cloak for the owners of Paras Cinema, the holders of permanent cinema licence in the locality, and the appellants thus being proxies for such a trade rival, they have no locus standi to file the objections. Mr. Sanghi heavily drew upon the observations of this Court in Jashbhai Motibhai Desai 's case (supra) to make good the submission. Undoubtedly, in the aforementioned case this Court in terms held that a rival in cinema business has no locus standi to question the validity of the order under which the other person has been granted a cinema licence, but as the only contention raised on behalf of the appellants does not commend to us and, therefore, the appeal is likely to fail on that ground alone, it is not necessary to explore this contention advanced on behalf of the respondents. 802 There was only one point raised in this appeal and as there is no merit in it, the appeal fails and is dismissed but with no order as to costs. PATHAK, J. I agree that the appeal should be dismissed, but on a very short ground. Rules 3 to 6 of the Madhya Pradesh Cinemas (Regulation) Rules, 1972 relate to the grant of a "no objection" certificate, that is to say a certificate that there is no objection to the location of the cinema at the site proposed by the applicant. The Rules contemplate the filing of objections by local residents. That is the stage at which opposition to the establishment of a cinema at the proposed site is specifically provided for. Any person opposing the establishment of a cinema at the proposed location must do so before a "no objection" certificate is granted. The appellants did not file any objection at that stage "no objection" certificate was granted to the third respondent. Thereafter, when the third respondent applied for a cinema licence, the appellants for the first time opposed the application. They opposed it on the ground that there was a mosque, a "madarsa" and a temple in the vicinity and that the cinema, if permitted, would constitute an obstruction and annoyance to the local residents. Inasmuch as those grounds were available to them during the proceedings for considering the grant of a "no objection" certificate, and they did not file any objection, they cannot now be permitted to plead a right to oppose the grant of a cinema licence. Had they apposed the grant of the "no objection" certificate and their objection had made out a good case, it is possible that the "no objection" certificate would have been refused, and in that event the applicant would not have applied for a cinema licence. on that short ground the appeal must fail. That being so, I need not consider the further question whether in an appeal filed by an applicant, who has been refused a cinema licence, the local residents, who had objected to the grant of a "no objection" certificate and had been over ruled, can contest the claim of the applicant to a cinema licence. Rule 102 empowers the licensing authority to refuse a cinema licence if the cinema is likely to cause obstruction, inconvenience, annoyance, risk, danger or damage to residents, or passers by in the vicinity of the cinema. Rule 6 declares that the. grant of a "no objection" certificate is without prejudice to the right of the licensing authority to refuse a cinema licence under Rule 102. I leave the question open whether a person who has objected to the grant of a "no objection" certificate when that grant was under consideration 803 can subsequently oppose the grant of a cinema licence on the same grounds which he took against the "no objection" certificate. The appellants not being entitled to challenge the grant of the cinema licence to the third respondent, I need express no opinion on the validity of that grant. The appeal is dismissed but without any order as to costs. N.V.K. Appeal dismissed.

The third respondent made an application for the grant of a licence for a temporary cinema and the District Magistrate issued a no objection certificate for a period of six months. This licence was renewed twice but a subsequent application for renewal was turned down by the District Magistrate on the ground that the 'Paras Talkies ' with a permanent cinema Licence in the locality which was hitherto closed had started functioning and, therefore, a renewal of the licence for a temporary cinema in the same locality would not be proper. In appeal, the State Government granted respondent 3 a licence for a quasi permanent cinema. The appellants in their writ petition questioned the validity of the State Government 's order on the ground that they were the residents of the locality and that they had objected to the grant/renewal of licence on the ground that there was a mosque, a madrasa and a temple in the vicinity of the place, where the cinema house was to be constructed and even though their objections were upheld by the licensing authority, the District Magistrate, they were not heard in the appeal preferred by the third respondent and therefore, the order of the first respondent, State of M.P. suffers from the vice of violation of the principles of natural justice. The High Court held that since the matter was left to the subjective satisfaction of the State Government, the State Government on being satisfied that there was no impediment to the grant of such a licence, was perfectly justified in granting the same, and that this was not a fit case for interference by the High Court. In the appeal to this Court it was contended on behalf of the appellants, that as objectors they should have been heard and the decision arrived at by the State Government in appeal at their back was violative of the principles of natural justice and the order granting licence for a quasi permanent cinema by the State Government was invalid. Dismissing the appeal, ^ HELD: ( per Desai, J.) 1. There is nothing in M.P. Cinema (Regulation) Act, 1952 or the M.P. Cinema (Regulation) Rules 1972 which require the licensing authority 793 to invite objections before grant of a quasi permanent cinema licence. The right to object is at the initial stage when a no objection certificate is applied for by the intending applicant for such a certificate. But there is no provision for inviting objections when the application is for a permanent or quasi permanent cinema licence or a touring cinema licence. [800 G] 2. There is no provision in the Act or Rules which requires advertisement of such an application inviting objections and consideration of the objections before grant of a cinema licence. [800 H] 3. When an application for no objection certificate is made, objections have to be invited in the prescribed manner. There can conceivably be hundred of objections. There is no question of giving a personal hearing to each objector. If after taking into consideration the objections a no objection certificate is granted, there ends the matter subject, of course, to any properly constituted legal proceedings, conceivably a writ petition under Article 226. [800 Cl 4. Sub section (3) of section 5 of the Act is unambiguous when it provides for an appeal only at the instance of a person aggrieved by the decision of the licensing authority refusing licence. A fortiori every objector to grant of a no objection certificate is not entitled to file an appeal if such certificate is granted rejecting his objections. Nor in an appeal by the aggrieved person within the meaning of section 5(3) every objector to the grant of a no objection certificate is entitled to be joined as a party respondent or that each objector is entitled to notice of hearing of the appeal. [800 D E] 5. The grievance of the appellants is without merits because initially when no objection certificate was applied for they did not object and one who has not objected cannot subsequently make a grievance. [800 F] Jasbhai Motibhai Desai vs Roshan Kumar, Haji Bashir Ahmed & others ; referred to. A right to notice by reason of any rule of natural justice, which a party may establish, must depend for its existence upon proof of an. interest which is bound to be injured by not hearing the party claiming to be entitled to a notice and to be heard before an order is passed. If the duty to give notice and to hear the party is not mandatory, the actual order passed on a matter must be shown to have injuriously affected the interest of the party which was given no notice of the matter. [1801 C D] Cosmosteels Private Ltd. vs Jairam Das Gupta & Ors. ; at 431, referred to 7. There is no substance in the grievance that before granting renewal of quasi permanent cinema licence the State Government in the appeal filed by the third respondent had not heard them and that such a decision was rendered in violation of the principles of natural justice. [801 E] In the instance case, the application for a no objection certificate and granting of the same had passed muster long before, and appellants had not raised any objection to the grant of no objection certificate. When the present appellants objected to the renewal of a quasi permanent cinema licence it was not the 794 stage for grant of a no objection certificate but it was the stage of renewal of quasi permanent licence subsequent to the stage of granting of a no objection certificate, when there was no statutory obligation in the licensing authority to invite objections nor were the appellants entitled to file objections and nor were they entitled to be heard. [801 A B] (per Pathak J. concurring) 1. Rules 3 to 6 of the M.P. Cinema (Regulation) Rules 1972, relate to the grant of a "No objection" certificate. The Rules contemplate the filing of objections by local residents. That is the stage at which opposition to the establishment of a cinema at the proposed side is specifically provide for. Any person opposing the establishment of a cinema at the proposed location must do so before a 'No objection ' certificate is granted. [802 B C] In the instant case, the appellants did not file any objections opposing the establishment of a cinema A "No objection certificate" was granted to the third respondent. When the third respondent applied for a cinema licence, the appellants for the first time opposed the application on the grounds that there was a mosque, a madras and a temple in the vicinity. Inasmuch as these grounds were available to them during the proceedings for considering the grant of a 'No objection ' certificate, and they did not file any objection, they cannot now be permitted to plead a right to oppose the grant of a cinema licence. Had they, opposed the grant of the 'no objection ' certificate and their objection had make out a good case, it is possible that the 'no objection ' certificate would have been refused, and in that event the applicant would not have applied for a cinema licence. [802 D F] 2. The question whether a person who has objected to the grant of a "NO objection certificate" certificate when that grant was under consideration can subsequently oppose the grant of a cinema licence on the same grounds which he took against a 'no objection ' certificate left open. [802 H 803 A]

vil Appeal No. 601213 of 1983. From the Judgment and Order dated 31.1.1983 of the Punjab & Haryana High Court in C.R.S.A. No. 1871 of 1975 and R.S.A. No. 16 11 of 1980. Shiv Dayal Srivastava, S.K. Bagga and Mrs. Bagga for the Appellant. Kapil Sibal, section Markandeya, Mrs. C. Markandeya, O.P. Ahluwalia, G. Seshagiri Rao and Km. U. Saraswat for the Respondents. The Judgment of the Court was delivered by OZA, J. This appeal arises out of a judgment of the Punjab & Haryana High Court delivered in Civil Regular Second Appeal No. 187 1 of 1975 dated 31.12.1983. This second appeal before the High Court of Punjab & Haryana was taken against the judgment of Additional Dis trict Judge, Patiala 386 who affirming the judgment of the trial Court i.e., sub Judge 1st class, Rajpura, maintained the dismissal of the suit filed by the plaintiffpresent appellant. The suit was filed for a declaration that the appellant plaintiff is the owner in possession of agricultural lands measuring 100 Bighas 10 Biswas comprising Khasra Nos. 54 1 2 3 8/3 9 11 19/2, 55 3 4 5 67 15, 55/16, 20 situated in village Urdan, Tehsil Rajpura with the consequential relief of permanent injunction restraining the defendant from interfering with the possession of the plaintiff and dispossession thereof in any manner. The appellant Pujari Bai, it is alleged, migrated from Pakistan in 1947 after the partition of the country and she left behind in Pakistan a large areas of agricultural land. In 1949 Government in order to settle such refugees adopted certain measures and gave land to the displaced persons for the purpose of cultivation. The displaced persons claims were examined by the claims organisation set up by the East Punjab Government at some places and the lands were given individually to those who had left behind agricultural lands in the West Punjab which become Pakistan after 1947. As Smt. Pujari Bai, was one of such claimants, she was allotted certain lands in village Urdan. On 29.12.1962 allotment made was quasi permanent in character, but on 29.4.1963 the lands were transferred to her permanently. The transfer was right, title and interest in ownership by a Sanad issued in the name of the President (the Central Government) under Rule 69 of the Displaced Persons (Compensation & Rehabilitation) Rules, 1954. This was the basis of her claim. It appears that the defendant respondent had also migrated from Pakistan like the appellant and on 29.12.1959 some lands were also allotted to him but no entry could be made in the revenue record and it was not certain whether possession was taken by the respondent. On 29.6.1960 during the consolidation proceedings, no tuk was however, made for the respondent. He filed objections and to these objections Pujari Bai was not a party. The objections were rejected. It appears that against this order he appealed to the Appellate Authority The Settlement Officer (Appeals) and this appeal also was dismissed. He took up the matter in second appeal to the Assistant Director Consolidation of Holdings who remanded the matter to the Special Settlement Officer with certain observations. He observed "that there have been over allotment and authorities will see that first allottee is given land first". He also observed that it all happened 387 because of the mistake of the Consolidation authorities. This order was passed on 2.12.1963. In spite of this remand order made by the Assistant Director Consolidation, nothing happened for about three years. In 1966 the respondent filed a writ petition before the High Court of Punjab & Haryana. Even to this writ peti tion the present appellant Pujari Bai was not a party. In this writ petition a direction was sought to implement the aforesaid order of the Assistant Director Consolidation. The High Court by the order dated 25.11.1966 directed that the observations contained in the order passed by the Assistant Director should be complied with. After the direction of the High Court the Consolidation Officer became active. He started enforcing the observations contained in the remand order of the Assistant Director and in so doing, he found that the land allotted to various persons in the village was more than the land available for allotment. In order to resolve this difficulty he evolved a via media. He deprived some of the allottees of the part of land allotted to them, and the appellant was one such casu alty. He allotted all such lands to the respondent and it is this which was the starting point of the trouble. It is, however, significant to note that before this order was passed by the Consolidation Officer so far as the appellant is concerned she had already obtained a permanent Sanad in respect of her lands from the Government of India. Against the order of the Consolidation Officer, the appellant preferred an appeal before the Assistant Director, Punjab & Haryana, Chandigarh. The appeal was dismissed with an observation that he was bound by the remand order and the right acquired by the appellant by the Sanad should have been brought to the notice when matter was disposed of earlier by the Assistant Director, Patiala. Against this order of the Assistant Director, the appellant preferred a writ petition which was rejected by the High Court in limine with one word 'dismissed ' by order dated 14.4.1969. After the rejection of the writ petition, the appellant had no other alternative and therefore instituted the suit out of which this appeal arises. Her case in the suit was that it was impermissible for the Consolidation Officer to adjust the lands or take away any part of it which became her absolute property by virtue of the Sanad granted on 29.4.1963. However, she became unsuccessful in all Courts. On 5.9.1975, the trial Court dismissed the suit. The Addi tional District 388 Judge confirmed that judgment. The High Court of Punjab & Haryana dismissed the Second Appeal by the judgment dated 31.1.1983 which is now under appeal before us. Learned counsel for the appellant contended that after the Sanad was granted to the appellant on 29.4.1963 she became the absolute owner of the land. The land was given to her in lieu of settlement of her claim of compensation and the Sanad specifically provided that all rights and interest in the property were transferred to the appellant under the authority of the President. It was, therefore, not open to any consolidation authority to cancel this Sanad. It was also contended that the Consolidation authorities and the civil courts did not examine the legal consequences of the Sanad and the scope of Section 10, and without taking that into consideration the allotment made was illegal and could not be sustained. The other limb of the argument of learned counsel re lates to the question of res judicata on which ground also the appellant was nonsuited. It may be recalled the appel lant being aggrieved by the order of the Consolidation Officer which was confirmed by the Assistant Director Con solidation approached the High Court in a writ petition. That writ petition was rejected in limine and therefore the courts below held that the question of res judicata operates and there was no scope for the civil court to go into the question once again. It was argued that the High Court committed an error since apparently the writ petition filed by the appellant was dismissed in limine and it could not operate as res judicata since it was not a decision on merits deciding anyone of the issues arising in the litiga tion. Learned counsel for the respondent, on the other hand contended that the allotment made in favour of the respond ent was very much before the allotment made in favour of the appellant. The allotment to the respondent was on 29.12.1959 and whereas the allotment to the appellant was on 29.12.1962. But unfortunately as there was no entry made in the revenue record about the allotment tO the respondent. No land was earmarked in the consolidation proceedings which ultimately had to be brought to the notice of Assistant Director. The later remanded the matter with a direction to the consolidation officer "to see that the first allottee is accommodated first and the later allottees who have been accommodated before the respondent shall not be given their allotment. " Learned counsel contended that when this order of the Assistant Director was not complied with, the re spondent had no option but to approach the High Court for a direction for 389 enforcement of the said order. But learned counsel had to concede that even before the order of the Assistant Director by which he remanded the matter, the allotment in favour of the appellant had been converted into a permanent transfer by a Sanad granted by the President. The main argument of the learned counsel for the re spondent was that in view of the fact that the respondent was allotted earlier in 1959 whereas the allotment in favour of the appellant being in December 1962 and if there was no adequate land available for allotment to the appellant, the authorities should find an alternative land somewhere else but the respondent could not be deprived of the land which was allotted to him He, however, frankly conceded that there is nothing on record to indicate that the same land which was allotted to the respondent was allotted to the appellant. He, however, said that it was a case of over allotment and the authorities were justified in taking the land proportionately from all allottees and adjusting all the allottees with the available lands. From all the facts and documents, one thing appears to be clear that although certain allotment was made in favour of the respondent in 2959, he was not put in possession of the allotted lands. It is also clear that the survey Nos. of lands allotted in 1959 to the respondent are not the same survey Nos. allotted to the appellant in December, 1962. It is further clear that the appellant was given possession of those properties allotted to her and even permanent Sanad was granted to her. The main question that arises for consideration there fore, is whether the lands given to the appellants by perma nent Sanad could be deprived of in the consolidation pro ceedings without giving them adequate alternate lands. Section 10 of the Displaced Persons (Compensation & Rehabil itation) Act of 1954 provides: "10. Where any immovable property has been leased or allotted to a displaced person by the Custodian under the conditions prescribed: (a) by the notification of the Government of Punjab in the Department of Rehabilitation No. 4891 S or 4892 S, dated the 8th July, 1949; or (b) by the notification of the Government of Patiala and 390 East Punjab States Union in the Department of Rehabilitation No. 8R or 9R, dated the 23rd July, 1949, and published in the Official Gazette of that State, dated the 7th August, 1949. and such property is acquired under the provi sions of this Act and forms part of the com pensation pool, the displaced person shall, so long as the property remains vested in the Central Government continue in possession of such property on the same conditions on which he held the property immediately before the date of the acquisition, and the Central Government may, for the purpose of payment of compensation to such displaced person, trans fer to him such property on such terms and conditions as may be prescribed. " From this provisions, it will be clear that the parties who were put in possession under initial allotment would continue to remain in possession even after its acquisition by the Central Government. But it is open to the Central Government for the purposes of payment of compensation to such displaced persons transfer to him such property on such terms and conditions as may be prescribed. Apparently this refers to a permanent transfer in lieu of compensation. It is not in dispute that the appellants were the only allot tees in whose favour permanent transfer was made on 29.4.1963 and 15.6.1964 respectively. A perusal of the terms of Sanad clearly indicate that it conveys absolute title and it could be cancelled only by the authority which granted the Sanad. Sanad (exhibit p 2) granted to the appellant on 29.4.1963 reads: "The President is hereby pleased to transfer the right, title and interest acquired by the Central Government in the said property to Pujari Bai wife of Bihari Lal (hereinafter referred to as the transferee) subject to the following terms and conditions. " It was perhaps for this reason, as contended for the appellant that after the Sanad was granted in favour of the appellant, the respondent went on with the proceedings before the consolidation authorities and also before the authorities under the Displaced Persons (Compensation & Rehabilitation) Act, 1964, but did not implead the appellant and only impleaded the other allottees who were not granted Sanad till 391 then. Quite naturally, the authorities had no opportunity to examine the effects of the Sanad granted to the appellant. Learned counsel for the respondent next contended that the consolidation proceedings had started when the Sanad was granted to the appellant on 29.4.1963 and Section 30 of the East Punjab Holdings (Consolidation and Prevention of Frag mentation) Act, 1948 prohibits a transfer during the consol idation proceedings. We do not think that Section 30 has any application to the facts of the case. Section 30 of the East Punjab Holdings (Consolidation and Prevention of Fragmentation) Act, 1948, provides: "Sec. 30. Transfer of Property during consoli dation proceedings After a notification under sub section (1) of Section 14 has issued and during the pendency of the consolidation proceedings no land owner or tenant having a fight of occupancy upon whom the scheme will be binding shall have power without the sanc tion of the Consolidation Officer to transfer or otherwise deal with any portion of his original holding or other tenancy so as to affect the rights of any other landowner or tenant having a right of occupancy therein under the scheme of consolidation. " Transfer of property referred to in this Section is either by a landowner or by a tenant, and it has no refer ence and indeed cannot have a reference to transfer of Sanad under Section 10 of the Displaced Persons (Compensation & Rehabilitation) Act of 1954. The conferment of fights in lieu of compensation under Section 10 stands on a different footing which could not be contemplated within the language of Section 30 of the aforesaid Act. This contention advanced by learned counsel for the respondent is, therefore, reject ed. This takes us to the question of res judicata. The question is whether the suit of the appellant was barred by res judicata in view of the summary dismissal of her writ petition earlier. It is not disputed that the writ petition filed by the appellant against the order of the Assistant Consolidation Officer was dismissed in limine. This order dated 14.4.1969 was passed by the Division Bench of Punjab & Haryana High Court. It was a one word order. The question or res 392 judicata apparently arises when a controversy or an issue between the parties has been heard and decided. This Court in Workmen of Cochin Port Trust vs Board of Trustees of the Cochin Port Trust & Another, 1 considered this principle and observed (at 977): "But the technical rule of res judicata al though a wholesome rule based upon public policy, cannot be stretched too far to bar the trial of identical issues in a separate pro ceedings merely on an uncertain assumption that the issues must have been decided. It is not safe to extend the principle of res judi cata to such an extent so as to found it on mere guess work. To illustrate our view point, we may take an example. Suppose a writ peti tion is filed in a High Court for grant of a writ of Certiorari to challenge some order or decision on several grounds. If the Writ Petition is dismissed after contest by a speaking order obviously it will operate as res judicata in any other proceeding, such as, of suit, Article 32 of Article 136 directed from the same order or decision. If the Writ Petition is dismissed by a speaking order either at the threshold or after contest, say, only on the ground of laches or the availabil ity of an alternative remedy, then another remedy open in law either by way of suit or any other proceeding obviously will not be barred on the principle of res judicata. " It thus becomes clear that when a writ petition after contest is disposed of an merits by a speaking order, the question decided ,in that petition would operate as res judicata, but not a dismissal in limine or dismissal on the ground of laches or availability of alternative remedy. The High Court and the courts below, therefore, were not right in throwing out the suit of the appellant on the ground of res judicata. It is, therefore, plain that all the three courts have omitted to consider the material question, that is, the impact of the grant of Sanad under Section 10 and its effect on the jurisdiction of the authorities under the Consolida tion Act. The authorities under Consolidation Act have no jurisdiction or power to modify or cancel the grant of proprietary rights granted in the Sanad under Section 10. In the connected Civil Appeal No. 6013 of 1983 the Sanad was also granted on 15.6.1964 in accordance with Section 10 and, therefore, the same principle applies to that case also. 393 The appeals are therefore allowed. The judgment and decree passed by all the three courts below are set aside and the suit filed in each case is decreed with costs. The appellant shall be entitled to costs in this Court. Costs quantified at Rs.5,000 in each of the two appeals. N.V.K. Appeals allowed.

The appellant who migrated from Pakistan in 1947 was allotted certain lands. On 29.12.1962 allotment was made quasi permanent in character, but on 29.4.1963, the lands were transferred to her permanently, by a Sanad issued under Rule 68 of the Displaced Persons (Compensation & Rehabilita tion) Rules, 1954. The respondent like the appellant had also migrated from Pakistan and on 29.12.1959 lands were also allotted to him but no entry could be made in the revenue record. On 29.6.1960 during consolidation proceedings no tuk was however made for the respondent. He filed objections which were rejected. He unsuccessfully appealed to the Appellate Authority The Settlement Officer (Appeals). In the second appeal, the Assistant Director Consolidation of Holdings remanded the matter to the Special Settlement Officer with the observation that because of the mistake of the Consoli dation authorities there had been over allotment, and the authorities 384 will see that the first allottee is given the land first. As nothing happened for about three years, the respond ent filed a writ petition in 1966 and the High Court direct ed implementation of the order of the Assistant Director Consolidation. The appellant was not a party to either of these proceedings. Pursuant to the order of the High Court the Consolida tion Officer started enforcing the observations of the Assistant Director, found that the land allotted to various persons was more than the land available for allotment, and in order to resolve this difficulty evolved a via media procedure. lie deprived some of the allottees of the land allotted to them, and the appellant was one such person. He allotted all such lands to the respondent. This was the commencement of the instant litigation. Against the aforesaid order of the Consolidation Officer the appellant preferred an appeal before the Assistant Director which was dismissed and the writ petition against the said order was rejected by the High Court in limine with only one word, namely, 'dismissed '. The appellant having no other alternative instituted a suit contending that it was impermissible for the Consolida tion Officer to adjust the lands, or take away any part of it which became her absolute property by virtue of the Sanad granted on 29.4.1963. The trial Court dismissed the suit. The Additional District Judge confirmed that judgment, and the second appeal to the High Court was also dismissed. In the appeal to this Court on the question; whether the lands given to the appellants by permanent Sanad could be deprived of in consolidation proceedings without giving them adequate alternate lauds. Allowing the appeal, HELD: 1. The authorities under the Consolidation Act have no jurisdiction or power to modify or cancel the grante of proprietary rights granted in the Sanad under section 10. [392G] 2. From section 10 of the Displaced Persons (Compensation & Rehabilitation) Act 1954, it is clear that the parties who were put in possession under initial allotment would contin ue to remain in possession even after its acquisition by the Central Government. But it is open to the Central Government for the purposes of payment of compensation to 385 such displaced person, transfer to him such property on such terms and conditions as may be prescribed. Apparently this refers to a permanent transfer in lieu of compensation. [390D E] 3. Transfer of property referred to in section 30 of the East Punjab Holdings (Consolidation and Prevention of Fragmenta tion) Act, 1948 is either by a landowner or by a tenant, and it has no reference, and indeed cannot have a reference to transfer of Sanad under section 10 of the Displaced Persons (Compensation & Rehabilitation) Act of 1954. The conferment of rights in lieu of compensation under section 10 stands on a different footing which could not be contemplated within the language of section 30 of the Consolidation Act. [391F] 4. When a writ petition after contest is disposed of on merits by a speaking order, the question decided in that petition would operate as res judicata, but not a dismissal in limine or dismissal on the ground of laches, or avail ability of alternative remedy. [392E F] Workmen of Cochin Port Trust vs Board of Trustees of the Cochin Port Trust & Another, ; , referred to.

iminal Appeal No. 11 of 1972. Appeal by special leave from the judgment and order dated September 16, 1971 of the Himachal Pradesh High Court in Criminal Appeal No. 37 of 1970 and Murder Reference No. 3 of 1970. G. Narayana Rao, for the appellant. H. R. Khanna and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Khanna, J. Nika Ram (34) was convicted by learned Sessions Judge Mahasu under section 302 Indian Penal Cods for committing the murder of his wife Churl (26) and was sentenced to death. On appeal and reference under section 374 of the Code of Criminal Procedure, the High Court of Himachal Pradesh confirmed the conviction and death sentence. Nika Ram has now come up in appeal to this Court by Special leave. The prosecution case is that Nika Ram was married to Churi deceased near about 1958. In 1964 Churi gave birth to a son named Joginder. Nika Ram considered that Joginder was not his son and had been born as a result of adulterous conduct on the part of Churi. When Joginder was three months old, Churi and Joginder were sent to the house of Churi 's mother Smt. Nagju (PW 2) in village Gani. Churi on arrival at her mother 's house told her that the accused had not been treating her well. After Churi had stayed at her mother 's house for about three or four years, the accused paid visits to her and wanted to take Churl to his house. The accused, however, declined to take Joginder with him. At the suggestion of Nagju, Churi, Joginder and Nagju came to the house of the accused in village Shilaroo which is at a distance of 1 1/2 mile from, Gani. At his house,, the accused gave beating to Churi deceased. Nagju consequently returned along with Churi and Jogindler to her village Gani. On the day of Shivratri before 'the present occurrence ', the accused took Churi along with him to his house. Joginder was, however, left with Churi 's mother Nagju. , The accused and his wife lived alone, in their house in Shilaroo. No one else resided with them in that house. On the evening of September 16, 1969, the accused and his wife were seen together at the house. 430 Kotkhai is at a distance of 2 1/2 furlongs from Shilaroo. At about 10.30 p.m. on September 16, 1969 the accused went to the residence of Shri Sudershan Kumar Mahajan (PW 15), Naib Tehsildar who exercised the powers of second class magistrate,, in Kotkhai. The accused appeared to be nervous and told Shri Mahajan that he had murdered his wife. Shri Mahajan told the accused to sit down and be composed. On enquiry of Shri Mahajan, the accused stated that his wife was of loose character and had given birth to in illegitimate son. His relations with her were consequently strained. the accused, who was wearing a Kachha and a coat, added that he had tried to commit suicide by jumping into nulla but had somehow survived. Shri Mahajan thereafter recorded statement PH of the accused, wherein the accused stated +that he had murdered his wife by giving her three Khokhri blows. According to the accused, he,had enquired from the wife regarding the father of the child, whereupon she had abused him. He consequently killed her. There was no reference to the attempt at suicide in statement PH of the accused. At about .10.45 p.m. Shri Mahajan called his peon Mangan Ram (PW 10) and sent him to the police post at Kotkhai to call the officer incharge of the police post. Mangat Ram went to the police post and arrived there at 10 50 p.m. At the police post he told Head Constable Bhag Singh (PW 13) that an accused in a murder case had come at the residence of the Naib Tehsildar and the police was wanted there. Entry 26, copy of which is PV, was made in the daily diary of the police post at 10 50 p.m. regarding the above, intimation given by Mangat Ram. The entry was signed by Mangat Ram. Head Constable Bhag Singh then went to the residence of Shri Mahajan Naib Tehsildar. The, accused, who was present there, was Put under arrest by the Head Constable. The Head Constable found that the coat and Kachha of the accused were wet. Writing PH was also handed over by the Naib Tehsildar to the Head Constable. The Head Constable returned with the accused to the police post and made entry in the daily diary. Intimation about the occurrence was also sent to Police station Theog as well as to the Superintendent of Police. At about 12 mid night, Head Constable Bhag Singh went to the. village of the accused. He awakened Poshu Ram (PW 7), Mani Ram (PW 8) and Bhagat Ram (PW 16) and went to the house of the accused with those witnesses The door of the verandah of the accused was found bolted from inside. Poshu Ram PW jumped into the verandah and unbolted the door. The door of the residential room of the accused was found closed and was opened. Torch light was thrown inside and the dead body (If Churi deceased was found lying in a pool of blood. There was 431 a quilt up to the, chest of the body. A number of injuries were found on the body. A Khokhri, its scabbard, male shirt and a pair of tongs were lying near the body stained with blood. The Read Constable then took steps for keeping a watch over the house. Police station Theog is at a distance of 20 miles from Shriaroo. Sub Inspector Devi Singh of Theog police station was on the night of September 16, 1969 away to Gajairi at a distance of five. or six miles from Theog in connection with a fair there. At mid night the Sub Inspector received intimation that a murder had taken place at Kotkhai. The Sub Inspector accordingly went in a truck to Kotkhai and reached there at about 3 a.m The Sub Inspector took rest at the police post and after sunrise went Lo the place of occurrence,. The accused too was taken by the Sub Inspector to the spot. The party reached, the house of the accused at about 8 a.m. Inside the room the Sub Inspector found the dead body of Churi deceased lying on. the floor. Ile Sub Inspector prepared injury statement and. inquest report. The blood stained clothes as well as Khokhri P. 1 and its scabbard were taken into possession and were made into sealed. parcels. The dead body of Chun deceased was sent for post mortem examination to Civil Hospital Kotkhai. Post mortem examination was performed at the said hospital by Dr. G. C. Gupta at 6 p.m. on September 17, 1969. Parcels containing the bloodstained articles which had been taken into possession from the spot were sent to the Chemical Examiner and the Serologist, whose report showed that human blood was found on the Khokhri, scabbard and the male shirt. The accused was sent to judicial lock up on September 17, 969. On September 29, 1969 Sub Inspector Devi Singh made ail application to PW 6 Shri Raj Kumar Sharma, magistrate first class Theog for recording the confessional statement of the accused. The accused was also, produced before Shri Sharma. Shri Sharma then apprised the accused of the, consequences of confession. The accused volunteered to make a confessional statement. Shri Sharma, however, considered it necessary to give him time to think over the matter. The accused was accordingly ordered to be, produced on October 4, 1969. Shri Shalma, who also holds his court at Kasumpti, could not visit Theog on October 4, 1969. The accused was directed to be produced before Shri Sharma on October 18, 1969. On that day the accused declined to make any confessional statement. At the trial the accused stated that he had been, married to Churi; deceased in 1957. It was admitted by the accused that Churi had given birth to Joginder about four years: after the marriage, but he denied having maltreated Churi. The accused admitted that Churi had come, to his House on the Shivratri day, 432 but, according to him, the child too had come along with her. As regards the date of occurrence, the accused stated that he was with Churi in the house during the day but at 6 p.m. he left for Kotkhai leaving his wife alone at the house. The accused denied having gone to Shri Mahaian and having made any confessional statement on the night of occurrence. It was also denied by the, accused that his Kachha and coat were in a wet condition at the ,time, of his arrest, As regards the 'blood stained Khokhri and shirt, the accused stated that those articles did not belong to him The accused further made the following statement "I had cordial relations with my wife for the fast 14 years. I claim the son to be my own. He is not illegitimate. I left my house, at 6 P. m. on 1st of Asuj last year. It was Tuesday 2026 Bk. leaving, my wife at home, to see a documentary film being exhibited at Kotkhai. Gaddu Ram was with me in the show. The picture finished at about 9 30 p.m. I was taken by the police to the Police Post from the bazar. I was called through a police constable who was not produced as prosecution witness. I was given beating at the police post. A.S.I. was there besides other Foot Constable. My signatures were obtained on a paper. I do not know what had been written on that. It was disclosed to me by the S.H.O. next morning that my wife had been murdered, and I was taken to my village. From there I was brought to Theog. I am innocent and have no hand in the, crime. " No evidence was produced in defence. Learned Sessions Judge accepted ,lie prosecution case that it was the accused who had caused injuries to Churi deceased, as a result of which she died. Reliance in this connection was placed upon the other evidence adduced by the prosecution in the case as well as upon the confession made to Shri Mahajan PW. On appeal the learned Judges of the High Court in maintaining the conviction of the accused relied upon the confession made by the accused to Shri Mahajan PW as well as upon the other circumstances of the case. The confession was found to have been amply Corroborated by the other evidence on record. The present appeal was filed by the accused appellant through jail. Arguments have, however, been addressed on his behalf by Shri Narayana Rao, who has contended that the material on record is not sufficient to justify the conviction of the accused appellant. Admissibility of the confessional statement of the accused recorded by Shri Mahajan PW has also been questioned. As against that, Mr. Khanna on behalf of the State has convassed for the correct ness of the view taken by the High Court. 433 It cannot be disputed that Churi deceased died as a result of the injuries inflicted upon her. Dr. G. C. Gupta, who performed post mortem examination on the dead body of the deceased, found ten injuries on the body of the deceased, out of which the following three were individually sufficient to cause death in the ordinary course of nature "(1) Punctured wound right side of the neck, 2 inches diameter 1 1/2 inches deep. (2) Punctured wound 2" diameter, 1 1/2" deep, 2" below injury No. 1. (3) Incised wound 6 X 1" x 1" on left side of the neck. " Besides the, above three injuries, there were one incised wound on the left eyebrow two incised wounds on the left forearm one incised wound on the fingers of the left hand, one incised wound on the right hand and one incised wound in the right arm. A scratch was also found on the right hand. The punctured and incised wounds, in the opinion of the doctor, could be caused by Khokhri P. 1 Larynx and trachea were found to be torn and punctured. Probable time between the receipt of injuries and death was five minutes, while between I death and post mortem was 19 1/2 hours. According to the prosecution case, the injuries found on the body of Churi deceased were caused by the accused. The accused, as stated earlier, has denied this allegation. In order to bring the charge home to the accused, the prosecution has relied upon the confessional statement PH of the accused recorded by Shri Mahajan as well as the other circumstances of the case. It has been argued on behalf of ,lie accused appellant that confessional statement exhibit PH is not admissible in evidence. In this connection it is pointed out that Shri Mahajan was a second class magistrate and there is nothing on the record to indicate that he was specially empowered by the State Government to record a confession. The confession, it is further stated, was recorded during, the investigation of the case and as it was not recorded in the manner prescribed by section 164 of the Code of Criminal Procedure, the same is inadmissible in evidence. In this contexts we find that according to sub section (1) of section 164 of the Code of Criminal Procedure, any Presidency Magistrate, and Magistrate of the First Class and any Magistrate of the Second Class specially empowered in this behalf by the State Government may, if he is not a police officer, record any statement or confession made to him in the course of an investigation under this chapter (Chapter XIV of the Code) be under any other law for the time being in force or at any time afterwards before the commencement 434 of the enquiry of trial. 'Mete is no material on the record to indicate that Shri Mahajan was a second class magistrate who had been specially empowered by the State Government to record a confession. Indeed, Mr. Khanna on behalf of the respondent State has argued the care on the assumption that Shri Mahajan was not specially empowered in this behalf. question as to whether a confession recorded during the investigation of a case by a second class magistrate not specially empowered was admissible in evidence was considered by this Court in the case of State of Uttar Pradesh vs Singhara Singh and Others.(1) It was held that the record of such a confession could not be put in evidence under sections 74 and 80 of the Indian Evidence Act. Reliance in this connection was placed upon the decision of the Judicial Committee in the case of Nazir Ahmed vs King Emperor. ( 2 ) Argument was further advanced in Singhara Singh 's case that oral evidence of the magistrate to prove the confession was admissible. This contention was rejected by this Court in the following words : "When a statute, confers a power on certain judicial officers, that power can obviously be exercised only by those officers. No other officer can exercise that power, for it has not been even to him. Now the power has been conferred by section 164 on certain magistrates of higher classes. Obviously, it was not intended to confer the power on magistrates of lower classes. If, therefore, a proper construction of section 164, as we have held, is that a magistrate of a higher class is prevented from giving oral evidence of a confession made to him because thereby the safeguards created for the benefit of an accused person by section 164 would be rendered nugatory, it would be an unnatural construction of the section to hold that these safeguards were not thought necessary and ' could be ignored, where the confession bad been made to a magistrate of a lower class and that such a magistrate was, therefore, free to give oral evidence of the confession made to him. We cannot put an interpretation on section 164 which produces the abnormaly that while it is not possible for higher class magistrates to, practically abrogate the safeguards created in section 164 for the benefit of an accused person, it is open to a lower 'class magistrate to do so. We, therefore, think that the 'decision in Nazir Ahmed 's case (supra) also covers the case in hand and that on the principles there applied, here to oral evidence given by Mr. Dixit of the confession made to him must be held inadmissible." Mr. Khanna on behalf of the State concedes that in view of the a decision, a confession recorded by a second class magistrate (1) [1964] 4 S.C.R. 485. (2) L.R.63 I.A. 372. 435 not specially empowered during the investigation of a case is not admissible in evidence and no oral evidence in respect of that confession can also be led at the: trial. Mr. Khanna, however, contends that the restriction on the admissibility of the above evidence would operate only if the confession is recorded during the course of investigation. If, however. the confession is recorded at a stage prior to the commencement of investigation, there would be no bar to the admissibility of such a confession. Reference in this connection has been made to the case of In re Yondra Narasimha Murthy. (1) In that case an accused after committing murder went to a second class magistrate and made a statement that he had killed the deceased. The statement was recorded by the magistrate and was signed by the accused. It was held that the aforesaid statement was admissible in evidence. Dealing with the contention that there had not been compliance with sect ion 164 of the Code of Criminal Procedure, the court observed that the person making the confession was not an accused at the time he went to the magistrate and no investigation of a crime registered against him was in progress at that time. Question consequently arises whether statement exhibit PH was recorded by Shri Mahajan during the investigation of the case or whether it was recorded before the commencement of the investigation. In this connection we find that the time mentioned by Shri Mahajan of the recording of confessional statement was 11 p.m. while the intimation which was given by Mangat Ram (PW 10) to the police regarding a murderer having come to the residence of Shri Mahajan was entered in the daily diary at 10.50 p.m. Head Constable Bhag Singh (PW 13) after having made that entry proceeded to the residence of Shri Mahajan and on arrival there put the accused under arrest. It is well established that the discovery and arrest of the suspected offender is one of the essential steps in the course of an investigation (see in this connection H. N. Rishbud and Inder Singh vs The State of Delhi(2) and The State of Madhya Pradesh vs Mubarak Ali.(2) We are, therefore of the view that the contention advanced on behalf of the appellant that the confessional statement exhibit PH was recorded during the investigation of the case cannot be deemed to be devoid of force. It is not, however, necessary to dilate upon this aspect of the matter because we are of the opinion that even after excluding the con fessional statement PH from consideration, the other material on record proves the guilt of the accused. It is in the evidence of Girju PW that only the accused in Churi deceased resided in the house of the accused. To similar effect are the statements of Mani Rm (PW 8), who is the uncle (1) A.I.R. 1966 A.P. 131. (2) ; (3) [1959] supp. 2 S.C.R. 201. 436 of the accused, and Bhagat Ram school teacher (PW 16). Ac cording to Bhagat Ram, he saw the accused and the deceased together at their house on the day of occurrence. Mani Ram (PW 8) saw the accused at his house at 3 p. in., while Poshu Ram (PW 7) saw the accused and the deceased at their house or, the evening of the day of occurrance. The accused also does not deny that he was with the deceased at his house on the day of occurrence. The house of the accused, according to plan PM, consists, of one residential room one other small room and a varandah. The correctness of that plan is proved by A. R. Verma overseer (PW 5). The fact that the accused alone was with Churi deceased in the house when she was murdered there with the Khokhri and the fact that the relations of the accused with the deceased, ts would be shown hereafter. were strained would, in the absence of any cogent explanation by him, point to his guilt. The evidence of Nagju (PW 2), mother of the deceased, shows that the accused had been illtreating Churi deceased. It is further in the testi mony of Girju (PW 1) that the accused had a Khokhri at his house similar to Khokliri P. 1 which was found near the dead body of the deceased and with which the injuries on the body of the deceased, according to Dr. Gupta, could have been caused. Besides that it is established by the evidence of Mangat Ram (PW 10) and Shri Mahajan (PW 15) 'that the accused on the night of occurrence at about 10.30 p.m. went to the house of Shri Mahajan and talked to him. Shri Mahajan thereafter sent for Head Constable Bhag Singh through Mangat Ram. Head Constable Bhag Singh lids deposed regarding his having arrested the accused at the house of Shri Mahajan. The dead body of Churi deceased was thereafter discovered lying in the house of the accused. The discovery of the dead body from the house of the accused can thus be traced to the visit of the accused to the residence of Shri Mahajan. The various circumstances referred to above, in our opinion. clearly point to the conclusion that it was tile accused and none else who was responsible for the murder of Churi deceased. The plea of the accused that he had gone to see film show at Kotkbai on that evening and that the murder of the deceased was committed during his absence cannot be accepted. I lad the accused gone to the film show, the persons with whom he sat at the film show must have noticed his presence there, but no evidence has been adduced to show that anyone noticed the accused at the film show. According to the accused, Gaddu Ram was with him at the film show. Gaddu Ram has, however, not been examined as a witness. The film show at Kotkhai, which had been arranged by the Publicity Department, according to Head Constable Bhag Singh PW, lasted from 7 to 8 30 p.m. Assuming that the accused went to the film show, it would not have taken more than 10 or 437 15 minutes 'for the accused to return ' to his house after the film show. The accused would thus be present at his house at about 9 30 p.m. when the present occurrence took place. Had someone other than the accused murdered his wife Churi, the accused would have raised hue and cry and this fact must. have attracted to the spot his neighbours like Poshu Ram PW. The accused would have also in that event gone and made a report to the police. The conduct of the accused in neither raising hue and cry nor going to the police even though his wife was murdered in his house is hardly consistent with his innocence. The version of the accused that he was taken by the rolice to the police post from the bazar cannot be accepted because there is nothing to show that the police was aware of the murder of Churi deceased before the visit of the accused to the house of Shri Mahajan. On the contrary, the evidence on record establishes beyond any manner of doubt that the dead body of the deceased was recovered after the accused had visited the house of Shri Mahajan. We are, therefore, of the view that it was the accused and none else who caused injuries, to Churi deceased as a result of which she died. We, therefore, maintain his conviction. So far as the sentence is concerned, we are of the view that it is not a fit case in which the extreme penalty need be exacted from the accused. It is the case of the prosecution itself that the accused suspected the fidelity of Churi deceased and believed that Joginder had been born to her as a result of her adulterous conduct. Had Joginder been the son of the accused, the accused would have had a natural affection for the child and it is difficult to believe that he would have insisted upon Churi staying with him without the child. It is also the case of the prosecution that shortly before the occurrence, the accused enquired from the deceased regarding the father of the boy and the deceased thereupon abused him. The act of the deceased in abusing the accused must have been taken by the accused to be adding insult to the injury by an unchaste wife. In view of the above, it would, in our opinion, meet the ends of justice if the accused is awarded tile lesser penalty. We, therefore, alter his sentence into that of imprisonment for life.

The appellant was tried by the Sessions Judge for an offence under section 30 of the Indian Penal Code for the murder of his wife. According to the prosecution the appellant had suspected the fidelity of his wife because he believed that a son born to her was not his. The wife was last scen in the company of the appellant on the evening of the murder. It was alleged that the appellant went to the Tahsildar and made a confession. The Tahsildar thereafter called the police. At the instance of the appellant the body of his wife was recovered from his house. When produced before a first class Magistrate for having his confessional statement 'recorded the appellant declined to make any confessional statement. Relying upon the confession made to the Tahsildar and the other evidence the Sessions Judge convicted the appellant. The High Court upheld the conviction. In appeal before this Court it was inter alia contended on behalf of the appellant that the confession recorded by the Tahsildar was inadmissible in evidence since he was a second class Magistrate not specially empowered by the State Government in terms of section 164 of the Code of Criminal Procedure, to record a confession, HELD : In Singhara Singh 's case this Court relying on Nazir Ahmed 's 'case laid down that a confession recorded during the investigation of a case by a second class Magistrate not specially empowered could not be put in evidence under sections 74 and 80 of the Indian Evidence Act. It was also held that the oral evidence of the Magistrate to prove the confession was inadmissible. In the present case therefore the confession recorded by the Tahsildar was inadmissible and so was his oral testimony to prove ,It. [434 B C] State of Uttar Pradesh vs Singhara Singh and Others, [1964] 4 S.C.R. 485 and Nazir Ahmed v, King Emperor, L.R. 63 I.A. 372, applied It could not be said that the Tahsildar recorded the statement before the commencement of investigation, The confession was recorded at It p.m. while the intimation to the police regarding a murderer having come to the residence of the Tahsildar was entered in the daily diary at 10.50 p.m. The Head Constable after having made that entry proceeded to the residence of the Tahsildar and on arrival there put the accused under arrest. It is well established that the discovery and arrest of the suspected offender is one of the essential steps in the course of an investi gation. [435 E G] H. R. Rishbud and Inder Singh vs The State of Delhi, ; and The State of Madhya Pradesh vs Mubarak Ali, [1959] Supp. 2 S.C.R. 201, followed. In re Yendra Narasimha Murthy, A.I.R. 1966 A.P. 131, referred to 429 However in the present case even if the confession was excluded the ,rest of the material on record proved the guilt of the accused. [435 E] [Conviction maintained but in view of the special facts of the case ,sentence reduced from death to imprisonment for life.]

Appeal No. 154 of 1976. (From the Judgment and Order dated 16 12 1975 of the Judicial Commissioner 's Court, Goa, Daman and Diu in Election petition No. 2/74). V.M. Tarkunde and Shri Natgin for the Appellant. Hardayal Hardy, S.K. Mehta and P.N. Puri for the Respondent. The Judgment of the Court was delivered by KHANNA, J. This appeal by Dr. Wilfred D 'Souza is against the judgment of learned Judicial Commissioner Goa whereby be dismissed. election petition filed by the appel lant to declare the election of Francis Menino Jesus Ferrao respondent to the Goa Legislative Assembly to be void and to declare instead the appellant to be duly elected. The appellant and the respondent were the two candi dates who sought election to the Goa Legislative Assembly from Benaulim Assembly constituency in the by election caused by the death of Vassuudev Garmalkar. Polling took place on June 9, 1974 and the counting of votes on June 10, 1974. After the first count, the Returning Officer found that the total number of valid votes cast in favour of the appellant was 4,656 and of those cast in favour of the respondent was 4,654. 234 ballot papers were rejected. The respondent then applied for recounting of the votes and the said application was granted. As a result of recounting, it was found that the appellant had secured 4,651 valid votes, while the respondent had secured 4,652 valid votes. Seven ballot papers were rejected. It may be mentioned that at the time of recounting 234 votes which had been earlier rejected in the first count were not taken into account. Soon after the recount the appellant made an application for a second recount. This application was granted and the recount took place on the following day, i.e., June 11, 1974. As a result.of the second recount the appellant was found to have secured 4,650 valid votes while the respondent was found to have secured 4,652 votes. One ballot paper was rejected. At the time of second recount the ballot papers which had been rejected at the time of the initial counting and the first recount were not taken into account. In the result the respondent was declared elected. The appellant thereafter filed the present petition on July 15, 1974. Besides the ground with which we are concerned in this appeal, the appellant challenged the election of the re spondent on the following two grounds: "(1) that in the first and second recount the Returning Officer illegally accepted .in favour of the returned candidate, some votes which he ought to have rejected, and rejected some votes in favour of the appellant which he ought to have accepted under law; (2) that the failure of the Returning Officer to re scrutinize the rejected votes in the first and second recounts is illegal" In respect of the above two grounds, objec tion was taken by the respondent that there was non compliance with the statutory require ments of section 83(1)(a) of the Representa tion of the People Act, 1951 (hereinafter referred to as the Act) inasmuch as the appel lant had not set out the material facts re garding those allegations. Learned Judicial Commissioner as per order dated March 22, 1975 held that the appellant had failed to give material particulars in respect of the said two grounds. The petition in that respect was held to have not disclosed a cause of action. It was also held that the appellant was not entitled to an order of the court for re counting the polled votes. The appellant, it may be stated, filed a petition seeking spe cial leave of this Court against the above order but that petition was dismissed on July 31, 1975. The only ground which survives and with which we are concerned in this appeal is given in para 9 of the petition. The same reads as under: "The petitioner further submits that the scrutiny and counting of the tendered votes is absolutely necessary in this case, consid ering the fact that the respondent has been declared the returned candidate after securing in his favour only 2 votes more than the petitioner and the fact that the tendered votes are 10, and that the non counting of such votes may materially affect the result of the election, in so far as it concerns the respondent, by the improper reception of votes originally polled by persons other than those who tendered their votes. The petitioner, therefore, submits that the votes initially and improperly received should be removed and the tendered votes should be accepted and counted instead. " The appellant accordingly asserted that the result of the election of the respondent had been materially affected by the improper reception, refusal and rejection of votes. Prayer made by the appellant was that the 'election of the respondent be declared void and the appellant be declared to be duly elected. The petition was resisted by the respondent, and in reply to para 9 of the petition the respondent submitted that no recount was justified 945 or required in law merely because of the returned candidate having secured only two votes more than the defeated candi date. The respondent denied that the tendered votes were cast by genuine voters. Issue No. 7 which is the only issue relating to the allega tion in para9 reads as under: "Whether the petitioner proves that the vote or votes were initially improperly received, and should be removed and in their place tendered vote or votes should be taken into account. " The Judicial Commissioner in his order dated March 22, 1975, while holding that no material particulars had been given in the petition in respect of the other two grounds of the election petition, found that regarding the allegation about tendered votes material facts had been given and a cause of action had been disclosed. An application was filed on April 4, 1975 after the above order on behalf of the appellant praying for a direc tion to the District Election Officer to send all the papers mentioned in rule 92 of the Conduct of Election Rules, 1961 to the court. In reply to that application the respondent stated that the court should, before sending for the said papers, call upon the appellant "to make out a prima facie case by undertaking to examine all the persons who have cast the tendered votes and producing some of them and proving that they had cast the tendered votes and that they are the true votes." Learned Judicial commissioner after refer ring to the case of Rameshwara Nand vs Madho Ram(1) and some other cases, passed order dated September 11, 1975, the material part of which reads as under: "In the present case the tendered votes are only ten and I see no reason why the petitioner should be allowed to break the principle of secrecy, particularly because the necessity of knowing for whom the voters have cast their vote does not arise now. The petitioner will have to establish his case before he succeeds in this petition. He will have, therefore, to produce all his evidence before the counting is done. I therefore order that the petitioner shall produce before the Court all the evi dence on which he relies. I also order that the District Election Officer be asked to produce the election papers mentioned in rule 92(2) of the Conduct of Election Rules, 1961 before this Court. " The appellant thereafter examined two witnesses, Joa quine Rodrigoes (PW 1) and Vina Farnandes (PW 2). These two witnesses, according to the appellant, had marked tendered ballot papers at the time of polling. Trunks containing election papers were also sent to the court by the Election Registration Officer. As the keys of those trunks were not available, those trunks were broken open in the presence of the parties. A Panchnama of the packets contained in those (1) A.I.R. 1968 Punjab 173. trunks was then prepared. Some of the packets having connection with the tendered ballot papers were opened after the conclusion of the evidence of the two witnesses examined by the appellant. The case was thereafter argued and the election petition was dismissed. In the judgment under appeal, learned Judicial Commissioner examined the evidence of the two witnesses produced by the appellant. According to the testimony of these two witnesses, when they went to the polling booth, they were told that someone else had already cast their votes. When these witnesses stated that they had not .voted, they were each given a paper for marking in favour of the candidate of their choice. They then marked that paper and handed over that paper to the persons present there. Learned Judicial Commissioner took the view that the evidence of these witnesses did not relate to tendered ballot papers but to the ordinary ballot papers. The appel lant as such was held to have failed to prove his case. In the result, the election petition was dismissed. In appeal before us, Mr. Tarkunde on behalf of the appellant has argued that the evidence of the two witnesses examined on behalf of the appellant relates to the tendered ballot papers marked by them and that the finding of the Judicial Commissioner to the contrary is not correct. As against that, Mr. Hardy on behalf of the respondent has canvassed for the correctness of the view taken by the Judicial Commissioner. Before dealing with this aspect of the matter, we think it opposite to deal with the legal position relating to tendered votes. Rule 42 of the Conduct of Election Rules, 1961 relates to tendered votes and reads as under: "42. Tendered votes. (1) If a person repre senting himself to be a particular elector applies for a ballot paper after another person has already voted as such elector, he shall, on satisfactorily answering such ques tions relating to his identity as the presid ing officer may ask, be entitled, subject to the following provisions of this rule, to mark a ballot paper (hereinafter in these rules referred to as a 'tendered ballot paper ') in the same manner as any other elector. (2) Every such person shall, before being supplied with a tendered ballot paper, sign his name against the entry relating to him in a list in Form 15. (3) A tendered ballot paper shall be the same as the other ballot papers used at the polling except that (a) such tendered ballot paper shall be serially the last in the bundle of ballot papers issued for use at the polling sta tion; and 947 (b) such tendered ballot paper and its counterfoil shall be endorsed on the back with the words 'tendered ballot paper ' by the presiding officer in his own hand and signed by him. (4) The elector, after marking a ten dered ballot paper in the voting compartment and folding it, shall, instead of putting it into the ballot box, give it to the presiding officer, who shall place it in a cover spe cially kept for the purpose." Perusal of the above rule makes it clear that the occasion for marking tendered ballot paper would arise if a person representing himself to be a particular elector applies for a ballot paper after another person has already voted as such elector. The person so applying would then be ques tioned regarding his identity by the presiding officer and, in case he gives satisfactory answer, he would be supplied a tendered ballot paper which would then be marked by the aforesaid person. Such person is also required to sign his name against the entry relating to him a list in form 16. The tendered ballot papers shall be the same as other ballot papers used at the polling, except that it would be serially the last in the bundle of ballot papers issued for used at the polling station. The words "tendered ballot paper" have to be endorsed on the back of the tendered ballot paper and its counterfoil by the presiding officer in his own hand and has to be signed by him. The tendered ballot paper, it is further provided, is not to be put in the ' ballot box but is to be kept in a separate cover. According to clause (6) of rule 56 of the Conduct of Elec tion Rules, no cover containing tendered ballot papers shall be opened at the time of the counting of the votes and no such tendered ballot papers shall be counted. The Represen tation of the People Act, 1951 as well as the above rules are, however, silent on the point as to what use would be made of the tendered ballot papers and how they would affect the result of the election. Learned counsel for the parties are, however, agreed that such tendered ballot papers, even though excluded from consideration at the time of counting of votes after the poll, can be taken into account in proceedings to challenge the validity of the election of the returned candidate provided certain conditions are fulfilled. We agree with the learned counsel for the parties in this respect, and find that this position of law is supported by two English decisions, Borough of St. Andrews(1) and The Stepney Divi sion of the Borough of Tower Homlets(2) as also by.two Indian decisions, Kalicharan Singh vs Ramcharitar Rai Yadava & Ors(3) and A.K. Subbarava Gounder vs G. Palanisami Gounder & Ors.(4) Before, however, a tendered ballot paper can be taken into account during the proceedings of election peti tion, evidence would have to be led on the following two points: (1) The person who cast the initial vote as a voter on a particular serial number in the electoral roll was someone other than the genuine voter mentioned at that number. (1)4 Omelly & Hardcastle 32, (2) Omelly & Hardcastle 34. (3) (4) (2) It was such genuine voter who marked the tendered ballot paper. So far as the first point is concerned, the evidence of the genuine voter that he had not cast such initial vote would normally and in the absence of any circumstance casting doubt regarding its veracity be sufficient. Once the above two points are proved, the following consequences would follow: (a) The court would exclude the vote initially cast by the person other than the genuine voter from the number of votes of the candidate in whose favour it was cast; and (b) The court would further take into account the tendered ballot paper in favour of the candidate in whose favour it is duly marked. It may also be mentioned that the proper occasion for scrutinising tendered ballot papers would normally arise only when the difference between the number of votes polled by the candidate declared elected and his nearest rival is so small that there is a possibility of that difference being wiped out and the result of election being thus materially affected if the court takes into account the tendered ballot papers and excludes from consideration the corresponding votes which were cast by persons other than the genuine voters. The present election petition would have to be decided in the light of the legal position set out above. We have been taken through the evidence on record and are of the view that the evidence of the two witnesses examined by the appellant is sufficient to prove that their evidence relates to tendered ballot papers. Each of these witnesses has deposed that when she arrived at the polling booth, she was told that someone else had cast her vote. When these witnesses persisted that they had not cast their votes, each of them was supplied with a paper which she marked. Both the witnesses were emphatic that they had not. put their votes in the ballot box and that they handed them over to the persons present at the polling booth. A very significant circumstance which shows that the evidence of these witnesses relates to tendered ballot papers and not to the ordinary ballot paper is the fact that there is actual reference to them in Form No. 15 which relates to list of tendered votes. The packet containing Form No. 15, it needs to be mentioned, was opened after the close of the evidence of these two witnesses. The name of Joaquina Rodrigues is mentioned in Form No. 15. The fact that the name mentioned in the electoral roll is Rodrigues Joaquina Domingos and not Joaquina Rodrigues is not very material because the name of the father of the witness is Domingos. So far as Vina Fernandes (PW 2) is concerned, Form No. 15 does not mention her name but only gives the serial number of the tendered ballot paper. The counterfoil of the tendered ballot paper however, makes it clear that it re lates to serial No. 244 of electoral roll, part No. 12. The said serial number of the electoral roll pertains to Vina Fernandes. It 949 appears that some of the formalities which were required to be observed in connection with tendered ballot papers were not complied with by the presiding officer, e.g., he did not note on the back of the counterfoil of the tendered ballot paper that it related to tendered ballot paper. The parties, however, cannot be made to. suffer because of any such omission on the part of the presiding officer. The evidence of the two witnesses examined on behalf of the appellant can also not be discarded on the ground that they have not deposed about their having affixed two thumb impressions instead of one thumb impression. As mentioned above, the reference to those two voters in Form No. 15 relating to tendered ballot papers goes a long way to show that it were these two witnesses who marked the tendered ballot papers. Their evidence also shows that they did not cast the initial votes which were cast in their names. Learned Judicial Commissioner in this case did not record any evidence on behalf of the respondents and pro ceeded to decide the cast after the evidence of the witness es of the appellant had been recorded and after the box containing the relevant necessary papers had been opened and those papers were examined. In view of the fact that the appellant has adduced prima facie proof in respect of two of the ten dered ballot papers, the Judicial Commission er, in our opinion, should now call upon the respondent to adduce his evidence. The evidence of the respondent would be confined not merely to the two tendere ballot papers in respect of which the appellant has adduced evidence but can also relate to some or all of the other eight tendered ballot papers in respect of which the appellant has not adduced any evidence After the said evidence is examined, learned Judicial Commissioner would decide the matter in the light of the legal position relating to tendered ballot papers as set out above. We accordingly accept the appeal, set aside the judgment of the learned Judicial Commissioner and remand the case to him for fresh decision after recording the evidence of the respondent in accordance with law as ex plained above. The parties in the circumstances shall bear their own costs of the appeal. We are conscious of the fact that the election matters should be dis posed of as soon as possible and that the remand of the case would have the effect of further prolong ing the matter, yet looking to the face of the case, we find no escape from the conclusion of remand. Learned Judicial Commissioner, we are sure, would try to expedite the dispos al of the case.

Rule 42, Conduct of Election Rules, 1961, shows that the occasion for marking tendered ballet paper would arise if a person representing himself to be a paticular elector ap plies for a ballot paper after another person has already voted as such elector. The person so applying, would then be questioned by the presiding officer regarding his identi ty, and in case he gives a satisfactory answer, he would be supplied a tendered ballot paper which would then be marked by such person. has to sign his name against the entry relating to him in a list in Form 15, prescribed under the Rules. The tendered ballot paper shall be the same as other ballet papers used at the polling, except that it would be serially the last in the bundle of ballot papers issued for use at the polling station. The words 'tendered ballot paper ' have to be endorsed on the back of the ten dered ballot paper and its counterfoil by the presiding officer in his own hand and has to be signed by him. The tendered ballot paper is not to. be put in the ballot box, but is to be kept in a separate cover. According to r. 56(6) no cover containing tendered ballot papers shall be opened or counted at the time of the counting of the votes. But even though the tendered ballot papers are thus excluded at the time of counting they can be taken into account in proceedings to challenge the validity of the election of the returned candidate provided, ( 1 ) the person who cast the initial vote as a voter on a particular serial number in the electoral roll was someone other than the genuine voter mentioned at that number; (2) it was such genuine voter who marked the tendered ballot paper; and (3) the difference between the number of votes polled by the candidate declared elected and his nearest rival is so small that there is a possibility of that difference being wiped out and the result of the election being materially affected. In such a case, the Court would exclude the vote initially cast from the number of votes of the candidate in whose favour it was cast; and take into account the tendered ballot paper in favour of the candidate in whose favour it is duly marked. In the present case, the appellant and respondent were two candidates for election to a Legislative Assembly, and the respondent was declared elected having secured just two votes more than the appellant. The appellant challenged the respondent 's election and contended that there were ten tendered votes and that they should be counted, after remov ing the votes initially and improperly cast. At the trial of the election petition, the appellant examined on his behalf two witnesses, who had, according to the appellant, marked tendered ballot papers at the time of the polling. The trial court however, took the view that the evidence of the two witnesses did not relate to tendered ballot papers but related to ordinary ballot papers, and dismissed the election petition. Allowing the appeal to this Court, and remanding the case to the trial Court HELD: (1) The evidence of the two witnesses of the appellant is sufficient to prove that their evidence relates to tendered ballot papers. Even though some of the formal ities which were required to be observed in connection with the tendered ballot papers were not complied with by the presiding officer, as for example, he did not note on the back of the counterfoil of the tendered ballot paper that it related to tendered ballot paper, the parties cannot 943 be made to suffer for such an omission. The evidence of the two witnesses cannot also be discarded on the ground that they have not deposed about their having affixed two thumb impression instead of one. [948 F G] (2) In view of the fact that the appellant has adduced prima facie proof in respect of the two tendered ballot papers the trial court should now call upon the respondent to adduce his evidence. The respondent 's evidence need not be confined to the two tendered ballot papers but may relate to some or all of the other eight tendered ballot papers in respect of which the appellant has not adduced evidence. The trial court should thereafter decide the matter in the light of the legal position. [949 D] Borough of St. Andrews (4 Orielly & Hardcastle 32), The Stepney Division the Borough of Tower Homlets (4 Orielly & Hardcastle 34), Kalicharan Singh vs Ramcharitar Raj Yadava & Ors. and .4. K. Subharava Gounder vs G. Pala nisami Gounder & Ors. referred to.

ition No. 13009 of 1983. (Under article 32 of the Constitution of India) Gopal Subra aniam (A.C) for the Petitioner Dr. Y.S. Chitale, A.V. Rangam and Mrs. Sarla Chandra for the Respondent. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. Smt. Katheeja Bai, is the widow of Abdul Salam who retired as a Line Inspector, Grade I, in the employment of the Tamil Nadu State Electricity Board on 31.7.76 and who unfortunately died on 15.10.76. Katheeja Bai failed to get from her late husband 's employers certain amounts which she claimed were due to her husband. She knocked continuously but in vain, at the doors of the Regional Provident Commissioner, Madras, Central Provident Commissioner, New Delhi and the Minister for Labour Government of India for several years for 800 redress. In sheer desperation she ultimately turned to this Court as a last resort. Unable to engage a lawyer, she addressed a letter to a learned judge of the Court setting forth her grievance. After being processed in the Registry, the letter was treated as a Writ Petition under Art 32 of the Constitution. A Rule Nisi was issued and the Tamil Nadu State Electricity Board have appeared before us through counsel. At our request Sri Gopala Subramanyam argued the case for the widow as amicus curiae. He presented the . case with understanding and thoroughness and we are grateful to him, as also to Dr. Chitaley who presented the employer 's case with his usual fairness. In exercise of the powers conferred by s.79(c) of the Electricity Supply Act, 1948, the Tamil Nadu Electricity Board made the Tamil Nadu Electricity Board Contributory Provident Fund Regulations. Regulation 3 Provides for this establishment of a fund known as the Tamil Nadu Electricity Board Employees ' ' Contributory Provident Fund, with effect from 1.7.57. Regulation 3 A to 3 K provide for the management and administration of the fund by the Board of Trustees. Regulation 4 prescribes that the Fund shall be governed by regulation a i may be in force for the time being but provides that no addition, alteration or repeal, of any regulation which may adversely effect a subscriber shall be retrospective. Regulation 5 provides that all employees who are eligible for the Contributory Provident Fund (Tamil Nadu) Scheme and Gratuity Scheme of the Government of Tamil Nadu except certain categories of employees with whom we are not concerned shall become subscribers to the fund on completion of three months continuous service. Regulation 6 prescribes that an account shall be opened in the name of each member in which shall be credited, the member 's subscriptions and interest thereon, the contributions made by the Electricity Board to his account and interest thereon and the pre existing account before the Electricity Department was taken over by the Electricity Board. Regulation 9 provides for subscription to the fund by members at a the rate of 7 1/2% of pay plus dearness allowance. Regulation 11 provides for contribution by the Electricity Board to the account of each member at the rate of 7% of pay plus dearness allowance. The member 's subscription along with the Electricity Board 's Contribution is required to be credited to the individual account of the member before the 15th of every month. Regulation 37 prescribes that the Electricity Board shall credit to a member 's Provident Fund account a special contribution calculated in the specified manner in addi 801 tion to the contribution credited under Regulation 11, if the Board is satisfied that the service of the member has been good, efficient and faithful and the member has not been dismissed from service or the member has not been removed from service in which case the sanction of the Board has to be obtained. In the case of a Class I or Class II employee who quits service on attainment of the age of superannuation, he is to be credited, if his service exceeds 18 years with six months pay plus half a month 's pay for each completed year of service after the 18th but not so is to exceed, in all, twelve months ' pay or rupees twenty five thousand, whichever is less. If the employee 's service does not exceed 18 years, he is to be credited with half a month 's pay for each completed year of service so as not to exceed six months ' pay. In the case of a Class III or Class IV employees who has attained the age of superannuation after 15 years ' service, the Electricity Board is required to credit his account with half a month 'S pay for each completed year of service, but not so as to exceed to 15 months ' pay. If the service is short of 15 years, he is to be credited with half a month 's pay for each completed year of service so as not is exceed six months ' pay. It is provided in Regulation 37 that pay for the purpose of reckoning special contribution shall be the pay last drawn during the last three years of service, whichever is more. The Board is also empowered to withhold or reduce the Special Contribution in any particular case. At this stage, we may refer to section 12 of the which prohibits all employer from reducing directly or indirectly the total quantum of benefits in the nature of old age pension, gratuity or Provident Fund or Life Insurance to which the employee is entitled under the terms of his employment, express or implied, by reason only of his liability for the payment of any contribution to the fund (which is defined by section 2(h) as meaning a Provident Fund established under the employees ' Provident Fund Scheme framed under section 5). In 1972, Parliament enacted the to provide for a scheme for the payment of gratuity to employees in certain establishments. There is no dispute that the Act applies to the Tamil Nadu State Electricity Board. Section 4 of the Act requires payment of gratuity to an employee who has rendered continuous service for not less than five years, on the termination of his employment on superannuation or on retirement or on his 802 death or disablement due to accident or disease. The employer is required to pay the gratuity to the employee at the rate of fifteen days ' wages for each completed year of service or part thereof in excess of six months. The amount of gratuity is not to exceed 20 months ' wages. The employer is not required to pay any gratuity to an employee if the service of the employee has been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, or if the services of the employee have been terminated for riotous or disorderly conduct or any other act of violence on his part or if his a services have been terminated for any act involving moral turpitude provided that such offence is committed by him in the course of his employment. Section 14 provides that the contribution of the Act shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument or contract having effect by virtue of any enactment other than the . Abdul Salam, who held a non pensionable post, retired on 31.7.76, after a service of 34 years and live months. He died on 15.10.76 within three months after his retirement. He was entitled or, in this case his widow was entitled to the payment of the entire amount standing to his credit in his Provident Fund account and the gratuity payable under the . The Electricity Board, however, took the stand that she was entitled to be paid the member 's subscription and interest, the employer 's contribution and interest and gratuity but not the special contribution under Regulation 37 of the Tamil Nadu State Electricity Board Contributory Provident Fund Regulations. The reason for the Board 's attitude was that the special contribution Required to be paid under Regulation 37 was nothing other than payment of gratuity and that they could not be asked to pay gratuity twice over, once under the and again under Regulation 37. Since they were ready to pay the gratuity payable under the , which was more favourable to the employee, they were not obliged to make payment of the contribution under Regulation 37. We may mention here that the Board has paid to the widow, the member 's subscription with interest and the employer 's contribution with interest but not the special contribution under Regulation 37. The Board has paid a sum of Rs. 4275/ towards gratuity under the payment of Gratuity Act but a sum of 803 Rs. 3167/ is admittedly yet due from the Board towards gratuity. In the counter affidavit filed on behalf of the Electricity Board we are not able to find any reason for non payment of the balance of gratuity. We are unable to appreciate how the Electricity Board can avoid payment of the Special Contribution to Provident Fund under their own Provident Fund Regulations on the pretext that it is akin to or the same as Gratuity payable under the . In the first place, the Board, in their Regulations, have themselves labelled the Special Contribution under Regulation 37 as a Special Contribution to Provident Fund not as a Gratuity. It is not as if they were unaware of the word 'Gratuity ' and what it meant since we find that there is a reference in Regulation 5 to a Gratuity Scheme of the Tamil Nadu Government which had been adopted by the Board. The Special Contribution under Regulation 37 is part of a well thought out Provident Fund Scheme designed to benefit 'good ' efficient and faithful employees (we borrow the words from the Regulation itself) by ranking annual contributions in addition the monthly contributions under Regulation 11. This is what appears from Regulation or itself, we see no justification for first dubbing it as a gratuity on the ground that it has some of the known characteristics af gratuity and then proceeding to deny the employees the benefit of it on the ground that the Board are paying gratuity under the . If the Special Contribution has some common features with gratuity, it has also distinctive features which distinguish it from gratuity payable under the payment of Gratuity Act, For example, one important feature which discriminates the Special Contribution under Regulation 37 from gratuity under the is that while the Payment of the latter is obligatory and can only be denied if the employee 's services have been terminated for his riotous or disorderly conduct or any other act of violence on his part or any act which constitutes an offence involving moral turpitude and can also be denied to the extent of the damage or loss caused by the employee, where the employee 's services have been terminated for any act, wilful omission or negligence causing any damage or to loss, or destruction of property belonging to the employer, the payment of the former is discretionary and may not be made if the service of the employee has not been good, efficient and faithful. The employee has also the discretion to withhold or reduce the Special Contribution in any particular case. Of course, 804 the employer cannot arbitrarily claim that the employee 's service was not good, efficient and faithful, or with hold or reduce the Special Contribution in an arbitrary fashion. Even so, the distinction between the mandate of the and the discretion involved in making the Special Contribution under Regulation 37 is intelligibly clear. Another feature which distinguishes the two is that the benefit of the is confined to persons drawing wages not exceeding Rs. 1000 and does not extend to persons employed in a managerial or administrative capacity whereas the Special Contribution under Regulation 37 is not so confined and extends to every employee of the Board a except casual employees, State or Central Government employees employed with the Board on foreign service terms etc. For the purpose of contribution of Provident Fund under Regulation 11 or Regulation 37 it makes no difference that a person is employed in a managerial or administrative capacity on that he draws wages more than Rs. 1000 per month. A third feature which marks the two apart is that the contribution to the Provident Fund whether under Regulation 11 or Regulation 37 becomes part of the Fund established by Regulation 3 and is to be managed and administered by trustees under Regulation 3 A to 3 K, whereas the payment of Gratuity Act does not provide for the Constitution of a fund to be managed and administered by trustees. In addition to these broad features, we have the outstanding circumstance that the Board themselves have described the contribution under Regulation 37 as a contribution to Provident Fund and have chosen to include it in their Provident Fund Scheme. That should conclude the matter. Dr. Chitaley invited our attention to section 14 of the which provides, "The provisions of this Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in an enactment other than this Act or in any instrument or contract having effect by virtue of any enactment other than this Act." He argued that the provision for Special Contribution under Regulation 37 was inconsistent with the provisions of the and therefore the latter should prevail to the exclusion of the former. This argument is dependent on the assumption that the Special Contribution under Regulation 37 is the same thing as the gratuity contemplated by the Payment of 805 Gratuity Act. We have held that it is not and the argument, therefore, fails. There was then the usual lament that a large number of employees were involved and, therefore, the cost will be heavy. We do not understand this argument at all. Does it mean that beneficent legislations and beneficent schemes must be confined to small establishments employing a few workers only ? On the other hand, it is misleading to say that the cost is heavy. The cost is made to appear heavy divorced from the size of the establishment. If the establishment is huge and if a large number of workmen are employed the total wage bill may appear to be heavy, but is it really so ? Is it disproportionate to the size of the establishment, its resources, its revenues and its other expenditure ? Is the individual wage bill also very high ? To talk of heavy cost without reference to other circumstances is to present an entirely unfaithful picture. We heed make no further comment. In the result we direct the respondent Board to pay to the petitioner the whole of the Special Contribution under Regulation 37 which was payable to her husband and the balance of the Gratuity payable under the , part of which we are told has been paid leaving the sum of Rs. 3167 unpaid. These amounts should be paid to the petitioner with interest at 15% per annum from the date on which the amounts fell due. The respondent Board should also pay a sum of Rs. 2500 to the petitioner towards compensatory costs. We must add that the case had left us with the feeling of uneasiness and distress at the plight of helpless persons like the petitioner whose repeated representations to those in authority were left uncared for so the tediously long despite frequent protestations of social justice. H.S.K. Petition allowed.

Regulation 37 of the Tamil Nadu Electricity Board Contributory Provident Fund Regulations framed by the Tamil Nadu Electricity Board under the Electricity Supply Act, 1948 provides that the Electricity Board shall credit to a member 's provident fund account a special contribution calculated in the specified manner, in addition to the contribution credited under Regulation 11, if the Board is satisfied that the service of the member has been good efficient and faithful and the member has not been dismissed from service or the member has not been removed from service in which case the sanction of the Board had to be obtained. The which was also applicable to the Tamil Nadu Electricity Board provided for the payment of gratuity to employees who would retire after rendering service for a specified number of years. The petitioner 's husband retired in 1976 after serving the Tamil Nadu Electricity Board for about 34 years and died three months thereafter. The petitioner was paid her husband 's subscription to the Contributory Provident Fund and interest and the Electricity Board 's contribution and interest and also the gratuity under the payment of Gratuity Act, 1972. The Electricity Board did not pay the Special Contribution to be made by it to the contributory Provident Fund under Regulation 37 on the ground that the special contribution being nothing other than the payment of gratuity, they could not be asked to pay gratuity twice over, once under and again under Regulation 37. The petitioner having got no relief from anywhere wrote a letter to a Judge of the Supreme Court which was treated as a writ petition. Allowing the petition, 799 ^ HELD: The Electricity Board cannot avoid payment of the special Contribution to Provident Fund under their own Provident Fund Regulations on the pretext that it is akin to or the same as Gratuity payable under the . In the first place, the Board, in their Regulations, have themselves labelled the Special Contribution under Regulation 37 as a Special contribution to Provident Fund and not as Gratuity. It is not as if they were unaware of the word 'Gratuity ' and that it meant since it is found that there is a reference in Regulation 5 to a Gratuity Scheme of the Tamil Nadu Government which had been adopted by the Board. The Special Contribution under Regulation 37 is part of a well thought out Provident Fund Scheme designed to benefit 'good, efficient and faithful ' employees (borrowing the words from the Regulation itself) by making annual contributions in addition to the monthly contributions under Regulation 11. This is what appears from Regulation 37 itself. There is no justification for first dubbing it as a gratuity on the ground that it has some of the known characteristics of gratuity and then proceeding to deny the employees the befit of it on the ground that the Board are paying gratuity under the . If the Special Contribution has some common features with gratuity, it has also distinctive features which distinguish it from gratuity payable under the . [803B F] In view of the finding that Special Contribution under Regulation 37 is not the same as gratuity under , the argument that the provision for Special Contribution under Regulation 37 was inconsistent with the provisions of the and therefore the latter should prevail to the exclusion of the former must fail. [804H; 805A]

Civil Appeal No. 3966 of 1987. From the Judgment and Order dated 20.1.1987 of the High Court of Orissa of O.J.C. No. 3300 of 1986. A.K. Panda for the Appellant. J. R. Das for the Respondent The Judgment of the Court was delivered by SHARMA, J. Special leave granted. Arguments heard. The respondent A.C. Jena was a Sarpanch of Padanipal Grama Panchayat, Orissa. He was removed from the office under section 115 of the Orissa Grama Panchayat Act, 1964 by the order of the State Government (petitioner No. I before us) dated 24.10.86, as contained in Annexure D to the special leave petition, which has been quashed by the impugned judgment of the Orissa High Court dated 20.1.1987 in o. J.c No. 330()/86. The relevant provisions of section 115 of the Act read as follows: "115(1). If on the report of the Sub Divisional 179 Officer the Collector is of the opinion that circumstances exist to show that the Sarpanch or Naib Sarpanch of a Grama Panchayat wilfully omits or refuses to carry out or violates the provisions of this Act, or the rules or orders made thereunder or abuses the powers, rights and privileges vested in him or acts in a manner prejudicial to the interest of the inhabitants of the Grama and that the further continuance of such person in office would be detrimental to the interest of the Grama Panchayat or the inhabitants of the Grama, he may, by order, suspend the Sarpanch or Naib Sarpanch, as the case may be, from office and report the matter to the State Government. (2) The State Government, on the report of the Collector under sub section (1) shall, or if the State Government themselves are of the opinion that the circumstances specified in the said sub section exist in relation to a Sarpanch or Naib Sarpanch, then on their own motion, may, after giving the person concerned a reasonable opportunity of showing cause, remove him from the office of Sarpanch or Naib Sarpanch, as the case may be. (3). . . . . . . . . . . . . . (4) A Sarpanch or Naib Sarpanch on removal from office under sub section (2) shall also cease to be a member of the Grama Panchayat, and such person shall not be eligible for election as a member for a period not exceeding four years as the State Government may specify. (5). . . . . . . . . . . . . . The Collector, Cuttack, petitioner No. 2, before us, received a report (Appendix to Annexure A) from the Sub Divisional officer, Kendra Pada, stating the facts and circumstances which clearly satisfy the conditions mentioned in section 115 of the Act, for the suspension and removal of the respondent. The Collector, Cuttack, thereupon suspended the Sarpanch by his order dated 24.4.1985 (Annexure A) and while so doing he expressly mentioned that on going through the 180 report of the Sub divisional officer he was satisfied that the Sarpanch acted in a manner as detailed in the Appendix and "his further continuance in office would be detrimental to the interest of the said Grama Panchayat as also of the inhabitants of the Grama." Accordingly a notice as required by sub section (2) was served on the Sarpanch, who filed his detailed reply and was also personally heard. His explanation however was not considered satisfactory and an order dated 24.10.1986 bearing No. 19032/GP was passed removing him from the office of the Sarpanch. A second notification of the same date bearing No. 19039/GP was issued under sub section (4). The Sarpanch in these circumstances moved the High Court under Article 226 of the Constitution. The High Court at the stage of admission by a short order quashed the notification issued against the petitioner "on the sole and simple ground that the order does not specify one of the mandatory requirements, i.e., his further continuance in the office would be detrimental to the interest of the Gram Panchayat or the inhabitants of the Gram". Elaborating the point the High Court observed as follows: ". One of the circumstances mentioned in sub section ( I) is just indicated above. As the existence of the circumstances mentioned in sub section (1) is condition precedent for passing an order of removal by the State Government, its absence makes the order wholly illegal and without jurisdiction . , .". As has been stated earlier, the Collector, while passing the order of suspension under sub section (1) of section 115 expressly stated that the further continuance of the petitioner in office would be detrimental to the interest of the Grama Panchayat and the inhabitants of the Grama. He relied upon the report of the Subdivisional officer mentioning serious allegations against the Sarpanch which undoubtedly, if true, satisfied the conditions for exercise of the power. Since it has not been suggested before us otherwise, we do not consider it necessary to deal with them except mentioning that besides many serious allegations, the report also said that certain money belonging to the Grama Panchayat which had been received at an auction was not deposited. In the order of removal, the State Government after mentioning the allegations stated that the explanation of the Sarpanch was not acceptable and he was, therefore, being removed from the office. The allegations made against him, 181 thus were accepted as correct. In other words the State Government was of the opinion that the circumstances specified in sub section ( I) existed. It will be noticed that the language of sub section (2) does not require a repetition of the necessary satisfaction in the same language as referable to sub section (1). Besides, the section cannot be interpreted to mandatorily lay down a rule for the authority concerned to express his conclusion in relation to the fulfilment of the conditions mentioned therein in a particular form using a particular set of words. What is contemplated by the section is the formation of an opinion in this regard after giving a reasonable opportunity to the sarpanch in question to meet the allegations suggested and to announce the conclusion in unambiguous and express terms. All that has been done in this case. We do not. therefore, see any justification in the High Court quashing the orders impugned before it. Accordingly the appeal is allowed, High Court 's judgment is set aside and the writ application filed before the High Court is dismissed. N.P.V. Appeal allowed.

% The respondent was a Sarpanch of a Gram Panchayat. Consequent upon a report made by the Sub Divisional officer, against the respondent stating the facts and circumstances which satisfied the conditions mentioned in section 115 of the orissa Gram Panchayat Act, 1964 for his suspension and removal, the second appellant, by his order dated 22.4.85, suspended the respondent. A notice, as required by sub section (2) of section 151, was served on the Sarpanch who filed his detailed reply and was also personally heard. As the explanation was not considered satisfactory, an order dated 24.10.86 removing him from the office of the Sarpanch was passed, in which it was mentioned that the appellant 's further continuance in office would be detrimental to the interest of the Gram Panchayat as also of the inhabitants of the Grama. A second notification dated 24.10.86 under sub section (4) was also passed. The Sarpanch challenged the above notifications before the High Court. The High Court quashed the notifications on the sole and simple ground that the order did not satisfy one of the mandatory requirements, i.e. the appellant 's further continuance in the office would be detrimental to the interest of the Gram Panchayat or inhabitants of the Grama. Allowing the appeal, ^ HELD: The language of sub section (2) does not require a repetition of the necessary satisfaction in the same language as referable to sub section (1). Besides, the section cannot be interpreted to mandatorily lay down a rule for the authority concerned to express his conclusion in relation to the fulfilment of the conditions mentioned therein in a particular form using a particular set of words. [181B] 178 What is contemplated by the section is the formation of an opinion in this regard after giving a reasonable opportunity to the Sarpanch in question to meet the allegations suggested and to announce the conclusion in unambiguous and express terms. All that has been done in the instant case. 1 [181B C] The second appellant, while passing the order of suspension under sub section (l) of section 115, expressly stated that further continuance of the appellant in the office would be detrimental to the interest of the Gram Panchayat and the inhabitants of the Grama. The State Government was of the opinion that the circumstances specified in sub section (1) existed. In the order of removal, the State Government after mentioning the allegations, stated that the explanation of the Sarpanch was not acceptable and he was, therefore, being removed from the office. The allegations made against him thus were accepted as correct. The High Court was, therefore, not justified in quashing the impugned orders.[180 H; 181A,C]

s Nos. 79 and 80 of 1963 and 140 of 1962. Petitions under article 32 of the Constitution of India for the enforcement of Fundamental Rights. section N. Andley, Rameshawar Nath and P. L. Vohra, for the petitioner (in Petition Nos. 79 and 80 of 1963). Sarjoo Prasad, Ajoy Kumar Gajdhar Mahapatra and A. D. Mathur for the petitioner (in Petition No. 140/1962). section V. Gupte Additional Solicitor General, section B. Misra, R.Ganapathi lyer and R. N. Sachthey, for the respondents (in all the petitions). M. C. Setalvad, J. B. Dadachanji, Ravinder Narain and O. C. Mathur, for the interveners (in Petition No. 140/ 1962). January 23, 1964. The Judgment of the Court was delivered by GAJENDRAGADKAR J. The petitioners in these three petitions have moved this Court under article 32 of the Constitution and claimed a declaration that the operative provisions of the Orissa Private Lands of Rulers (Assessment of Rent) Act,, 1958 (hereinafter called `the Act ') and the Rules framed thereunder are unconstitutional and ultra vires. The private lands in the possession and enjoyment of the three respective petitioners have been assessed by the Revenue Officers in conformity with the Rules framed under the Act. The petitioners claim a writ or direction, or order 304 in the nature of certiorari quashing the said orders of assessment. The petitioner in Writ Petition No. 140/1962 is the Patrani Saheba of Keonjhar and is in possession and enjoyment of eight villages, viz., Mangalpur; Barigan; Nua Rampas; Nilung; Ghutru; Mohadijore; Patang and Anara in the district of Keonjhar. These villages were granted to her for maintenance a long time ago and as such, they have been recorded in the village papers as Khoraki Posaki (Maintenance Grant) Lands since the last settlement of 1918. She has held these lands without paying assessment; and her case is that the relevant provisions of the Act which authorise the levy of assessment in respect of her lands are unconstitutional and invalid. In her petition, she has referred to the fact that from time to time, the Government of the day had refrained from levying any assessment in respect of her lands and thereby recognised her right to hold the said villages on assessment free basis. The Revenue Officer of Keonjhar levied an assessment in respect of the said villages purporting to act under the Rules framed under the provisions of the Act. The petitioner then preferred appeals to the Board of Revenue against the said assessment orders but these appeals were dismissed. The assessment levied against the petitioner in respect of these lands is of the order of Rs. 9,000 and odd and it has to be paid by her from 1958 retrospectively. The petitioner in W.P. No. 79/1963 is Smt. Rani Ratna Prova Devi who is the wife of Raja Sankar Pratap Singh Deo Mahindra Bahadur, ex Ruler of Dhenkanal State in Orissa. At the time when the State of Dhenkanal. merged with India, the petitioner was in possession and enjoyment of lands in five villages as a Proprietor. In respect of these lands, assessment had never been levied; but purporting to give effect to the relevant provisions of the Act, the Revenue Officer Dhenkanal assessed rent in respect of all the lands which are in possession and enjoyment of the petitioner. The appeals preferred by the petitioner against the said order of assessment failed; and so, the petitioner filed the present writ petition challenging the validity of the Act as well as the validity of the assessment order. 305 The petitioner in W.P. No. 80 of 1963 is the ex Ruler of Dhenkanal. On the date of merger he held and was in possession of 89 acres 18 dec. and 5 kadis of land in Niz garh Town as his private lands. These lands were never subjected to the payment of rent and yet the Revenue Offi cers assessed rents in respect of these lands under the provisions of the Act. The petitioner failed in persuading the Appellate Authority to set aside the order of assess ment, and so, has filed the present writ petition challenging the validity of the Act and the order of assessment. Thus, the facts on which the three petitions claim relief are substantially similar and they have raised common points of law for our decision. That is why the three petitions have been heard together and would be disposed of by a common judgment. The Act which is challenged in the present proceedings was passed by the Orissa Legislature because "it was thought expedient to provide for assessment of rent with respect to the private lands of Rulers in the State of Orissa". It received the assent of the Governor on the 21st May. 1958 and was published in the State Gazette on the 6th June, 1958. It consists of 15 sections and the main object of the Act is to authorise the levy of rent in respect of the private lands of persons included in the definition of the word "Ruler" prescribed by section 2(h) of the Act. Section 2(e) defines 'Private land ' as meaning any land held on the date of merger by a Ruler free from payment of rent, while section 2 (h) defines a "Ruler" as meaning the Ruler of a merged territory in the State of Orissa and includes his relatives and defendants. Thus, the definition of the word "Ruler" is an inclusive definition and takes within its sweep the re latives of the Ruler and his dependents, with the result that private lands held by such relatives or dependents by virtue of the grants made by the ruling Prince or otherwise come within the mischief of the operative provisions of the Act. Section 2(i) provides that all other expressions used and not defined in the Act shall have the same meaning as are respectively assigned to them under the tenancy laws in force in the concerned areas. Section 3 contains the main operative provision and it lays down that notwith 134 159 S.C. 20 306 standing anything contained in any other law, custom, con tract or agreement to the contrary, the private lands field by a Ruler shall, with effect from the date of commencement of this Act, be liable to assessment and levy of rent as provided in the Act. Thus, the effect of this provision is that private lands held by Rulers which till then were not liable to pay rent or assessment, were made liable to pay the same. In other words the exemption from the payment of assessment or rent which the private lands of Rulers enjoyed till then ceased to be operative, and the said lands were treated like other lands in the State liable to pay assessment and rent. Section 4 provides for the appointment of Revenue Officers, and sections 5 and 6 deal with the classification of lands and prescribe the maximum rates of rent, and the procedure in determining the rent respectively. Under section 5, the lands have to be classified as irrigated wet land, rainfed wet land, and dry land; this section provides that subject to the provisions of section 6, the rates at which the fair and equitable rent shall be assessed with respect to the said three categories of land shall not exceed the amount as may be prescribed from time to time by the State Government. The proviso to section 5 deals with the special category of cases where the tenants of the Ruler have already acquired rights of occupancy, and lays down that the rent payable by the Ruler in respect of such lands shall be such proportion of the rent received by him from the tenants as may be prescribed. Under section 6, the considerations which have to be borne in mind in determining the rates of fair and equitable rent are specified by clauses (a) to (e), viz., the nature of the soil and general productivity of such land; the class under which the land is assessable; market value of the land; the prevailing rates of rent obtaining for similar lands in the neighbourhood; and such other matters relating thereto as may be prescribed. It is thus clear that whereas section 5 requires the classification of the Ruler 's private lands to be made and provides for the prescription of the maximum of the rent which may be levied in respect of them, section 6 indicates the factors which have to be borne in mind in determining the rates of fair and equitable rent. Clause (e) 307 shows that in addition to the factors mentioned in clauses (a) to (d), other matters may also be specified by the Rules. The rest of the sections deal with matters relating to the levy and recovery of assessment with which we are not concerned in the present petitions. The first contention which has been raised before us by the petitioners is that the provisions contained in sections 5 and 6 are invalid inasmuch as they contravene article 14 of the Constitution. It is convenient to refer to some facts set out in W.P. No. 79/1963 in support of this argument. We have already noticed that under section 6 certain considerations which the Act considers to be relevant have been prescribed, and so, the Revenue Officer has to bear those considerations in mind in determining the fair and equitable rent in respect of a given land. W.P. No. 79/1963 points out that as a result of the consideration of the relevant factors mentioned in section 6, the rates fixed by the preliminary pattas in respect of the petitioner 's lands are in every case higher than the rates of rent which are in operation in res pect of the Revisional Settlement Khatian. Basing them selves on the fact that in the calculation of the rent made by the Revenue Officers in respect of the private lands of Rulers they have arrived at a figure of rent which is gene rally higher than the rent which would be determined in case the rates current under the Settlement prevailing in respect of the other lands were applied, the petitioners contend that in their operation the relevant provisions of the Act have introduced an illegal discrimination as between their lands and the other lands liable to assessment of rent in the State of Orissa. It is also urged in support of this argument that it would not be a valid consideration for levying higher assessment in respect of the private lands of Ruler that they were not required to pay assessment until the Act was passed. The legislature may in its authority make the private lands of Rulers liable to assessment of rent, but when these lands are brought within the class of assessable lands, they should be treated in the same way as the other assessable lands are treated in Orissa. That, briefly stated, is the contention on which the validity of the Act is challenged under article 14. Prima facie, there is 308 some force in this contention. But, on the whole we are not satisfied that the plea thus raised by the petitioners can be said to displace and rebut the initial presumption of constitutionality in favour of the impugned statute. In dealing with the question raised before us, it is neces sary to bear in mind the fact that in regard to other assessable lands, a survey settlement which had already been made was in operation and was expected to continue in opera tion for a certain specified period; usually, when a settle ment has been made and assessment levied in pursuance of it, it cannot be revised merely by an executive order during the stipulated period, though, of course, the legislature can, if it so desires, make a law prescribing for a fresh assess ment even during the said specified period. But, in the present case, the legislature appears to have taken the view that it was not necessary or expedient to introduce a fresh settlement in regard to all the other assessable lands, and so, it has passed the present statute only in regard to the private lands of Rulers. That is one relevant and historical fact which cannot be ignored. Proceeding to deal with the private lands of Rulers on this basis, the legislature had to prescribe the method of determining the rent payable by the said lands; and the re levant factors specified by section 6 appear to be just and substantially similar to the considerations which are generally taken into account at the time of survey settlement for determining the proper revenue assessment on ryotwari lands. There has been some argument at the Bar before us as to whether the market value of the land which has been prescribed as a relevant consideration by section 6 was also treated as relevant on the occasion of the earlier settlement. No material has, however, been placed before us in that behalf, and so, it is not possible to decide whether this consideration was taken into account on the earlier occasion or not, and if it was not, what the effect of the said circumstance would be on the validity of the impugned statute. Having regard to the relevant factors prescribed by section 6, it would, however, not be unreasonable to take the view that fair and equitable tests have been laid down for determin 309 ing the rent which should be assessed in respect of the pri vate lands of the Rulers, and in the absence of any proof that there has been a material departure in that behalf, we find it difficult to uphold the plea that section 6 can be attacked on the ground that it has contravened article 14 of the Constitution. The problem posed by the requirement to levy assessment on these private lands had to be dealt with by the legislature on an ad hoc basis. The settlement of rent and assessment introduced by the Act had been made applicable to these lands for the first time, and so, strictly speaking, these lands cannot be treated as comparable in every respect with the lands which were governed by the rates prescribed under the previous settlement and that may help to meet the argument that the impugned Act contravenes article 14. If the two categories of lands do not constitute similar lands in all particulars, no valid complaint can. be made on the ground that there has been discrimination as between them. That is another aspect which may be relevant. There is yet another factor which may be mentioned in this connection. It appears that in 1959, the Orissa Legislature has passed an Act, No. 3 of 1959 with a view to consolidate and amend the laws relating to survey, record of rights and settlement operations in the State of Orissa, and so, it appears that after the settlement operations are duly conducted and completed under the relevant provisions of this latter Act, assessment in regard to all the assessable lands, including the private lands with which we are con cerned in the present proceedings would be made on the basis prescribed by it. The operation of sections 3, 5 and 6 of the impugned Act is, therefore, limited to the period between June, 1958 when the Act came into force and the date when the assessment determined under the provisions of the subsequent Act actually come into operation in respect of all the lands. That is another factor which has to be considered in dealing with the question about the validity of the impugned Act. The allegations made by the petitioners, in challenging the validity of the Act are somewhat vague and the mate 31O rials placed by them in support of their challenge are in sufficient, inadequate and unsatisfactory. The reply made by the State is also not very helpful or satisfactory. It is precisely where a challenge to the validity of a statute is made by a party under Article 14 and he fails to adduce satisfactory evidence in support of his challenge that the task of the Court to decide the issue becomes very difficult. In considering the validity of a statute under article 14, we cannot ignore the well established principle that the legislature can make class legislation, provided the classification on which it purports to be based is rational and has a reasonable nexus with the object intended to be achieved by it, and so, on the failure of the party to show that the said classification is irrational, or has no nexus with the object intended to be achieved by the impugned Act, the initial presumption of constitutionality would help the State to urge that the failure of the party challenging the validity to rebut the initial presumption goes against his claim that the Act is invalid. In all cases where the material adduced before the Court in matters relating to article 14 is unsatisfactory, the Court may have to allow the State to lean on the doctrine of initial presumption of constitutionality and that is precisely what has happened in these cases. On the whole therefore we must hold that the petitioners have failed to show that the impugned Act contravenes article 14 of the Constitution. it is then argued that the Act is invalid because the definition of the expression "Ruler" is inconsistent with the definition of the said word prescribed by article 366(22) of the Constitution. article 366(22) defines a "Ruler" in relation to an Indian State as meaning 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. There is no doubt that the definition of the word " Ruler" prescribed by section 2(h) of the Act is wider than that prescribed by article 366(22). The dependents of the Ruler and his relatives are not included in the latter defini 311 tion, though they are expressly included in the former. But it must be remembered that the definitions prescribed by article 366 are intended for the purpose of interpreting the articles in the Constitution itself, unless the context otherwise requires, and so, the argument that the definition of the word "Ruler" prescribed by the Act is inconsistent with the definition prescribed by article 366(22), has really no substance or meaning. Besides, it is fallacious to assume that the Act has made any provision in respect of Rulers as such; what the Act has purported to do is to authorise the levy of assessment and rent in respect of lands situated in Orissa; these lands are the private lands of the Rulers as defined by section 2 (h), and so, there is no doubt that the whole object of defining the word "Ruler" is to specify and describe the lands in respect of which the operative provisions of the Act would come into play. The subject matter of the levy consists of the private lands and the compendious way adopted by the legislature in describing the said lands is that they are the private lands of the Rulers. It is in that connection that the word "Ruler" has been broadly defined in an inclusive manner. If the legislature had said that the private lands of the Rulers as well as the private lands of the dependents and relatives of Rulers were liable to the levy permitted under section 3, the petitioners would not have been able to raise any objection because, then, it would have been unnecessary to define the word "Ruler" in a comprehensive. Once it is conceded, as it must be, that the Orissa Legislature was competent to pass the Act under Entry 18 of List II of the Seventh Schedule, it is idle to suggest that the method adopted by the Act in describing the lands which are made liable to pay assessment, introduces any infirmity in the Art itself. Therefore, we are satisfied that the contention that the definition of the word "Ruler" is inconsistent with article 366(22) and that makes the whole Act void, is without any substance. The third argument which was faintly urged before us is that the Act contravenes the provisions of article 31 of the Constitution. This argument is wholly misconceived. article 31(1) deals with the deprivation of property save by autho rity of law, and cannot obviously be invoked against any 312 of the provisions of the Act; and article 31(2) deals with compulsory acquisition or requisition which also is entirely inapplicable to the present Act. What the Act has purported to do is to authorise the levy of assessment in respect of lands which till then had been exempted from the said levy, and as article 31(5)(b)(i) provides nothing contained in clause (2) shall affect the provisions of any law which the State may make for the purpose of imposing or levying any tax or penalty. If the Orissa Legislature has imposed a tax in the form of the assessment of the private lands of Rulers, clearly it has not purported either to deprive the Rulers of their property, or to acquire or requisition the said property; it is a simple measure authorising the levy of a tax in respect of agricultural lands and as such, it is entirely outside the purview of article 31. It appears that in Pratap Kessari Deo vs The State of Orissa & Ors.(1) the validity of the Act was challenged before the Orissa High Court and the said High Court has repelled the challenge and upheld the validity of the Act. In our opinion, the view taken by the Orissa High Court is right. The result is. the petitions fail and are dismissed with costs. One set of hearing fees. Petition dismissed.

The petitioners in these three writ petitions challenged the operative provisions of the Orissa Private Lands of Rulers (Assessment of Rent) Act, 1958 and the, Rules framed thereunder. These petitioners possess 302 private lands in the State of Orissa, which before the impugned Act were not subjected to the payment of rent, but which were assessed by the Revenue Officers in conformity with the Rules framed under the Act. The petitioners claims a writ in the nature of certiorari quashing the said orders of assessment. The Act was passed by the Orissa Legislature because it was thought expedient to provide for assessment of rent with respert to the private lands of Rulers in the State of Orissa. The main object of the Act is to authorise the levy of rent in respect of the private lands of persons included in the definition of the word "Ruler" prescribed by section 2(h) of the Act. Section 2(h) defines a "Ruler" as meaning the Ruler of a merged territory in the State of Orissa and includes his relatives and dependants. The petitioners attacked the pro visions of the Act mainly on the ground that they contravened article 14 of the Constitution. Held:(i) that section 6 of the Act does not contravene article 14 of the Constitution for the reason that fair and equitable tests have been laid down under section 6 of the Act for determining the rent which should be assessed in respect of the private lands of the Rulers. In the present case the legislature had prescribed the method of determining the rent payable on the private lands; and the relevant factors specified by section 6 appear to be just and substantially similar to the considerations which are generally taken into account at the time of survey settlement for determining the proper revenue assessment on ryotwari lands. The problem posed by the requirement to levy assessment on these private lands had to be dealt with by the legislature on an ad hoc basis. The settlement of rent and assessment introduced by the Act had been made applicable to these lands for the first time, and so, these lands could not be treated as comparable in every respect with the lands which were governed by the rates prescribed under the previous settlement. (ii)In considering the validity of a statute under article 14 the wellestablished principle is that the legislature can make class legislation, provided the classification on which it purports to be based is rational and has a reasonable nexus with the object intended to be achieved by it. If the party fails to show that the said classification is irrational, or has no nexus with the object intended to be achieved by the impugned Act, the initial presumption of constitutionality would help the State to urge that the failure of the party challenging the validity to rebut the initial presumption goes against his claim that the Act is invalid. In all cases where the material adduced before the court in matters relating to article 14 is unsatisfactory, the court may have to allow the State to lean on the initial presumption of constitutionality. (iii)There is no substance in the contention that the impugned Act is void because the definition of the word "Ruler" is inconsistent with Art, 366(22) of the Constitution. There is no doubt that the definition of the word "Ruler" prescribed by section 2(h) of the Act is wider than that prescribed by article 366(22) of the Constitution. 303 The definitions prescribed by article 366 are intended for the purpose of interpreting the articles in the Constitution itself, unless the context otherwise requires. The whole object of defining the word "Ruler" in the Act is to specify and describe the lands in respect of which the operative provisions of the Act would come into play. It is in that connection that the word "Ruler" has been broadly defined in an inclusive manner. (iv) The impugned Act is entirely outside the purview of article 31 of the Constitution as it has not purported either to deprive the Rulers of their property, or to acquire or requisition the said property. It is a simple measure authorising the levy of a tax in respect of agricultural lands. Pratap Kesari Deo vs The State of Orissa, A.I.R. 1961 Orissa 131, relied on.

Civil Appeal Nos. 12 10 to 12 17 of 1980 etc. From the Judgment and Order dated the 22nd April, 1980 of the 445 Andhra Pradesh High Court in Writ Appeal Nos. 499, 500 to 505 of 1979 and 144 of 1980. Anil Dev Singh, G.B. Pai, K. Madhva Reddy, P.A. Choud hary, Hemant Sharma, P. ParmeshWaran, B. Parthasarthi, C.V. Subba Rao, Abbas Naqvi, R.P. Gupta, N.K. Nair, B. Kanta Rao, Chandrashekhar Panda, A.T.M. Sampath, P.N. Ramalingam, R.D. Upadhyay, Ms.S. Janani and A. Subba Rao for the appearing parties. It may be noted that, except in C.A. 3044/89, the Union of India is the appellant. The short common question arising in this large batch of appeals is: who is the authority competent to initiate disciplinary proceedings against the Government servants who are the parties here (hereinafter referred to, for conven ience, as 'the respondents ')? There are two sets of appeals before us, one arising out of proceedings in the Ministry of Defence, and the other in the Ministry of Railways. The rules governing the former are the Central Civil Services (Classification, Control & Appeal) Rules (hereinafter re ferred to as "the Civil Services rules") and those governing the latter are the Railway Servants (Discipline and Appeal) Rules (hereinafter referred to as 'the Railway rules '). S/Shri G.B. Pai, Anil Dev Singh, P.A. Choudhary, Madhava Reddy, B. Kanta Rao, A. Subba Rao, A.T.M. Sampath, R.D. Upadhyay and others have argued the matters at length and in great detail and we proceed to dispose of these appeals after considering all the aspects urged before us. We shall take Daniel 's case (C.A. Nos. 1210 to 1217 of 1,980) as illustrative of the cases under the Civil Service Rules. Though the employees in these and connected matters are Class III employees of Research Laboratories attached to the Ministry of Defence (shortly referred to as DRDL, DMAL, DERL and DLRL), they are serving in civil posts therein and, hence, governed by the Civil Service Rules. They had been appointed by the Director of the Laboratory. Disciplinary proceedings were initiated against them by the Director. There is, therefore, no possibility of any eventual viola tion of the constitutional prohibition in Article 311(1) against a Government servant being dis 446 missed or removed from office by an authority subordinate to the appointing authority. Still, the respondents contend that the Director is not competent to initiate disciplinary proceedings against them and that it is only the Scientific Adviser to the Government of India a higher authority that can do so. This contention, based on the relevant provisions of the Civil Service Rules, proceeds on the following lines. Rules 12 and 13 of the Civil Service Rules deal with this topic and read as follows: "12. Disciplinary Authorities (1)The President may impose any of the penalties specified in rule 11 on any Government servant. (2) Without prejudice to the provisions of sub rule (1), but subject to the provisions of sub rule (4), any of the penal ties specified in rule 11 may be imposed on (a) xx XX xx (b) a person appointed to a Central Civil post included in the General Central Service, by the authority specified in this behalf by a general or special order of the President or, where no such order has been made, by the appointing authority or the authority specified in the Schedule in this behalf. Authority to institute proceedings (1) The President or any other authority empowered by him by general or special order may (a) institute disciplinary proceedings against any Govern ment servant; (b) direct a disciplinary authority to institute discipli nary proceedings against any Government servant on whom that disciplinary authority is competent to impose under I these rules any of the penalties specified in rule 11. (2) A disciplinary authority competent under these rules to impose any of the penalties specified in clauses (i) to (iv) of 447 rule 11 may institute disciplinary proceedings against any Government servant for the imposition of any of the penal ties specified in clauses (v) to (ix) of rule 11 notwith standing that such disciplinary authority is not competent under these rules to impose any of the latter penalties. " In these cases, the disciplinary proceedings have been instituted neither by the President nor by an authority directed by him to do so, nor by any other authority empow ered by him, by general or special order, to do so. The disciplinary authority (D.A.) in the present case, there fore, has to be in terms of rule 12(2)(b), "the appointing authority or the authority specified in the schedule in this behalf". The "authority specified in the schedule in this behalf", admittedly, is the Scientific Adviser to the Gov ernment of India. The question next is whether the Director is the "appointing authority" in the case of the respond ents. This matter is dealt within Rule 9(1) mad with its proviso which read thus: "9. Appointments to other Services and Posts (1) All appointments to the Central Civil Services (other than the General Central Service) Class II, Class III and Class IV, shall be made by authorities specified in this behalf in the Schedule." "Provided that in respect of Class III and Class IV civilian services, or civilian posts m the Defence services appoint ments may be made by officers empowered in this behalf by the aforesaid authorities. " The 'appointing authority ' specified in the schedule referred to in Rule 9(1), in the case of the respondents, is, again, the Scientific Adviser to the Government of India. But, by a notification made in exercise of the power conferred by the proviso, he had authorised the Director to make appointments to Class III and Class IV posts in his establishment and, it is common ground, the Director had appointed the respondents in exercise of that power. In other words, there is no dispute that the Director is the "appointing authority" of the respondents not only in the sense that he was empowered to appoint them under rule 9 but also in the sense that he actually made these appointments. Nevertheless, it is said, he is not the 'appointing authori ty ' in the case of the respondents within the meaning of rule 12(2)(b). In support of this argument, attention is drawn to rule 2 which contains 448 the definitions of various expressions for the purposes of the rules which will be applicable in the absence of any thing to the contrary in the relevant context. Rule 2(a) reads: "(a) 'appointing authority ' in relation to a Government servant means (i) the authority empowered to make appointments to the Service of which the Government servant is for the time being a member or to the grade of the service in which the Government servant is for the time being included, or (ii) the authority empowered to make appointments to the posts which the Government servant for the time being holds, or (iii) the authority which appointed the Government servant to such Service, grade or post, as the case may be, or (iv) where the Government servant having been a permanent member of any other Service or having substantively held any other permanent post, has been in continuous employment of the Government, the authority which appointed him to that Service or to any grade in that Service or to that post. whichever authority is the highest authority. " It will be noticed that this clause refers to two classes of persons: (a) the authority empowered to make appointments to the service, grade or post with which we are concerned sub clauses (i) and (ii) and (b) the authority who actually appointed the Government servant to the service, grade or post in question sub clauses (iii) and (iv). Each of these is sub divided into two categories but we need not, for the purposes of the present cases, bother about this sub divi sion. Stopping here, it will be seen, as pointed out al ready, that the Director falls under both the above catego ries as he is empowered to appoint the respondents by virtue of the power delegated to him under the proviso to rule 9(1) and as he has also factually appointed them. But, it is said, the Scientific Adviser to the Government of India, notwithstanding his having delegated his power to the Direc tor under the proviso, also continues to be an authority empowered to appoint persons to the posts in question under rule 9(1) read with the schedule. So under the 449 first category of persons indicated above as referred to in rule 2(a) there are two authorities the Scientific Adviser and the Director and under the second category we have the Director. And, here comes the crucial point on which the respondents bank their entire case: the last few words of rule 2(a) make it clear and specific that the expression 'appointing authority ' means the highest of the authorities mentioned in sub clauses (i) to (iv). So, it is said, the 'appointing authority ' for purposes of rule 12(2)(b), in the instant case, will be the highest of the three authorities we have referred to above, viz. the Scientific Adviser to the Government of India. In short, it is contended that, by using the last few significant words in rule 2(a), the Civil Rules seek to ensure that, though the power to appoint persons to a particular post, grade or service may be dele gated under the proviso to rule 9(1), such delegation should not extend to the exercise of disciplinary powers. It is the clear intention of the rule makers, it is argued, that disciplinary powers should continue to vest in the appoint ing authority mentioned in the schedule read with rule 9(1) and should not be allowed to be exercised by his delegate under the proviso. The emphasis, it is said, is not on the person who has made, or is empowered to make, the appoint ment of the particular civil servant in question; it is on the person Who makes, or is empowered to make, appointment of persons generally to the post, grade or service to which the civil servant in question belongs. It is, therefore, urged that though one Class III servants in the laboratory may be appointed by the Director and another by the Scien tific Adviser (who can make such appointment despite the delegation), the disciplinary authority for both and, indeed for all class III servants in the Laboratory, must be the same and cannot be different. This interpretation of rule 2(a), it is said, is not only quite plain on the language used but has also received the approval of this Court in Dharam Der vs Union, ; Further force is sought to be lent to the argument by pointing out that the expression 'appointing authority ' is used only in rules 2, 10, 12 and 24 of, and the schedule to, the Civil Service rules and that, to refuse to give effect to the definition for purposes of rule 12 is to render the definition clause virtually otiose. This plea was upheld by the Andhra Pradesh High Court in Danial 's case and, following it, in the other cases before us. A similar view has been taken in the Delhi High Court in Murishwar vs Union, [1976] Service Law Cases 82 in Union vs Tarlok Singh, cited there in, and by the Calcutta High Court in Union vs Choudhury, But a contrary view has been taken by the M.P. High Court in Chaudhury vs Union, [1977] All India Services Journal 1) and by the Andhra Pradesh High Court in W.A. 793/83 and W.P. 2441/79. 450 The position in respect of ordnance factories which has to be considered in some of the cases is identical, except for the nomenclatures of the respective authorities, and does not need any separate discussion. To turn, next, to the railway cases, we are concerned with appointees to Group C and Group D of the services, which correspond to class III and class IV of the Civil Services. In respect of these persons, the relevant provi sions are as follows: "2(1)(a) 'Appointing Authority ', in relation to railway servant, means: (i) the authority empowered to make appointments to the service of which the railway servant is, for the time being, a member or to the grade of the Service in which the railway servant is, for the time being, included, or (ii) the authority empowered to make appointments to the post which the Railway servant, for the time being holds, or (iii) the authority which appointed the Railway servant to such Service, grade or post, as the case may be, or (iv) where the Railway servant having been a permanent member of any other Service or having substantively held any other permanent post, has been in continuous employment under the Ministry of Railways, the authority which appoint ed him to that service or to any grade in that Service or to that post whichever authority is highest authority". "2(1)(c) 'Disciplinary Authority ' means (i) in relation to the imposition of a penalty on a Railway Servant, the authority competent, under these rules, to impose on him that penalty; (ii) in relation to rule 9 and clauses (a) and (b) of sub rule (1) of Rule 11 in the case of any Gazetted Railway servant, an authority competent to impose any of the penal ties specified in rule 6. 451 (iii) in relation to rule 9 in the case of any non gazetted Railway servant, an authority competent to impose any of the major penalties specified in rule 6; (iv) in relation to clauses (a) and (b) of sub rule (1) of Rule 11, in the case of a non gazetted Railway servant, an authority competent to impose any of the penalties specified in Rule 6". Disciplinary authorities (1) The President may impose any of the penalties specified in Rule 6 on any Railway Servant. (2) Without prejudice to the provisions of sub rule (1), any of the penalties specified in Rule 6 may be imposed on a Railway servant by the authorities as specified in Schedules I, II and III. (3) The disciplinary authority in the cases of a Railway Servant officiating in a higher post, shall be determined with reference to the officiating post held by him at the time of taking action". Authority to institute proceeding. (1) The President, or any other authority empowered by him, by general or special order, may (a) institute disciplinary proceedings against any Railway servant; (b) direct a disciplinary authority to institute discipli nary proceedings against any Railway servant on whom that disciplinary proceedings against any Railway servant on whom that disciplinary authority is competent to impose, under these rules, any of the penalties specified in rule 6. (2) A disciplinary authority competent under these rules to impose any of the penalties specified in clauses (i) to (iv) of Rule 6 may, subject to the provisions of clause (c) of subrule (1) of rule 2, institute disciplinary proceedings against any Railway servant for imposition of any of the penalties 452 specified in clauses (v) to (ix) of rule 6, notwithstanding that such disciplinary authority is not competent under these rules, to impose any of the latter penalties". Schedule II referred to in rule 7(2) lays down that an order of compulsory retirement, removal or dismissal from service may be ordered, in the case of a Group C or Group D Railway servant by the appointing authority or authority equivalent in rank or any higher authority and Note 2 to the Schedule mentions that such an authority may also impose any tower penalty. Under rule 275 of the Railway Establishment Code (Vol. I), which deals with the recruitment, training and promotion of Group C and Group D railway servants, the authority competent to make a first appointment is the General Manager or any lower authority to whom he may dele gate the power. The General Manager of each Railway has delegated his powers under several heads. One set of the Schedule of Delegation of Powers by the General Manager of the Southern Railway in Establishment Matters has been set out in some detail in the order of the Central Administra tive Tribunal (CAT) in the case of Gafoor Mia and Ors. vs Director, DMRL, , (which is one of the orders in appeal before us.) It is neither useful nor neces sary to repeat them here in extenso. Here also, the argument is that, notwithstanding the delegation of powers of ap pointment of Group C and Group D employees to various other zonal officers, the General Manager has. not divested him self of the power to make such appointments and continues to be the 'appointing authority '. Being the highest among the various appointing authorities, he alone stands vested with the power to institute disciplinary proceedings and impose penalties. It is, therefore, submitted that the disciplinary proceedings, in the cases under this batch, initiated by the Divisional Superintendent and like officers were without jurisdiction and were rightly quashed by the CAT in Gaffoor Mia 's case, already referred to, and the decisions in the other matters before us following the said decision. This, in crux, is the argument for the respondents. Before dealing with this argument, it will perhaps be help ful to steer clear of certain minor arguments addressed by either side: (a) Sri Kanta Rao submitted that the same view as in Gafoor Mia, had been taken by the C.A.T. in Supriya Roy 's, case and that this Court has already, on 21.9.88, dismissed S.L.P. Nos. 9956 57 of 1988 filed against the said order. This appears to be correct but the dismissal in limine of that S.L.P. 453 cannot preclude us from considering the issue in these appeals on merits. It is seen that, in C.A. 3963/88, an application has been filed for revocation, on this ground, of the leave granted by this Court. We dismiss this applica tion. (b) Much store is set, on behalf of the respondents, by the decision of this Court in Dharam Dev 's case '(supra). It is no doubt true that the decision refers to the provisions of Rule 2(a) and applies the same to the case before it. But the context in which the case arose was a very simple and straight forward one. In that case, the employee in question had in fact been appointed by the Comptroller and Auditor General of India (CAG) and he was the highest authority in regard to the service in question. All that the decision pointed out was that, in view of this and of Article 311, no authority lower in rank to the CAG was competent to take action against the appellant before the Court. The Court had no occasion to consider the type of controversy that has arisen here and did not consider either the interaction of sub clauses (i) and (iii) of clause (a) of rule 2 or the situation as to whether there could be more than one author ity empowered to appoint persons to a post, grade or service within the meaning of sub clause (i) or (ii) of clause (a) itself. This decision is therefore not helpful and certain ly not conclusive to solve the issue arising before us. The same is the position in regard to the decision of this Court in Om Prakash Gupta vs Union, A.I.R. 1975 S.C. 1265 which seems to have been relied on, for the Union, before the CAT. In that case, the appellant was a temporary Government servant not holding a specified post. All that this Court pointed out was that, if the definition in rule 2(a) was not applicable to such a person, the word 'appointing authori ty ', understood in its plain and natural meaning would mean the authority which appointed him viz. the Director General of the Geological Survey of India. If, on the other hand, the terms of rule 2(a) were applicable the person empowered to appoint the appellant being one Sri Moghe and the person who appointed him being the Director General the latter, who was the higher authority, would be the 'appointing authority '. This, again, was an instance of a simple and direct application of the rule, involving no complications as here and cannot be treated as deciding the issue before us. (c) On behalf of the appellant, the Union of India, reliance is placed on section 16 of the . It is argued 454 that, irrespective of the provisions in the rules, a person who makes an appointment has always an implied power of suspending or dismissing him vide: Heckett Engineering Co. vs Workmen; , There are three difficul ties in accepting this argument. In the first place, even if the argument is valid, it confers on the factual appointing authority, in terms, only a power to suspend or dismiss and not a power to conduct disciplinary proceedings or impose the various other kinds of penalties envisaged in the rules. To say that the latter power also comes within section 16, one would need to make a further assumption that the power to suspend or dismiss is a more comprehensive power which would include the power to impose smaller penalties too and this assumption is said to run counter to the rules which deal with the two powers separately. Secondly, section 16 app. lies only "unless a different intention appears". If the con struction placed on the Civil Service Rules and the Railway rules on behalf of the respondents is correct, then the rules express a different intention and it would therefore not be possible to rest on the general principle enunciated by section 16. The contention has, therefore, to be examined independently and section 16 cannot be an answer to it. Thirdly, section 16 applies only where a general power of appointment is conferred under an Act or Regulation. Here the Act or Regu lation (i.e. the Rules) envisage the power of appointment conferred by them on certain authorities being delegated. The power conferred on the delegatees is circumscribed by the instrument of such delegation and cannot be extended beyond its ambit, as observed by the C.A.T. in Gafoor Mia 's case (supra). section 16, therefore, does not come to the rescue of the appellants. (d) An argument was raised at the earlier stages, that the words "whichever is the highest authority" governs only subclause (iv) of rule 2(a) of the Civil Service Rules and not the other sub clauses. This contention cannot bear a moment 's scrutiny both because the above words occur in the Rules separately from the four sub clause but also because the terms thereof clearly envisage a determination of one who, among several authorities, is the highest. It, there fore, clearly means that the 'authorities ' falling under the definitions in sub clauses (i) to (iv) have to be ascer tained and the highest among them taken as the disciplinary authority for purposes of rule 12(2)(b). The above discussion narrows down the controversy before us to a very short issue: Can it be said, where the appoint ing authority under 455 rule 9(1) has delegated his powers of appointment under the proviso, that both the authorities should be treated as the "authority empowered to appoint" persons to the post, grade or service or does this expression get restricted only to the latter, i.e. the delegatee authority? If both fail under the above description within the meaning of sub clause (i), the respondent 's plea that the definition in rule 2(a) will mark out only the Scientific Adviser/General Manager would be correct. On the other hand, if the second of the above interpretation is correct, the appellant 's stand will have to be upheld. Learned counsel for the respondents vehemently contend that the authority specified under the schedule read with rule 9(1) does not lose his authority to appoint merely by the act of delegating his powers to a subordinate authority. Such delegation no doubt empowers the subordinate authority to appoint but does not take away the power of appointment conferred on the authority specified in the schedule read with rule 9(1). Before dealing with the above contention, we may make reference to certain decisions cited by counsel on the consequences of such delegation. In Roop Chand vs State, [1963] Suppl. 1 SCR 539 the petitioner had filed an appeal from the order of the Settlement Officer to the State Gov ernment under section 21(4) of the relevant Act. But the State Government, having delegated under section 41(1) of the Act the right to hear and dispose of the appeals made to it to the Assistant Director (Consolidation), the petitioner 's appeal was disposed of by the said Officer who allowed the same. The Respondent thereupon sought to invoke a power conferred on the State Government under section 42 of the Act to revise the orders passed by the authorities under the Act. On a writ petition filed before it the Supreme Court quashed the revisional order passed by the State Government on the simple logic that the order passed under section 41(1) read with section 21(4) was an order of the State Government (though, in fact, passed by a delegate) and could not be "revised" by the State Government itself under section 42. The Andhra Pradesh High Court speaking through P.A. Choudary, J. in Daniel 's case (since reported in thought that the principle of the case was of no avail to the Union of India which appears to have contended, on the strength thereof, that "though the disciplinary action was initiated by the Director, it must be treated as having been taken by the Scientific Adviser himself because the action of the Director, being that of a delegate, must be regarded in law as that of the principal himself". The learned Judge repelled the argument, observing: 456 "The ratio of the aforesaid case is that the action of the delegate can be treated as that of the princi pal himself. Applying the ratio of the above case to the facts of our case, it can be said at the most that the orders of appointments made by the Director, by reason of the statutory delegation made by the Scientific Adviser under Rule 9(1), are those of the Scientific Adviser him self, on the basic that the exercise, of the power delegated to an authority may be treated as an exercise of the power by the principal himself. Accepting the principle, we cannot agree with the contention of the learned Counsel that the Director 's exer cise of the disciplinary power against the petitioners should be treated as an exercise of disciplinary authority by the Scientific Adviser himself. The reason is too simple. Firstly, the statute deals, throughout its provisions, with the disciplinary power as a different and separate power from the power to appoint. Secondly, the disciplinary power is never delegated by the Scientific Adviser to the Director either under Rule 9(1) or any other rule of the CCA Rules. It follows, therefore, that the theory of imputation to the principal the acts of the delegate can have no application to such a situation as the one before us. We, therefore, find that the Roop Chand 's case is of no avail to the re spondents." Though Sri Choudhary, who appeared before us for the re spondents seemed to have second thoughts about this, we are of opinion that the observations extracted above set out the correct position and that the Roop Chand decision is of no help. An attempt has been made before us to invoke the Roop Chand principle in a different way to support the case of the employees and argue that their appointments made by the Director should be treated as appointments made by the Scientific Adviser himself and that, therefore, no discipli nary action can be initiated against them by any one other than the Scientific Adviser himself. We do not think that this argument can be accepted. As observed in Kishore Ku mar 's case a delegation of power does not enhance or improve the hierarchical status of the delegate. The rule in Roop Chand as to the nature and character of the power exercised by a delegate was enunciated in a particular context. It cannot be treated as a general principle ap plicable to all situations. In particular, in the context of rules 2(a) and 12(2) with which we are concerned and which outline a contrast between the person who is empowered to 457 appoint and the person who actually appoints, it is impossi ble to treat the Scientific Adviser/General Manager as the person who appointed the respondents. Reference has not been made to Daluram Pannalal Modi vs Commissioner, This was a case as to the interpretation of the scope of a delegate 's power. section 19 of the Madhya Pradesh Sales Tax Act, 1958, empowers the Commis sioner, if he is satisfied that any sale or purchase of goods, has escaped assessment, to make a reassessment. section 30 of the Act, however, enabled the Commissioner to "delegate any of his powers and duties under the Act" and the Commis sioner, exercising this power, delegated to the Assistant Commissioner his powers and duties to make an assessment or reassessment and to exercise all other powers under Sections 18, 19 and 20. An assessee challenged a reassessment notice issued by an Assistant Commissioner contending that what had been delegated was only the power of reassessment but not the duty of being satisfied that there was an escapement which, according to the assessee, still remained with the Commissioner. This argument was repelled and it was held that the requirement of being satisfied was an adjunct of the power to initiate reassessment proceedings. That princi ple cannot apply here as it is doubtful how far, in the context of the service rules which make a clear distinction between the power to appoint and the power to take discipli nary proceedings, the latter can be said to be adjunct or ancillary to the former. This leads us to the question whether the appointing authority specified in the schedule can exercise his power of appointment to a post, cadre or service even after he has delegated that power to a subordinate authority under the proviso. An answer to this question in the affirmative is contended for on the strength of certain authorities which may now be considered. In Godawari section Parulekar vs State of Maharashtra, 14 the appellant had been de tained by an order passed by the State Government under rule 30 of the Defence of India Rules. 1t was contended on behalf of the appellant, inter alia, that the State Government had earlier issued a notification delegating its powers under rule 30 to the District Magistrate and was so not competent to make the order of detention in question. Reliance was placed for this argument on the observations of the Judicial Committee in King Emperor vs Shibnath Banerjee, 72 I.A. 241. These observations were distinguished and the above conten tion was repelled. It was held that by issuing the notifica tion in question, the State Government had not denuded itself of the power to act under r. 30 (vide Willis J. in 458 Huth vs Clarke, [1890] 25 QBD 39 1. Learned counsel also referred to the decision of the Karnataka High Court in Ramachandra Rao vs State, This case does hold that a power which is delegated can be exercised both by the delegator and the delegatee, though the Supreme Court decisions cited therein as deciding this issue do not seem to help. Halsbury 4th Edn., para 32, citing Huth vs Clarke, (supra), summarises the English Law on the subject thus: "In general, a delegation of power does not imply parting with authority. The delegating body will retain not only the power to revoke the grant but also power to act concurrently on matters within the area of delegated authority except in so far as it may already have become bound by an act of its delegate". However, the following passage from Wade on Administrative Law (Sixth Edition) at p. 365 would seem to indicate that the position is not quite clear and may need detailed con sideration in an appropriate case: "A statutory power to delegate will normally include a power to revoke the delegation when desired. While the delegation subsists it may be arguable whether the delegating authority is denuded of its power or is able to exercise it concur rently with the delegate. This question arose where under statutory authority the executive committee of a county council delegated to a sub committee its powers to make regulations for the control of rabies; but before the sub committee had done anything the executive committee, without revoking the delegation, itself issued regulations for the muzzling of dogs. These regulations were upheld, but on inconsistent grounds, one judge holding that the executive committee had resumed its power and the other that it had never parted with them, and that 'the word "delegate" means little more than an agent. In a later case the latter view prevailed, on the ground that 'one cannot divest oneself of one 's statutory duties '. But the contrary was held by the Court of Appeal where a minister had formally delegated to local authorities his power to requisition houses. By doing this he had for the time being divested himself of his powers, so that an invalid requisition by the local authori ty could not be cured by their acting in his name; and the court rejected the contention that 459 delegation was a form of agency. The Local Government Act 1972 expressly preserves the powers of a local authority concurrently with those delegated to its commits, etc. " We do not think it is necessary to go into this question. In view of the decision in Godawari (supra), we shall accept the general proposition that the delegation of the power of appointment under the proviso to rule 9(1) does not neces sarily deprive the disciplinary authority specified in the main part of the rule from exercising the delegated power of appointment in any case or class of cases. Still the basic question that remains is, whether, in the context of rule 2(a) read with rule 9(1), the reference to the authority empowered to make the appointment is to the authority mentioned in the proviso to rule 9 or to both the authorities falling under the main part 01 ' rule 9(1) as well as the proviso. The sheet anchor of the respondent 's case is that the expression 'appointing authority ' is used in very few of the rules. One of them is rule 12 and there can, therefore, be no valid reason to refuse to apply the definition clause in the context of those rules. It is urged that, by holding the person specified in the schedule also to be the 'appointing authority ' as defined in rule 2(a), none of the other rules relating to appeal, revision etc. become redundant as urged on behalf of the appellants. We agree with the respondents that the expression 'appointing authority ' in rule 12 should have the meaning attributed to it in rule 2(a). But what is the real and true interpreta tion of Rule 2(a)? What does that sub rule talk of when it refers to a 'person empowered to make the appointment ' in question? These words clearly constitute a reference to rule 9. Does rule 2(a) refer then to the authority empowered by the schedule to make the appointments or the authority to whom he has delegated that power or both? We think, on a proper and harmonious reading of rule 2(a) and rule 9, that sub rule (a) of rule 2 only envisages the authority to whom the power of appointment has been delegated under rule 9 and not both the delegator and the delegate. We have come to this conclusion for a number of reasons. In the first place, it is clear on the plain language of rule 2(a), that it directs the ascertainment of the authorities specified, in such of clauses (i) to (iv) of the rule as may be applicable to a particular case and designates the highest of them as the 'appointing authority '. It envisages only one authority as falling under each of these clauses and not more. The respondent 's contention which involves interpretation of clause (i) or (ii) as contemplating more than one authority runs counter to the tenor of the rule. Secondly, the strict ly literal meaning of rule 2(a) insisted upon by the re spondents 460 would render the rules unworkable. For instance, under clause (i), one of the authorities to be considered is the 'authority empowered to make appointments to the service of which the government servant is for the time being a mem ber '. The respondents belong to one of the Central Civil Services. Though they belong to class III or class IV, there are class and class II officers as well therein. Rule 8 declares that only the President can make appointments to Class I in the service. If each of the clauses is read as envisaging a plurality of authorities as contended for and if clause (i) is literally interpreted, it will also include the President who is one of the authorities empowered to make appointments to the service of which the concerned employees is a member. This will render the entire gamut of the rules unworkable. On this interpretation, the President will be the only appointing authority under rule 2(a) in all cases, being the highest of the authorities envisaged there in. This cannot clearly be correct. Rule 2(a) does not contemplate any authority other than the one empowered to appoint a person belonging to the post or grade which the concerned government employee holds. In that sense the two parts of clause (i) and clause (ii) are not to be read distributively to ascertain the authority empowered to make appointments (a) to the service (b) to the grade and (c) to the post and consider the highest of them. One has to re strict oneself to the post or grade of the government serv ant concerned and invoke clause (i) or (ii) as the case may be. Thirdly, the whole purpose and intent of rule 2(a) is to provide that appointing authority means either the de facto or the de jure appointing authority. It will be appreciated that, generally speaking, only the de jure authority can make the appointment but, occasionally, a superior authority or even a subordinate authority (with his consent) could have made the appointment. Again it is possible that the authority empowered to make the appointment at the time when relevant proceedings in contemplation may be higher or lower in rank to the authority which was empowered to make the appointment or which made the appointment at a different point of time. The whole intent or purpose of the definition to safeguard against an infringement of article 311(1) and ensure that a person can be dealt with only by either a person competent to appoint persons of his class or the person who appointed him, whoever happens to be higher in rank. That rule is not infringed by the interpretation placed by the appellants. The provisions of Schedule II in the case of the Railways which specify the appointing au thority or an authority of equivalent rank or any higher authority as the disciplinary authority are also consistent with this interpretation. Fourthly, the interpretation sought to be placed by the respondents on rule 2(a) is artificial and strained. It amounts to saying that a person who is 461 empowered to appoint a government servant (as the Director, DERL, for example, undoubtedly is) and who has also appoint ed him will not be the appointing authority, because, theo retically, even a more superior authority could have ap pointed him despite having delegated his authority in this regard to a subordinate. On the contrary, the interpretation urged by the Union will not adversely affect the few employ ees, if any, who may be appointed by a superior scheduled authority despite delegation of such power to a subordinate authority. For, in such a case, the superior authority would be the person who has factually appointed such an employee and he will clearly be the 'appointing authority ' by virtue of rule 2(a). Lastly, the interpretation sought for by the Union is consistent with practical consideration. The ap pointing authority under the Schedule is a high ranking authority and, in an organisation like the Railways for instance, it will be virtually impossible for him to consid er each and every case of appointment of, or disciplinary action against all the Class III or Class IV employees in the organisation. It is indeed this realisation that has rendered necessary delegation of the power of appointment and cannot be ignored, in the absence of compelling reasons, in the matter of disciplinary powers. On behalf of the respondents, it is contended that the intention of the rules is to restrict powers of discipline from being exercised by all appointing authorities. Central isation, it is urged, is the object. This contention is not borne out by the table of innumerable disciplinary authori ties set out in the schedule, not to speak of those on whom factual or special powers have been conferred by the Presi dent (as was indeed done in many of these very cases later). As against this, Sri Pai, for the appellants pointed out that if one has regard to the strength of the railway staff or the other class III or IV staff employed in various civil services, the interpretation urged on behalf of the respond ents would cast an impossible burden of work on the authori ties specified in the schedule to whom alone the respondents seek to confine the power to take disciplinary proceedings. There is force in this contention. It has been brought to our notice that notifications have since been issued (for example on 29th August 1979 in the case of the DERL and 2.1.87 in the case of Ordnance factories) by the President under rule 12 empowering certain authorities to exercise disciplinary powers. We need hardly say that any disciplinary proceedings initiated by such authorities from the date when such notifications came into effect will be perfectly valid. It has also been brought to our notice that, in some cases, (for example, C.A. Nos. 1443, 1444 and 4340/88), the CAT has 462 also gone into the merits of the cases and set aside the penalties or punishments imposed on the concerned respond ent. We do not propose to review the finding on this aspect of the matter under Article 136. C.A. No. 1444/88, .we are told, has also abated as the appellant has taken no steps to bring on record the legal representatives of the respondent but, in view of the Tribunal 's findings on merits, it is unnecessary to go 'into this question now. The order of the CAT, in such cases, will therefore, stand notwithstanding our conclusion being different from that of the CAT on the main issue discussed above On the other hand, in most cases, the CAT, because of the view taken by it on the main ques tion, 'has not dealt with the merits of the proceedings. For example, it was mentioned that in C.A. 316/81, the respond ent has been removed from service by the Deputy Director, an authority subordinate to the Director who had appointed him. This aspect has not been considered and will have to be considered now. Similarly, in C.A. 3044/89 filed by the employee, it is pointed out that the appellant had been appointed by the Director of Ordnance Services in 1964. The power of appointment was delegated to Commandants in 1971 and the respondent was penalised by the Commandant, a subor dinate authority, to whom disciplinary powers were delegate by the President only in 1979. Though this point does not appear to have been raised before the Tribunal, it goes to the root of the matter and we, therefore, think that it should be left open to be considered by the Tribunal now. As the cases before us are many and were decided princi pally on the point of law discussed earlier, we have not touched upon the facts or merits of individual cases. We set aside the orders of the CAT in all cases except C.A. Nos. 1443 and 4340/88 which stand dismissed as mentioned above and direct the Tribunal/High Court. to pass fresh orders disposing of the applications filed before them in the light of our judgment. Where disciplinary proceedings have been stayed at the stage of initiation or later because of the view taken by the Tribunal, they should now be con tinued and finished without delay in accordance with law. The appeals are disposed of accordingly. T.N.A. Appeals disposed of.

The respondents were holding class III civil posts in the Research Laboratories attached to the Ministry of De fence. Under the Central Civil Services (Classification, Control and Appeal) Rules, 1965, their 'appointing authori ty ' was the Scientific Adviser. But the appointing authori ty, the Scientific Adviser, delegated his power of appoint ment to the Director under Proviso to Rule 9(1). Pursuant to the delegated power. the Director appointed the respondents. Subsequently, the Director initiated disciplinary proceed ings against the respondents. Similarly for the respondents, in the connected appeals, belonging to Group C and D employees of the Railways the competent authority, prescribed under the Railway Establish ment Code. to make appointments was the General Manager. But the General Manager delegated his power of appointment to Zonal Officers/Divisional Superintendents. Pursuant to the delegated power the Divisional Superintendents appointed the respondents. Subsequently, disciplinary proceedings were initiated against the respondents by the Divisional Superin tendents. The respondents challenged the disciplinary proceedings before the Central Administrative Tribunal contending that they were without jurisdiction since the Director and the Divisional Superintending were not competent to initiate the disciplinary proceedings. The Central Administrative Tribu nal accepted the plea and quashed the proceedings. In appeals to this Court it was contended on behalf of the respondents (i) that the Director was not competent to initiate disciplinary proceedings against them and only the Scientific Adviser, a higher authority, could do so; the expression "whichever authority is the high 442 est authority" in Rule 2(a) governs only sub clause (iv) of Rule and this expression seeks to ensure that though the power to appoint may have been delegated under the Proviso to Rule 9(1), such delegation does not extend to the exer cise of disciplinary powers; (ii) that appointments made by the Scientific Adviser should be treated as .appointments made by the Scientific Adviser himself with the result that a subordinate authority could not initiate disciplinary action against the respondent. Also, in the connected railway cases, it was contended on behalf of the respondents that notwithstanding the delegation of powers of appointment by the General Manag er, he, being the highest amongst the various appointing authorities, was alone competent to institute disciplinary proceedings. On behalf of the appellant, Union of India, it was contended: (i) that on a proper interpretation of the rules, the Director Zonal Officer/Divisional Superintendents were competent to initiate the proceedings and (ii) that, irre spective of the provisions in the rules, a person who makes an appointment has always an implied power of suspending or dismissing the appointee under section 16 of the . Disposing of the appeals, this Court, HELD: 1. The delegation of the power of appointment under the Proviso to rule 9(1) does not necessarily deprive the disciplinary authority specified in the main part of the rule from exercising the delegated power of appointment in any case or class of cases. [459B] Godawari section Parulekar vs State of Maharashtra, ; ; followed. Ramachandra Rao vs State, ; Hals bury 's Laws of England, 4th Edn., pare 32; Wade on Adminis trative Law, 6th Edn., P. 365, referred to. King Emperor vs Shibnath Banerjee, 72 I.A. 241; Huth vs Clarke, , cited. A proper and harmonious reading of rules 2(a) and rule 9 shows that sub rule (a) of rule 2 only envisages the authority to whom the power of appointment has been delegat ed under rule 9 and not both the delegator and the delega tee. Rule 2(a) directs the ascertainment of the authorities specified, in such of clauses (i) to (iv) of the rule as may be applicable to a particular case and designates the high est of them as the 'appointing authority '. It envisages only one authority as failing under each of these clauses and not more. An inter pretation of clause 443 (i) or (ii) as contemplating more than one authority runs counter to the tenor of the rule. The said rule does not contemplate any authority other than the one empowered to appoint a person belonging to the post or grade which the concerned government employees holds. In that sense the two parts of clause (i) and clause (ii) are not to be read disjunctively to ascertain the authority empowered to make appointments (a) to the service (b) to the grade and (c) to the post and consider the highest of them. One has to re strict oneself to the post or grade of the government serv ant concerned and invoke clause (i) or (ii) as the case may be. [459F H; 460C D] Dharma Dey vs Union of India, ; ; Om Prakash Gupta vs Union of India, A.I.R. 1975 S.C. 1265, explained and held inapplicable. Murishwar vs Union, ; Union vs Choud hary, ; Choudhary vs Union, , cited. 2.1 In Rule 2(a), not only do the words "whichever is the highest authority" occur in the Rules separately from the four sub clauses but the terms thereof also clearly envisage a determination of one who, among several authori ties, is the highest. It, therefore, clearly means that the 'authorities ' falling under the definition in sub clauses (i) to (iv) have to be ascertained and the highest among them taken as the disciplinary authority for purposes of rule 12(2)(b). [449B] 3. The appointing authority under the Schedule is a high ranking authority and, in an organisation like the Railways for instance, it will be virtually impossible for him to consider each and every case of appointment of, or disciplinary action against, all the Class III or Class IV employees in the organisation. It is indeed this realisation that has rendered necessary a delegation of the power of appointment and cannot be ignored, in the absence of compel ling reasons, in the matter of disciplinary powers. [461C D] 4. In the context of rules 2(a) and 12(2) which outline a contrast between the person who is empowered to appoint and the person who actually appoints, it is impossible to treat the Scientific Adviser/General Manager as the person who appointed the respondents. [456H; 457A] Roop Chand vs State, [1963] Supp. 1 S.C.R. 539, held inapplicable. 444 B. Daniel & Ors. vs Union of India, , referred to. 4.1 A delegation of power does not enhance or improve the hierarchical status of the delegate. [456G] Krishna Kumar vs Electrical Engineer Central Railway & Ors., , referred to. It is doubtful how far, in the context of the service rules which make a clear distinction between the power to appoint and the power to take disciplinary proceedings, the latter can be said to be adjunct or ancillary to the former. [457D E] Daluram Pannalal Modi vs Commissioner, [1964] 2 S.C.R. 286, held inapplicable. Section 16 of the confers on the factual appointing authority, in terms, only a power to suspend or dismiss and not a power to conduct disciplinary proceedings or impose the various other kinds of penalties envisaged in the rules. To say that the latter power also comes within section 16, one would need to make a further assump tion that the power to suspend or dismiss is a more compre hensive power which would include the power to impose small er penalties too and this assumption is said to run counter to the rules which deal with the two powers separately. The said section applies only "unless a different intention appears". It applies only where a general power of appoint ment is conferred under an Act or Regulation. Here the Act or Regulation i.e. the Rules envisage the power of appoint ment conferred by them on certain authorities being delegat ed. The power conferred on the delegatees is circumscribed by the instrument of such delegation and cannot be extended beyond its ambit. [454B E] Heckett Engineering Co. vs Workmen, ; ; Gafoor Mia and Ors. vs Director, DMRL, , referred to. The dismissal in limine of the Special Leave Petition cannot preclude the Tribunal or Court from considering the issue in the appeals on merits.[452H; 453A]

Appeal No. 1707 of 1967. 422 Appeal under Section 116 A of the Representation of the People Act, 1951 from the judgment and order dated September 19, 1967 of the Punjab and Haryana High Court in Election Petition No. 28 of 1967. Harder Singh, P. Parmeswara Rao and S.S. Khanduja, for the appellant. R.K. Garg, S.C. Agarwala, Baldev Singh Khojiand Anil Kumar Gupta, for respondent No. 1. The Judgment of the Court was delivered by Bhargava, J. The appellant, who was defeated by respondent No. 1 (hereinafter referred to as "the respondent"), the successful candidate, in the General Election of 1967 to the Punjab Vidhan Sabha from Nakodar Constituency, District Jullundur, challenged the election of the respondent in an election petition inter alia on the ground that he was disqualified from being chosen as a member of the Assembly, because he was holding an office of profit under the State Government at the relevant time. This was the only ground which was pressed at the trial of the election petition before the High Court of Punjab and Haryana at Chandigarh. The High Court dismissed the election petition rejecting this contention of the appellant and, consequently the appellant has come up to this Court in this appeal under section 116A of the Representation of the People Act, 1951. Admittedly, the respondent was the Chairman of a Panchayat Samiti and the ground that he was disqualified from being a candidate was based on Rules 3 to 7 of the Punjab Panchayat Samitis and Zila Parishads, Non official Members (Payment of Allowances) Rules, 1965 (hereinafter referred to as "the Rules") which are as follows : "3. There shall be paid a monthly consolidated allowance, in lieu of all other allowances, at the following rates. to the Chairman of a Panchayat Samiti and that of a Zila Parishad, for performing all official duties and journeys concerning the Panchayat Samitis or Zila Parishad as the case may be, within the district, including attending of meeting, supervision of plans, projects, schemes and other works and also for 'the discharge of all lawful obligations and implementation of Government directives : (a) Chairman, Panchayat Samiti . Rs. 100 (b) Chairman, Zila Parishad . Rs. 150 4. The Chairmen, Vice Chairmen and Members shall, for the purpose of rates of mileage and daily allowance admissible to them under these rules, be divided into the following two categories : 423 (i) Category I This shall include Chairmen and Vice Chairmen of the Panchayat Samitis and Zila Parishads. (ii) Category II This shall include all other Members of the Panchayat Samitis and Zila Parishads. There shall be paid to the Chairman, Vice Chairman and Member, mileage allowance for journeys performed for any official work outside the district. Such journeys shall not be undertaken unless authorised by the Panchayat Samiti or the Zila Parishad, as the case may be. Note : The Power under this sub rule shall not be delegated to any other authority. (2) The Vice Chairman and the Member shall also be paid mileage allowance, in respect of a journey performed within the district, for (a) attending the meetings; and (b) for any official work or for supervision of a cattle fair held by the Panchayat Samiti: Provided that the Vice Chairman and the Members shall not be entitled to mileage allowance under clause (b) unless the journey for such work or supervision has been approved by the Panchayat Samiti or Zila Parishad, as the case may be, and the number of Members deputed for supervision does not exceed five on any one day. The payment of mileage allowance to a Chairman, Vice Chairman and Members for the purposes and journeys mentioned in rule 5 shall be regulated as follows : (i) Mileage allowance by rail. For 'a journey between the stations connected by rail, the Chairman and Vice Chairman shall be entitled to travel by 1st Class and the Members by 2nd Class. The Chairman, Vice Chairman and the Members shall be enti tled to draw single fare of the Class of accommodation to which he is entitled: Provided that if the journey is performed in lower class, the Chairman, Vice Chairman and Members shall 424 be entitled to the fare actually paid for that class. (ii) Mileage allowance by bus. For a journey between the places connected by road, where regular bus service plies, and also for a journey between the stations connected by rail but performed by bus by taking a single seat the Chairman, Vice Chairman and Members shall be paid the fare actually paid. (iii) Mileage allowance for journeys between the stations partly connected by rail and partly by bus. For a journey between stations partly connected by rail and partly by bus, the Chairman, ' Vice Chairman and Members shall be paid actual railway fare limited to the class of accommodation to which he is entitled and the bus fare actually paid. (iv) Mileage allowance by road. (a) The mileage allowance by road shall be admissible, at the rates specified below, for the journeys performed by the Chainnan, Vice Chairman or Members between stations which are neither connected by rail nor by regular bus : Motor Cycle or Ordinary cycle Other means of con Scooter veyance 12 Paise per mile 9 Paise per mile 25 Paise per mile (b) If a Chairman, Vice Chairman or Member performs a journey by Motor Cycle, Scooter, Ordinary Cycle or by other means of conveyance between the stations connected by rail or regular bus, the mileage allowance calculated at the rates prescribed 'above for each kind of conveyance shall be limited to rail or bus fare, had the journey been performed by rail or bus as the case may be. Notes. ( 1 ) A Chairman, Vice Chairman or Member, using means of locomotion provided at the expense of the Government, Panchayat Samiti, Zila Parishad or any other local authority shall not be entitled to any mileage allowance. (2) A Chairman, Vice Chairman or Member travelling in a vehicle belonging to any other Member, Vice Chairman or Chairman shall not be entitled to any mileage allowance. The mileage allowance of the owner of the vehicle shall, however, be regulated under clause (iv). 425 7. Subject to the provisions of rule 3, (1) the daily allowance to a Chairman, Vice Chairman and Members shall be admissible at the following rates : Category I . Rs. 6.00 per day. Category II . Rs. 4.00 per day. (2) A Chainnan, Vice Chairman, or Member shall be allowed : (a) full 'daily allowance for the day he. attends the meeting; (b) full daily allowance for the days of halt in case the halt is for any of the purposes specified in rule 5 above; (c) half daily allowance for the day of departure and half daily allowance for the day of arrival in connection with a journey performed for any of the purposes specified in rule 5: Provided that (i) in the case of a Chairman, Vice Chairman or Member who is treated as a State guest while attending the meeting or while on duty within or outside the district his daily allowance for such days shall be limited to one fourth if he is provided with free board and lodging and to one half, if he is charged either for board or for lodging; (ii) not more than one daily allowance shall be admissible for a day in any case. (iii) a Chairman, Vice Chairman or Member may, at his option draw one daily allowance in lieu of mileage allowance plus half daily allowance for the day of journey preceding and following the day(s) of halt. " It was alleged that the office of Chairman of a Panchayat Samiti was an office under the State Government of Punjab and that the allowances paid under these Rules made that office an office of profit. Two questions, therefore, arose for decision. The first was whether the payment of the allowances under rules 3 to 7 made the office of Chairman of Panchayat Samiti an office of profit, and the second was whether the office of Chairman of Panchayat Samiti was an office under the State Government. The learned Judge trying the election petition recorded evidence in the trial of the petition up to 31st July, 1967, and adjourned the case for arguments to 21st August, 1967. On 19th 426 August, 1967, however, the Governor of Punjab issued Ordinance No. 10 of 1967 to amend the State Legislature (Prevention of Disqualification) Act, 1952, so as to add section 2(b) in that Act as follows : "It is hereby further declared that the office of Chairman of a Panchayat Samiti or Zila Parishad shall be deemed never to have disqualified and shall not disqualify the holder thereof for being chosen as, or for being, a Member of the Punjab State Legislature." In view of the issue of this Ordinance, the appellant was allowed to challenge the validity of the Ordinance without amendment of the election petition, and the learned Judge trying the petition, being of the view that the various questions involved were of considerable importance and should be settled by a larger Bench, referred the petition to a Full Bench. The Full Bench held on the first two questions against the appellant, so that the petition had to be dismissed on that ground. Consequently, the Full Bench refrained from expressing any opinion on the third question relating to the validity of the Ordinance and passed an order dismissing the petition with costs. In this appeal also, the same three questions have been again raised by the .appellant. We consider that this appeal can be disposed of on the basis of the answer to the first question alone, because, in our opinion, the High Court came to a correct conclusion in holding that the allowances paid under rules 3 to 7 of the Rules did not convert the office of Chairman of a Panchayat Samiti into an office of profit. The payment to a Chairman, Panchayat Sanuti, under r. 3 is described in the rule as 'a monthly consolidated allowance in ' lieu of all other allowances for performing all official duties and journeys concerning the Panchayat Samiti within the disutility, including attending of meetings, supervision of plans, projects, schemes and other works, and also for the discharge of all lawful obligations and implementation of Government directives. This provision in very .clear language shows that the allowance paid is not salary, remuneration or honorarium. It is clearly an allowance paid for the purpose of ensuring that the Chairman of a Panchayat Samiti does not have to spend money out of his own pocket for the discharge of his duties. It envisages that, in performing the duties, the Chairman must undertake journeys within the district and must be incurring expenditure when attending meetings, supervising plans, projects, schemes and other works and also in connection with the discharge of other lawful obligations and implementation of Government directives. No evidence has been led on behalf of the appellant to show that a Chairman of a Panchayat Samiti does not have to perform such journeys 427 in the course of his official duties and to incur expenditure in that connection. The State Government, which was the competent authority, fixed the allowance for a Chairman of a Panchayat Samiti at Rs. 100/ per month, obviously because it was of the opinion that this sum will be required on an average every month to meet the expenses which the Chairman will have to incur in this connection. In these circumstances, the burden lay on the appellant to give evidence on the basis of which a definite finding could have been arrived at that the amount of Rs. 100/ per month was excessive and was not required to compensate the Chairman for the expenses to be incurred by him in the discharge of his official duties as envisaged in the rule. That burden clearly has not been even attempted to be discharged by the appellant. In this connection, the High Court rightly compared rule 3 of the Rules with the earlier provision on the same subject contained in the Punjab Panchayat Samitis and Zila Parishads NonOfficial Members (Payment of Allowances) Rules, 1961. Under those earlier Rules of 1961, the Chairman was entitled to draw travelling allowance and daily allowance even when travelling within the district. There were, however, certain limitations, such as that no travelling allowance was to be drawn by a Member, if the journey was performed for attending a meeting held within a radius of five miles from his place of residence or he performed the journey in a transport provided at the expense of the Zila Parishads/Panchayat Samiris or any other local authority or Government. There were also limitations on the right to draw daily allowance, e.g., the amount of daily allowance was to be limited to 1/4th of the rate provided, if the Chairman was provided free board and lodging officially and. at 1/2 rate if he was charged either for board or for lodging. It appears that in the year ' 1965, it was considered desirable that the Chairman of a Panchayat Samiti should not draw travelling allowance and daily allowance while performing duties within the district and should only be entitled to these ,allowances when required to travel outside the district. Consequently, under r. 3 of the Rules, provision was made for this monthly allowance of Rs. 100/ as a consolidated amount in lieu of the travelling allowance, daily allowance, or any other allowances to which he might have been entitled in order to compensate him for expenses incurred in connection with the discharge of his official duties. In these circumstances, the High Court was perfectly correct in arriving at the conclusion that this allowance of Rs. 100/ per month did not amount to receipt of any profit or gain by the Chairman and only represented the amount which he was expected to spend on an average every month for the purpose of properly discharging his official duties. So far as rules 4 to 7 are concerned they only provide for payment of travelling allowance and daily allowance when a Chair 428 man performs a journey in connection with his official duties outside the district. Clearly, these allowances are also meant to ensure that he does not have to incur expenditure from his own pocket for the purpose of discharging his official duties. There is again no evidence from which an inference may be drawn that the amount received by a Chairman for travelling allowance or daily allowance is in excess of the amount of expenditure which he would have to incur for 'the purpose of performing the journeys in order to discharge his official duties. Our attention was drawn by learned counsel to the fact that in rule 7 the persons entitled to daily allowance are divided into two categories and a Chairman of a Panchayat Samiti belonging to Category II is entitled to Rs. 6/ per diem when a Member of the. .Samiti belonging to Category II is only entitled to Rs. 4/ per diem. The argument was that there was no explanation for payment at a higher rate to the Chairman and, consequently, it must be held that the Chairman must be making gain out of the payment to him of daily allowance. We are unable to accept this submission. The daily allowance is invariably fixed after estimating what extra expenditure in a day the person concerned would have to incur. A Chairman, it appears, was expected to incur more expenditure per day than a Member, and that seems to be the reason why a higher rate of daily allowance was prescribed for him. In any case, such a payment is clearly meant only to cover additional expenditure and out of pocket expenses of the Chairman and, while no evidence has been advanced to show that out of the amount received as daily allowance the Chairman will in fact invariably make a saying, it cannot be held that this payment would result in gain so as to make the office an office of profit. In the course of his submissions, learned counsel tried to urge that the payment of travelling allowance and daily allowance under rules 3 to 7 was in addition to the payment of the consolidated monthly allowance under r. 3 and payment of two sets of aLlowances must necessarily result in profit to 'the payee. The argument proceeds on a complete misunderstanding of the Rules. Rule 3 only covers payment to compensate a Chairman for journeys performed by him for his official duties within the district in which the Panchayat is situated, while rules 4 to 7 govern cases where the journey is performed outside the district. Rule 3, and rules 4 to 7 are, therefore, complementary and exclusive of each other. In fact, r. 5 makes it clear that the mileage allowance is admissible only for journeys undertaken outside the district, while, in respect of daily allowance, the fact that the right to receive it accrues only when the journey is outside the district is made manifest by laying down that the receipt of this daily allowance is to be subject to the provisions of r. 3. The submission that the payment under rules 429 4 to 7 is in addition to the payment under r. 3 is, thus, clearly misconceived. In this connection, learned counsel drew our attention to a decision of this Court in Ravanna Subanna vs G.S. Kaggeerappa(1) where dealing with the provision relating to this disqualification the Court held: "The plain meaning of the expression seems to be that an office must be held under Government to which any pay, salary, emoluments or allowance is attached. The word "profit" connotes the idea of pecuniary gain. there is really a gain, its quantum or amount would not be material; but the amount of money receivable by a person in connection with the office he holds may be material in deciding whether the office really carries any profit. This principle, on the finding arrived at by the High Court and affirmed by us above, is of no assistance to the appellant. It is clear that the appellant has failed to establish that the allowances payable under rules 3 to 7 of the Rules result in any pecuniary gain to a Chairman of a Panchayat Samiti and, consequently, there is no question of any disqualification arising. The appeal fails and is dismissed with costs. R.K.P.S. Appeal dismissed. (1) A.I.R. 1954 S.C. 653 at p. 656.

The appellant who was defeated by the first respondent in the General Election of 1967 to the Punjab Vidhan Sabha, challenged the latter 's election on the ground that he was disqualified from being chosen as a member of the Assembly because he was holding an office of profit under the State Government at the relevant time. It was admired that the respondent was the Chairman of a Panchayat Samiti and it was contended by the appellant that the allowances paid to the Chairman under Rules 3 to 7 of the Punjab panchayat Samitis and Zila Parishads, Non Official Members (Payment of Allowances) Rules, 1965, made that office an office of profit. The High Court dismissed that election petition and on appeal to this Court, HELD: The High Court came to a correct conclusion in holding that the allowances paid under Rules 3 to 7 did not convert the office of Chairman of Panchayat Samiti into an office of profit. The payment to a Chairman under r. 3 is described in the rule as a monthly consolidated allowance in lieu of all other allowances for performing all official duties and journeys concerning the Panchayat Samiti within the district. This provision clearly shows that the allowance paid is not salary, remuneration or honorarium but an allowance paid for the purpose of ensuring that the Chairman of a Panchayat Samiti does not have to spend money out of his own pocket for the discharge of his duties. The burden which lay on the appellant to show that the allowance of Rs. 100/ per month was excessive and was not required to compensate the Chairman for his actual expenses had not been discharged. [426 F G, 427 B C] Rules 4 to 7 only provide for payment of traveling allowance and daily allowance when a Chairman performs a journey in connection with his official duties outside the district. There is again no evidence from which it could be inferred that the amount received by a Chairman was in excess of his actual expenditure. [427 H 428 B] There was no force in the contention that the payment of traveling allowance under Rules 3 to 7 was in addition to the payment of the consolidated monthly allowance under Rule 3 and payment of two sets of allowances must necessarily result in profit to the payee. Rule 3 only covers payment to compensate a Chairman for journeys performed by him for his official duties within the district in which the Panchayat is situated, while rules 4 to 7 govern cases where the journey is performed outside the district. [428 F G] Ravanna Subanna vs G. section Kaggeerappa, A.I.R. 1954 S.C. 653 at p. 656; distinguished.

Civil Appeal No. 2090 of 1980 973 Appeal by Special leave from the Judgment and order dated the 30th January, 1979 of the Kerala High Court in l. T.R. No. 76 of 1977. Abdul Khadder and Miss. A. Subhashini for the Appellant. P. Gobindan Nair, N. Sudhakaran and Mrs. Baby Krishnan for the Respondent. The Judgment of the Court was delivered by BALAKRISHNA ERADI, J. Whether a company in liquidation is chargeable to super profits tax under the Super Profits Tax Act, 1963 Act XIV of 1963 (hereinafter called 'the Act ') is the short question arising for determination in this appeal. The answer thereto will depend upon whether during the period subsequent to the date of winding up, any part of the funds in the hands of the official liquidator can be distinctly classified as representing paid up share capital of the company as on the first day of the year of account relevant to assessment year and whether any portion of the fund can be similarly identified as forming as, "reserve". The assessee is a banking company, namely, The Palai Central Bank Ltd., which went into liquidation on August 8, 1960. On that date the official Liquidator took charge of the assets and liabilities of the company and a balance sheet had been prepared as on the same date. Thereafter, for every year, the liquidator used to prepare only an income and expenditure statement for submission to the Reserve Bank of India. The assessment year, with which we are concerned is 1963 64 i.e., the year ended March 31, 1963. For the said assessment year the taxable income of the assessee was determined by the Income tax officer at Rs. 5,76,678. The officer was of the opinion that this amount would attract liability for super profits tax also and since the assessee had not submitted any return under the Act, a notice under section 9 (a) of the Act calling for the return was issued. The assessee thereupon, submitted a return showing the chargeable profits as 'nil '. In support of the said return the assessee contended inter alia before the officer that there could be not liability to super profits tax in respect of a company in liquidation since the formula laid down in the Second Schedule to the Act for calculation of the 'standard deduction ' was inapplicable on account of the fact that a company in liquidation could not be said to have paid up share capital as on the first day of 974 the previous year relevant to the assessment year which was long subsequent to the winding up. Certain other contentions were put forward by the since they are not of any material relevance at this State, it is unnecessary to refer to them. The Income tax Officer overruled the contentions raised by the assessee and worked out the chargeable profits at Rs. 2,04,740 after adopting minimum amount of Rs. 50,000 mentioned in 2 (9) of the Act as a "standard deduction" applicable to the case. The Appellate Assistant Commissioner, before whom the assessee filed an appeal, confirmed the order of the Income tax officer. The assessee carried the matter in further appeal before the Income tax Appellate Tribunal, Cochin Bench. The Tribunal held that in the hands of the liquidator, there is only one integral fund which could not be split up into share capital, reserve and profits. In the opinion of the Tribunal the exemption provision contained in section 27 of the Act which states that nothing contained in the Act shall apply to any company which has no share capital was clearly attracted to the case. It was further held by the Tribunal that even if the exemption under section 27 of the Act did not get attracted, section 4 of the Act, which is the charging section would not apply to the assessee company in liquidation as the 'standard deduction ' was incapable of ascertainment. The Tribunal, accordingly, allowed the appeal of the assessee and held that no assessment to super profits tax could be made on a company in liquidation. Thereafter, at the instance of the revenue, the Tribunal referred the following question of law to the High Court of Kerala for its opinion: "Whether, on the facts and in the circumstances of the case, was the Tribunal justified in holding that no assessment under the Super Profits Tax Act, 1961, can be made on the assessee company (in liquidation)" ? The High Court agreed with the view taken by the Tribunal that after a company has gone into liquidation there cannot be said to be in the hands of the liquidator any amount that can be distinctly designated as paid up share capital of the company or as 'reserve ' with respect to which the capital of the company is to be worked out as provided in Second Schedule to the Act in order to arrive at the amount or standard deduction, The question referred 975 was accordingly answered by the High Court in the affirmative, that is, in favour of the assessee and against the revenue. Aggrieved by the said decision, the revenue has preferred this appeal to this Court by special leave. After hearing Counsel appearing on both sides, we have unhesitatingly come to the conclusion that the view taken by the High Court is perfectly correct and that this appeal is devoid of merit. Section 4 of the Act which is the charging section reads: "4. Charge of tax Subject to the provisions contained in this Act, there shall be charged on every company for every assessment year commencing on and from the 1st day of April, 1963, a tax (in this Act referred to as the super profits tax) in respect of so much of its chargeable profits of the previous year or previous years, as the case may be, as exceed the standard deduction, at the rate or rates specified in the Third Schedule. " The expression "chargeable profits" has been defined in clause (5) of section 2 thus: "2(5) "Chargeable profits" means the total income of an assessee computed under the Income tax Act, 1961 (XLIII of 1961), for any previous year of years as the case may be, and adjusted in accordance with the provisions of the First Schedule. " The next definition, that is relevant is contained in clause (9) of the same section which deals with the expression "standard deduction". That clause reads as follows: 2(9) "Standard deduction" means an amount equal to six per cent, of the capital of the company as computed in accordance with the provisions of the Second Schedule or an amount of fifty thousand rupees, whichever is greater: Provided that where the previous year is longer or shorter than a period of twelve months, the aforesaid amount of six per cent or, the case may be, of fifty thousand rupees shall be increased or decreased proportionately: 976 Provided further that where a company has different previous years in respect of its income, profits and gains, the aforesaid increase or decrease, as the case may be, shall be calculated with reference to the length of the previous year of the longest duration. It is seen from the above definition that for the calculation of 'standard deduction ' one has to ascertain the capital of the company as computed in the manner specified in second Schedule. That makes it necessary for us to examine the provisions of Second Schedule of the Act which contains the rules for computing the a capital of a company for the purpose of levy of super profits tax. The relevant provision is contained in rule I of the said Schedule which is in the following terms: " 1. Subject to the other provisions contained in this Schedule, the capital of a company shall be the sum of the amounts, as on the first day of the previous year relevant to the assessment year, of its paid up share capital and of its reserve, if any, created under the proviso (b) to clause (vi b) of sub section (2) of section 10 of the Indian Income tax Act, 1922 (XI of 1922), or under sub section (3) of section 34 of the Income tax Act, 1961 (XLIII of 1961), and of its other reserves in so far as the amounts credited to such other reserves have not been allowed in computing its profits for the purpose of the Indian Income tax Act, 1922 (XI of 1922) or the Income tax Act, 1961 (XLIII of 1961), diminished by the amount by which the cost to it of the assets the income from which in accordance with clause (iii) or clause (vi) or clause (viii) of rule 1 of the First Schedule is not includible in its chargeable profits, exceeds the aggregate of (i) any money borrowed by it which remains outstanding, and (ii) the amount of any fund, any surplus and any such reserves is not to be taken into account in computing the capital under this rule. Explanation 1 A paid up share capital or reserve brought into existence by creating or increasing (by revaluation or otherwise) any book asset is not capital for computing the 977 capital of a company for the purposes of this Act. Explanation 2 Any premium received in cash by the company on the issue of its shares standing to the credit of the share premium account shall be regarded as forming part of its paid up share capital. Explanation 3 Where a company has different previous years in respect of its income, profits and gains, the computation of capital under rule 1 and rule 2 of this Schedule shall be made with reference to the previous year which commenced first. " It is manifest from the terms of rule that the essential components which will together go to make up the capital of a company are: (i) Its paid up share capital on the first day of the previous year relevant to the assessment year. (ii) Its reserves, if any, created under the proviso (b) to clause (vi b) of sub section (2) of section 10 of the Indian Income tax Act, 1922 or under sub section (3) of section 34 of the Income tax Act, 1961; and (iii) Other reserves in so far as the amounts credited there to have not been allowed in computing the profits of the company for the purposes of the assessment to income tax. From the aggregate of the aforesaid amounts certain deductions as specified in the section have to be made but the details of such deductions are not relevant for the purposes of the present case. What is important to notice is that unless the company can be said to have a paid up share capital as on the first day of the previous year relevant to the assessment year the formula laid down in the rule for computation of capital of the company cannot have any application and calculation of "standard deduction" being based wholly on the capital of the company it becomes wholly incapable of ascertainment. After a company has gone into liquidation, can it be said that as on the first day in any subsequent year forming the previous year relevant to the assessment year, there exists in the hands of the liquidator any amount distinctly forming the paid up share capital of the company or any sum that can be 978 characterized as "reserve"? In our opinion the answer must clearly be in the negative. In Commissioners of Inland Revenue vs George Burrell, Pollock M.R. Observed: ". it is a misapprehension, after the liquidator has assumed his duties, to continue the distinction between surplus profits and capital. Lord Macnaghten in Birch vs cropper the case which finally determined the rights inter se of the preference and ordinary shareholders in the Bridgewater Canal, said ': I think it rather leads to conclusion to speak of the assets which are the subject of this application as "surplus assets" as if they were an accretion or addition to the capital of the company capable of being distinguished from it and open to different considerations. They are part and parcel of the property of the company part and parcel of the joint stock or common fund which at the date of the winding up represented the capital of the company. " The above statement of the law was cited with approval and adopted by this Court in Commissioner of Income tax vs Girdharas and Co. Private Ltd., and it was held that in respect of a company in liquidation after the date of its winding up, the distinction between capital, reserve and the accumulated profits disappears and there is only one integrated or consolidated fund in the hands of the liquidator. The concept of a fluctuating share capital or reserve which is the basic premise necessary to attract the applicability of rule 1 of the Second Schedule is wholly foreign in respect of a company in liquidation. In Commissioner of Income tax, Bangalore vs B.C. Srinivasa Setty, this Court pointed out that under the scheme of the Income tax Act, 1961, charge of tax will not get attracted unless the case or transaction falls under the governance of the relevant computation provisions. "The character of the computation provisions in each case bears a relationship to the nature of the charge. Thus, the charging section and the computation provisions together 979 constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section. Otherwise, one would be driven to conclude that while a certain income seems to fall within the charging section there is no scheme of computation for quantifying it. The legislative pattern discernible in the Act is against such a conclusion". Exactly similar being the scheme of the ; the above observations fully apply to case before us. Hence, it has to be held that inasmuch as the provisions contained in the Act for computing the capital of the company and its reserves and cannot have any application in respect of a company in liquidation and consequently the 'standard deduction ' is incapable of ascertainment, the charge of super profits tax under section 4 of the Act is not attracted to such a case. The judgment of the High Court does not, therefore, call for any interference. This appeal is accordingly dismissed with costs. M.L.A. Appeal dismissed.

The assessee company went into liquidation on August 8, 1960. The Income tax officer, while determining the taxable income of the assessee company at Rs. 5,79,978 for the assessment year 1963 64, was of the opinion that this amount would attract liability for super profits tax also and therefore asked the assessee company to file its return. The assessee company submitted its return showing the chargeable profits as 'nil ', contending that there could be no liability to super profits tax in respect of a company in liquidation since the formula laid down in the Second Schedule to the for calculation of the 'standard deduction ' was inapplicable on account of the fact that a company in liquidation could not be said to have paid up share capital as on the first day of the previous year relevant to the assessment year which was long subsequent to the winding up. The Income Tax officer however overruled the aforesaid contention and worked out the chargeable profits at Rs. 2,04,740 after adopting a minimum amount of Rs. 50,000 mentioned in s.2 (9) of tho Act as a "standard deduction". The said order was confirmed in appeal by the Appellate Assistant Commissioner. But, on further appeal by the assessee company the Income tax Appellate Tribunal while allowing the appeal held: (1) that in the hands of the liquidator there is only one integral fund which could not be split up into share capital, reserve profits and therefore s.27 of the Act was clearly attracted to the case; and (ii) that no assessment to super profits could be made on a company in liquidation since section 4 of the Act would not apply to the assessee company in liquidation as the standard deduction was incapable of ascertainment. The High Court, rejected the reference made at the instance of the Revenue. 972 Dismissing the appeal by the Revenue, ^ HELD: (1) After a company has gone into liquidation it cannot be said that as on the first day in any subsequent year forming the previous year relevant to the assessment year, there exists in the hands of the liquidator any amount distinctly forming the paid up share capital of the company or any sum that can be characterized as "reserve. " The distinction between capital, reserve and tho accumulated profits disappears in respect of a company in liquidation after the date of its winding up and there is only one integrated or consolidated fund in the hands of the liquidator. The concept of a fluctuating share capital or reserve which is the basic premise necessary to attract the applicability of rule 1 of the Second Schedule is wholly foreign in respect of a company in liquidation. [977H; 978E F] (2) It is clear from the definition of "standard deduction" that for the purpose of calculation of "standard deduction" one has to ascertain the capital of the company as computed in the manner specified in Second Schedule. But, it is important to notice from the terms of Rule I of Second Schedule that unless the company can be said to have a paid up share capital as on the first day of the previous year relevant to the assessment year the formula laid down in the rule for computation of capital of the company cannot have any application and the calculation of "standard deduction" being based wholly on the capital of the company, it becomes wholly incapable of ascertainment. [976B; 977F G] Commissioner of Inland Revenue vs George Burrell, 1924 2 [K.B.] 52, 63 and Birch vs Cropper [1889] L.R. 14 App. 525, 546 referred to. Commissioner of Income tax vs Girdhars and Co. Private Ltd, ; followed. (3) Under the scheme of the Income tax Act 1961, charge of tax will not get attracted unless the case or transaction falls under the governance of the relevant computation provisions. The character of the computation provisions in each case bears a relationship to the nature of the charge. Thus, the charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all. it is evident that such a case was not intended to fall Within the charging section. The scheme of the being similar to that of the Income tax Act 1961, it has to be held that inasmuch as the provisions contained in the Act for computing the capital of the company and its reserves and cannot have any application in respect of a company in liquidation and consequently the 'standard deduction ' is incapable of ascertainment, the charge of super profits tax under section 4 of the Act is not attracted to such a cases. [978G H ; 979A C] Commissioners of Income tax, Bangalore vs B.C. Srinivasa Setty; , ; referred to.

ivil Appeal No. 2873 of 1987. From the Judgment and Order dated 5.8.1987 of the Punjab & Haryana High Court in Civil Revision No. 2209 of 1979. Harbans Lal, S.K. Mehta, Dhruv Mehta and Aman Vachher for the Appellant. Rajinder Sachhar, K.C. Dua and Ms. Manju Chopra for the Respondent. N.S. Das Behl, (Not present) The Judgment of the Court was delivered by 425 RANGANATH MISRA, J. This is a tenant 's appeal by special leave challenging his eviction from a business premises located at Jallandhar. Under a rent note (Exh. A I), the appellant had taken the premises on rent from the respondent landlord. The use to which the premises was intended to be put was running of a cycle and rickshaw repairing shop. As far as relevant, on the allegation that the tenant had put the premises to different use, an application for his eviction was made under section 13(2)(ii)(b) of the East Punjab Urban Rent Restric tion Act, 1949. The Controller found that the appellant had continued the business of repairing of cycles and rickshaws but side by side had for a period of about seven months been selling televisions in the premises but he stopped the same as it was not viable. According to the Controller, this did not constitute user for a purpose other than that for which the premises was leased and he accordingly rejected the peti tion. The appellate authority at the landlord 's instance held that the statutory condition was satisfied and granted eviction. The High Court when moved by the tenant declined to interfere. The short question that arises for consideration is whether there has been a violation of the terms of tenancy by using the premises for a purpose other than that for which the premises had been leased. The tenant did not dispute that he had taken the premises for running a repair shop of cycles and rickshaws. In his statement he said that he had commenced the business of selling the televisions side by side in view of the slump in the cycle and rickshaw repairing business. He also accepted the position that he had not obtained the consent of the landlord when he started the TV business. The landlord has accepted the position that in the rent note it was not written that the respondent would not do any business in the shop in dispute except the cycle or rickshaw repairs. On these facts it has now to be decided as to whether the premises has been used for a purpose other than that for which it had been leased. Reliance was placed on the Full Bench decision of the Punjab High court in Des Raj vs Sham Lal, AIR 1980 P & H 229 where the question for consideration was as to whether when the lease was for the purpose of a shop without anything more specific, user thereof as a godown amounted to change of user. The High Court in course of the discussion in the judgment rightly drew the distinction between resi 426 dential and non residential premises and also classified non residential buildings into known categories like shop, godown, restaurant, cinema, hotel etc. In course of the discussion the Full Bench referred to the decision of this Court in Moti Ram vs State of Madhya Pradesh, ; and came to the conclusion that when the letting out purpose was location of a shop and it .was exclusively used as a godown, it amounted to a change of user. Not much of support is directly available for the resolution of the present dispute from that judgment. Reliance was also placed on a decision of this Court in the case of Mohan Lal vs Jai Bhagwan, ; where the very provision of the East Punjab Act was considered in a case of eviction. The decision of this Court in the case of Maharaj Kishan Kesar vs Milkha Singh, (C.A. No. 1086/64 decided on November 10, 1965) was referred to therein. That again was a decision under the very Act and the dispute related to the allegation of change of user when petrol was sold as an allied business of the avowed purpose of locating the workshop. The Court found. that location of a petrol pump could not be regarded as not being a part of motor workshop business. Rightly, our learned brother Mukharji, J. indicated that the ratio in Maharaj Kishan Kesar 's case did not provide any guideline of general nature. What was said in pars 9 of his judgment is perhaps useful. Our learned Brother quoted the observations of Lord Diplock, J. in Duport Steels Ltd. vs Sirs, and said: "While respectfully agreeing with the said observations of Lord Diplock, that the; Par liament Legislates to remedy and the judiciary interprets them, it has to be borne in mind that the meaning of the expression must be found in the felt necessities of the time. In the background of the purpose of rent legisla tion and inasmuch as in the instant case the change of the user would not cause any mis chief or detriment or impairment of the shop in question and in one sense could be called an allied business in the expanding concept of departmental stores, in our opinion, in this case there was no change of user which at tracted the mischief of section 13(2)(ii)(b). " On that conclusion, the order of eviction was reversed. Letting of a premises can broadly be for residential or commercial purpose. The restriction which is statutorily. provided in section 13(2)(ii)(b) of the Act is obviously one to protect the interests of the landlord .and is intended to restrict the use of the landlord 's premises 427 taken by the tenant under lease. It is akin to the provision contained in section 108(0) of the dealing with the obligations of a lessee. That clause pro vides: 'The lessee may use the property and its products, if. any, as a person of ordinary prudence would use then if they were of his own; but be must not use or permit another to use the property for a purpose other than that for which it was leased . ' A house let for residential purpose would not be available for being used as a shop even without structural alteration. The concept of injury to the premises which forms the foundation of cl. (o) is the main basis for providing cl.(b) in section 13(2)(ii) of the Act as a ground for the tenant 's eviction. The Privy Council in U Po Naing vs Burma Oil Co., AIR 1929 PC 108 adopted the same considera tion. The Kerala High Court has held that premises let out for conducting trade in gold if also used for a wine store would not amount to an act destructive of or permanently injurious to the leased property Simi larly, the Bombay High Court has held that when the lease deed provided for user of the premises for business of fret work and the lessee used the premises for business in plas tic goods, change in the nature of business did not bring about change of user as contemplated in section 108(o) of the The landlord parts with possession of the premises by giving a lease of the property to the tenant for a consider ation. Ordinarily, as long as the interest of the landlord is not prejudiced, a small change in the user would not be actionable. In this case, the premises was let out for running of a repair shop. Along with the repair business, sale of televi sions was temporarily .carried on. We do not think this constituted a change of user within the meaning of section 13(2)(ii)(b) of the Act so as to give a cause of action to the landlord to seek eviction of the tenant. The appeal is allowed and the order of eviction passed by the appellate authority and affirmed by the High Court is vacated and the order of the Controller is restored. Parties are directed to bear their own costs throughout. T.N.A. Appeal allowed.

The appellant had taken the premises on rent from the respondent landlord for running a cycle and rickshaw repair ing shop. In the rent note there was no stipulation that the appellant would not do any business in the shop except the cycle or rickshaw repairs. Along with the repair business the appellant temporarily carried on sale of televisions also in the premises. The landlord filed an application for eviction under section 13(2)(ii)(b) of the East Punjab Urban Rent Restriction Act, 1949 alleging that the tenant had put the premises to different use. The Rent Controller rejected the application by holding that the temporary sale of televisions did not constitute user for a purpose other than that for which the premises was leased. On an appeal filed by the landlord the appellate authority granted eviction by holding that the statutory condition was satisfied. The appeal filed by the tenant against the decision of the appellate authority was dis missed by the High Court. Hence this appeal by the tenant. Allowing the appeal and setting aside the order of eviction, HELD: Letting of a premises can broadly be for residen tial or commercial purpose. The restriction which is statu torily provided in section 13(2)(ii)(b) of the Act is obvi ously one to protect the interests of the landlord and is intended to restrict the use of landlord 's premises taken by the tenant under lease. It is akin to the provision con tained in section 108(o) of the dealing with the obliga 424 tions of a lessee. A house let for residential purpose would not be available for being used as a shop even without structural alteration. The concept of injury to the premises which forms the foundation of clause (o) is the main basis for providing clause (b) in section 13(2)(ii) of the Act as a ground for the tenant 's eviction. [426H, 427A B] The landlord parts with possession of the premises by giving a lease of the property to the tenant for a consider ation. Ordinarily, as long as the interest of the landlord is not prejudiced, a small change in the user would not be actionable. In the instant case, the premises was let out for running of a repair shop. Along with the repair busi ness, sale of televisions was temporarily carried on. This did not constitute a change of user within the meaning of section 13(2)(ii)(b) of the Act so as to give a cause of action to the landlord to seek eviction of the tenant. [427E, F] Mohan Lal vs Jai Bhagwan, ; , applied. Des Raj vs Sham Lal, A.I.R. 1980 P & H 229, held inapplica ble. Moti Ram vs State of Mahdya Pradesh, A.I.R. 1978 S.C. 1594; Maharaj Krishan Kesar vs Milkha Singh, Civil Appeal No. 1086 of 1964 decided on November 10, 1965 (S.C.); Dup port Steel Ltd. vs Sirs, ; U.P. Naing vs Burma Oil Co., A.I.R. 1929 P.C. 108; Raghavan Pillai vs Sainaba Beevi, [1977] Kerala L.T. 417 and Dattatraya vs Gulab Rao, , referred to.

Civil Appeal No. 8818 of 1983. From the Judgment and order dated 23.12.1982 of the Madras High Court in W.P. No. 220, 221 and 222 of 1980. C.S. Vaidyanathan, M.N. Krishnamani, Parbir Chowdhary, S.R. Bhat and K.V. Mohan for the Appellants. F.S. Nariman, Harbans Lal, Shanti Bhushan, Harish N. Salve, H.K. Puri, section Ramasubramaniam, Rajen Mahapatra, Miss Mridula Ray, Mrs. Kitty Kumarmangalam, C.V. Subba Rao, R. Mohan, and A.V. Rangam for the Respondents. The Judgment of the Court was delivered by VENKATARAMIAH, J. The important question which arises for determination in this appeal by special leave is whether sections 9 A, 10, 11 A, 12 and 33 of the (hereinafter referred to as 'the Act ') are applicable to educational institutions established and administered by minorities which are protected by clause ( 1) of Article 30 of the Constitution of India. 553 the highest grade in the art and science of Medicine and Nursing or in one or other of the related professions to equip them, in the spirit of Christ, for service in the relief of suffering and the promotion of health. ' Dr. Ida Scudder, a daughter of an American Medical missionary in India, realising the need for more women doctors in India to give relief of the suffering women, in particular, started a one bed clinic in 1900 at Vellore in the State of Tamil Nadu. Within two years she set up a 40 bed hospital with the assistance of a group of medical women. Since her main desire was to train women as nurses and doctors who should go out to serve suffering women and children she started the training courses for nurses in 1906 and a medical school for women in 1918. The hospital and the medical school grew in their stature in course of time. The medical school was converted into a medical college with degree courses in 1942. In the year 1947 even men were admitted to the medical college as students. The hospital has since become an important medical institution in South India The hospital is being used for training the students of the medical college by providing clinical facilities. The medical college and the college of nursing in Vellore are affiliated to the University of Madras and they both go by the name, the Christian Medical College. In the medical college the post graduate degree courses have also been started. In addition thereto post graduate diploma courses in different specialities have also been started. In the year 1982, when the common judgment of the High Court of Madras in the three writ petitions, out of which this appeal arises, was delivered, there were about 500 students including post graduate students in the medical college, 400 in college of nursing and about 164 in para medical courses. The medical college also conducts research into the fundamental causes of diseases, their prevention and treatment. It is also claimed that the medical college is a pioneer in the development of higher specialities like Cardiology, Neuro Surgery, Psychiatry, Thoracic Surgery, Urology, Gastro Enterology etc. The hospital in which the clinical facilities are provided to the students of the medical college is also a very big hospital which attracts large number of patients, many of whom are treated as in patients. The college and the hospital are now being managed by respondent No. 1 Association. In view of the heavy responsibilities undertaken by the college and the hospital it has become necessary to employ a large number of persons as teachers, doctors, nurses and other staff for running the college and the hospital, and also administrative staff for the purpose of managing their affairs. The employees of the college and the hospital are paid salaries and allowances and are entitled to the usual conditions of service as are applicable to such employees in other medical colleges and hospitals in India. It is natural 554 that in a big establishment like the one under consideration between A the management and its employees there would be disputes with regard to the security of employment and other conditions of service. Sometime during the period 1975 1978, three employees, namely, Mr. Gilbert Samuel, a clerk in the Microbiology Department of the Christian Medical College and Hospital, Mr. M. Devadoss, a packer in the Central Sterile Supply Department of the Hospital and Mrs. Yesudial, a cook in the Staff & Student Nurses ' Hostel of the Rural Health Center attached to the hospital, were dismissed from service by the management. On an industrial dispute being raised by the Christian Medical College Hospital Employee 's Union in respect of the dismissal of the above three persons, the Government of Madras by its order dated 19.2.1979 referred the following question to the Labour Court for adjudication: "Whether the non employment of Thiruvalargal Gilbert Samuel, M. Devadoss and Tmt. Yesudial is justified, and if not, to what relief each of them would be entitled; to compute the relief, if any awarded, it terms of money, if it could be so computed. " This reference was numbered as I.D. No. 52 of 1979 on the file of the Labour Court one R. Subramaniam, a probationer Stenographer of the above institutions, whose services had been terminated in 1975 at the end of the probationary period also raised an industrial dispute in 1978 and that case was also referred to the Labour Court by the State Government on 11.4.1979. The question referred to the Labour Court read as follows: "Whether the non employment of Thiru R. Subramaniam is justified, if not to what relief he is entitled; to compute the relief, if any awarded, in terms of money, if it could be so computed. " This reference was numbered as I.D. No. 84 of 1979 on the file of the Labour Court. Questioning the validity of the above two references the first respondent Association filed Writ Petition Nos. 221 and 222 of 1980 on the file of the High Court of Madras for quashing the said refe 555 rences. The first respondent Association also filed Writ Petition No. 220 of 1980 on the file of the High Court of Madras praying for a declaration that the provisions of the Act were unconstitutional and ultra vires and were inapplicable in entirety to the minority educational institutions protected by Article 30(1) of the Constitution of India, like the Christian Medical College and the hospital attached thereto at Vellore. The first respondent Association pleaded that the hospital attached to the Christian Medical College formed an integral part of the college which was an educational institution established and administered by a minority and thus was also entitled to the protection of Article 30(1) of the Constitution of India. Secondly, it was urged that the college and the hospital being minority institutions entitled to the protection of Article 30(1) of the Constitution of India any industrial dispute arising between the management and employees of the college and the hospital could not be adjudicated upon under the provisions of the Act as such adjudication amounted to interference with the right of the minority to administer the college and the hospital which together constituted an educational institution. It was also contended that the Act was not applicable to educational institutions generally irrespective of their being minority institutions or not The petitions were contested by the Union of India, the State of Tamil Nadu, the Christian Medical College and Hospital Employees ' Union and the workmen concerned. The High Court after hearing the parties recorded the following findings: 1. The Christian Medical College Hospital which was attached to the Christian Medical College was an educational institution; 2. The Christian Medical College Hospital even though it was an educational institution was an industry within the meaning of the expression 'industry ' given in the Act; and 3. Even though the Christian Medical College and the hospital attached thereto constituted an industry, they together constituting an educational institution established and administered by a minority, sections 9 A, 10, 11 A, 12 and 33 of the Act would not be applicable to them by virtue of Article 30(1) of the Constitution of India. Accordingly, the High Court quashed the references made under section 10(1)(c) of the Act to the Labour Court. Aggrieved by the judgment of the High Court the Christian Medical College Hospital 556 Employees ' Union and one of its workman have filed this appeal by special leave. The principal question which arises for determination in this case is whether the Act which is passed with the twin object of preventing industrial disputes and the settlement of such disputes between employers and employees is applicable to educational institutions which are protected by Article 30(1) of the Constitution of India. Article 30(1) of the Constitution of India provides as follows: "All minorities, whether based on religion or language, shall have the right to establish and administer educational institutions of their choice. " In Re. The Kerala Educational Bill, 1957, [1959] S.C.R. 995. this Court construed Article 30(1) of the Constitution of India and held thus: The first point to note is that the Article gives certain rights not only to religious minorities but also to linguistic minorities. In the next place, the right conferred on such minorities is to establish educational institutions of their choice. It does not say that minorities based on religion should establish educational institutions for teaching religion only, or that linguistic minorities should have the right to establish educational institutions for teaching their language only. What the Article says and means is that the religious and the linguistic minorities should have the right to establish educational institutions of their choice. (Pages l052 l053) . . . . The next thing to note is that the Article, in terms, gives all minorities, whether based on religion or language, two rights, namely, the right to establish and the right to administer educational institutions of their choice. (Page 1053) . The right to administer cannot obviously include the right to maladminister. (Page 1062) . . " The meaning of Article 30(I) of the Constitution of India was again considered by a Constitution Bench of this Court in the Ahmedabad St. Xavier 's College Society & Anr. etc. vs 5tate of Gujarct & Anr. , ; Ray, C.J. Observed in the above decision thus: 557 "The minority institutions have the right to administer institutions. This right implies the obligation and duty of the minority institutions to render the very best to the students. In the right of administration, checks and balances in the shape of regulatory measures are required to ensure the appointment of good teachers and their conditions of service. The right to administer is to be tempered with regulatory measures to facilitate smooth administration. The best administration will reveal no trace or colour of minority. A minority institution should shine in exemplary eclectism in the administration of the institution. The best compliment that can be paid to a minority institution is that it does not rest on or proclaim its minority character. Regulations which will serve the interest of the students, regulations which will serve the interest of the teachers are of paramount importance in good administration. Regulations in the interest of efficiency of teachers, discipline and fairness in administration are necessary for preserving harmony among affiliated institutions. (Pages 196 197) . . . . . . . . . In the field of administration it is not reasonable to claim that minority institutions will have complete autonomy. Checks on the administration may be necessary in order to ensure that the administration is efficient and sound and will serve the academic needs of the institution. The right of a minority to administer its educational institution involves, as part of it, a correlative duty of good administration. (Page 200)" Mathew, J. discussing what type of action by the State would amount to the abridgement of the right guaranteed under Article 30(1) of the Constitution of India observed at page 265 266 thus: "The application of the term 'abridge ' may not be difficult in many cases but the problem arises acutely in certain types of situations. The important ones are where a law is not a direct restriction of the right but is designed to accomplish another objective and the impact upon the right 558 is secondary or indirect. Measures which are directed at other forms of activities but which have a secondary or direct or incidental effect upon the right do not generally abridge a right unless the content of the right is regulated. As we have already said, such measures would include various types of taxes, economic regulations, laws regulating the wages, measures to promote health and to preserve hygiene and other laws of general application. By hpothesis, the law, taken by itself, is a legitimate one, aimed directly at the control of some other activity. The question is about its secondary impact upon the admitted area of administration of educational institutions. This is especially a problem of determining when the regulation in issue has an effect which constitutes an abridgement of the constitutional right within the meaning of Article 13(2). In other words, in every case, the court must undertake to define and give content to the word 'abridge ' in Article 13(2)(1). The question to be asked and answered is whether the particular measure is regulatory or whether it crosses the zone of permissible regulation and enters the forbidden territory of restrictions or abridgement. So, even if an educational institution established by a religious or linguistic minority does not seek recognition, affiliation or aid, its activity can be regulated in various ways provided the regulations do not take away or abridge the guaranteed right. Regular tax measures, economic regulations, social welfare legislation, wage and hour legislation and similar measures may, of course have some effect upon the right under Article 30(I). But where the burden is the same as that borne by others engaged in different forms of activity, the similar impact on the right seems clearly insufficient to constitute an abridgement. If an educational institution established by a religious minority seeks no recognition, affiliation or aid, the state may have no right to prescribe the curriculum, sllabi or the qualification of the teachers. " (Underlining by us). 559 machinery for investigation and settlement of industrial disputes between employers and workmen in accordance with the decisions of the International Labour organisation. The Act provides for a machinery for collective bargaining. The object of industrial adjudications has, therefore, been to be a countervailing force to counteract the inequalities of bargaining power which is inherent in the employment relationship. In one of the commentaries on the Act the need for and the character of industrial adjudication is described as follows: "The law governing industrial relations is one of the vitally important branches of the law the legal system on which depends the social and economic security of a very large majority. "The parties to the industrial disputes present an infinite permutations of attitudes" on, economics, politics and human relations. General consensus on the methods of resolving them is beyond reach. The core of modern industrial law, therefore, consists of the problems dealing with the conflict arising between the industrial employers and their employees relating to employment and social security. The study of industrial law, therefore, necessarily concerns itself with the struggle of industrial workmen for security. It is the security of job, the minimum standard of living, of his future and that of his children and conversely the fear of insecurity which bedevil the worker. In other words, security is the keystone in dealing with the industrial relations between the industrial employers and their workers. The industrial worker, therefore, is the 'focal point ' of any legal enquiry in the industrial relations. In the words of Prof. Forkosch, "the sociologist may see the worker as a human being caught in congeries of frustrations, complexes and urges a mind that cannot cope with the baffling contradictions of the modern society. "There is", therefore, as Prof. Otto Kahn Freund points out "everywhere a constant need for finding a judicium finium regundorum between collective bargaining and legislation of all kinds as instruments for the regulation of conditions of employment wages and hours, holidays and pensions, health, safety and welfare, and even, increasingly, social security." (See O.P. Malhotra: The Law of Industrial disputes, Fourts Edn., Vol. I, (1985) Introduction page XX) Section 2(k) of the Act defines an 'industrial dispute 560 dispute or difference between employers and employers or between employers and workmen or between workmen and workmen which is connected with the employment or non employment on the terms of employment or with the conditions of labour of any person. The Act provides for the constitution of works committees in industrial establishments employing 100 workmen or more and they are charged with the duty of removing causes of friction between the employer and workmen in the day to day working of the establishment and promoting measures for securing amity and good relations between them. Industrial peace is most enduring where it is founded on voluntary settlement, and the works committees are entrusted with the duty of providing a machinery for the settlement of disputes. Section 12 of the Act provides for the appointment of Conciliation officers in order to negotiate between the managements and their workmen and to bring about settlement if possible. If the conciliation proceedings fail, the Conciliation officer has to make a report to the appropriate Government accordingly. A reference to an Industrial Tribunal of a dispute under section 10 of the Act is made where both parties to an industrial dispute apply for such reference or where the appropriate Government considers it expedient so to do. An award of a Tribunal may be in operation for a period of one year subject to the provisions of section 19 of the Act. The power to refer disputes to Industrial Tribunals and enforce their awards is an essential corollary to the obligation that lies on the Government to secure conclusive determination of the disputes with a view to redressing the legitimate grievances of the parties thereto, such obligation arising from the imposition of restraints on the rights of strike and lock out, which must remain inviolate, except where considerations of public interest override such rights. The Industrial Tribunals or Labour Courts constituted under the Act are presided over by persons having judicial experience such as a person who is or has been a Judge of the High Court or who has been for a period not less than three years a District Judge or an Additional District Judge or a person who has not less than five years ' service as presiding officer of a Labour Court constituted under any law for the time being in force or who holds a degree in law of a University established by law in any part of India and is holding or has held an of fice not lower in rank than that of Assistant Commissioner of Labour under the State Government for not less than ten years. The Presiding officer of a Labour Court should also possess substantially the same qualifications and they are set out in section 7 of the Act. Section 9 A of the Act, which is one of the sections the applicability of which to a minority educational institution is questioned, provides that no employer, who proposes to effect any change in the conditions of service 561 applicable to any workman in respect of any matter specified in the Fourth Schedule to the Act shall effect such change without giving to the workmen likely to be affected by such change a notice in the prescribed manner of the nature of the change proposed to be effected; or within twenty one days of giving such notice, except in certain cases which are mentioned in the proviso thereto. This section was introduced since there was a persistent demand that notice should be given whenever it was proposed to make any change in the conditions of service of the workmen. Section 11 A of the Act confers powers on the Labour Courts, Tribunals and National Tribunals to give appropriate relief in case of discharge or dismissal of workmen. It provides that where an industrial dispute relating to the discharge or dismissal of a workmen has been referred to a Labour Court, Tribunal or National Tribunal for adjudication and, in the course of the adjudicational proceedings, the Labour Court, Tribunal or National Tribunal, as the case may be, is satisfied that the order of discharge or dismissal was not justified, it may, by its award, set aside the order of discharge or dismissal and direct reinstatement of the workman on such terms and conditions, if any, as it thinks fit, or give such other relief to the workman including the award of any lesser punishment in lieu of discharge or dismissal as the circumstances of the case may require. On the basis of the materials on record, the Tribunal is empowered to pass an appropriate order under section 11 A of the Act. Section 33 of the Act provides that the conditions of service etc. Of the employees should remain unchanged under certain circumstances during pendency of proceedings before an arbitrator or a conciliation officer or a Board or of any proceeding before a Labour Court or Tribunal or National Tribunal in respect of an industrial dispute. It further provides that no employer shall in regard to any matter connected with the dispute, alter, to the prejudice of the workmen concerned in such dispute, the conditions of service applicable to them immediately before the commencement of such proceeding; or for any misconduct connected with the dispute, discharge or punish, whether by dismissal or otherwise, any workman concerned in such dispute, save with the express permission in writing of the authority before which the proceedings is pending. If the conditions of service relate to any matter not connected with the dispute or if the misconduct of the workman is not connected with the dispute the management should seek the approval of the authority concerned and comply with the other conditions mentioned in the proviso to section 33(2) of the Act. Section 33(3) of the Act provides that in the case of protected workmen the express permission of the authority concerned should be obtained before any such action is taken. Section 33 A of the Act pro H 562 vides for the making of an application before a conciliation officer, A Board, an arbitrator, a Labour Court, Tribunal or National Tribunal for appropriate relief if section 33 of the Act is contravened. Thus it is seen that the Act is one which is enacted as a social security measure in order to ensure welfare of labour and it falls within one or the other of entry 22 Trade Unions; industrial and labour disputes, entry E3 23 social security and social insurance; employment and unemployment and entry 24 welfare of labour including conditions of work, provident funds, employer 's liability, workmen 's compensation, invalidity and old age pensions and maternity benefits in the List III of the Seventh Schedule to the Constitution of India. The Act generally applies to all industries irrespective of the religion or caste to which the parties belong. It applies to industries owned by the Central and the State Governments too. Any decision given by the Industrial Tribunal or a Labour Court under the Act is subject to judicial review by the High Court under Article 226 of the Constitution of India and an appeal to this Court under Article 136 of the Constitution of India The Labour Court, the Industrial Tribunal, the High Court and this Court while dealing with matters arising out of the Act have to deal with them objectively. The smooth running of an educational institution depends upon the employment of workmen who are not subjected to victimisation or any other kind of maltreatment. The conditions of service of workmen in all institutions including minority educational institutions have to be protected in the interest of the entire society and any unfair labour practice, such as 'hiring and firing ', termination or retrenchment of the service of a workman on irrational grounds will have to be checked. The Act makes provisions in respect of these matters. The Act being a general law for prevention and settlement of industrial disputes cannot be construed as a law which directly interferes with the right of administration of a minority educational institution guaranteed under Article 30( 1) of the Constitution of India The law is not enacted with the object of interfering with any such right. It clearly falls within the observation of Mathew, J. in St. Xavier 's College, case (supra) that "regular tax measures, economic regulations, social welfare legislation, wage and hour legislation and similar measures may, of course have some effect upon the right under Article 30(1). But where the burden is the same as that borne by others engaged in different forms of activity, the similar impact on the right seems clearly insufficient to constitute an abridgement. " It is, however, argued on behalf of the first respondent Association that the application of the provisions of the Act will result in the abridgment of the right of the management of minority educa 563 tional institutions to administer such institutions since there is always a chance in the course of an industrial adjudication that the Tribunal or the Labour Court as the case may be may pass an order setting aside an order of dismissal or removal of a workman passed by the management and reinstating him in service or making an order altering the conditions of service of workmen contrary to the agreement entered into with them. It is urged that such adjudication results in the attenuation of the power of the management to dismiss or remove a workman as and when it likes. It is also stated that the minority educational institution is likely to be exposed to constant and endless litigation which would again adversely affect the right of the minority to establish and administer an educational institution guaranteed under Article 30(1) of the Constitution of India. Reliance is placed in support of the above propositions on the decision of this Court in the St. Xavier 's College case (supra). In that case the Court held that clause (b) of sub section (1) and clause (b) of sub section (2) of section 51 A of the Gujarat University Act, 1949 were violative of Article 30(1) of the Constitution of India so far as the minority educational institutions were concerned. The Court also held that section 52 A of that Act was also violative of Article 30(1) of the Constitution of India. The contentions of the parties urged in that case and the conclusion reached by the Court are briefly stated in the judgment of Khanna, J. at pages 243 244 which read thus: "Clause (a) of sub sections (1) and (2) of section 5 lA of the impugned Act which make provision for giving a reasonable opportunity of showing cause against a penalty to be proposed on a member of the staff of an educational institution would consequently be held to be valid. Clause (b) of those sub sections which gives a power to the Vice Chancellor and officer of the University authorised by him to veto the action of the managing body of an educational institution in awarding punishment to a member of the staff, in my opinion, interferes with the disciplinary control of the managing body over its teachers. It is significant that the power of approval conferred by clause (b) in each of the two sub sections of section 5 lA on the Vice Chancellor or other officer authorised by him is a blanket power. No guidelines are laid down for the exercise of that power and it is not provided that the approval is to be withheld only in case the dismissal, removal, reduction in rank or termination of service is malafide or by way of victimisation or other similar cause. The conferment of such blanket power 564 on the Vice Chancellor or other officer authorised by him for vetoing the disciplinary action of the managing body of an educational institution makes a serious inroad on the right of the managing body to administer an educational institution. Clause (b) of each of the two sub sections of section 51A should, therefore, be held to be violative of article 30(1) so far as minority educational institutions are concerned. Section 52A of the Act relates to the reference of disputes between a governing body and any member of the teaching, other academic and non teaching staff of an affiliated college or recognized or approved institution connected with the conditions of service of such member to a Tribunal of Arbitration, consisting of one nominated by the governing body of the college or, as the case may be, of the recognised or approved institution, one member nominated by the member of the staff involved in the dispute and an Umpire appointed by the Vice Chancellor. Section 52A is widely worded and as it stands it would cover within its ambit every dispute connected with the conditions of service of a member of the staff of an educational institution, however, trivial or insignificant it may be, which may arise between the governing body of a college and a member of the staff. The effect of this section would be that the managing committee of an educational institution would be embroiled by its employees in a series of arbitration proceedings. The provisions of section 52A would thus act as a spoke in the wheel of effective administration of an educational institution. It may also be stated that there is nothing objectionable to selecting the method of arbitration for settling major disputes connected with conditions of service of staff of educational institutions. It may indeed be a desideratum. What is objectionable, apart from what has been mentioned above, is the giving of the power to the Vice Chancellor to nominate the Umpire. Normally in such disputes there would be hardly any agreement between the arbitrator nominated by the governing body of the institution and the one nominated by the concerned member of the staff. The result would be that the power would vest for all intents and purposes in the nominee of the Vice Chancellor to decide all disputes between the governing body and the member of the staff connected with 565 the latter 's conditions of service. The governing body would thus be hardly in a position to take any effective disciplinary action against a member of the staff. This must cause an inroad in the right of the governing body to administer the institution. Section 52A should, therefore, be held to be violative of article. 30(1) so far as minority educational institutions are concerned. " (emphasis added). We are of the view that the decision in the St. Xavier 's College case (supra) is distinguishable from the present one. Clause (b) of the two sub sections of section 51 A of the Gujarat University Act, 1949 conferred a blanket power on the Vice Chancellor or other officer authorised by him to approve or not any recommendation made by the management regarding the dismissal, removal, reduction in rank or termination of service of a workman. The said Act did not furnish any guidelines regarding the exercise of that power which was in the nature of a 'veto ' power. Secondly, section 52 A of the Gujarat University Act, 1949 which required the disputes between the governing body and any member of the teaching staff, other academic and non teaching staff of an affiliated college or recognised or approved institution connected with the conditions of service of such member to be referred to a Tribunal of Arbitration, consisting of one nominated by the governing body of the college or, as the case may be, of the recognised or approved institution, one member nominated by the member of the staff involved in the dispute and an Umpire approved by the ViceChancellor was held to be an unconstitutional interference with a right guaranteed under Article 30(1). Of the Constitution of India as it was likely to involve the minority educational institutions in a series of arbitration proceedings and that the power vested in the Vice Chancellor to nominate an Umpire to decide all disputes between the governing body and the members of the staff connected with the latter 's conditions of service would make virtually the Vice Chancellor the person who would have the ultimate voice in the decision of the Tribunal of Arbitration. There was also no check on the question whether the dispute was one which deserved to be considered by the Tribunal of Arbitration. In the instant case there is no room for such contingency to arise. A reference under the Act has to be made by the Government either when both parties requested the Government to refer an industrial dispute for adjudication or only when it is satisfied that there exists an industrial dispute. When an industrial dispute exists or is apprehended, the conciliation officer should first consider whether it can be settled after hearing both the parties and it is only 566 when his efforts to bring about a settlement fail and he makes a report accordingly to the appropriate Government, the Government is called upon to take a decision on the question whether the case is a fit one for reference to the Industrial Tribunal or the Labour Court. It is only when a reference is made by the Government the Industrial Tribunal vi the Labour Court gets jurisdiction to decide a case. It cannot, therefore, be said that each and every dispute raised by a workman would automatically end up in a reference to the Industrial Tribunal or the labour Court. Secondly, the circumstances in which the Industrial Tribunal or the Labour Court may set aside the decision arrived at by the management in the course of a domestic enquiry held by the management into an act of misconduct of a workman are evolved by a series of judicial decisions. In Indian Iron & Steel Co. Ltd. and Another vs Their workmen, [1958] S.C.R. 667 this Court has observed that the powers of an industrial tribunal to interfere in cases of dismissal of a workman by the management are not unlimited and the Tribunal does not act as a court of appeal and substitute its own judgment for that of the management. It will interfere (a) where there is want of good faith; (b) when there is victimisation or unfair labour practice; (c) when the management has been guilty of the basic error or violation of the principles of natural justice; and (d) when on the materials before the Court the finding is completely baseless or perverse. It cannot, therefore, be said that the Industrial Tribunal or the Labour Court will function arbitrarily and interfere with every decision of the management as regards dismissal or discharge of a workman arrived at in a disciplinary enquiry. The power exercisable by the Industrial Tribunal or the Labour Court cannot, therefore, be equated with the power of 'veto ' conferred on the Vice Chancellor under clause (b) of either of the two sub sections of section 51 A of the Gujarat University Act, 1949. As we have already said earlier the decision of the Industrial Tribunal or the Labour Court is open to judicial review by the High Court and by this Court on appeal. Section 11 A which has been introduced since then into the Act which confers the power on the Industrial Tribunal or the Labour Court to substitute a lesser punishment in lieu of the order of discharge or dismissal passed by the management again cannot be considered as conferring an arbitrary power on the Industrial Tribunal or the Labour Court. The power under section 11 A of the Act has to be exercised judicially and the Industrial Tribunal or the Labour Court is expected to interfere with the decision of a management under section 11 A of the Act only when it is satisfied that the punishment imposed by the management is highly disproportionate to the degree of guilt of the workman concerned. The Industrial Tribunal or the Labour Court has to give reasons for its EMPLOYEES UNION vs C.M. COLLEGE [VENKATARAMIAH, J.] 567 567 decision. The decision of the Industrial Tribunal or of the Labour Court is again, as already said, subject to judicial review by the High A Court and this Court. In Lilly Kurian vs Sr. Lewina and Ors J [1979] 1 S.C.R. 820 this Court was required to consider a provision which was more or less similar to the provisions in St. Xavier 's College, case (supra). The Court held that the conferment of a right of appeal to an outside authority like the Vice Chancellor which took away the disciplinary power of a minority educational institution was violative of Article 30( 1) of the Constitution of India since the said power was uncanalised and unguided in the sense that no restriction had been placed on the exercise of the power. Explaining his own decision in Lilly Kurian 's case (supra) A.P. Sen, J. has observed recently in Mrs. Y. Theclamma vs Union of India and Ors., ; that while the right of the minorities, religious or linguistic, to establish and administer educational institutions of their choice could not be interfered with, restrictions by way of regulations for the purpose of ensuring educational standards and maintaining excellence thereof can validity be prescribed. He further held that regulations can be made for ensuring proper conditions of service for the teachers and also for ensuring a fair procedure in the matter of disciplinary action and that the endeavour of the court in all the cases had been to strike a balance between the constitutional obligation to protect what was secured to the minorities under Article 30(1) of the Constitution of India and the social necessity to protect the members of the staff against arbitrariness and victimisation. Accordingly, A.P. Sen, J. held that section 8(4) of the Delhi School Education Act, 1973 was designed to afford some measure of protection to teachers of minority institutions without interfering with the management 's right to take disciplinary action. According to the learned Judge section 8(4) which provided that where a management committee of a recognised school intended to suspend any of its employees such intention should be communicated to the Director and no such suspension should be made except with the prior permission of the Director was not invalid. The learned Judge emphasised his earlier view expressed in Lilly Kurian 's case (supra) that the right guaranteed under Article 30(1) of the Constitution of India was subject to the regulatory power of the State and that Article 30(1) of the Constitution of India was not a charter for maladministration. In doing so the learned Judge followed the observation made by Chinnappa Reddy, J. in Frank Anthony Public School Employees ' Association vs Union of H 568 India and others, [ ; which read as follows: "Section 8(4) would be inapplicable to minority institutions if it had conferred blanket power on the Director to grant or withhold prior approval in every case where a management proposed to suspend an employee but we see that it is not so. The management has the right to order immediate suspension of an employee in case of gross misconduct but in order to prevent an abuse of power by the management a safeguard is provided to the employee that approval should be obtained within 15 days. The Director is also bound to accord his approval if there are adequate and reasonable grounds for such suspension. The provision appears to be eminently reasonable and sound and the answer to the question in regard to this provision is directly covered by the decision in All Saints High School, where Chandrachud, C.J. and Kailasam, J. upheld section 3(3)(a) of the Act impugned therein. " In All Saints High School, Hyderabad etc. etc. vs Government of Andhra Pradesh and Ors. , ; etc. a provision imposing certain restrictions on the power of suspension of a teacher by a minority educational institution which was contained in clauses (a) and (b) of sub section (3) of section 3 of the Andhra Pradesh Recognised Private Educational Institution Control Act, 1975 was upheld by Chandrachud, C.J. at pages 937 939 thus: "Section 3(3)(a) provides that no teacher employed in any private educational institution shall be placed under suspension except when an inquiry into the gross misconduct of such teacher is contemplated. Section 3(3)(b) provides that no such suspension shall remain in force for more than a period of two months and if the inquiry is not completed within that period the teacher shall, without prejudice to the inquiry, be deemed to have been restored as a teacher. The proviso to the sub section confers upon the competent authority the power, for reasons to be recorded in writing to extend the period of two months for a further period not exceeding two months if, in its opinion, the inquiry could not be completed within the initial period of two months for reasons directly attributable to the teacher. With respect, I find it difficult to agree with Brother 569 Fazal Ali that these provisions are violative of article 30(1). The question which one has to ask oneself is whether in the normal course of affairs, these provisions are likely to interfere with the freedom of minorities to administer and manage educational institutions of their choice. It is undoubtedly true that no educational institution can function efficiently and effectively unless the teachers observe at least the commonly accepted norms of good behaviour. Indisciplined teachers can hardly be expected to impress upon the students the value of discipline, which is a sine qua non of educational excellence. They can cause incalculable harm not only to the cause of education but to the society at large by generating a wrong sense of values in the minds of young and impressionable students. But discipline is not to be equated with dictatorial methods in the treatment of teachers. The institutional code of discipline must therefore conform to acceptable norms of fairness and cannot be arbitrary or fanciful. I do not think that in the name of discipline and in the purported exercise of the fundamental right of administration and management, any educational institution can be given the right to 'hire and fire ' its teachers. After all, though the management may be left free to evolve administrative policies of an institution, educational instruction has to be imparted through the instrumentality of the teachers; and unless. they have a constant assurance of justice, security and fair play it will be impossible for them to give of their best which alone can enable the institution to attain the ideal of educational excellence. Section 3(3)(a) contains but an elementary guarantee of freedom from arbitrariness to the teachers. The provision is regulatory in character since it neither denies to the management the right to proceed against an erring teacher nor indeed does it place an unreasonable restraint on its power to do so. It assumes the right of the management to suspend a teacher but regulates that right by directing that a teacher shall not be suspended unless an inquiry into his conduct is contemplated and unless the inquiry is in respect of a charge of gross misconduct. Fortunately, suspension of teachers is not the order of the day, for which reason I do not think that these restraints which bear a reasonable nexus with the attainment of educational excellence can be considered to be violative of the right given by article 30(1). The limitation of the period of suspension initially to two 570 months, which can in appropriate cases be extended by another two months, partakes of the same character as the provision contained in section 3(3)(a). In the generality of cases, a domestic inquiry against a teacher ought to be completed within a period of two months or say, within another two months. A provision founded so patently on plain reason is difficult to construe as an invasion of the right to administer an institution, unless that right carried with it the right to maladminister. I therefore agree with Brother Kailasam that sections 3(3)(a) and 3(3)(b) of the Act do not offend against the provisions of article 30(1) and are valid." In view of the observations of this Court in All Saints High School 's case (supra), Frank Anthony Public School 's case (supra) and Y. Theclamm 's case (supra) it has to be held that the provisions of the Act which provide for the reference of an industrial dispute to an Industrial Tribunal or a Labour Court for a decision in accordance with judicial principles have to be declared as not being violative of Article 30(1) of the Constitution of India. It has to be borne in mind that these provisions have been conceived and enacted in accordance with the principles accepted by the International Labour organisation and the United Nations Economic, Social and Cultural organisation. The International Convenent on Economic, Social and Cultural Rights, 1966 which is a basic document declaring certain specific human rights in addition to proclaiming the right to work as a human right treats equitable conditions of work, prohibition of forced labour, provision for adequate remuneration, the right to a limitation of work hours, to rest and leisure, the right to form and join trade unions of ones ' choice, the right to strike etc. also as human rights. The Preamble of our Constitution says that our country is a socialist republic. Article 41 of the Constitution provides that the State shall make effective provision for securing right to work. Article 42 of the Constitution provides that the State shall make provision for securing just and humane conditions of work and for maternity relief. Article 43 of the Constitution states that the State shall endeavour to secure by suitable legislation or economic organisation or in any other way to all workers agricultural, industrial or otherwise work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities. These rights which are enforced through the several pieces of labour legislation in India have got to be applied to every workman irrespective of the character of the management. Even the management of a minority educational institution has 571 got to respect these rights and implement them. Implementation of these rights involves the obedience to several labour laws including the Act which is under consideration in this case which are brought into force in the country. Due obedience to those laws would assist in the smooth working of the educational institutions and would facilitate proper administration of such educational institutions. If such laws are made inapplicable to minority educational institutions, there is every likelihood of such institutions being subjected to maladministration. Merely because an impartial tribunal is entrusted with the duty of resolving disputes relating to employment, unemployment, security of work and other conditions of workmen it cannot be said that the right guaranteed under Article 30(1) of the Constitution of India is violated. If a creditor of a minority educational institution or a contractor who has built the building of such institution is permitted to file a suit for recovery of the money or damages as the case may be due to him against such institution and to bring the properties of such institution to sale to realise the decretal amount due under the decree passed in such suit is Article 30(1) violated? Certainly not. Similarly the right guaranteed under Article 30(1) of the Constitution is not violated, if a minority school is ordered to be closed when an epidemic breaks out in the neighbourhood, if a minority school building is ordered to be pulled down when it is constructed contrary to town planning law or if a decree for possession is passed in favour of the true owner of the land when a school is built on a land which is not owned by the management of a minority school. In the same way if a dispute is raised by an employee against the management of a minority educational institution such dispute will have necessarily to be resolved by providing appropriate machinery for that purpose. Laws are how passed by all the civilised countries providing for such a machinery. The Act with which we are concerned in this case is an Act which has been brought into force for resolving such industrial disputes. Sections 10, 11 A, 12 and 33 of the Act cannot, therefore, be construed as interfering with the right guaranteed under Article 30(1) of the Constitution of India. Similarly, section 9 A of the Act, which requires the management to issue a notice in accordance with the said provision in order to make changes in the conditions of service which may include changes in the hours of work, leave rules, introduction of new rules of discipline etc., cannot be considered as violative of the right guaranteed under Article 30(1) of the Constitution of India. The High Court was in error in thinking that the power of the Industrial Tribunal or the Labour Court under the Act was uncanalised, unguided and unlimited and in thinking that the said power was equivalent to the power of the Vice Chancellor or any other officer nominated by him functioning under 572 the Gujarat University Act, 1949 which was the subject matter of decision in the St. Xavier s College case (supra). Accordingly we are of the view that the provisions of sections 9A, 10, llA, 12 and 33 of the Act are applicable to the minority educational institutions like the Christian Medical College and hospital at Vellore also. Before concluding we feel that it is appropriate to refer to some decisions of the Supreme Court of the United States of America in which it has construed some of the provisions of the Constitution of the United States of America which appear to confer absolute rights. It is interesting to note that the right to enter into a contract which was considered to be an absolute right at one stage is no longer construed as a bar on the legislature making a law imposing restrictions on the managements in order to advance the welfare of the labour. The Fourteenth Amendment to the Constitution of the United States of America provides that "no State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws". The 'liberty ' guaranteed by this clause was variously defined by the Supreme Court of America as will be seen hereinafter. In the early years it meant almost exclusively 'liberty of contract '. The concept of 'liberty of contract ' was elevated to the status of an accepted doctrine in Allgeyer vs Louisiana. ; Applied repeatedly in subsequent cases as a restraint on state power, freedom of contract was also alluded to as a property right, as is evident in the language of the Court in Coppage vs Kansas ; which said that "included in the right of personal liberty and the right of private property partaking of the nature of each is the right to make contracts for the acquisition of property. Chief among such contracts is that of personal employment by which labour and other services are exchanged for money or other forms of property. If this right be struck down or arbitrarily interfered with there is substantial impairment of liberty in the long established constitutional sense. (emphasis added). In Lochner vs New York ; (1905) a law restricting employment in bakeries to ten hours per day and 60 hours per week was held to be an unconstitutional interference with the right of adult labourers to contract with respect to their means of livelihood. In Adair vs United States ; (1908) a statute attempting to outlaw 'yellow dog ' contracts whereby, as a condition of obtaining employment, a worker had to agree not to join or to remain a member of a union, were voided on grounds of unconstitutional impairment of freedom of contract, or more particu 573 larly, of the unrestricted right of the employer to hire and fire. In this case the Supreme Court of the United States of America went to the extent of holding that it was a part of every man 's civil rights that he should be left at liberty to refuse business relations with any person whomsover whether the refusal rested upon reason, or was the result of whim, caprice, prejudice or malice and with his reasons neither the public nor third person had any legal concern. This was done during the first decade of this century. But during 1930s 'liberty ' in the sense of freedom of contract, judicially translated into what Justice Black has labelled the Allgeyer Lochner Adair Coppage constitutional doctrine, lost its potency as an obstacle to the enforcement of legislation calculated to enhance the bargaining capacity of workers as against that already possessed by their employers (Vide Lincoln Federal Labour Union vs Northwestern Iron & Metal Co. ; (1949). It is now settled in the United States of America that neither the 'contract ' clause nor the 'due process ' clause had the effect of overriding the power of the state to establish all regulations that are reasonably necessary to secure the health, safety, good order, comfort, or general welfare of the community and that this power can neither be abdicated nor bargained away, and is inalienable even by express grant; and that all contract and property or other vested rights are held subject to its fair exercise. In view of the change in the attitude of the Court laws regulating hours of labour, labour in mines, employment of children in hazardous occupations, payment of wages, minimum wages laws, workmen 's compensation laws and collective bargaining have been upheld in recent years even though the right guaranteed by the Fourteenth Amendment had been once construed as an absolute right not alienable by any consideration of public weal. Two other provisions of the Constitution of the United States of America which appear to confer absolute rights have also been construed as rights which may be regulated by the statute in the public interest in exercise of its police powers and they are the religious freedom and the freedom of expression. The relevant part of the First Amendment to the Constitution of the United States of America reads that "the Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press. " In Reynolds vs United States ; (1879) the question for consideration was whether the conviction of a member of the Mormons faith under a law prohibiting polygamy despite the fact that an accepted doctrine of his church which then imposed on its male members the duty to practice polygamy was valid or not. The Supreme Court of the United States of America rejecting the contention of the 574 accused based on the right which guaranteed the free exercise of religion observed thus: " . There never has been a time in any State of the Union when polygamy has not been an offense against society, cognizable by the civil courts and punishable with more or less severity. In the face of all this evidence, it is impossible to believe that the constitutional guaranty of religion freedom was intended to prohibit legislation in respect to this more important feature of social life. Marriage, while from its very nature a sacred obligation, is, nevertheless, in most civilized nations, a civil contract, aud usually regulated by law. Upon it society may be said to be built, and out of its fruits spring social relations and social obligations and duties, with which government is necessarily required to deal . An exceptional colony of polygamists under an exceptional leadership may some times exist for a time without appearing to disturb the social condition of the people who surround it; but there cannot be a doubt that, unless restricted by some form of constitution, it is without the legitimate scope of the power of every civil government to determine whether polygamy or monogamy shall be the law of social life under its dominion. In our opinion the statute immediately under consideration is within the legislative power of Congress. It is constitutional and valid as prescribing a rule of action for all those residing in the territories, and in places over which the United States have exclusive control. This being so, the only question which remains is, whether those who make polygamy a part of their religion are excepted from the operation of the statute. If they are, then those who do not make polygamy a part of their religious belief may be found guilty and punished, while those who do must be acquitted and go free. This would be introducing a new element into criminal law. Laws are made for the government of actions, and while they cannot interfere with mere religious belief and opinions, they may with practices. Suppose one be lieved that human sacrifices were a necessary part of religious worship, would it be seriously contended that the civil government under which he lived could not interfere to prevent a sacrifice? or if a wife religiously believed it was 575 her duty to burn herself upon the funeral pile of her dead husband, would it be beyond the power of the civil government to prevent her carrying her belief into practice? So here, as a law of the organization of society under the exclusive dominion of the United States, it is provided that plural marriages shall not be allowed. Can a man excuse his practices to the contrary because of his religious belief? To permit this would be to make the professed doctrines of religious belief superior to the law of the land, and in effect to permit every citizen to become a law unto himself. Government could exist only in name under such circumstances. More recent decisions of the Supreme Court of America on the above question show that the said Court has always balanced the interest asserted by the Government against the claim of religious liberty accepted by the person affected and if the governmental interest is compelling and if no alternative forms of regulation would subserve that interest the claimant of the right is required to yield. Thus it is seen that the religious freedom guaranteed by the First Amendment is not absolute although the Court has tried to protect substantially the exercise of religious freedom by the citizens of the United States of America. Similarly as regards the right of free speech and expression the Supreme Court of the United States of America has observed in Whitney vs California ; (1927) thus: "But although the rights of free speech and assembly are fundamental, they are not in their nature absolute. Their expercise is subject to restriction, if the particular restriction proposed is required in order to protect the State from destruction or from serious injury, political, economic or moral. " It may be noted that the Constitution of the United States of America does not contain any clauses corresponding to Article 25(1) of the Constitution of India which guarantees freedom of conscience and free profession, practice and propagation of religion, "subject to public order, morality and health and to the other provision of" of Part III of the Constitution of India and Article 25(2) of the Constitution which provides that "nothing in this article shall affect the operation of H 576 any existing law or prevent the State from making any law (a) regulating or restricting any economic, financial, political or other secular activity which may be associated with religious practice . " The Constitution of the United States of America also does not contain a provision corresponding to clause (2) of Article 19 of the Constitution of India which provides that "nothing in sub clause (a) of clause (1) shall affect the operation of any existing law, or prevent the State from making any law, in so far as such law imposes reasonable restrictions on the exercise of the right conferred by the said clause in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality, or in relation to contempt of court, defamation or incitement to an offence. " Yet, the right to liberty, the right to religious freedom and the right of free speech though they appear to be asbolute, have been construed to be subject to regulation by the State in exercise of its legitimate police powers. We have set out in some detail these aspects of the constitutional law of the United States of America in order to facilitate the construction of and the meaning to be given to our own constitution, though we need not be guided always by what the Supreme Court of the United States of America says about its own constitution Having given our very anxious consideration to the right of the minorities guaranteed under Article 30(1) of the Constitution of India and the necessity for having a general law which regulates the relationship between employers and workmen and after balancing the two interests we have come to the conclusion that the decision of the High Court is liable to be set aside and the three writ petitions filed before the High Court should be dismissed. We, accordingly, allow this appeal, set aside the common judgment of the High Court in Writ Petition Nos. 220 to 222 of 1980 on the file of the High Court and dismiss the said writ petitions. The Labour Court to which the references have been made by the Government of Tamil Nadu shall now proceed to dispose of the said references in accordance with law. There shall be no order as to costs. H.L.C. Appeal allowed.

% Sometime during the period 1975 78, the first respondent Association managing the affairs of the Christian Medical College and Hospital at Vellore dismissed three of its employees from service and terminated the services of another employee who was on probation. When industrial disputes were raised in this behalf, the State Government made two separate references to the Labour Court for adjudication: one in respect of the three employees who had been dismissed and the other in respect of the employee whose services had been terminated. Questioning the validity of the reference the first respondent filed two Writ Petitions for quashing them and a third Writ Petition praying for a declaration that the provisions of the were unconstitutional and ultra vires and were inapplicable in entirety to the minority educational institutions protected by article 30(l) of the Constitution. The first Respondent pleaded that the hospital attached to the Christian Medical College formed an integral part of the college which was an educational institution established and administered by a minority and thus was also entitled to the protection of article 30(l); that the college and the hospital being minority institutions entitled to the protection of article 30(l), any industrial dispute arising between the management and employees of the college and the hospital could not be adjudicated upon under the provisions of the Act as such adjudication amounted to interference with the right of the minority to 547 administer the college and the hospital; and that the Act was not applicable to educational institutions generally irrespective of their being minority institutions or not. The High Court held that the Christian Medical College Hospital which was attached to the Christian Medical College was an educational institution; that even so, it was an industry within the meaning of the expression 'industry ' given in the Act, and that even though the College and the hospital constituted an industry, they together constituting an educational institution established and administered by a minority, sections 9 A, 10, 11 A, 12 and 33 of the Act would not be applicable to them by virtue of article 30(l) of the Constitution, and, accordingly, quashed the reference made under section 10(l)(c) of the Act to the Labour Court. It was argued on behalf of the first respondent that the application of the provisions of the Act would result in the abridgment of the right of the management of minority educational institutions guaranteed under article 30(l) of the Constitution to administer such institutions inasmuch as the Labour Court or Tribunal might set aside an order of dismissal or removal of a workman passed by the management and reinstate him in service or make an order altering his conditions of service contrary to the agreement entered into with him and the minority educational institution would be exposed to constant and endless litigation. Reliance was placed in support of the above propositions on the decision of this Court in Ahmedabad St. Xavier 's College Society & Anr. etc. vs State of Gujarat & Anr., ; wherein this Court held that certain provisions of the Gujarat University Act, 1949 were violative of article 30(l) of the Constitution. Allowing the appeal, ^ HELD: The has been conceived and enacted with the object of bringing into existence a machinery for investigation and settlement of industrial disputes between employers and workmen in accordance with the principles accepted by the International Labour organisation and the United Nations Economic, Social and Cultural organisation. The Act is meant to be a counter vailing force to counteract the inequalities of bargaining power which is inherent in the employment relationship. The International Covenant on Economic, Social and Cultural Rights, 1966 which is a basic document declaring certain specific human rights in addition to proclaiming the right to work as a human right treats equitable conditions of work, prohibition of forced labour, provision for adequate remuneration, the 548 right to a limitation of work hours, to rest and leisure, the right to form and join trade unions of ones ' choice, the right to strike etc. also as human rights. The Preamble of our Constitution says that our country is a socialist republic. Articles 41 and 42 provide that the State shall make effective provision for securing right to work, just and humane conditions of work and for maternity relief. Article 43 states that the State shall endeavour to secure by suitable legislation or economic organisation or in any other way to all workers agricultural, industrial or otherwise work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities. These rights which are enforced through the several pieces of labour legislation in India have got to be applied to every workman irrespective of the character of the management. Even the management of a minority educational institution has got to respect these right and implement them. Due obedience to these laws would assist in the smooth working of the educational institutions and would facilitate their proper administration. If such laws are made inapplicable to minority educational institutions, there is every likelihood of such institutions being subjected to maladministration. Merely because an impartial tribunal is entrusted with the duty of resolving disputes relating to employment, unemployment, security of work and other conditions of workmen it cannot be said that the right guaranteed under article 30(1) of the Constitution is violated. If a dispute is raised by an employee against the management of a minority educational institution such dispute will have necessarily to be resolved by providing appropriate machinery for that purpose. Laws are now passed by all the civilized countries providing for such a machinery. The Act with which we are concerned in this case is an Act which has been brought into force for resolving such industrial disputes. Sections 9A, 10, 11 A, 12 and 33 of the Act cannot, therefore, be construed as interfering with the right guaranteed under article 30(1) of the Constitution. [570D H; 571A C. E F] 2. The Act is a social security measure intended to ensure welfare of labour and it falls within one or the other of the following entries in List III of the Seventh Schedule to the Constitution: Entry 22 Trade Unions, industrial and labour disputes; Entry 23 Social security and social insurance, employment and unemployment; and Entry 24 Welfare of labour including conditions of work, provident funds, employer 's liability, workmen 's compensation, invalidity and old age pensions and maternity benefits. The Act generally applies to all industries irrespective of the religion or caste to which the parties belong. It applies to industries owned by the Central and the State Governments too. Any decision given by the Industrial Tribunal or a Labour Court under 549 the Act is subject to judicial review by the High Court under article 226 and an appeal to this Court under article 136 of the Constitution. The Labour Court, the Industrial Tribunal, the High Court and this Court while dealing with matters arising out of the Act have to deal with them objectively. The smooth running of an educational institution depends upon the employment of workmen who are not subjected to victimisation or any other kind of maltreatment. The conditions of service of workmen in all institutions including minority educational institutions have to be protected in the interest of the entire society and any unfair labour practice, such as 'hiring and firing ', termination or retrenchment of the service of a workmen on irrational grounds will have to be checked. The Act makes provisions in respect of these matters. The Act being a general law for prevention and settlement of industrial disputes cannot be construed as a law which directly interferes with the right of administration of a minority educational institution guaranteed under article 30(1) of the Constitution. The law is not enacted with the object of interfering with any such right. It clearly falls within the observation of Mathew, J. in Ahmedabad St. Xavier 's College Society & Ant. vs State of Gujarat & Anr. that "regular tax measures, economic regulations, social welfare legislation, wage and hour legislation and similar measures may, of course have some effect upon the right under article 30(l). But where the burden is the same as that borne by others engaged in different forms of activity, the similar impact on the right seems clearly insufficient to constitute an abridgement". [582A G] Observations of Mathew, J. in Ahmedabad St. Xavier 's College Society & Anr. vs State of Gujarat & Anr. , ; , relied nn 3. The decision in Ahmedabad St. Xavier 's College Society & Anr. vs State of Gujarat & Anr. is distinguishable from the present one. Clause (b) of the two sub sections of section 51 A of the Gujarat University Act, 1949 conferred a blanket power on the Vice Chancellor or other officer authorised by him to approve or not any recommendation made by the management regarding the dismissal, removal, reduction in rank or termination of service of a workman. The said Act did not furnish any guidelines regarding the exercise of that power which was in the nature of a 'veto ' power. Secondly, section 52 A of the said Act which required the disputes between the governing body and any member of the teaching staff, other academic and non teaching staff of an affiliated college or recognized or approved institution connected with the conditions of service of such member to be referred to a Tribunal of Arbitration, consisting of one nominated by the governing body of the college 550 or, as the case may be, of the recognised or approved institution, one member nominated by the member of the staff involved in the dispute and an Umpire approved by the Vice Chancellor was held to be an unconstitutional interference with the right guaranteed under article 30(1) of the Constitution as it was likely to involve the minority educational institutions in a series of arbitration proceedings and the power vested in the Vice Chancellor to nominate an Umpire to decide all disputes between the governing body and the members of the staff connected with the letter 's conditions of service would make virtually the Vice Chancellor the person who would have the ultimate voice in the decision of the Tribunal of Arbitration. There was also no check on the question whether the dispute was one which deserved to be considered by the Tribunal of Arbitration. In the instant case there is no room for such contingency to arise. A reference under the Act has to be made by the Government either when both parties request the Government to refer an industrial dispute for adjudication or only when it is satisfied that there exists an industrial dispute. When an industrial dispute exists or is apprehended, the conciliation officer should first consider whether it can be settled after hearing both the parties and it is only when his efforts to bring about a settlement fail and he makes a report accordingly to the appropriate Government, the Government is called upon to take a decision on the question whether the case is a fit one for reference to the Industrial Tribunal or the Labour Court. It is only when a reference is made by the Government the Industrial Tribunal or the Labour Court gets jurisdiction to decide a case. It cannot, therefore, be said that each and every dispute raised by a workman would automatically end up in a reference to the Industrial Tribunal or the Labour Court. Secondly, the circumstances in which the Industrial Tribunal or the Labour Court may set aside the decision arrived at by the management in the course of a domestic enquiry held by the management into an act of misconduct of a workman are evolved by a series of judicial decisions. The powers of an industrial tribunal to interfere in cases of dismissal of a workman by the management are not unlimited and the Tribunal does not act as a court of appeal and substitute its own judgment for that of the management. It will interfere (a) where there is want of good faith; (b) when there is victimisation or unfair labour practice: (c) when the management has been guilty of the basic error or violation of the principles of natural justice; and (d) when on the materials before the Court the finding is completely baseless or perverse. It cannot, therefore, be said that the Industrial Tribunal or the Labour Court will function arbitrarily and interfere with every decision of the management as regards dismissal or discharge of a workman arrived at in a disciplinary enquiry. The power exercisable by 551 the Industrial Tribunal or the Labour Court cannot, therefore, be equated with the power of 'veto ' conferred on the Vice Chancellor under cl.(b) of either of the two sub sections of section 51 A of the Gujarat University Act, 1949. As already stated the decision of the Industrial Tribunal or the Labour Court is open to judicial review by the High Court and by this Court on appeal. Section ll A which confers the power on the Industrial Tribunal or the Labour Court to substitute a lesser punishment in lieu of the order of discharge or dismissal passed by the management cannot be considered as conferring an arbitrary power on the Industrial Tribunal or the Labour Court. The power under section ll A has to be exercised judicially and the Industrial Tribunal or the Labour Court is expected to interfere with the decision of a management under section ll A only when it is satisfied that the punishment imposed by the management is highly disproportionate to the degree of guilt of the workman concerned. The Industrial Tribunal or the Labour Court has to give reasons for its decision which again, would be subject to judicial review by the High Court and this Court. [565C H; 566A H; 567A] Ahmedabad St. Xavier 's College Society & Anr. vs State of Gujarat & Anr. , ; , distinguished. Indian Iron & Steel Co. Ltd. & Anr. vs Their Workmen, ; ; Lilly Kurian vs Sr. Lewina & ORS ; ; Mrs. Y. Theclamma vs Union of India &ORS. ; ; Frank Anthony Public School Employees Association vs Union of India & ORS. ; and All Saints High School, Hyderabad, etc. vs Government of Andhra Pradesh & ORS. ; , ; referred to. In this context it is interesting to note that the right to enter into a contract flowing from the right to liberty guaranteed by the Fourteenth Amendment to the Constitution of the United States of America which was considered to be an absolute right at one stage is no longer construed as a bar on the legislature making a law imposing restrictions on the managements in order to advance the welfare of the labour. It is now settled in the United States of America that neither the 'contract ' clause not the 'due process ' clause had the effect of overriding the power of the state to establish all regulations that are reasonably necessary to secure the health, safety, good order, comfort, or general welfare of the community and that this power can neither be abdicated nor bargained away, and is inalienable even by express grant; and that all contract and property or other vested rights are held subject to its fair exercise. In view of the change in the attitude of the Court laws 552 regulating hours of labour, labour in mines, employment of children in hazardous occupation, payment of wages, minimum wages laws, workmen 's compensation laws and collective bargaining have been upheld in recent years. Similarly, the right to religious freedom and the right to free speech guaranteed by the First Amendment to the Constitution of the United States of America, though they appear to be absolute have been construed to be subject to regulation by the State in exercise of its legitimate police Powers. [572C; 573C E; 577C] Allgeyer vs Louisiana, ; ; Coppage vs Kansas, 236 U.S.l; Lochner vs New York, ; ; Adair vs United States, ; ; Lincoln Federal Labour Union vs North Western Inn & Metal Co., ; ; Reynolds vs United States, ; ; and Whitney vs California. 274 U.S. 357: referred to.

iminal Appeal No. 50 of 1969. Appeal from the judgment and order dated December 24, 1968 of the Calcutta High Court in Criminal Revisions No. 235 of 1966. Nur ur din Ahmed, section C. Agarwal and Indiraj Jaisingh, for the appellant. S.P. Mitra and G. section Chatterjee for Sukumar Basu for the respondent. The Judgment of the Court was delivered by Jaganmohan Reddy, J. This appeal is by certificate under article 134(1) (c) of the Constitution. The appellant is the Manager of Sree Krishna Oil Mills, Midnapore, the proprietor of which was one Srilal Bajoria. Both these persons were tried jointly for an offence under section 7(1)/16(1)(a)(i) of the Prevention of Food Adulteration Act, 1954 hereinafter referred to as 'the Act '. The proprietor Srilal Bajoria was acquitted but the appellant was sentenced to one year rigorous imprisonment. The offence in respect of which the appellant was charged was that he being the Manager of the Oil Mills for manufacturing mustard oil was responsible for the adulteration. On July 10, 1964, at about II A.M. the appellant was going in a truck carrying 100 tins of mustard oil and was stopped by the Food Inspector, Kharagpore Municipality. On being 847 questioned by the Food Inspector the appellant informed him that the oil which he was carrying was manufactured at Sree Krishna Oil Mills, Midnapore. As the Food Inspector suspected that this oil may have been adulterated, he took three samples according to the provisions of the Act. He sent one sample to the Public Analyst one he kept with himself and the third he gave to the appellant. The Public Analyst on examining the sample sent to him reported on August 5, 1964, that saponification value of the oil was 181.6, Iodine value 107.2 and B. R. reading at 40 'C was 60.1 and was of the opinion that the sample of mustard oil was adulterated vide Ext. After obtaining the sanction for prosecution from the Chairman of the Municipality, the appellant was prosecuted before, the Magistrate, 1st Class, Midnapore. He pleaded not guilty but on the evidence and the report of the Public Analyst he was convicted and sentenced as aforesaid. An appeal to the Sessions Judge was without success. Thereafter the appellant filed a revision before the High Court and that was also dismissed. Before us the learned counsel for the appellant has urged similar points as were urged before the High Court, namely, (i) that the trial was vitiated for want of valid and legal sanction; (ii) that the report of the Public Analyst was not a proper report in law and cannot form the basis of legal conviction; and (iii) that the Public Analyst 's report Was bad and incomplete for failure to carry out all the tests required under A. 17.06 of Appendix B to the Prevention of Food Adulteration Rules, 1955, and also for failure to disclose the data in the report. It is contended on behalf of the appellant that the sanction to prosecute the appellant was given by the Chairman of Kharagpore Municipality Shri K C. Chaki on August 19, 1964. This sanction did not show (a) that tile Chairman had applied his mind before giving the sanction; (b) that it was valid as it was not granted by the Local Authority, namely, the Municipality; and (c) that since the resolution of the Municipality had authorised the Chairman to give the sanction, the new Chairman cannot avail himself of that authorisation as by that time there were fresh elections and a new Chairman was elected. Accordingly it is submitted that the sanction given by Mr. Chaki was not a proper sanction. It appears to us that the challenge to the validity of the sanction is misconceived. As pointed out by the High Court, section 51 of the Bengal Municipal Act, 1932, enumerates the powers of the Chairman as under: "Save as hereinafter provided, the Chairman shall for the transaction of the business connected with this Act or for the purpose of making any order authorised 848 thereby, exercise all the powers, vested by this Act in the Commissioners and whereby any other law power is vested in the Commissioners for any purpose, the Chairman may transact any business or make any order authorised by that law in the exercise. of that power, unless it is otherwise expressly provided in that law." Section 20 of the Act provides for sanction of the Local Authority for prosecutions under the Act which includes a Municipality. Reading these two provisions together the Chairman of a Municipality duly authorised by the Municipality can accord sanction for prosecution of offences under the Act. In compliance with the aforesaid power under section 51 of the Bengal Municipal Act, the Municipality by resolution dated July 28, 1960 authorised the Chairman "to perform all the functions and exercise the. powers of the Local Authority within the meaning of the ." (Exe. This power, it may be noticed, is not granted to any particular Chairman Eo nominee, but is a general power exercisable by any Chairman for the time being of the Municipality. It is true that a fresh election of the Chairman was held after the resolution of the Municipality but that does not deprive the new Chairman of the power to grant sanction in under that, resolution. The appellant in Criminal Miscellaneous Petitions Nos. 450 & 515 of 1970 seeks permission to allow him to adduce additional evidence to show that there was another resolution by the Kharagpore Municipality dated August 18, 1965, which had given a, fresh authorisation to the Chairman to grant sanctions for prosecution under the Act which would show that the previous authorisation was not really valid when sanction was given to prosecute the appellant. Apart from the fact that, no case has been made out to adduce any fresh evidence, the resolution itself has been passed after the sanction for the prosecution was. given and even that resolution as can be noticed is in similar terms to the earlier resolution passed by the Municipality. This subsequent resolution does not in any way indicate that the previous power could not be availed of by the Chairman who in fact had granted the sanction. At, the most it may have been passed by way of abundant caution, having regard to the contentions raised during the trial of the appellant. The High Court has pointed out, and we think rightly, that under section 15(2) of the Bengal Municipal Act, the Municipality is a body corporate and it has perpetual succession, if so any authorisation granted by it is not limited to the Chairman then in office, but will continue unless otherwise rescinded. Nextly it has been strenuously urged before us on behalf of the appellant that the report of the Public Analyst is not a complete report in that out of the seven tests that he had to make under 849 A 17.06 of Appendix B to the Rules he had only made three tests and secondly the report does not give the basis on which. the Public Analyst came to the conclusion that the sample of the mustard oil was adulterated. It is true that the Public Analyst in his report has only indicated the result of the three tests out of which two tests were as indicated in A 17.06 while only one, namely, the saponification test was said to have exceeded the maximum on the strength of which the Public Analyst reported that the sample was adulterated. Omission to report on the other four tests does not, in our view make the reporter ineffective or the report inconclusive. Even assuming that the other four tests are normal, if the saponification test alone did not conform to the standards indicated in A 17.06 of Appendix B to the Rules the sample cannot be said to have come up to the standard and, therefore, it is adulterated. An attempt was made to refer us to certain technical books and the decisions in Jagadish Chandra Jain vs Corporation of Calcutta(1) Messrs. Netai Chandra and Surendra Nath Dey vs Corporation of Calcutta,(2) and In re. Perumal & Co.(3) for the proposition that the standard prescribed by A 17.06 in Appendix B to the Rules is not conclusive because in some places mustard can yield a higher reading. We cannot allow any fresh evidence to be used, nor do we think that the decisions referred to, even if they justify that contention, can alter or vary the standard fixed in exercise of the powers conferred by the Act in Appendix B to the Rules. Section 3 of the, Act authorises the Central Government to constitute a Committee called the Central Committee for Food Standards to advise the Central Government and the State Governments on matters arising out of the administration of the Act and to carry out the other functions assigned to it under the Act. Under section 23 ( 1 ) (b) of the Act the Central Government may, after consultation with the Committee and subject to the condition of previous publication, make rules "defining the standards of quality for, and fixing the limits of variability permissible in respect of, any article of food. " It is in exercise of this power that r. 5 was made authorising standards of quality of the various articles of food specified in Appendix B to the Rules. In view of this provision any article of food which does not conform to the standards specified in Appendix B to the Rules which under section 2 (1) of the Act is said to be adulterated because "the quality or purity of the article falls below the prescribed standard or its constituents are present in quantities which are in excess of the prescribed limits of variability. " The contention that the standards cannot be conformed to by an ordinary vendor who is not versed in the technicalities is also (1) (3) A.I.R. 1943 Mad. (2) A.I.R. 1967 Cal. 65. 850 not of significance. In this regard it was pointed out by Shah, J., as he then was, speaking for this Court in Andhra Pradesh Grain and Seed Merchants Association and others vs Union of India & Anr. (1) : "The various items in the Schedule setting out standards of quality use technical expressions with which an ordinary, retail dealer may not be familiar, and also set out percentages of components which the dealer with the means at his command cannot verify. But by section 3, the Central Government has to set up the Central Committee for Food Standards to advise the Central and the State Governments on matters arising out of the administration of the Act. . . Under section 23 ( 1 ) (b) the Central Government makes rules prescribing the standards of quality and the limits of variability permissible in any article of food. The rules are made after consultation with the Committee for Food Standards. The standards set out in the Appendix to the Rules are prescribed after consultation with the Committee for Standards. " It appears to us therefore that standards having been fixed as aforesaid any person who deals in articles of food which do not confirm to them contravenes the provisions of the Act and is liable to punishment thereunder. It was again urged that the Public Analyst had not given the basis for his conclusion that the saponification test did not conform to the standards specified in A 17.06 of Appendix B to the Rules which contention is also not tenable. Under section 13 (5) of the Act any document purporting to be a report signed by a Public Analyst, unless it has been superseded under sub section (3), or any document purporting to be a certificate signed by the Director of the Central Food Laboratory, may be used as evidence of the facts stated therein in any proceeding under the Act or under sections 272 to 276 of the Indian Penal Code. Under the proviso to that sub section any document purporting to be a certificate signed by the Director of the Central Food Laboratory shall be final and conclusive evidence of the facts stated therein. If the report of the Public Analyst was not satisfactory, it was open to the appellant to have made an application for the sample which was in his possession to be sent to the Director of the Central Food Laboratory for examination. If he had made such an application and sent the sample under section 13 (2) the certificate granted by the (1) ; 851 Director of the Central Food Laboratory would have superseded the report given by the Public Analyst. This he has not done. In the circumstances he has been properly convicted. Lastly it has to be considered whether the sentence awarded in the circumstances requires any modification. It was urged that the prosecution of the appellant was prior to the amendment of sub section (1) of section 16 of the with effect from March 1, 1965, under which the sentence has to be a minimum of six months rigorous imprisonment, but there is no such injunction under the unamended section and yet the maximum sentence has been awarded to the appellant which is harsh for a first offender. Offences under the Act being antisocial crimes affecting the health and well being of our people, the Legislature having regard to the trend of courts to impose in most cases only fines or where a sentence of imprisonment was passed a light sentence was awarded even in cases where a severe sentence was called for, a more drastic step was taken by it in prescribing a minimum sentence and a minimum fine to be imposed even for a first offence. An exception was however made in cases falling under sub cl. (i) of cl. (a) of section 16(1) and in respect of an article of food which was considered to be adulterated under section 2 cl. (i),(i) or misbranded under section 2 cl. (ix) or for an offence under sub clause (ii) of clause (a) of section 16(1), in which case the Court is given the discretion, for any adequate and special reasons to be mentioned, to award a lesser sentence than six months or impose a fine lesser than one thousand rupees or of both lesser than the minimum prescribed. If for the offence of which the appellant is convicted even under the amended section a lesser sentence can be awarded, if there were adequate and special reasons, it would be much more so under the unamended section. The reasons for the Legislature to make the exception is not that the offences specified are not considered to be serious, but the gravity of the offence having regard to its nature can be less if there are any special or adequate reasons. In our view though offences for adulteration of food must be severely dealt with, no doubt depending on the facts of each case which cannot be considered as precedents in other cases, in this case having regard to the fact that the appellant has been on bail since 1964 for a period of nearly seven years, and also because not only the mustard oil sample satisfied all the tests except one but the main person concerned in the manufacture of the said oil has been acquitted, interests of justice would be served if the sentence of one year is reduced to two months rigorous imprisonment and the appellant is further directed to pay a fine of 852 Rs. 1,000/ failing which to be directed to undergo a further term of rigorous imprisonment for one month. We accordingly so direct. Subject to this modification, the appeal and the Criminal Miscellaneous Petitions Nos. 450 and 515 of 1970 are dismissed. K.B.N. Appeal and petitions dismissed.

The appellant, manager of an Oil Mill, was convicted under section 7(i)/16(1)(a)(i) of the , and sentenced to one year rigorous imprisonment. His appeal to the Sessions Judge was without success and a revision to the High Court, was also dismissed. In appeal to this Court it was contended that (i) the sanction for prosecution did not show (a) that the Chairman of the Muni cipality had applied his mind before giving the sanction, (b) that it was invalid since it was not granted by the local authority, namely, the municipality and (e) that since the resolution of the Municipality had authorised the Chairman to give the sanction, the new Chairman could not avail himself of that authorisation and, therefore. the trial was vitiated for want of valid and legal sanction; (ii) the 'report of the Public Analyst was not a proper report in law and was bad and incomplete for failure to carry out all the tests required under A. 17.06 of Appendix B to the Prevention of Food Adulteration Rules, 1955, and also for failure to disclose the data in the report; and (iv) the sentence awarded was harsh for a first offender. Reducing the sentence and dismissing the appeal, HELD : (i) Reading sections 20 and 51 of the Bengal Municipal Act, 1932, the Chairman of a municipality duly authorised by the municipality can accord sanction for prosecution of offences under the Act. The resolution of the Municipality authorising the Chairman to perform all the functions and exercise the powers of the local authority within the meaning of the , is not to grant power to any particular Chairman eo nominee, but, is a general power exercisable by any Chairman, for the time being, of the municipality. The High Court has rightly pointed out that under section 15(2) of the Bengal Municipality Act the Municipality is a body corporate and it has perpetual succession and, as such, any authorisation granted by it is not limited to the Chairman then in office but will continue unless rescinded. [848 D; G H] (ii) It is. true that the Public Analyst in his report has only indicated the result of the three tests out of which two tests were as indicated in A 17.06, while, only one, namely, the saponification test, was said to have exceeded the maximum on the strength of which the Public Analyst reported that the sample was adulterated. Omission to.report on the other four tests does not make the report ineffective or inconclusive. Even assuming that the other four tests are normal, if the saponification test alone did not conform to the standards indicated in A 17.06 of Appendix B to the Rules, the sample cannot be said to have come up to the standard and, therefore, it is adulterated. It is in exercise of the powers conferred by section 23 (i) (b) that rule 5 was made authorising standards of quality of 846 the various articles of food specified in Appendix B to the Rules. Standards having been fixed, any person who deals in articles of food which do not conform to them contravenes the provisions of the Act and is liable to punishment thereunder. [849 A C; 850 E] Andhra Pradesh Grain and Seed Merchants Association and others vs Union of India & Anr., A.I.R. , referred to. If the report of the Public Analyst was not satisfactory it was open to the appellant to make an application for sending the sample which was in his possession to the Director. If he had made such an application and sent the sample under section 13(2) the certificate granted by the Director of the Central Food Laboratory would have superseded the report given by the Public Analyst. This has not been done. In the circumstances he has been properly convicted. [850 H] (iv) The reason for the legislature to makeexception to the minimum of six months rigorous imprisonment prescribedunder section 16(1) is not that the offences specified are not considered to be serious, but the gravity of the offences, having regard to its nature can be less if there are any special or adequate reasons. In the present case having regard to the fact that the appellant has been on bail since 1964 for a period of nearly seven years, and also because not only the oil sample satisfied all the tests except one but the main person concerned in the manufacture of the oil has been acquitted, interests of justice would be served if the sentence of one year is reduced to two months rigorous imprisonment and the appellant is further directed to pay a fine of Rs. 1000/ . [851 F, H]

vil Appeal Nos. 3564 65 of 1979. From the Judgment and Order dated 6.3.1979 of the Calcutta High Court in F.M. Appeal Nos. 446 & 447 of 1978. S.K. Nany for the Appellant. G.L. Sanghi, D.P. Mukharjee, Praveen Kumar and G.S. Chatterjee for the Respondents. The Judgment of the Court was delivered by VENKATARAMIAH, J. It is unfortunate that nearly 15,000 bargemen, i.e., Majhis the Dandees working at the Calcutta Port have been denied their right to receive reasonable wages and allowances for nearly 12 years on account of a very narrow view taken by the Calcutta High Court in the decision under appeal. PG NO 1037 The Government of India set up a Wage Board for the port and dock workers at major ports on November 13, 1964 and made a reference to the said Board of the following terms, namely (a) to determine the categories of employees (manual, clerical, supervisor, etc.) who should be brought within the scope of proposed wage fixation (excluding, however, the Class I and Class II Officers); and (b) to work out a wage structure based on the principle of fair wages as set forth in the report of the Committee of Fair Wages. In making the reference the Central Government laid down guidelines as to how the fair wages were to be determined and further directed the Board to submit its recommendations in respect of interim relief pending submission of the final report. The Wage Board submitted its recommendations regarding the interim relief on April 9, 1965 and in the course of the said recommendations it observed that they would be applicable to certain categories of employees and port and dock workers at major ports. The Wage Board submitted its final report on November 29,1969. Since the Wage Board had been authorised under the terms of reference to determine the specific categories of dock workers and employees who in the opinion of the Board should be brought under the scope of the principles of wage fixation, the Wage Board had specified the categories of workers who were entitled to relief at its hands even at the stage of making of the interim recommendations, referred to above. At this stage it is necessary to refer to the definition of the expression 'dock worker ' in the (hereinafter referred to as 'the Act '). Clause (b) of section 2 of the Act defines the expression 'dock worker ' thus: "2(b). 'dock worker ' means a person employed or to be employed in, or in the vicinity of, any port on work in connection with the loading, unloading, movement or storage of cargoes, or work in connection with the preparation of ships or other vessels for the receipt or discharge of cargoes or leaving port. " The above definition of 'dock worker ' is of wide import and it includes all categories of workers working in a port or in the vicinity, if they are handling cargoes. But the Wage Board, however, did not choose to make any PG NO 1038 recommendation in respect of bargemen, i.e., Dandees and Majhis at the Port of Calcutta, who were more than 15,000 in number. As a matter of fact there was an earlier reference by the State Government of a dispute regarding the wages payable to bargemen, i.e., Dandees and Majhis at the Port of Calcutta and the Industrial Tribunal had by an award dated March 9, 1966 fixed their basic wages at Rs.110 and Rs.130 per month respectively. There were also certain ad hoc increments of such wages by different interim agreements. When these categories of workmen found that the Wage Board had not made any recommendation regarding the wages payable to them, they raised an industrial dispute claiming the benefit of the Wage Board recommendations. Accordingly, the Central Government on August 22, 1970 constituted a National Tribunal at Calcutta and referred to it under section 7 B and section 10( 1A) of the the following issue for adjudication, namely, "Whether recommendations of the Central Wage Board for the Port and Dock workers as accepted by the Central Government in their resolution No. WB 21(7)/69 dated the 26th March, 1970 are applicable to the bargemen in the matter of wages and allowances? If not to what other relief with regard to wages and allowances are they entitled? ' ' In the statement of claims filed by the trade union representing bargemen it was contended that barges, lighters and boats performed the combined functions of transit sheds, warehouses, jetties, quays, wharfs on a miniature scale and enabled loading and unloading of cargoes into and from ships, and that they carried almost all the cargoes from mills, factories and establishments located at the back of the river as it was found to be advantageous and economical to use barges, lighters and boats for loading and unloading of cargoes into and from ships because of all round lower costs. Accordingly, the trade union claimed that barges, lighters and boats were engaged in dock works and the workmen concerned fully conformed to the definition of 'dock workers ' as given in the Act. It, therefore, claimed that the bargemen were also entitled to the scale fixed by the Wage Board in Paragraph 7.2.108 of its final report. Alternatively, the union claimed that if their wages were to be assessed independently then they were entitled to d minimum wage of Rs.206.40 paise on the very same considerations which led the Wage Board in its recommendations to fix the minimum wage figure as incorporated in Paragraphs 7.1.19 to 7.1.70. The employers on the other hand and mainly the two Yassociations PG NO 1039 representing the employers in their counter statement made out a case that bargemen did not come within the definition of 'dock workers ' and were not covered by the Wage Board recommendations since they were employed mainly in the transportation of goods. According to them the bargemen were employed in carrying jute and jute goods from jute mills to ships berthed in and around the docks from mills to mills, jetties and ghats and also cargoes from ships to various places in the State of West Bengal. The managements claimed that the bargemen were neither wholly engaged in docks and streams nor were they involved in the process of unloading and loading. In support of this claim the managements depended upon the findings of an Expert Committee appointed by the Central Government to the effect that bargemen were engaged more in the transport of cargo rather than its handling and they therefore did not fit in with the definition of 'dock worker., '. In that view the employers contended that the first part of the reference was totally misconceived inasmuch as on the recommendations of the Wage Board itself the bargemen did not come within its purview. Secondly, the employers disputed the correctness of the wage fixation as made by the Wage Board with reference to certain alleged infirmities pointed out by them including the infirmity of the Board not considering the capacity of the industry to pay as laid down by the Courts. So far as the second part of the reference was concerned, the employers urged that the wages of the bargemen had been fixed by the Industrial tribunal on a reference by the Government of West Bengal made on 4. l.1965 and that the wages so fixed had been revised from time to time by agreement between the parties and there being no change in the circumstances justifying any further revision thereof, there should be no upward revision of the existing wage structure. They also pleaded that the financial capacity of the employers did not permit any further enhancement in the wages. The National Tribunal after overcoming certain preliminary obstacles placed before it by the institution of a writ petition in the High Court of Calcutta by the management questioning the validity of the reference itself, was able to pass an award on 20.7.1976. The National Tribunal held that since the bargemen, i.e., Dandees and Majhis were dock workers they were entitled to get wages and allowances in accordance with the Wage Board recommendations. After taking into consideration the relevant circumstances, the National Tribunal also held that the Dandees and Majhis working under the members of the Calcutta River Transport Association, and of the Bengal River Transport Association and under the Port Shipping Co. Ltd. were entitled to payment of higher wages and allowances PG NO 1040 w.e.f. 1.1.1976 even independently of the recommendations of the Wage Board but at the same rates which had been recommended by the Wage Board, which were considered by the National Tribunal reasonable in the circumstances of the case. This part of the award was made pursuant to the second part of the reference made to the National Tribunal. Aggrieved by the award of the National Tribunal, the managements filed two writ petitions before the High Court of Calcutta questioning the validity of the award. The learned Single Judge, who heard the writ petitions, was of the view that the award was liable to be set aside as it was beyond the scope of the reference. The learned Single Judge observed in the course of his order dated 4.4.1978 thus: "The reference has two parts. One part relates to the applicability of the recommendation of the Central Wage Board for Port and dock workers to the Bargemen in the matter of wages and allowances, the other part relates to the wages and allowances the Bargemen are entitled to if the recommendations of the Central Wage Board are not applicable to the said Bargemen As regards the first part, the scope of reference is, to find out from the report of the Central Wage Board itself whether the recommendations are applicable to the Bargemen or not The tribunal in exercising its jurisdiction is only bound by the terms of reference. The Jurisdiction is confined to the actual points of disputes referred to. In the instant case, the reference was whether the recommendation of the Central Wage Board was applicable to the Bargemen or not. It is not for the tribunal to criticise the report of the Central Wage Board and to establish upon oral and documentary evidence that the Bargemen are dock workers within the meaning of the Act, and as such they are entitled to the wage recommended by the Central Wage Board lo the Bargemen of the Calcutta Port. Rightly or wrongly the Central Wage Board arrived at a particular conclusion. The National Tribunal. it seems, acted as a Court of Appeal. found fault with the recommendations arrived at by the Central Wage Board and criticised its recommendation in saying that the word PG NO 1041 "wholly engaged" did not find place in the definition of dock workers in Sec. 2(b) of the Act of 1948 and the Wage Board came to a wrong conclusion which was inconsistent with the definition of the dock workers in the Act. In a round about way, the National Tribunal made the recommendations of the Central Wage Board applicable to the Bargemen although apparently the recommendations are not applicable to them. In my view, in doing so and in making such an award the Tribunal has exceeded its jurisdiction. In making the reference, the Central Government was conscious that the recommendation of the Central Wage Board might not be applicable to the Bargemen although the Bargemen made demand for implementation of the said recommendation and raised a dispute. That is why, the second part of the reference was there. The National Tribunal could have come to an independent conclusion that the Bargemen are dock workers and they should be paid similar wages as recommended by the Central Wage Board with respect to the Bargemen of Calcutta port. The Tribunal answered the first part of the reference and held that the recommendation of the Central Wage Board would be applicable to the Bargemen, as such there was no scope for deciding the second part of the reference although the Tribunal dealt within its Award the pay Structure of Dandees and Majhis, which should not have been done. On the basis of the above findings the learned Single Judge quashed the award passed by the National Tribunal. Aggrieved by the decision of the learned Single Judge, the trade union filed an appeal before the Division Bench of the High Court. The Division Bench by its judgment dated 6.3.1979 affirmed the judgment of the learned Single Judge. The Division Bench was of the view that there was a serious doubt as to whether all dock workers answering the definition of 'dock workers ' in the Act were entitled to be brought within the scope of the proposed wage fixation by the Wage Board. So far as the second issue was concerned, the Division Bench held that the National Tribunal had failed to fix the wages in accordance with the settled principles. It also agreed with the finding of the learned Single Judge that the decision of the National Tribunal was beyond its jurisdiction. which was controlled by the questions referred to it for adjudication. Aggrieved by the PG NO 1042 decision of the Division Bench, the trade union has filed these appeals by special leave under Article 136 of the Constitution of India. The object of enacting the and of making provision therein to refer disputes to tribunals for settlement is to being about industrial peace. Whenever a reference is made by a Government to an industrial tribunal it has to be presumed ordinarily that there is a genuine industrial dispute between the parties which requires to be resolved by adjudication. In all such cases an attempt should be made by Courts exercising powers of judicial re,view to sustain as far as possible the awards made by industrial tribunals instead of picking holes here and there in the awards on trivial points and ultimately frustrating the entire adjudication process before the tribunals by striking down awards on hyper technical grounds. Unfortunately the orders of the Single Judge and of the Division Bench have resulted in such frustration and have made the award fruitless on an untenable basis. In the present case the National Tribunal has held in Paragraph 27 of its award that the reference related to the determination of the wage structure in respect of bargemen, i.e., Dandees and Majhis working in or about the Calcutta Port and to none other. There is no dispute on this question before us. We shall proceed on that basis. The reference on made on 22.8.1970, The validity of the reference itself was questioned by some of the managements in a writ petition filed in the High Court. That writ petition was dismissed on 24.1.1972. Against the dismissal of the writ petition a writ appeal was filed before the Division Bench of the High Court which was unconditionally withdrawn on 11.7.1974. During this interval there were atleast two strikes and some attempts at settlement between the parties. The settlements did not conclusively put an end to the dispute. In the aforementioned settlements which were only of interim character it was made certain that the demands of the workmen concerned for the enhancement of wages and allowances to be paid to the barge men, both on the basis of the recommendation of the Wage Board as well as on the basis of their alleged legitimate claim for enhancement in spite of the Wage Board award, were to be decided by the National Tribunal. During the period of four years between the date of the reference and the date on which the writ appeal was withdrawn from the High Court there were changes in the Presiding Officers of the National Tribunal Shri B.N. Banerjee was the Presiding Officer of PG NO 1043 the National Tribunal at the time when the reference was made. On his retirement on 24.6.1971 Shri S.N. Bagchi was appointed as Presiding Officer. On the retirement of Shri S.N. Bagchi on 31.1.1974 Justice E.K. Moidu was appointed as the Presiding Officer on 18.7.1974. The reference was finally heard and decided by Justice E.K. Moidu. When the hearing of the reference was resumed by the National Tribunal after the disposal of the Writ Appeal before the High Court some of the managements raised several preliminary objections before the National Tribunal. They were all rejected by the National Tribunal for the reasons given in the course of its award (vide Paragraphs 10 to 15 of the award). The National Tribunal rightly observed that the reference in question consisted of two distinct parts viz. one part relating to wages and allowances to be paid to the bargemen on the basis of the recommendations of the Wage Board and the other part relating to the wages and allowances to be fixed in favour of the bargemen on the basis of the demands made by the bargemen independently of the recommendations of the Wage Board. The National Tribunal rejected the contention of the managements that the second part of the reference could not be considered by it as under the settlement dated 25.7.1970 what was sought to be referred to it was only the dispute relating to the implementation of the recommendation of the Wage Board and not the general claim made by the bargemen for enhancement of their wages and allowances by fixing a wage structure. The National Tribunal pointed out that both parties had agreed in Exhibit M 5(a), which was a settlement, that the Government should refer the dispute to an appropriate tribunal and that right was left to be decided by the Central Government. The Central Government thereafter had referred the matter to the National Tribunal for its decision and hence, it could not be held that the second part of the reference was without any basis. The National Tribunal then proceeded to consider the two points referred to it independently. The first part of the reference, as already stated, related to the application of the Wage Board award to the bargemen, i.e., Dandees and Majhis. In order to decide the said question the National Tribunal had to take into consideration the recommendations made by the Wage Board. While the Wage Board had accepted that the definition of the expression 'dock worker ' found in the Act was relevant for purposes of determining the scope of the reference made to it, it however declined to make any recommendation in respect of the bargemen working in the Port of Calcutta. even though it felt that the conditions of service and emoluments of the bargemen at Calcutta were unsatisfactory. The Wage Board observed in the course of its recommendation thus: PG NO 1044 "Bargemen are engaged more in the transport of Cargo rather than in its handling and they therefore do not fit in with definition of dock workers. They are also workers who have to be attached to or employed at particular barges (sic). We recommend that the Government should make an early investigation into their conditions of services, emoluments, etc. which are stated to be highly unsatisfactory (unanimous). " After the recommendations of the Wage Board were received by the Government of India, the Government of India by its order dated 26.5.1970 requested the Calcutta Dock Labour Board and the Commissioners for the Port of the Calcutta and concerned employers to implement expeditiously the recommendations of the Tripartite Expert Committee in the light of the observation made by the Government. The Government of India by a letter written by the Joint Secretary, Ministry of Labour, Employment and Rehabilitation (Department of Labour and Employment) dated 15.6.1970 to the Secretary, Government of West Bengal drew the attention of the Government of West Bengal to the terms of reference under the Tripartite Expert Committee for Calcutta Dock and the recommendations of the Committee pertaining to bargemen and pointed out inter alia that the barge crew did not come under the term 'dock worker ' as alleged by both the Central Wage Board as well as by the Tripartite Expert Committee. It, however, requested the State Government to consider the question of setting up a committee for bargemen of Calcutta Port and to keep the Central Government informed of the developments. No action was taken on the basis of the above letter. It was the case of the bargemen that they were dock workers as defined in the Act and the denial of the benefits under the recommendations of the Wage Board was wrong. It appears that at some stage even the Central Government was not quite sure of the position whether bargemen, i.e., the Majhis and Dandees could be classified as dock workers. The bargemen, therefore, thought that it was proper to approach the Central Government to refer the dispute in question to a tribunal. The National Tribunal after taking into account the above events and the evidence recorded by it and the submissions made by the parties held that the definition of 'dock worker ' did include within its scope bargemen too but the Wage Board had erroneously failed to make any recommendation with regard to the wages and allowances payable to the bargemen. The National Tribunal held that "they (bargemen) live in the barges, cook food and sleep PG NO 1045 there and stay in the barges for 24 hours of the day. So, they form part and parcel of the dock workers." In paragraphs 24 and 25 of the award the National Tribunal observed thus: "The above evidence both on the union 's side as well as on the management 's side establishes that Majhis and Dandees have been doing similar work of other Dock Workers employed by the Calcutta Dock Labour Board in the matter of loading and unloading of Cargo in and out of the barges. The Wage Board, however, restricted the scope of the word "Dock Worker" with a view to exclude the bargemen out of the definition of dock worker as defined in Act 9 of 1948. In paragraph 4 of the Wage Board report the Board stated that the definition of dock workers in Act 9 of the 1948 was very wide and may be construed to mean all categories of workers working in a port or in the vicinity, if they are handling cargo. But once the bargemen come into the purview of the definition of dock workers as defined in Act 9 of 1948, there was no ground for excluding bargemen from the definition. They had to admit that bargemen are also working in the Ports. The most prominent activity in a port is cargo handling and it is in this work that a lot of labour is employed. In most of the ports a fairly large quantity of cargo is handled overside in the docks or in the stream by lightermen. This aspect of the case had been understood by the members of the Board. They had given a restricted meaning to the definition of dock worker . The definition of the dock workers has to be under stood in the light of not only their work in the port but also consistent with the definitions of cargo, vessel, employer and the port in the Acts referred to above. The terms, loading, unloading and movement of persons employed in any port in connection with the preparation of Ships or Vessels for the receipt or discharge of cargo would indicate that the work of the bargemen came rightly within the definition of dock workers as defined in Act 9 of 1948. There is plenty of evidence in the case that their main work and activity is within the Port. The fact that one of the companies had made use of them to go beyond the port by itself does not in any manner bring down their description to make them less as dock workers. The Shipping Company has caused to be produced PG NO 1046 Ext. They are printed copies of bills. Most of these bills came into existence after the controversy had set in. It is true that there are some bills of the years, 1964 and 1965. But it is not possible from those bills to make out whether the Shipping Company used barges or other crafts for the purpose of carrying goods to distant places. The inner foils of these printed slips had also not been produced. There is nothing to show that they are genuine slips maintained by the persons who issued the same. In the absence of correct material it is difficult to hold that the Shipping Company had taken its barges outside the Port limits. Any way, even assuming that they had taken the barges outside the Port limits that circumstance alone will not make the bargemen less Dock Workers in the facts and circumstances of this case. l have gone through the evidence in its entirety and I am satisfied from the available evidence and records that the Wage Board as well as Chatterjee Committee deviated from the definition of the Dock Workers as defined in Act 9 of 1948 and came to a wrong conclusion which is inconsistent with the definition of the dock worker in that Act with the result that the bargemen were deprived of their due share of wages to be paid to them on the basis of the recommendation they made in the report of the Wage Board. I am satisfied that the evidence in the case leads to the only conclusion that the bargemen are dock workers within the meaning ot dock workers as defined in Act 9 of 1948. It follows therefore that the bargemen would be entitled to all the benefits by way of wages and allowances which the Wage Board recommended in their report. ' ' Having held that the bargemen, i.e., Majhis and Dandees were also dock workers, the National Tribunal observed that the recommendations made by the Wage Board were applicable to the bargemen also and they were entitled to be paid the wages and allowances in accordance with the said recommendation. Alternatively the National Tribunal took up for consideration the second question referred to it, namely. that if for any reason the bargemen were not entitled to the benefits under the recommendations made by the Wage Board to what other relief with regard to the wages and allowances they were entitled? In that connection the National Tribunal observed at paragraph 37 of its award thus: PG NO 1047 "37. The next question for consideration is the second part of the reference. i.e., whether the Dandees and Majhis would be entitled to enhanced wages, and allowances and if so what would be the rate of their monthly wages and allowances. This has to be decided independently of the recommendations of the Wage Board on the materials available on record. The rates of wages and allowances under the 2nd part of the Award has to be determined as if the rate under the Wage Board is fair wage and not minimum wage. Taking into consideration the evidence and all other facts and circumstances borne out from the records of this case there is justification for fix ing the rate recommended by the Wage Board as the fair wage due to be paid to the Dandees and Majhis with effect from 1 1 1976. " In deciding the second question the National Tribunal placed before itself the principles laid down by this Court in Express Newspapers (Private) Ltd. and Anr. vs The Union of India and Ors., which had laid down the relevant criteria for the fixation of rates of wages for workmen and considered the evidence placed before it in the light of the said principles. It took into consideration the financial capacity of the various managements who were involved in the case, the prevailing conditions of service in Calcutta and other questions governing the determination of the fair wages. It also took into consideration the observations made by the Wage Board which for purposes of fixing wage rates had taken into consideration the relevant matters while making its recommendations with regard to certain categories of workmen working in the Calcutta Port. It found that almost all the managements who had given evidence before it were capable of bearing the financial burden which would have to be borne by them on account of the payment of fair wages to be fixed by it. It found that having regard to all the circumstances of the case that the fair wages and allowances payable to the bargemen with effect from 1 1 1976 should be the same as the fair wages payable pursuant to the recommendations made by the Wage Board. After giving our anxious consideration to the entire Award and to the judgments of the learned Single Judge and the Division Bench of the Calcutta High Court we feel that both the learned Single Judge and the Division Bench of the High Court erred on the facts and in the circumstances of the case in setting aside the Award passed by the National Tribunal. As observed by the learned Single Judge himself ' PG NO 1048 that the first question, namely, whether the recommendations of the Central Wage Board for the Port and Dock workers as accepted by the Central Government were applicable to the bargemen in the matter of wages and allowances was referred to the National Tribunal by the Central Government as there were doubts regarding the question whether the bargeman came with in the meaning of the definition of 'dock worker ' in the Act or not. Naturally in order of decide the said question the National Tribunal had to examine incidentally the correctness of the decision of the Wage Board on the question whether the bargemen were dock workers or not and after taking into consideration all the material before it the National Tribunal had come to the conclusion that the bargemen were also dock workers and there was no justification for denying them the benefit of the recommendations of the Wage Board. This part of the Award cannot, therefore. be considered to be outside the scope of the reference made to the National Tribunal. The learned Single Judge and the Division Bench of the High Court were therefore in error in finding that the National Tribunal had exceeded its jurisdiction while recording its findings on the above question. The finding on the said question recorded by the National Tribunal may be right or wrong but it cannot be considered as one recorded without jurisdiction. We are of the view that the said question clearly fell within the first part of the reference made to the National Tribunal. Having held that the finding that the bargemen were also dock workers had been recorded by the National Tribunal without jurisdiction the learned Single Judge proceeded to quash the finding recorded by the National Tribunal on the second question also by which the National Tribunal had held that even independently of the recommendations of the Wage Board, the bargemen were entitled to the same wages and allowances which had been recommended by the Wage Board having regard to the financial capacity of the managements and all other relevant factors governing the question of wages payable to them. The Division Bench also erred in observing that the National Tribunal had not applied the relevant principles governing the determination of fair wages. It erred in observing that the National Tribunal had taken into consideration the financial capacity of the port authorities to pay wages and allowances and not of the private employers like those who had challenged the Award in the High Court. The Division Bench, however, has observed in the course of its order that no doubt in the Award some reference was made to the financial capacity of some of the employers but that had been done only to support the conclusion that the minimum wage as fixed by the Wage Board should be admissible to these workmen and that it would not be beyond the capacity of the employers to pay the same. On going through the Award PG NO 1049 we feel that the above criticism of the Award made by the National Tribunal is wholly unjustified. It has dealt with the second part of the reference in paragraphs 37 to 44 of the Award which are found in pages 146 to 157 of the Paper Book placed before us. The National Tribunal has given reasons as to why it has adopted, while answering the second part of the reference to it, the recommendations of the Wage Board. The learned Single Judge and the Division Bench of the High Court should have seen that the National Tribunal was of the opinion that the bargemen were entitled to be paid wages and allowances at the rates of wages recommended by the Wage Board on the ground that the Bargemen came within the meaning of definition dock workers under the Act and thus the recommendations of the Wage Board were applicable to them and alternatively on the ground that they were entitled to the same rates of wages and allowances even independently of the recommendations of the wage Board as according to the National Tribunal they were entitled to be paid at those rates having regard to the financial capacity of the managements and all other relevant considerations governing the determination of the wages. In these circumstances we feel that the reasons given by the learned Single Judge and by Division Bench of the High Court to set aside the Award passed by the National Tribunal are wholly unsustainable. The wages and allowances fixed by the National Tribunal were just and not at all excessive. We, therefore, set aside the judgment of the Division Bench of the High Court and also the judgment of the learned Single Judge of the High Court and restore the award passed by the National Tribunal. The award passed by the National Tribunal should now be enforced by the authorities concerned in accordance with law. These appeals are accordingly allowed. The appellant is entitled to costs which we quantify at Rs. 5,000. R.S.S . Appeals allowed .

The Government of India set up a Wage Board for the port and dock workers at major ports on November 13, 1964(1) to determine the categories of employees who should be brought within the scope of proposed wage fixation, and (2) to work out a wage structure for those employees on the basis of the guidelines laid down by the Government. The Wage Board submitted its final report on November 29, 1969. The Wage Board did not choose to make any recommendation in respect of bargemen, i.e., Dandees and Majhis at the Port of Calcutta. According to the Wage Board, the bargemen were engaged more in the transport of cargo rather than its handling and they therefore did not fit in with the definition of 'dock worker '. Thereupon, the bargemen raised an industrial dispute claiming the benefit of the Wage Board recommendations. Accordingly, the Central Government on August 22, 197o constituted a National Tribunal at Calcutta for adjudication whether the recommendations of the Wage Board were applicable. to the bargemen, and if not, to what relief with regard to wages and allowances were they entitled. The National Tribunal held that the bargemen were entitled to be paid wages and allowance at the rates of wages recommended by the Wage Board on the ground that the bargemen came within the meaning of the definition of 'dock worker ' and thus the recommendations of the Wage Board were applicable to them, and alternatively, on the ground that PG NO 1034 PG NO 1035 they were entitled to the same rates of wages and allowances even independently~ having regard to the financial capacity of the management and all other relevant considerations governing the determination of the wages. Aggrieved by the award of the National Tribunal, the managements filed two writ petitions before the High Court at Calcutta questioning its validity on the ground that it was beyond the scope of the reference. The learned Single Judge observed: (1) that the scope of the reference was to find out from the report of the Central Wage Board itself whether the recommendations were applicable to the bargemen or not, and it was not for the National Tribunal to criticise the report of the Central Wage Board and to establish that the bargemen were dock workers within the meaning of the Act; (2) the National Tribunal, in a round about way, made the recommendations of the Central Wage Board applicable to the bargemen although apparently the recommendations were not applicable to them, and (3) the National Tribunal having held that the recommendations of the Central Wage Board were applicable to the bargemen, there was no scope for it to decide independently the pay structure of the bargemen. The learned Single Judge accordingly quashed the award as beyond the jurisdiction of the National Tribunal. The Division Bench, on appeal, agreed with the Single Judge and further held that the National Tribunal had failed to fix the wages in accordance with the settled principles. Allowing the appeal, it was, HELD: (l) The object of enacting the and of making provision therein to refer disputes to tribunals for settlement is to bring about industrial peace. Whenever a reference is made by a Government to an industrial tribunal it has to be presumed ordinarily that there is a genuine industrial dispute between the parties which requires to be resolved by adjudication In all such cases an attempt should be made by Courts exercising power of judicial review to sustain as far as possible the awards made by industrial tribunals instead of picking holes here and there in the awards on trivial points and ultimately frustrating the entire adjudication process before the tribunals by striking down awards on hyper technical grounds.[1042B C] PG NO 1036 (2) In order to decide the question whether the bargemen were dock workers or not the National Tribunal had to examine incidentally the correctness of the decision of the Wage Board on the question, and after taking into consideration all the material before it the National Tribunal had come to the conclusion that the bargemen were also dock workers and there was no justification for denying them the benefit of the recommendations of the Wage Board. This part of the Award could, therefore, be considered to be outside the scope of the reference made to the National Tribunal. The finding recorded by the National Tribunal may be right or wrong but it could not be considered as one recorded without jurisdiction. [1048B D] (3) The National Tribunal while holding that even independently of the recommendations of the Wage Board, the bargemen were entitled to the same wages and allowances which had been recommended by the Wage Board had observed that it would not be beyond the capacity of the employers to pay. The criticism of the award in this regard by the High Court was wholly unjustified. [1048E F; 1049A] (4) The wages and allowances fixed by the National Tribunal were just and not at all excessive. [1049E] Express Newspapers (Private) Ltd. and Anr. vs The Union of India and Others, referred to.

ION: Civil Appeal No. 914 of 1987. From the Judgment and Order dated 22.8.1984 of the Kerala High Court in O.P. No. 6806 of 1984. Abdul Khader and E.M.S. Anam for the Appellant. 1081 G. Vishwanath Iyer, N. Sudhakaran for the Respondent. The Judgment of the Court was delivered by JAGANNATHA SHETTY, J. A tea estate of 100 acres with some buildings, machinery and equipments was given as security to the Kerala Financial Corporation ("The Corporation") against the loan taken by the appellant. A part of the loan remained outstanding and the appellant could not clear it. The Corporation thereupon filed O.A. No. 8/64 before the District Court of Kottayam for recovery of the arrears and obtained decree for an amount of Rs.1,20,000. In execution of the decree, the said tea estate was brought for sale by court auction. On November 5, 1969, the auction sale was held. There was no bidder. So the Corporation itself had to purchase the property for about Rs.1,65,000. There was long standing dispute between the workmen of the estate and the previous management relating to payment of their wages. The Corporation therefore could not take possession of the estate. An extent of 85 acres out of 100 acres of the estate was in possession of the workmen as per settlement arrived at between the Labour Commissioner and the District Collector. The workmen used to collect the income therefrom towards their wages. This arrangement continued for about thirteen years. On January 7, 1982, the Corporation got possession of the entire estate. The Corporation wanted to recover its amount. It was not interested in the property. It therefore, invited tenders for the sale of the estate. On March 19, 1982, a tender notification was published in dailies like Malayala Manorama, Mathrubhoomi and Deepika newspapers. In response to the notification, the daughter in law of the appellant was the only tenderer. She offered Rs.5,10,505. The Corporation accepted the tender. It was subsequently found that the daughter in law was no better than the appellant. She also could not pay any amount. On January 18, 1983, the Corporation again invited tenders for the sale of the property. The notification was published in the said newspapers as it was done earlier. This time, the Corporation received these tenders: (i) T.M. Hassan Rawther (Appellant before us) for Rs. six lakhs; (ii) P.M. Jacob for Rs.4,15,550 and (iii) K.K. Mathew for Rs.2,07,451. Since the appellant submitted the highest offer, the Corporation naturally had to accept it. On March 2, 1983, the acceptance was communicated to the appellant. He must have thanked his stars for getting back his family property which was so dear to him or which was according to him so valuable. But there was no such anxiety shown. He did not pay anthing except the earnest money of Rs.40,000. 1082 The Corporation, however, extended the time for payment again and again. The Corporation also gave him instalments for payment of the balance price. All the efforts of the Corporation failed to induce the appellant. The Corporation wanted to get back its money. It was not interested in retaining the property. So it negotiated with P.M. Jacob who had submitted his tender alongwith the appellant in response to the notification dated January 18, 1983. He had then offered Rs.4,16,550. His tender was the next best. After negotiation, he enhanced the offer to Rs. four and a half lakhs. The Corporation accepted it and decided to sell the property to P.M. Jacob. The property however, was sold to M/s. Gumraj Plantations at the request of P.M. Jacob. M/s. Gumraj Plantations is a partnership firm in which P.M. Jacob is one of the partners. The appellant who could not purchase the said property by any means filed suit O.S. No. 229/84 before the Munsif Court Thidupuzha to restrain the Corporation from selling the property. He could not get relief in the suit since by then the sale deed was executed in favour of M/s. Gumraj Plantations. Subsequently, he moved the High Court of Kerala complaining that the Corporation while selling the property for Rs. four and a half lakhs to M/s. Gumraj Plantations, had deviated from the normal practice of inviting tenders from the public. He contended that the Corporation being a public authority was bound to act reasonably and fairly and it ought not to have arbitrarily selected the purchaser. The High Court found no substance in those submissions. The High Court observed: "The submission made by the petitioner 's counsel is that the decision to sell the property by private negotiations is arbitrary and is therefore liable to be interfered with by this court. This is clearly a case where in execution proceedings the decreeholder has purchased the property and thereafter the property was sold in public auction to the petitioner, who purchased it for Rs. six lakhs but failed to pay the sale amount in spite of the fact that this court and afterwards the corporation had shown great indulgence towards the petitioner. This is not at all a fit case for interference under article 226 of the Constitution." Being aggrieved by the judgment of the High Court, the appellant has preferred the present appeal. On May 18, 1985, this Court 1083 while entertaining the appeal issued notice limited to the question whether the sale of the property should be made by general auction. This Court further directed that in any event, the appellant will not be allowed to participate in the auction. Very interesting turn of events. The appellant who miserably failed to secure the property for himself is now interested in securing the best price for the Corporation. He says that this is a public interest litigation. His case is that the Corporation in all fairness must dispose of the property by public auction. It could not have bargained with P.M. Jacob and sold the property to M/s. Gumraj Plantations. Before the High Court, the appellant attacked the sale also on the ground that it was actuated by extraneous considerations. He alleged that the corporation had succumbed to the pressure of some influential persons for the sale of the property in favour of M/s. Gumraj Plantations. The appellant made these allegations but did not substantiate it. He did not give the names of influential persons who had brought pressure on the Corporation. He did not even state as to how the Corporation officials had shown undue interest with P.M. Jacob or with the other partners of M/s. Gumraj Plantations for sale of the property. It is not proper to make such light hearted and vague allegations against the statutory authorities. These allegations, in our opinion, are uncharitable and unfounded. The only question that arises for consideration is whether on the facts and in the circumstances, the Corporation was not justified in selling the property by private negotiations in favour of M/s. Gumraj Plantations at the instance of P.M. Jacob. It is needless to state that the Government or public authorities should make all attempts to obtain the best available price while disposing of public properties. They should not generally enter into private arrangements for the purpose. These principles may be taken as well established by the following decisions of this Court: (i) K.N. Guruswamy vs The State of Mysore and others; , at 312; (ii) Mohinder Singh Gill & Anr. vs The Chief Election Commissioner, New Delhi and others, ; (iii) R.D. Shetty vs The International Airport Authority of India and Ors., ; ; (iv) Kasturi Lal Lakshmi Reddy vs State of Jammu and Kashmir and Anr., ; ; (v) Fertilizer Corporation Kamagar Union vs Union of India, ; ; (vi) Ram and Shyam Company vs State of Haryana and Ors. [1985] Supp. SCR 541 and (vii) Shri Sachidanand Pandey vs State of W.B. ; 1084 In R.D. Shetty vs The International Airport Authority of India and Ors. ; at 1041 Bhagwati, J. speaking for the Court observed: "Now, obviously where a corporation is an instrumentality or agency of Government, it would, in the exercise of its power or discretion, be subject to the same constitutional or public law limitations as Government. The rule inhibiting arbitrary action by Government which we have discussed above must apply equally where such corporation is dealing with the public, whether by way of giving jobs or entering into contracts or otherwise, and it cannot act arbitrarily and enter into relationship with any person it likes at its sweetwill, but its action must be in conformity with some principle which meets the test of reason and relevance. This rule also flows directly from the doctrine of equality embodied in Art 14. It is now well settled as a result of the decisions of this Court in E.P. Rayappa vs State of Tamil Nadu and Maneka Gandhi vs Union of India that Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. It requires that State action must not be arbitrary but must be based on some rational and relevant principle which is non discriminatory: it must not be guided by any extraneous or irrelevant considerations, because that would be denial of equality. The principle of reasonableness and rationality which is legally as well as philosophically an essential element of equality or non arbitrariness is protected by article 14 and it must characterise every State action, whether it be under authority of law or in exercise of executive power without making of law. The State cannot, therefore, act arbitrarily in entering into relationship, contractual or otherwise with a third party, but its action must conform to some standard or norm which is rational and non discriminatory. " In Kasturi Lal Lakshmi Reddy vs State of J & K, ; at 1355 Bhagwati, J. again speaking for the Court reiterated what he said earlier to R.D. Shetty case. The learned Judge went on to state: 1085 "Every action taken by the Government must be in public interest; the Government cannot act arbitrarily and without reason and if it does, its action would be liable to be invalidated. If the Government awards a contract or leases out or otherwise deals with its property or grants any other largess, it would be liable to be tested for its validity on the touch stone of reasonableness and public interest and if it fails to satisfy either test, it would be unconstitutional and invalid. " The learned Judge continued (at p. 1357): "But one basic principle which must guide the Court in arriving at its determination on this question is that there is always a presumption that the Governmental action is reasonable and in public interest and it is for the party challenging its validity to show that it is wanting in reasonableness or is not informed with public interest. This burden is a heavy one and it has to be discharged to the satisfaction of the Court by proper and adequate material. The Court cannot lightly assume that the action taken by the Government is unreasonable or without public interest because as we said above, there are a large number of policy considerations which must necessarily weigh with the Government in taking action and therefore, the Court would not strike down governmental action as invalid on this ground, unless it is clearly satisfied that the action is unreasonable or not in public interest. But where it is so satisfied it would be the plainest duty of the Court under the Constitution to invalidate the governmental action. This is one of the most important functions of the Court and also one of the most essential for preservation of the rule of law. " In Fertilizer Corporation case ; at 350 this Court speaking through Chandrachud, C.J., observed: "We want to make it clear that we do not doubt the bona fides of the authorities, but as far as possible, sales of public property, when the intention is to get the best price, ought to take place publicly. The vendors are not necessarily bound to accept the highest or any other offer, but the public at least gets the satisfaction that the Government has 1086 put all its cards on the table. In the instant case, the officers who were concerned with the sale have inevitably, though unjustifiably attracted the criticism that during the course of negotiations the original bid was reduced without a justifying cause. We had willy nilly to spend quite some valuable time in satisfying ourselves that the reduction in the price was a necessary and fair consequence of the reduction in the quantity of the goods later offered for sale on March 31, 1980. One cannot exclude the possibility that a better price might have been realised in a fresh public auction but such possibilities cannot vitiate the sale or justify the allegations of malafides. " In Shri Sachidanand Pandey vs State of West Bengal, ; at 1133, O. Chinnappa Reddy, J. after considering almost all the decisions of this Court on the subject summarised the propositions in the following terms: "On a consideration of the relevant cases cited at the bar the following propositions may be taken as well established: State owned or public owned property is not to be dealt with at the absolute discretion of the executive. Certain percepts and principes have to be observed. Public interest is the paramount consideration. One of the methods of securing the public interest when it is considered necessary to dispose of a property, is to sell the property by public auction or by inviting tenders. Though that is the ordinary rule, it is not an invariable rule. There may be situations where there are compelling reasons necessitating departure from the rule but then the reasons for the departure must be rational and should not be suggestive of discrimination. Appearance of public justice is as important as doing justice. Nothing should be done which gives an appearance of bias, jobbery or nepotism." After applying these tests, the learned Judge finally upheld the action of West Bengal Government in not inviting tenders, or in not holding a public auction but negotiating straightway at arms length with Taj Group of Hotels for giving about four acres of land for establishing a five star hotel. The public property owned by the State or by any instrumentality of the State should be generally sold by public auction or by inviting 1087 tenders. This Court has been insisting upon that rule, not only to get the highest price for the property but also to ensure fairness in the activities of the State and public authorities. They should undoubtedly act fairly. Their actions should be legitimate. Their dealings should be above board. Their transactions should be without aversion or affection. Nothing should be suggestive of discrimination. Nothing should be done by them which gives an impression of bias, favouritism or nepotism. Ordinarily these factors would be absent if the matter is brought to public auction or sale by tenders. That is why the Court repeatedly stated and reiterated that the State owned properties are required to be disposed of publicly. But that is not the only rule. As O.Chinnappa Reddy, J. Observed "that though that is the ordinary rule, it is not an invariable rule. " There may be situations necessitating departure from the rule, but then such instances must be justified by compulsions and not by compromise. It must be justified by compelling reasons and not by just convenience. What is the position in the present case. Here is a case where the Corporation invited tenders for the sale of the property under notification dated January 18, 1983. The appellant submitted the highest tender in response to the said notification. He was given all concessions for payment of the tender amount. But he did not. He negotiated with the Managing Director of the Corporation for facilities for payment by instalments. That was also granted to him. There again he failed. If the appellant could not act according to his tender, we fail to see why the property should not be offered to the person who was next in order. The Corporation, in our opinion, did not do anything unfair with P.M.Jacob. The Corporation got the tender amount raised from Rs.4,16,550 to Rs.4,50,000. It shows the fairness with which the Corporation dealt with the property. On a consideration of all the facts and circumstances of the case, we are satisfied that the action of the Corporation in offering the property to P.M.Jacob and selling the same at his request to M/s. Gumraj Plantations was perfectly justified and cannot be found fault with In the result the appeal fails and is dismissed. In the circumstances, however, we make no order as to costs. P.S.S. Appeal dismissed.

% The respondent, a State Government Corporation obtained decree for certain amount against the appellant and in execution proceedings a tea estate was brought for sale by court auction in 1969, but in the absence of a bidder the respondent itself had to purchase it at a higher price. The respondent, however, could take possession of the estate only in 1982. It then invited tenders for the sale of the estate. The appellant offered Rs.6,00,000. The next best offer was for Rs.4,15,550 and the third for Rs.2,07,451. The highest offer was accepted, but the appellant could not pay the amount except the earnest money, even after repeated extension of time and offer to receive the balance in instalments. The respondent then negotiated with the next highest bidder, who enhanced the offer to Rs.4,50,000 which was accepted by the respondent. The property, however, was sold to a partnership firm in which the said bidder was a partner. The appellant thereupon moved the High Court complaining that the respondent in selling the property to the firm had deviated from the normal practice of inviting the tenders from the public and that the Corporation being a public authority was bound to act reasonably and fairly and it ought not be have arbitrarily selected the purchaser. The High Court declined to interfere. Dismissing the appeal, ^ HELD: The action of the respondent in offering the property to the person next in order by private negotiations and selling the same at 1080 his request to the partnership firm was perfectly justified. [1087G] The public property owned by the State or by any instrumentality of the State should be generally sold by public auction or by inviting tenders, not only to get the highest price for the property but also to ensure fairness in the activities of the State and public authorities. They should act fairly. Their actions should be legitimate. Their dealings should be above board. Their transactions should be without aversion or affection and should not be suggestive of discrimination, bias, favouritism or nepotism. Ordinarily these facts would be absent if the matter is brought to public auction or sale by tenders. Though that is the ordinary rule, it is not an invariable rule. There may be situations necessitating departure from the rule, but then such instances must be justified by compelling reasons and not by just convenience. [1086H; 1087A C] In the instant case, the respondent dealt with the property in all fairness. It invited tenders for the sale of the property under the notification. The appellant submitted the highest tender in response to the said notification. He was granted all concessions and facilities for payment by instalments but he failed. If the appellant could not act according to his tender, there was no reason why the property should not be offered to the person who was next in order. The respondent, therefore, did not do anything unfair with the second bidder after it had got the tender amount raised substantially. [1087D F] K.N. Guruswamy vs The State of Mysore & Ors., ; at 312; Mohinder Singh Gill & Anr. vs The Chief Election Commissioner, New Delhi & Ors., ; R.D. Shetty vs The International Airport Authority of India State of Jammu and Kashmir & Anr., ; ; Fertilizer Corporation Kamagar Union vs Union of India, ; ; Ram and Shyam Company vs State of Haryana & Ors., and Shri Sachidanand Pandey vs State of W. B. ; , applied.

Appeal No. 791 of 1962. Appeal by special leave from the judgment and order dated March 22, 1960, of the Bombay High Court in Award No. 18 of 1959. section T. Desai and I. N. Shroff, for the appellant. B. C. Misra, for the respondent. April 29, 1964. The Judgment of the Court was delivered by HIDAYATULLAH J. This appeal by special leave is directed against an order of the High Court of Bombay dated March 22, 1960 in its ordinary original civil jurisdiction. The facts are simple. By a letter dated July 30, 1955, Messrs. Kajaria rraders (India) Ltd., who is the respondent here and Messrs. Foreign Import and Export Association (sole proprietory firm owned by the appellant Jagdish C. Gupta) entered into a partnership to export between January and June 1956, 10,000 tons of manganese ore to Phillips Brothers (India) Ltd., New York. Each partner was to supply a certain quantity of manganese ore. We are not concerned with the terms of the agreement but with one of its clauses which provided: "That in case of dispute the matter will be referred for arbitration in accordance with the Indian . " The company alleged that Jagdish Chander Gupta failed to carry out his part of the partnership agreement. After some correspondence, the company wrote to Jagdish Chander Gupta on February 28, 1959 that they had appointed Mr. R. J. Kolah (Advocate O.S.) as their arbitrator and asked Jagdish Chander Gupta either to agree to Mr. Kolah 's appointment as sole arbitrator or to appoint his own arbitrator. Jagdish Chander Gupta put off consideration and on March 17, 1959 the company informed Jagdish Chander Gupta that as he had failed to appoint an arbitrator within 15 clear days they were appointing Mr. Kolah as sole arbitrator. Jagdish Chander Gupta disputed this and the corn 53 pany filed on March 28, 1959 an application under section 8 (2) of the Indian for the appointment of Mr. Kolah or any other person as arbitrator. Jagdish Chander Gupta appeared and objected inter alia to the institution of the petition. Two grounds were urged (i) that section 8(2) of the Indian was not appli cable as it was not expressly provided in the arbitration clause quoted above that the arbitrators were to be by consent of the parties and (ii) that section 69(3) of the afforded a bar to the petition because the partnership was not registered. The petition was refer red by the Chief Justice to a Divisional Bench consisting of Mr. Justice Mudholkar (as he then was) and Mr. Justice Naik. The two learned Judges agreed that in the circumstances of the case an application under section 8 of the Indian was competent and that the court had power to appoint an arbitrator. They disagreed on the second point: Mr. Justice Mudholkar was of the opinion that section 69(3) of the barred the application while Mr. Justice Naik held otherwise, The case was then referred to Mr. Justice K. T. Desai (as he then was) and he agreed with Mr. Justice Naik with the result that the application was held to be competent. In this appeal it was not contended that the conclusions of the learned Judges in regard to section 8(2) were erroneous. The decision was challenged only on the ground that section 69(3) was wrongly interpreted and the bar afforded by it was wrongly disallowed. Section 69 of the may be reproduced here : "69.(1) No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any Court by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm. 54 (2) No suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the (3) The provisions of sub sections(1) and (2) shall apply also to a claim ofset off or other proceeding to enforce a rightarising from a contract, but shall not affect (a) the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm, or (b) the powers of an official assignee, receiver or Court under the , or the , to realise the property of an insolvent partner. (4) This section shall not apply (a) to firms or to partners in firms which have no place of business in the territories to which this Act extends, or whose places of business in the said territories are situated in areas to which, by notification under section 56, this Chapter does not apply, or (b) to any suit or claim of set off not exceeding one hundred rupees in value which, in the Presidency towns, is not of a kind specified in section 19 of the , or outside the Presidency towns, is not of a kind specified in the Second Schedule to the Provincial Small Cause Courts Act, 1887, or to any proceeding in execution or other proceeding incidental to or arising from any such suit or claim 'Me section, speaking generally, bars certain suits and pro ceedings as a consequence of non registration of firms. Sub 55 section (1) prohibits the institution of a suit between partners inter se or between partners and the firm for the purpose of .enforcing a right arising from a contract or conferred by the Partnership Act unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm. Sub section (2) similarly prohibits a suit by or on behalf of the firm against a third party for the purpose of enforcing rights arising from a contract unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm. In the third sub section a claim of set off which is in the nature of a counter claim is also similarly barred. Then that subsection bars "other proceedings". The only doubt that has arisen in this case is regarding the meaning to be given to the expression "other proceeding". One way to look at the matter is to give these words their full and natural meaning and the other way is to cut down that meaning in the light of the words that precede them. The next question is whether the application under section 8 (2) of the can be regarded as a proceeding "to enforce a right arising from a contract", and therefore, within the bar of section 69 of the . Mr. Justice Mudholkar in reaching his conclusion did not interpret the expression "other proceeding" ejusdem generis with the words "a claim of set off". He held further that the application was to enforce a right arising from the contract of the parties. Mr. Justice Naik pointed out that the words used were not "any proceeding" nor "any other proceedings" but "other proceeding" and that as these words were juxtaposed with 'a claim of set off ' they indicated a, proceeding of the nature of a claim in defence. On the second point Mr. Justice Naik held that this was not a proceeding to enforce a right arising from a contract but was a claim for damages and such a claim, could be enter tained because it was based on something which was inde pendent of the contract to supply ore. He held that the, right which was being enforced was a right arising from the and not from the contract of the parties. Mr. Justice K. T. Desai agreed with most of these conclu sions and suggeted that the words preceding "other proceed 56 ing", namely, "a claim of set off" had 'demonstrative and limiting effect '. He seems to have ascertained the meaning of the expression "other proceeding" by reference to the meaning of the words "a claim of set off", which he considered were associated with it. Ile first question to decide is whether the present pro ceeding is one to enforce a right arising from the contract of the parties. The proceeding under the eighth section of the has its genesis in the arbitration clause, because without an agreement to refer the matter to arbitration that section cannot possibly be invoked. Since the arbitration clause is a part of the agreement constituting the partnership it is obvious that the proceeding which is before the court is to enforce a right which arises from a contract. Whether we view the contract between the parties as ;a whole or view only the clause about arbitration, it is impossible to think that the right to proceed to arbitration is not one of the rights which are founded on the . agreement of the parties. The words of section 69(3) "a right arising from a contract" are in either sense sufficient to cover the present matter. It remains, however, to consider whether by reason of the fact that the words "other proceeding" stand opposed to the words "a claim of set off" any limitation in their eaning was contemplated. It is on this aspect of the case that the learned Judges have seriously differed. When in a statute particular classes are mentioned by name and then are followed by general words, the general words are sometimes construed ejusdem generis, i.e. limited to the same category or genus comprehended by the particular wordsbut it is not necessary that this rule must alwavs apply. The nature of the special words and the general words must e considered before the rule is applied. In Allen vs Emerson (1), Asquith J. gave interesting examples of particular words followed by general words where the Principle of ejusdem generis might or might not apply. We ink that the following illustration will clear any difflculty. In the expression "books, pamphlets, newspapers and other (1) [i944] 1 K.B. 362. 57 documents" private letters may not be held included it 'other documents ' be intepreted ejusdem generis with what goes before. But in a provision which reads "newspapers or other document likely to convey secrets to the enemy", the, words 'other document ' would include document of any kind and would not take their colour from 'newspapers '. It follows, therefore, that interpretation ejusdem generis or noscitur a sociis need not always be made when words showiig particular classes are followed by general words. Before the general words can be so interpreted there must be a genus constituted or a category disclosed with reference to which the general words can and are intended to be restricted. Here the expression "claim of set off" does not disclose a category or a genus. Set offs are of two kinds legal and equitable and both are already comprehended and it is difficult to think of any right "arising from a contract" which is of the same nature as a claim of set off and can be raised by a defendant in a suit. Mr. B. C. Misra, whom we invited to give us examples, admitted frankly that it was impossible for him to think of any proceeding of the nature of a claim of set off other than a claim of set off which could be raised in a suit such as is described in the second sub section. In respect of the first sub secton he could give only two examples. They are (i) a claim by a pledger of goods with an unregistered firm whose goods are attached and who has to make an objection under 0. 21 r. 58 of the Code of Civil Procedure and (ii) proving a debt before a liquidator. The latter is not raised as a defence and cannot belong to the same genus as a "claim of set off". The former can be made to fit but by a stretch of some considerable imagination. It is difficult for Lis to accept that the Legislature was thinking of such far fetched things when it spoke of "other proceeding" ejusdem generis with a claim of set off. Mr. Justice Naik asked the question that if all proceedings were to be excluded why was it not considered suffi cient to speak of proceedings along with suits in sub sections (1) and (2) instead of framing a separate subsection about proceedings and coupling 'other proceeding, ' with 'a 58 the search for the answer in the ' scheme of the section itself gives the clue. The section thinks in terms of (a) suits and (b) claims of set off which are in a sense of the nature of suits and (c) of other proceedings. The section first provides for exclusion of suits in sub sections (1) and (2). Then it says that the same ban applies to a claim of set off and other proceeding to enforce a right arising from a contract. Next it excludes the ban in respect of the right to sue (a) for the dissolution of a firm, (b) for accounts of. a dissolved firm and (c) for the realisation of the property of a dissolved firm. The emphasis in each case is on dissolution of the firm. Then follows a general exclusion of the section. The fourth sub section says that the section as a whole, is not to apply to firms or to partners and firms which have no place of business in the territories of India or whose places of business are situated in the territories of India but in areas to which Chapter VII is not to apply and to suits or claims of set off not exceeding Rs. 100 in value. Here there is no insistence on the dissolution of the firm. It is significant that in the latter part of clause (b) of that section the words are "or to any proceeding in execution or other proceeding incidental to or arising from any such suit or claim" and this clearly shows that the word "proceeding" is not limited to a proceeding in the nature of a suit or a claim of set off. Subsection (4) combines suits and a claim of set off and then speaks of "any proceeding in execution" and "other proceeding incidental to or arising from any such suit or clainm" as being outside the ban of the main section. It would hardly have been necessary to be so explicit if the words other proceeding in the main section had a meaning as restricted as is suggested by the respondent. It is possible that the draftsman wishing to make exceptions of different kinds in respect of suits, claims of set off and other proceedings grouped suits in sub sections (1) and (2), set off and other proceedings in sub section (3) made some special exceptions in respect of them in sub section (3) in respect of dissolved firms and then viewed them all together in sub section (4) providing for a complete exclusion ' of the section in respect of suits of particular classes. For convenience of drafting this 59 scheme was probably followed and nothing can be spelled out from the manner in which the section is sub divided. Some cases noticed by the High Court were cited to us but none of them appears to be really in point. In Hafiz Qamar Din vs Nur Din( ') and Babutal Dhandhania vs Messrs. Gauttam and Co.( ') proceedings were started on an award, in one to make it a rule of the Court and in the other to get it set aside. These cases are distinguishable because they deal with awards and it is not necessary to decide whether after an award the proceeding is one to enforce a right arising from a contract. We do not refer to them. In Kottamasu Sreemannarayanamuthy and another vs Chakka Arjanadu() a petition for adjudication of a partner as insolvent was held to be a right arising not from, a contract but from statute. Here the right that is being enforced through the medium of the arises from the contract between the parties and is a part of it. In Jamal vs Firm Umar Haji Karim (4 ) the bar of section 69(3) was claimed during the execution of a consent decree and was disallowed. Grille C. J. observed that the expression 'other proceeding ' indicated something which was 'sui generis of a claim of set off '. If the partners of an unregistered firm. go to court without either asking for a dissolution of the firm or dissolving it themselves and enter into an agreement and compose their differences it is possible to say that the enforcement of the consent decree is no more than the enforcement of a right arising from a contract and is within the ban. It is, however, not necessary to decide this point here. in Ram Lal Harnam Das vs Pal Krishan and others() it was expressly pointed out that the expression 'other proceeding ' in the third sub section applied to proceedings of the nature of a claim of set off and nothing else. This case cannot be said to interpret the sub section correctly. Similarly, Mahendra vs Gurdeyal( '), which lays down that section 69 does not bar a partner of an unregistered partnership firm from applying to the court under section 8 of the for referring the dispute (1) A.T.R (3) A.I.R. 1939 Mad. (5) A.I.R. 1917 Punjab 159. (2) A.r. R. (4) I.L.R. (6) I.L.R. 30 Pat. 109. 60 between partners to arbitrator as provided in the condition of their agreement, cannot be accepted as sound. The ,reason given by the Divisional Bench that as section 69 allows dissolution and accounts of unregistered partnership it cannot bar such an application appears to us to be not quite in Point. In our judgment, the words 'other proceeding ' in sub section (3) must receive their full meaning untramelled by the words 'a claim of set off '. The latter words neither intend nor can be construed to cut down the generality of the words 'other proceeding '. The sub section provides for the application of the provisions of sub sections (1) and (2) to claims of set off and also to other proceedings of any Kind which can properly be said to be for enforcement of any right arising from contract except those expressly mentioned as exceptions in sub section (3) and sub section The appeal is, therefore, allowed. The decision of the High Court will be set aside and the application under section 8(2) of the shall stand dismissed with costs throughout on the applicant in the High Court.

The respondent entered into a partnership agreement with the appellant. But this was not registered. There was an arbitration clause sti 51 pulating that in case of dispute the matter will be referred for arbitration in accordance with . Dispute having arisen between the respondent and the appellant the former wrote to the latter stating that the dispute be referred for arbitration and that the respondent has appointed one K as the sole arbitrator. On the failure of the appellant to agree to this the respondent filed an application under section 8(2) of the Indian for the appointment of arbitrator. The application was heard by a Division Bench of the High Court before which the appellant contended that section 69(3) of the afforded a bar to the petition because the partnership was not registered. One of the Judges upheld the contention while the other rejected it and the matter was referred to another Judge who held that the application was competent. The present appeal was filed by special leave granted by this Court. HELD: (i) Thai since the arbitration clause formed a part of the agreement constituting the partnership it is obvious that the proceeding which is before the Court is to enforce a right which arises from a contract. Whether one views the contract between the parties as a whole or one views only the arbitration clause it is impossible to think that the right to proceed to arbitration is not one of the rights which are founded on the agreement of the parties. The words of section 69(3) "a right arising from a contract" are in either sense sufficient to cover the present matters. (ii) Interpretation ejusdem genuris or noscitur a sociis need not always be made when showing particular classes are followed try general words. Before the general words can be so interpreted there must be a genus constituted or a category disclosed with reference to which the general words can and are intended to be restricted. The expression "claim of set off" does not disclose a category or a genus. Set offs are of two kinds legal and equitable and both are already comprehended and it is difficult to think of any right "arising from a contract ' which is of the same nature as a claim of set off and can be raised by a dependent in suit. Allen vs Emerson, , referred to. Hafiz Qamar Din vs Nur Din, A.I.R. 1936 Lah. 136, Babulal Dhan Dhania vs M/s. Gautam & Co. A.I.R. 1950 Cal. 341, Kottamasu sreemannarayanmurthy vs Chokka Arjanadtu, A.I.R. , Jamal vs Firm Umar Haji Karim, I.L.R. , and Ram Lal Harnam Das Y. Bal Kishan, A.I.R. 1957 Punj. 159, distinguished. (iii) The words "other proceeding" in sub section (3) must receive their full meaning untramelled by the words "a claim of set off. The latter words neither intend nor can be construed to cut down the generality of the words "other proceeding". The sub section provides for the application of the provisions of sub sections (1) and (2) to claims of set off and also to other proceedings of any kind which can properly be said to be for enforcement of any right arising from contract except those expressly mentioned as exceptions in subsections (3) and (4).

ivil Appeal No. 1349(NT) of 1974. From the Judgment and Order dated 20th June, 1973 of the Gujarat High Court in Estate Duty Ref. No. 3 of 1970. S.C. Manchanda, K.P. Bhatnagar and Miss A. Subhashini for the Appellant. 48 S.T. Desai and S.C. Patel for the Respondent. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This is an appeal by certificate granted by the High Court of Gujarat by its order dated 2nd May, 1974 from the judgment and order dated 28th June, 1973 in Estate Duty Reference No. 3 of 1970 under section 65(1) of the (hereinafter called the 'Act '). One Nareshchandra Kantilal died on 13th September, 1962. He was a partner in the firm of Messrs G. Bhagwatiprasad & Co. having 28% share in the partnership. The partnership was by the document of partnership which is dated 6th June, 1957. On the death of the deceased, the accountable person filed necessary return under the Act. The Assistant Controller of Estate Duty while valuing the estate of the deceased, came to the conclusion that the share of the deceased in the goodwill of the firm in which he was a partner was liable to be included in the principal value of his property. This inclusion was resisted by the accountable person on the ground that the question of adding the value of the share of the deceased in the goodwill of the firm did not arise in view of clause (10) of the partnership deed. Clause (10) was as follows: "The firm shall not stand dissolved on death of any of the partners and the partner dying shall have no right whatever in the goodwill of the firm". The accountable person contended on the basis of this clause that on the death of the deceased, his heirs had no right in the goodwill of the firm, and as such the value of the said goodwill did not pass under the provisions of the Act and was, therefore, not liable to any estate duty. The Assistant Controller, however, negatived the said contention. He valued the goodwill at Rs.2,16,900. The share of the deceased in the goodwill was worked out from this value at Rs.60,732. The Assistant Controller also worked out the value of the interest which the deceased had in the partnership assets and added to the above referred amount of Rs.60,732 as the value of his share in the goodwill. The accountable person, being aggrieved, preferred an appeal before the Appellate Controller of Estate Duty, Bombay. He by and 49 large confirmed the order of the Assistant Controller and made only a slight reduction in the value of the goodwill. The accountable person thereafter went up in appeal before the Appellate Tribunal. She raised before the Tribunal two principal contentions, namely, (1) that the deceased had no interest in the assets of the firm and hence his share in the goodwill did not pass at all, and (2) as, according to the partnership agreement, the partnership was to continue on the death of any of the partners and as it was further stipulated that the deceased would have no interest in the goodwill of the firm on his death, his share in the goodwill did not pass and as such was not liable to the charge of estate duty. The Tribunal rejected both these contentions. It was contended on behalf of the accountable person before the Tribunal that when a partnership was a going concern there could not be any separate valuation of the goodwill which went with the running business. The Tribunal noted that there was no question of valuing the goodwill separately because what was to be valued was the totality of interest of a partner in partnership assets including the value of the goodwill. The Tribunal eventually decided the matter relying upon the decision of the Privy Council in Perpetual Executors and Trustees Association of Australia Ltd. vs Commissioner of Taxes, = 25 I.T.R. (ED) 47. The Tribunal held that in spite of clause (10) of the partnership agreement, the value of the goodwill to the extent of the share of the deceased passed on the death of Nareshchandra Kantilal and it was liable to be charged estate duty. Three questions of law were referred to the High Court. These were: "1. Whether, on the facts and in the circumstances of the case, the interest of the deceased in the firm of Messrs. G. Bhagwatiprasad & Co. of Ahmedabad was property within the meaning of the provisions of the ? 2. If the answer to the above question is in the affirmative, whether, on the facts and in the circumstances of the case, having regard to the terms of the partnership deed dated June 6, 1957, the value of the interest of the deceased in the said partnership would include the goodwill of the partnership firm? 3. Whether, on the facts and in the circumstances of the case, the value of the goodwill, if any, would be exempt under the provisions of section 26(1) of the Act?" 50 The last question was not pressed before the High Court. The High Court, therefore, did not give any answer. The first question, the High Court, answered in favour of the revenue and in the affirmative and the second question was answered in the negative. As the first question was in favour of the revenue and there was no appeal by the accountable person this appeal is concerned only with the second question namely 'whether the value of the interest of the deceased in the said partnership would include the goodwill of the partnership firm '. The High Court answered the question in the negative and in favour of the accountable person as mentioned hereinbefore. The High Court noted that the primary object of every taxing statute was to recover a tax or duty in cash on the happening of a particular taxable event. This event under the Act, is the actual or deemed passing of property on the death of a person. Every taxing statute, according to the High Court, contemplated the levy of a tax or duty on the valuation date which has to be arrived at on the principles stated in the statute itself. If the valuation principles stipulated in the Act could not be worked out with any precision in respect of any property it would follow as a necessary corollary that that property was not one which was intended to be subject to tax or duty contemplated by the statute. This basic principle, according to the High Court, should be applied while construing sections 7 and 40 of the Act. Section 7 of the Act, according to the High Court would apply only if two conditions were satisfied, namely (1) that there was a cesser of interest in the property on the death of a person, and (2) an accrual or arising of benefit to another as a result of the said cesser. In order to assess the tax liability the value of the benefit had to be worked out and section 40 of the Act provides the basis for the valuation. Section 40 clearly postulates that the property in which interest had ceased must be capable of yielding income. If the 'benefit ' arising under section 7 on the cesser of an 'interest ' could not be measured under section 40, the cesser of such interest, according to the High Court did not attract payment of estate duty under section 7 of the Act. A partner in a firm has a marketable interest in all the capital assets of the firm including the goodwill even during the subsistence of the partnership. Interest in goodwill was property within the meaning of section 2(15) of the Act, according to the High Court. But the goodwill of a firm, in the opinion of the High Court, standing by itself could not earn any income. In a case where it was specially stipulated 51 that on the death of any of the partners, the partnership shall not stand dissolved and that the heirs of the deceased partner shall have no right whatsoever to claim any share in the goodwill of the firm, the benefit arising to the other partners on the cesser of interest in the goodwill, on the death of the partner could not be measured in terms of section 40. The High Court, therefore, was of the view that such a benefit was not liable to estate duty under section 7 of the Act. The High Court was, therefore, of the view that the facts of this case were not covered by either section 5 or section 7 and answered the question No. 2 in the negative. In order to appreciate this controversy, it is necessary to refer first to section 2(15) of the . Section 2(15) deals with 'property '. It provides as follows: " 'property ' includes any interest in property, movable or immovable, the proceeds of sale thereof and any money or investment for the time being representing the proceeds of sale and also includes any property converted from one species into another by any method. " There are two explanations with which we are not presently concerned. Section 2(16) deals with 'property passing on the death ' and is as follows: " 'Property passing on the death ' includes property passing either immediately on the death or after any interval, either certainly or contingently, and either originally or by way of substitutive limitation, and "on the death" includes "at a period ascertainable only by reference to the death" . The imposition of estate duty is by sub section (1) of section 5. It stipulates that in case of every person dying after the commencement of this Act, there shall, save as hereinafter expressly provided, be levied and paid upon the principal value ascertained as provided in the Act, all property, settled or not settled including agricultural land. ., which passes on the death of such person, a duty called 'estate duty ' at the rates fixed in accordance with section 35. Section 6 of the Act deals with property which is deemed to pass 52 and provides that property which the deceased was at the time of his death competent to dispose of shall be deemed to pass on his death. Section 7(1) deals with interest ceasing on death and is as folllows: "(1) Subject to the provisions of this section, property in which the deceased or any other person had an interest ceasing on the death of the deceased shall be deemed to pass on the deceased 's death to the extent to which a benefit accrues or arises by the cesser of such interest, including, in particular, a coparcenary interest in the joint family property of a Hindu family governed by the Mitakshara, Marumakattayam or Allyasantana law. The other sub sections of the section deal with special cases of different communities, the details of which need not be considered. The other relevant provisions which need be considered deal with the value which is chargeable. Sub section (1) of section 36 of the Act stipulates that the principal value of any property shall be estimated to be the price which, in the opinion of the Controller, it would fetch if sold in open market at the time of the deceased 's death. Sub section (2) of the section stipulates that in estimating the principal value under this section the Controller shall fix the price of the property according to the market price at the time of the deceased 's death and shall not make any reduction in the estimate on account of the estimate being made on the assumption that the whole property is to be placed on the market at one and the same time, provided that where it is proved to the satisfaction of the Controller that the value of the property has depreciated by reason of the death of the deceased, the depreciation shall be taken into account in fixing the price. Sections 37, 38 and 39 are provisions with which the present controversy is not directly concerned. Section 40 deals with the valuation of benefits from interests ceasing on death. This is relevant and is as follows: "The value of the benefit accruing or arising from the cesser of an interest ceasing on the death of the deceased shall (a) if the interest extended to the whole income of the property, be the principal value of that property; and 53 (b) if the interest extended to less than the whole income of the property, be the principal value of an addition to the property equal to the income to which the interest extended. " The other provisions of the Act need not be considered for the present controversy. Section 14 of The recognises that subject to contract between the partners, the property of the firm would include all the property and rights and interests in property originally brought into the stock of the firm or acquired by purchase or otherwise, by the firm or for the purpose or in the course of business of the firm and includes the goodwill of the business. It further provides that unless contrary intention appears property and rights in the property acquired with money belonging to the firm are deemed to have been acquired for the firm. Section 15 of the said Act provides that the property of the firm shall be held and used exclusively for the purpose of the firm. In a partnership there is a community of interest in which all the partners take in the property of the firm. But that does not mean that during the subsistence of the partnership a particular partner has any proprietary interest in the assets of the firm. Every partner of the firm has right to get his share of profits till the firm subsists and he has also a right to see that all the assets of the partnership are applied to and used for the purpose of partnership business. Section 29 of the said Act also shows that he can transfer his interest in the firm either absolutely or partially. He has also the right to get the value of his share in the net asset of the firm after the accounts are settled on dissolution. All these rights of a partner show that he has got a marketable interest in all the capital assets of the firm including the goodwill asset even during the subsistence of the partnership. This interest is property within the meaning of section 2(15) of the Act as mentioned hereinbefore. Our attention was drawn to the decision of the King 's Bench Division in the case of Attorney General vs Boden and Another, , in support of the contention on behalf of the revenue. There the Court was concerned with section 1 of the Finance Act, 1894 of United Kingdom. By the said provision, estate duty was, except as in the Act provided, payable upon the principal value of all property which passes on the death of every person dying after the 54 date therein mentioned. By seation 2, sub section (1), property passing on the death of the deceased was deemed to include. .(b) property in which the deceased had an interest ceasing on the death of the deceased, to the extent to which a benefit accrues or arises by the cesser of such interest;. (c) property which would be required on the death of the deceased to be included in an account under section 38 of the Customs and Inland Revenue Act, 1881, as amended by section 11 of the Customs and Inland Revenue Act, 1889. There, a father and his two sons carried on the business of lace or plain net manufacturers under a deed of partnership which included covenants (among others) to the following effect: Neither of the sons was, without the consent of the father, to be directly or indirectly engaged in any trade or business except on account and for the benefit of the partnership; both the sons were bound to give so much time and attention to the business as the proper conduct of its affairs required; the father was not bound to give more time or attention to the business then he should think fit; if the father should die his share was to accrue to the sons in equal shares subject only to their paying out to his representatives the value of his share and interest at his death as ascertained by an account to be made as on the day of his death with all proper valuations, but without any valuation of or allowance for goodwill, which goodwill was to accrue to the sons in equal shares. The father died, the value of his share and interest at his death was ascertained by an account taken as directed by the deed of partnership without any valuation of or allowance for goodwill. The share and interest so ascertained amounted to a large sum, and estate duty was paid on that sum. The Crown claimed estate duty on the value of the father 's share in the goodwill on the ground that it was (1) property which passed on the death of the father within section 1 of the Finance Act, 1894, or (2) property in which the deceased had an interest ceasing on his death in which a benefit accrued or arose to the sons by the cesser of that interest within section 2, sub section 1(b) of the Act, or (3) property passing under a settlement by deed whereby an interest for life was reserved to the father, and therefore property which would be required on the death of the father to be included in an account under section 38 of the Customs and Inland Revenue Act, 1881, as amended by section 11 of the Customs and Inland Revenue Act, 1889, as further amended by and within the provision of section 2, sub section 1(c), of the Finance Act, 1894, or (4) an interest provided by the father in which a beneficial interest accrued or arose by survivorship on his death within section 2, sub section 1(d) of the Act. 55 The Court deciding on the evidence that the goodwill of the business was of small value held that, having regard to the obligation of the sons under the partnership deed, the share and interest of the father in the goodwill of the busines passed on the death of the father to the sons by reason only of a bona fide purchase for full consideration in money 's worth paid to the father for his own use and benefit, within the meaning of section 3, sub section(1) of the Act. It was further held that the share and interest of the father in the goodwill of the business was not (1) property which passed on the death of the father within the meaning of section 1 of the Act, nor (2) an interest for life reserved to the father within the meaning of section 38, subsection 2(c) of the Customs and Inland Revenue Act, 1881, as amended by section 11 of the Customs and Inland Revenue Act, 1889. It was further held that it was a benefit accruing or arising to the sons by the cesser of an interest which the father had in property and which ceased on his death within section 2 sub section 1(b) of the Act. The High Court, on the analysis of this case which was placed before it, came to the conclusion that clause 10 of the present partnership deed with which we are concerned is entirely different. In the partnership agreement in Boden 's case, the interest of the deceased passed to his legal representatives immediately after his death because his share was to accrue to his partnership who were his sons subject only to their paying to his legal representatives the value of their share as on the date of death ascertained by proper valuation. This decision, in our opinion, must be understood in the light of the facts of that case and though there is a ring of similarity with the facts of the present case. Though clause 10 of the present agreement is different on the aspect of section 7 of the Act, this decision certainly supports the revenue 's contentions. In Perpetual Executors and Trustees Association of Australia Ltd. vs Commissioner of Taxes of the Commonwealth of Australia (supra) (E.D) the Privy Council had to deal with a case where the principal asset of a testator was his interest in a partnership pursuant to a deed of partnership which, inter alia, conferred option on the surviving partners to purchase the testator 's share in the capital on his death and further provide that "in computing the amount of purchase money payable on account of the exercise of any option, no sum shall be added or taken into account for the goodwill. " It was held by the Privy Council that the whole of the testator 's interest including goodwill was assessable to duty. In so far as the Boden 's case decided that the 56 goodwill did not pass was dissented from. But the moot question is, what happens to the share of the partner in the goodwill of the firm. Clause 10 of the partnership deed in the instant case states as indicated before that the firm shall not stand dissolved on the death of any of the partners. Therefore death of any of the partners will not dissolve the partnership firm and so long as partnership firm exists, goodwill as an intangible asset will belong to all the partners. What the clause says that on the death of the partner, the partner dying shall have no right whatsoever in the goodwill of the firm. It is clear, there fore, that goodwill exists up to the death among the partners. If it does, then the property in the goodwill will also exist in the partners. After his death, the partner shall have no right. It means to convey that as a result of inheritance, the heirs of the partners will not get any share but it cannot evaporate nor can the parties by agreement defeat the rights of the revenue. The very moment life ceases, the right of the deceased in the asset ceases and at that moment the property shall pass and/or shall be deemed to pass on. Jawaharlal Nehru in 'The Discovery of India ' quotes Aurobindo Ghose thus: "Aurobindo Ghosh writes comewhere of the present as 'the pure and virgin moment ' that razor 's edge of time and existence which divides the past from the future, and is, and yet, instantaneously is not. The phrase is attractive and yet what does it mean? The virgin moment emerging from the veil of the future in all its naked purity, coming into contact with us, and immediately becoming the soiled and stale past. Is it we that soil it and violate it? Or is the moment not so virgin after all, for it is bound up with all the harlotry of the past?" (1983 Impression p. 21) So therefore in that razor 's edge of time and existence which divides the past from the future, and is, and yet, instantaneously is not, the property indubitably passes on, to whom depends upon the facts and circumstances of a particular case. If property exists, as it must as the clause does not and indeed cannot say that goodwill vanishes, then share of the partner exists. If that is so then the title to that property cannot be in the vacuum. The High Court at page 309 of the report has observed that interest of a dying partner automatically comes to an end on his death. The High Court further stated that if an interest in any property came 57 to an end at a particular point of time, nothing survived which could be inherited by the heirs. We are unable to accept this position. The moment the life comes to an end, 'the razor ' edge of time and existence which divides the past from the future, and is, and yet, instantaneously is not, ' at that time property passes or is deemed to pass. The goodwill of the firm after the death of the dying partner does not get diminished or extinguished. Whoever has the benefit of that firm has the benefit of the value of that goodwill. Therefore if by any arrangement, for instance, clause (10) of the partnership agreement in the instant case, the heirs do not get any share in the goodwill, the surviving partners who will have the benefit of the partnership will certainly have that benefit. The High Court was right in observing at page 312 of the report that section 7 of the Act might apply to the facts of a given case if it could be shown that there was a cesser of any interest resulting in some form of benefit. Indeed in this case whoever gets the partnership firm is the gainer. Therefore, as a result of the death of the dying partner, there is cesser of interest as well as accrual or arising of benefit of the said cesser. It is well settled that during the subsistence of the partnership, no partner can claim any specific share in any particular items of the partnership assets. A partner 's interest in running partnership is not specific and is not confined to any specific item of partnership property but that does not mean that the partner has no interest in any individual asset of the firm. His interest obviously extends to each and every item of firm 's asset. See the observations in the case of Addanki Narayanappa & Anr. vs Bhaskara Krishnappa and 13 Ors.; , 3 S.C.R. 400. So the goodwill of the firm was an asset in which dying partner had a share. It passed from the death of the dying partner and the beneficiary of such passing would be one who by virtue of the partnership agreement would be entitled to the value of that asset. The question is how should such asset be valued? Under the Act, the levy of the estate duty is on every asset that will pass on the death of the deceased. Part V of the Act deals with the valuation of assets that is chargeable to tax under the Act. Sub section (1) of section 36 provides that the principal value of any property shall be estimated to be the price which, in the opinion of the Controller, it would fetch if sold in the open market at the time of the deceased 's death. Subsection (2) of section 36 further stipulates that in estimating the principal value under this section the Controller shall fix the price of the property according to the market price at the time of the deceased 's 58 death and shall not make any reduction in the estimate on account of the estimate being made on certain assumptions. Section 40 deals with the valuation of benefits from interests ceasing on death. It has been canvassed before the High Court on behalf of the accountable person and it found favour with the High Court that clause (b) of section 40 of the Act which deals with the valuation of benefit of interest arising on death would be wholly inapplicable with the facts and circumstances of this case. We are unable to accept this position. Difficulties in making apportionment does not make a taxable item non taxable. See in this connection the observations of this Court in Commissioner of Income tax, Madras. vs Best and Co. (Private) Ltd., Reliance was placed on behalf of the accountable person on a decision of the Judicial Committee in Attorney General of Ceylon vs AR. Arunachalam Chettiar and Others, 34 I.T.R. 20 E.D. The facts of that case and the clauses with which the Judicial Committee was concerned there were entirely different. There the son had merely a right to be maintained by the Karta out of the common fund to an extent in the Karta 's absolute discretion and there was no basis of valuation which in relation to such an 'interest ' would conform to the scheme prescribed under section 17(6) of the Ordinance with which the Judicial Committee was concerned. A full bench of the Madras High Court in the case of Alladi Kuppuswami vs Controller of Estate Duty, Madras, , had to construe the effect of a Hindu Women 's Rights to Property Act, 1937 and to consider the nature of the right of the widow in the property. It was found that at the death of the widow, there was no cesser of any interest she had in the joint family property and, in any case, her interest being entirely undefined, it lapsed on her death resulting in no change in the coparcenership as such and her interest could not properly be regarded as an interest in property within the meaning of section 7(1) of the Act. Our attention was drawn to certain observations of Veeraswami, C.J. at page 507 of the report wherein it was observed that it was only property that passed in the sense of passing hands by way of inheritance, or other form of devolution which seemed to attract section 5. Likewise, for purposes of section 6, it must be property which the deceased at the time of his death was competent 59 to dispose of. So also, for the application of the first part of section 7(1), it should be such interest in property, as on its cesser the benefit that accrues or arises should be referable to the whole or less than the whole income of the property. The Chief Justice had observed that the implication was that if that measure in terms of income of the property was not apposite to the cesser of an interest, it would not be an interest such as was contemplated by section 7(1) of the Act. It is not necessary to examine this proposition in any greater detail because in our opinion under section 5 of the Act read with section 36, valuation can be made in the instant case. The Madras High Court in Controller of Estate Duty, Madras vs Ibrahim Gulam Hussain Currimbhoy, , observed that the goodwill being an asset of the firm belonged to the firm, i.e., to all the partners, and the death of the deceased partner did not extinguish his share in the goodwill but resulted in the augmentation of the interest of the surviving partners in the goodwill in view of clause 14 of the partnership deed in that case. Clause 14 was as follows: "The retiring partner or the legal representatives of the deceased partner shall not be entitled to the goodwill of the business as the surviving or continuing partners alone shall be entitled to the goodwill and to continue to carry on the business under the same name and style. " And hence there was a passing of the deceased 's share in the goodwill even if there was no devolution of the deceased 's interest in the goodwill on the legal representatives. The interest in the goodwill which the deceased possessed and could dispose of along with his entire interest in the firm at the time of his death came to devolve on the surviving partners and their share in the goodwill was augmented to the extent of the share of the deceased as per clause 14 of the partnership deed in that case and the Madras High Court held that section 5, of the Act applied. Section 5, we have noted, is applicable in the instant case in the sense that property passed on the death of the deceased partner and if that is so, section 40 would not have any application in the valuation. On this aspect, the Madras High Court was unable to agree with the Gujarat High Court 's decision under appeal. The Madras High Court relied on the decision of this Court in Khushal Khemgar Saha vs Mrs. Khorsed Banu, [1970]3 S.C.R. 689. Our attention was also drawn to a decision of the Madras High 60 Court in the case of Smt. Surumbayi Ammal vs Controller of Estate Duty, Madras, But the question under controversy was different in that case and no useful purpose would be served by examining that case in detail. The full bench of Punjab and Haryana High Court in the case of State vs Prem Nath, , held that the goodwill of a firm was an asset of the firm, the share of the deceased partner in which, along with his share in the other assets of the firm, devolved for the purposes of estate duty, on his death, upon his legal representatives notwithstanding any clause in the deed of partnership to the effect that the death of a partner should not disolve the firm and that the surviving partners were entitled to carry on the business on the death of the partner. The Punjab & Haryana High Court noted that the decision under appeal of the Gujarat High Court did not consider the question whether the devolution of the goodwill on the surviving partners on the death of the deceased partner was itself not sufficient to constitute passing of the property within the meaning of section 5 of the Act. It noted that this view of the Gujarat High Court was contrary to the Privy Council 's decision referred to hereinbefore and that of the Madras High Court 's view noted earlier. The Bombay High Court in the case of Controller of Estate Duty, Bombay City I vs Fakirchand Fatehchand Sachdev, , came to the conclusion that the charging provisions and the computation provisions in the constituted an integrated scheme, and if in a given case it was not possible to compute the value of a particular property passing on death, then that property did not become exigible to the charge of estate duty. Where certain property was deemed to pass under section 7(1) of the Act, estate duty thereon would be chargeable under section 5, but the value of the benefit accruing or arising from the cesser of an interest ceasing on the death of the deceased would have to be computed under section 40 and if it could not be computed, then such a benefit was not liable to the charge of estate duty. The goodwill of a firm was one of the properties or assets of a firm. Merely because it was an intangible asset, it did not stand on a diferent footing from the tangible assets of the firm, but in making up the final accounts it had to be taken together with the other assets of the firm in arriving at the value of the total assets and for deducting therefrom the liabilities as provided by law and in paying to the partners their share in the balance so arrived at. Where a partnership was dissolved by the death of a partner, his share in the firm 61 passed on his death to his legal representatives. Where a partnership A was not dissolved on the death of a partner but the surviving partners became entitled to continue the partnership business, the deceased partner 's share passed to his surviving partners subject to their making payment to the legal representatives of the deceased partner of the amount of the value of his share in accordance with the provisions of the deed of partnership. A partner did not have a defined share in the goodwill of the firm and the estate duty authorities could not regard it as a separate property by itself apart from the other assets and liabilities of the firm and include its value in the estate of a deceased partner under section section The Bombay High Court could not agree with the view of the Gujarat High Court under appeal. In the case of Controller of Estate Duty vs Kanta Devi Taneja, , the Gauhati High Court held that passing of property was not a mere change of source or title but change of beneficial possession or enjoyment. The interest of a partner in a partnership firm was property within the meaning of section 2(15) of the , and such interest extended to the share of the partnership including goodwill. Therefore, on the death of a partner, his interest in the entire unit of the firm including goodwill passes, irrespective of the provisions of the partnership deed as to its final devolution. The Calcutta High Court in the case of Controller of Estate Duty, West Bengal vs Annaraj Mehta and Deoraj Mehta, had occasion to consider this question and held that what passed on the death of a partner was his share in the firm, that is, his interest in the entire unit of the firm. This had to include goodwill. The fact that such interest might devolve not on the legal representatives but on a different group or category of persons or that from the goodwill of the legal representatives might be excluded would not make any difference for the purpose of assessment to estate duty. The entirety of the the interest of the deceased partner that would pass, which necessarily included goodwill, would be includible in the estate. The valuation of such entire interest had to be determined as provided under section 36 of the read with rule 7(c) of the Estate Duty Rules, 1953. Goodwill as such could not be valued, according to the Calcutta High Court, for inclusion in the estate of the deceased for purposes of estate duty. The High Court observed at page 552 of the report as follows: "We hold that the Tribunal 's finding that the goodwill in 62 the firm, Messrs. Ashok Foundary and Metal Works, did not pass on the death of the deceased is incorrect but the finding that the valuation of the goodwill as such could not be included in the estate of the deceased for the purpose of the estate duty is correct. Goodwill being part of the entire assets of the firm, the entire share of the deceased therein has to be valued in accordance with law and this value has to be included in the estate for levy of estate duty." The Allahabad High Court in the case of Controller of Estate Duty vs Smt. Ram Sumarni Devi, , followed the decision under appeal and was of the view that the goodwill could not be included in the value of the property passing on the death of a partner. In P.T. Abdul Sattar vs Controller of Estate Duty, , the Kerala High Court came to the conclusion that under clause 15 of the deed it had to construe, provided that in the event of death or retirement of a partner, such deceased or retiring partner would not be entitled to any goodwill of the firm. A had died in 1969 and the Asst. Controller held that the interest of A in the goodwill of the firm passed on his death and this was upheld by the Tribunal. It was held by the High Court that under clause 15, the interest of A in the goodwill of the firm automatically came to an end on his death. Property in the goodwill did not, therefore, pass on his death. We are, however, for the reasons we have indicated before, unable to accept this conclusion. In the aforesaid view of the matter, we are of the opinion that the share of the deceased in the partnership did not evaporate or disappear. It went together with the other assets and should be valued in the manner contemplated under rule 7(c) of the Estate Duty Rules as indicated in the judgment of the High Court of Calcutta in Controller of Estate Duty, West Bengal vs Annaraj Mehta and Deoraj Mehta (supra) . The second question must, therefore, be answered in the affirmative and in favour of the revenue. The appeal is, therefore, allowed. In the facts and circumstances of the case, parties will pay and bear their own costs. Consequential orders in accordance with law and in consonance of this decision should be passed by the Tribunal upon notice, to all necessary parties. A.P.J . Appeal allowed.

One N. Kanti Lal had 28% share in a partnership firm. The Partnership Deed, by cl. (10) provided that the firm shall not stand dissolved on death of any of the partners and the partner dying shall have no right whatever in the goodwill of the firm. On his death, the respondent accountable person filed necessary return under the without including the value of the share of the deceased in the goodwill of the firm. The Assistant Controller of Estate Duty, however, held that the share of the deceased in the goodwill of the firm was liable to be included in the principal value of his property and added the same to the value of the interest which the deceased had in the partnership assets. The Appellate Controller of Estate Duty confirmed the aforesaid order in appeal. The accountable person preferred appeal before the Appellate Tribunal contending: (1) that the deceased had no interest in the assets of the firm and hence his share in the goodwill did not pass at all; (2) that in view of cl. (10) of the Partnership Deed the share of the deceased partner in the goodwill did not pass and as such was not liable to the charge of estate duty; and (3) that when a partnership was a going concern, there could not be any separate valuation of the goodwill which went with the running business. The Tribunal rejected all the contentions and held that in spite of cl. (10) of the partnership agreement, the value of the goodwill to the extent of the share of the deceased passed on his death and it was liable to be charged to estate duty. 46 On reference by the Tribunal, the High Court held: (i) that the interest of the deceased in the firm was property within the meaning of the provisions of the ; and (ii) that the value of the interest of the deceased in the partnership firm would not include the goodwill of the partnership firm. This Court, on the question: 'Whether the value of the interest of the deceased in a partnership firm would include the goodwill of the partnership firm and liable to estate duty ', allowing the Appeal of the Revenue, ^ HELD: 1. In a partnership there is a community of interest in which all the partners take in the property of the firm. But that does not mean that during the subsistence of the partnership a particular partner has any proprietary interest in the assets of the firm. Every partner of the firm has a right to get his share of profits till the firm subsists, and he has also a right to see that all the assets of the partnership are applied to and used for the purpose of the partnership business. All these rights of a partner show that he has got a marketable interest in all the capital assets of the firm including the goodwill asset even during the subsistence of the partnership. This interest is 'property ' within the meaning of section 2(15) of the . [53 D F] 2. The goodwill of the firm is an asset in which the dying partner has a share. It passes on the death of the dying partner and the beneficiary of such passing would be one who by virtue of the partnership agreement would be entitled to the value of that asset. The fact that such interest might devolve not on the legal representatives but on a different group or category of persons or that from the goodwill the legal representatives might be excluded, would not make any difference for the purpose of assessment of estate duty. The entirety of the interest of the deceased partner that would pass, which necessarily included goodwill, would be includible in the estate. The valuation of such entire interest has to be determined as provided under section 36 of the read with Rule 7(2) of the Estate Duty Rules, 1953. [61 E G] 3. The share of the deceased in the partnership did not evaporate or disappear. It went together with the other assets and should be valued in the manner contemplated under Rule 7(c) of the Estate Duty Rules. The goodwill of the firm after the death of the dying partner does not get diminished or extinguished. Whoever has the benefit of that firm has the benefit of the value of that goodwill. Therefore, if by any 47 arrangement, for instance, clause (10) of the partnership agreement in the instant case, heirs do not get any share in the good will, the surviving partners who will have the benefit of the partnership will certainly have that benefit. Therefore, as a result of the death of the dying partner, there is cesser of interest as well as accrual or arising of benefit of the said cesser. B D] 4. Difficulties in making apportionment do not make a taxable item non taxable.[58 C] Perpetual Executors and Trustees Association of Australia Ltd. vs Commissioner of Taxes, = 25 I.T.R. (ED) 47, Attorney General vs Boden and Another, 1912 (I) K.B. 539, Addanki Narayanappa & Anr. vs Bhashara Krishnappa and 13 ors. , A.I.R. 1966 S.C. 1330=[1966] 3 SCR 400, Commission of Income tax, Madras vs Best and Co. (Private) Ltd., 60 I.T.R.11 and Khushal Khemgar Shah vs Mrs. Khorshed Banu; , relied upon. Controller of Estate Duty, Madras vs Ibrahim Gulam Hussain Currimbhoy, , State vs Prem Nath, , Controller of Estate Duty, Bombay City I vs Fakirchand Fatchchand Sachdev, , Controller of Estate Duty vs Kanta Devi Taneja, and Controller of Estate Duty, West Bengal vs Annaraj Mehta and Deoraj Mehta, , approved. Attorney General of Ceylon vs AR. Arunachalam Chettiar and Others, E.D., Alladi Kuppuswami vs Controller of Estate Duty, Madras, and Smt. Surumbayi Ammal vs Controller of Estate Duty, Madras, , distinguished. Controller of Estate Duty vs Smt. Ram Sumarni Devi, and P. Abdul Sattar vs Controller of Estate Duty, , overruled.

Appeal No. 605 of 1963. Appeal by special leave from the judgment and order dated the January 24, 1961 of the Punjab High Court in Income tax Case No. 16 of 1956. Niren De, Additional Solicitor General, Gopal Singh and R. N. Sachthey, for the appellant. 178 Bishan Narain, O.C. Mathur and J. B. Dadachanji, for the respondent. The Judgment of Sarkar and Bachawat JJ. was delivered by Bachawat J. Mudholkar J, delivered a dissenting Opinion. Bachawat, J. This appeal by special leave is from an order of the Punjab High Court rejecting an application by the Commissioner of Income tax Punjab under section 66(2) of the Indian Income tax Act, 1922. On April 21, 1953, 14 partners of the firm of Messrs. Chander Bhan Harbhajan Lal of Rupar (hereinafter referred to as the assessee firm) constituted under the instrument of partnership dated December 5, 1952, applied to the Income tax Officer, Project Circle, Ambala for registration of the firm under section 26 A of the Indian Income tax Act. It may be. mentioned at this stage that there was another firm of the name of Chander Bhan & Co., of Ferozepore (hereinafter referred to as the Ferozepore firm), consisting of 8 partners and constituted under a deed dated June 14, 1952, which provided inter alia: "If any one of the executants enters into business individually or along with another person all the partners of the firm shall be entitled to the profit and liable for the loss, accruing from that business according to the shares hereinbefore mentioned. " One Gosain Chander Bhan was a partner of both the assessee firm and the Ferozepore firm. In course of proceedings arising out of the application for registration of the assessee firm under section 26 A, Harbhajan Lal, one of its partners, stated on January 30, 1954 : "I Harbhajan Lal son of Shri Ram Chand of Rupar solemnly declare that firm M/s. Chander Bhan Harbhajan Lal consisted of 14 partners as mentioned in the return and deed of partnership. Gosain Chander Bhan was partner not in his individual capacity but on behalf of the firm M/s. Gosain Chander Bhan and Company Ferozepur having about six partners. Other partners are partners in their individual capacity. ' It seems that other partners of the assessee firm made similar statements on February 27, 1954. The capital of the assessee firm was supplied by Gosain Chander Bhan. It appears that Gosain Chander Bhan had taken the capital from the Ferozepore firm, and the amount was shown as an item in his accounts with the Ferozepore firm. 179 By his order dated February 27, 1954, the Income tax Officer rejected the application under section 26 A. He held that (1) the deed dated December 5, 1952 did not specify the date of the constitution of the assessee firm; (2) some of the parties to deed having no experience in the business of the firm were not really partners therein, and the number of partners in the firm had been artificially increased with a view to reduce the taxable liability; (3) the firm was not genuine, as it had no banking account, did not possess the income tax clearance certificate, did not notify its constitution to the P.W.D., and payments were received from the P.W.D. in the name of Harbhajan Lal. On appeal, the Appellate Assistant Commissioner, Ambala Branch,. set aside all these findings of the Income tax Officer. The correct ness of the decision of the Appellate Assistant Commissioner on! these points is no longer challenged. The Income tax Officer so held that thought the deed dated December 5, 1952 stated that Gosain Chander Bhan was the partner having 6/16th share, in reality the Ferozepore firm was the partner of the assessee firm having 6/16th share therein and consequently, the assessee firm was illegally constituted, because (1) the Ferozepore firm could not legally be a partner in the assessee firm; (2) the total number of partners of the assessee firm was 21; and (3) moreover, the individual shares of the eight partners of the Ferozepore firm were not specified in the deed dated December 5, 1952. On these findings, the Income tax Officer rejected the application 'Under section 26 A. On appeal, the Appellate Assistant Commissioner set aside these findings, and held that Gosain Chander Bhan was the partner of the assessee firm in his individual capacity and not as representative of and on behalf of all the partners of the Ferozepore firm. He held that Gosain Chander Bhan had merely agreed to share his profits and losses in the assesses firm with his other partners of the Ferozepore firm, that such an agreement did not make the other partners of the firm, partners in the assessee firm, and the effect of the agreement was to constitute a sub partnership only. On further appeal, the Income tax Appellate Tribunal, Delhi Branch, upheld these findings of the Appellate Assistant Commissioner, and held that those findings were supported by the decisions in Commissioner of Income tax vs Messrs. Agardih Colliery(1) and Commissioner of Income tax vs Laxmi Trading Company(2). The Commissioner of Income tax, Punjab then applied to the Appellate Tribunal under section 66(1) of the Indian Income tax Act (1) A.I.R. 1955 Patna 225. (2) [1953]24 I.T.R. 173. 180 requiring the Tribunal to refer the following questions to the Punjab High Court: "1. Whether the Income tax Appellate Tribunal was right in applying the decision of the Patna High Court in the case of Commissioner of Income tax versus M/s. Agardih Colliery Company and of the Punjab High Court in the case of Commissioner of Income tax versus Lakshmi Trading Company to the facts of this case. If the answer to question No. 1 is in affirmative whether the rulings noted above lay down a correct law. Whether there is any material to show that there was a sub partnership formed by Gosain Chander Bhan with other persons at Ferozepore. Whether in the circumstances of the case the correct status of the assessee was firm or association of persons and whether registration under section 26 A of the Indian Income tax Act could be allowed in this case. " By its order dated September 5, 1955, the Tribunal rejected the application, and held that the questions were concluded by judicial decisions and no useful purpose will be served by referring them again to the High Court. On September 18, 1956, the Commissioner of Income tax applied to the Punjab High Court under section 66(2) of the Indian Income tax Act for an order directing the Tribunal to refer the aforesaid questions to the High Court, At the hearing of the application before the High Court, Counsel for the Commissioner of Income tax gave up questions Nos. 2 and 4, and submitted that the following two questions of law arose for decision : "(a) is there any material on the record to support the finding that Gosain Chander Bhan was the real partner of the assessee firm and is not a partner in a representative capacity representing all the partners of Gosain Chander Bhan and Company of Ferozepore, and (b) whether the present is a case of sub partnership to which the two cases referred to in the order by the Tribunal apply ?" By its order dated January 24, 1961, the High Court dismissed the application, and held that the questions of law were well settled. The Commissioner of Income tax now appeals to this Court by special leave. 181 Counsel for the appellant contended that all the partners of the Ferozepore firm were the partners in the assessee firm having, regard to (1) the fact that the capital of the assessee firm was secured by Gosain Chander Bhan from the Ferozepore firm, (2) the clause in the deed of partnership dated June 14, 1952 under which all the partners of the Ferozepore firm were entitled together profit and liable for the loss in respect of the share of Gosain Chander Bhan in the assessee firm, and (3) the statement of Harbhajan Lal and other partners of the assessee firm that Gosain Chander Bhan was a partner in the assessee firm not in his indivi dual capacity but on behalf of the Ferozepore firm. We are unable to accept this contention. The real question before us is whether any substantial question of law arises out of the order of the Tribunal. We think that no such question arises. The deed dated December 5, 1952 clearly stated that Gosain Chander Bhan and 13 other parties to the deed were the partners of the assesee firm. On the face of the deed, it does not appear that Gosain Chander Bhan was a partner in a representative capacity on behalf of the Ferozepore firm, or that the Ferozepore firm was the partner in the assessee firm. On the materials on the record, the Appellate Tribunal was entitled to come to the conclusion that Gosain Chander Bhan and not the Ferozepore firm was the partner in the assessee firm. The capital of the assesses firm was supplied by Gosain Chander Bhan. Gosain Chander Bhan in his turn had taken the amount of the capital from the Ferozepore firm, but there is no evidence to show that he took the money otherwise than in his individual capacity. The clause in the partnership deed constituting the Ferozepore firm to the effect that all the partners of the Ferozepore firm are entitled to the profits and liable for the losses accrued in the share of Gosain Chander Bhan in the assesses firm may show that there is a partnership between Gosain Chander Bhan and other partners of the Ferozepore firm in respect of the share of Gosain Chander Bhan in the profits and losses of the assessee firm. This partnership, if any, between the members of the Ferozepore firm does not make the Ferozepore firm a partner in the assessee firm. The Ferozepore firm is not a party to the agreement of partnership constituting the assesses firm. Gosain Chander Bhan in his individual capacity could legally be a partner in the assessee firm, and the fact that he secured the capital from the Ferozepore firm, or that he entered into a partnership with the other members of the Ferozepore firm in respect of his share in the assessee firm does not show that the Ferozepore firm is a partner of the assessee firm, or that the assessee firm is not validly 182 Exporting Co.(1), Subba Rao, J. observed: "A partner of a firm can certainly secure his capital from any source or surrender his profits to his sub partner or any other person. Those facts cannot conceivably convert a valid partnership into a bogus one. " The statements of Harbhajan Lal and other partners of the assessee firm do not carry the matter any further. In the statement dated January 30, 1954, Harbhajan Lal clearly stated that the assessee firm consisted of 14 partners as mentioned in the deed of partnership dated December 5, 1952. It is true that he stated also that Gosain Chander Bhan was a partner not in his individual capacity but on behalf of the Ferozepore firm, but this statement must be read in the background of the clause in the partnership deed constituting the Ferozepore firm, under which the partners of the Ferozepore firm were entitled to the profits and liable for the losses in the share of Gosain Chander Bhan in the assessee firm. The statement fairly read shows that only the 14 persons mentioned in the deed dated December 5, 1952 were the partners in the assessee firm. If the 8 partners of the Ferozepore firm were partners in the asses see firm, Harbhajan Lal could not have stated 'that the number of the partners of the assessee firm was 14 only. Counsel for the appellant pointed out that the High Court erron eously assumed that the partnership deed constituting the Ferozepore firm was dated June 14, 1954, whereas, in fact, this partnership was dated June 14, 1952. Counsel for the appellant rightly pointed out that on the erroneous assumption that the partnership deed constituting the Ferozepore firm was executed after 'December 5, 1952 when the assessee firm was constituted, the High 'Court held that there was a sub partnership between Gosain Chander. Bhan and the other partners in the Ferozepore firm in respect of the share of Gosain Chander Bhan in the assessee firm. 'Counsel then contended that in law, a sub partnership can be entered only after the partnership is constituted, and, therefore, there was no sub partnership between the members of the Ferozepore firm in respect of the share of Gosain Chander Bhan in the assessee firm. In support of this contention counsel relied on the following passage in Lindley on Partnership, 12th Edn, pp. 99 100: "A sub partnership is as it were, a partnership within a partnership; it presupposes the existence of a partnership to which it is itself subordinate." (1) ; , 27. 183 We did not enquire into the correctness of counsel 's assumption that this passage is an authority for the proposition that there cannot be an agreement of sub partnership in anticipation of the head partnership coming into existence. But the question whether the relevant clause in the deed dated June 14, 1952 created a sub partnership in respect of the share of Chander Bhan in the assessee firm having regard to the fact that this deed was executed before the assessee firm came to be constituted is not material for the purpose of the case, and need not be decided. The clause regulated the relationship of the partners of the Ferezepore firm inter se, and created a partnership between them in respect of the share of Gosain Chander Bhan in the assessee firm. Assuming, without deciding that this partnership was not, strictly speaking, a subpartnership, it does not follow that the partners of the Ferozepore firm became partners in the assessee firm. By reason of this clause vis a vis the partners of the Ferozepore firm, Gosain Chander Bhan could be reagrded as their representative in the assessee firm; nevertheless, they were strangers to the contract of partnership constituting the assessee firm and did not become partners therein. In Commissioner of Income tax vs Bagyalakshmi & Co.(1), Subba Rao, J. observed: "A contract of partnership has no concern with the obligation of the partners to others in respect of their shares of profit in the partnership. it only regulates the rights and liabilities of the partners. A partner may be the Karta of a joint Hindu family; he may be a trustee; he may enter into a sub partnership with others; he may under an agreement, express or implied, be the representative of a group of persons; he may be a benamidar for another. In all such cases he occupies a dual position. Qua the partnership, he functions in his personal capacity; qua the third parties, in his representative capacity. The third parties, whom one of the partners repre sents, cannot enforce their rights against the other partners nor the other partners can do so against the said third parties. Their right is only to a share in the profits of their partner representative in accordance with the terms of the agreement, as the case may be." Quite plainly, the relevant clause in the deed dated June 14, 1952 was not part of the agreement of partnership dated December 5, 1952 constituting the assessee firm, and did not affect the Tight of the partners of the assessee firm, to claim registration of (1) , 26. 184 the assessee firm under section 26 A. It is not possible to say that there are no materials on the record to support the finding that Gosain Chander Bhan was a partner of the assessee firm in his individual capacity and not as representing the Ferozepore firm. The question whether there was a sub partnership between the members of, the Ferozepore firm in respect of the share of Gosain Chander Bhan is not material because assuming that there was no sub partnership the members of the Ferozepore firm did not become partners in the assessee firm by virtue of the relevant clause in the deed dated June 14, 1952 or otherwise. We are, therefore, satisfied that no substantial question of law arises out of the order of the Appellate Tribunal. Counsel for the appellant submitted that as a question of law arose out of the order of the Tribunal, the High Court was bound to call for a statement of case. We are not inclined to accept this contention. Where, as in this case, the question of law is not substantial and the answer to the question is self evident, the High Court is not bound to require the Tribunal to refer the question. In our opinion, the High Court in the exercise of its discretion under section 66(2) rightly rejected the appellant 's application. In the result, the appeal is dismissed with costs. Mudholkar, J. This is an appeal from a judgment of the high Court of Punjab rejecting a petition made by the Commissioner of Income tax, Punjab under section 66(2) of the Indian Income tax Act, 1922 for calling upon the Income tax Appellate Tribunal to refer certain questions of law to the High Court. The relevant facts are these On December. 29, 1948 Gosain Chander Bhan and four others entered into a partnership for carrying on the business of contractors in the name of "Gosain Chander Bhan & Co." The partnership was entered into at Ferozepore and Gosain Chander Bhan wag a major shareholder in the firm. By a deed of partnership dated June 14, 1952 the firm was re constituted and three other persons were admitted as partners therein. old name, however, was continued. One of the terms of the partnership was that if any work was carried on by any one of the partners individually or in partnership with others, the profits and losses arising out of that work would be divided amongst all the partners in proportion of their shares in the firm. On December 5, 1952 a partnership firm bearing the name of "Messrs. Chander Bhan Harbhajan lal" was formed at Rupar. The dead of partnership sets out the names 185 object of the firm was to carry on business similar to that carried on by Gosain Chander Bhan & Co. It may be mentioned that in this firm also Gosain Chander Bhan was the major shareholder. For convenience we would call the firm constituted on June 14, 1952 as the Ferozepore firm and the one constituted on December 5, 1952 as the Rupar firm. On April 21, 1953 an application was presented by the part ners of the Rupar firm, accompanied by the deed of partnership dated December 5, 1952 before the Income tax Officer, Ambala for registration of the firm under section 26 A of the Act for the assessment year 1953 54. The Income tax Officer examined the partners constituting the firm and recorded their statements in order to ascertain the true position with regard to the constitution of the firm. Harbhajan Lal in his statement dated January 30, 1954 and the other partners in their statements dated February 27, 1954 admitted that Gosain Chander Bhan had entered into the partnership not in his individual capacity but on behalf of the Ferozepore firm. The Income tax Officer also found that the funds invested in the Rupar firm in the name of Gosain Chander Bhan were also provided by the Ferozepore firm. Upon these and some other facts he came to the conclusion that the deed of partnership dated December 5, 1952 did not specify the real partners of the firm and, therefore, the firm cannot be registered. He further came to the conclusion that as in reality all the partners of the Ferozepore firm and not Gosain Chander Bhan alone, were also partners along with 13 other persons in the Rupar firm, the total number of partners exceeded 20. Such a partnership being invalid in law the firm could not be registered under section 26A of the Act. He, therefore, dismissed the application by his order dated February 27, 1954. In appeal his order was, however, reversed by the Appellate Assistant Commissioner by his ' order dated August 12, 1954. The appeal preferred therefrom by the Income tax Officer before the Income tax Appellate Tribunal (Delhi Branch) was dismissed by it by its order dated September 5, 1955. In doing so the Tribunal based itself on the decisions in The Commissioner of Income tax vs Agardih Colliery Company(1) and Commissioner of Income tax vs Laxmi Trading Co.(2) The Commissioner of Income tax then applied to the Tribunal under section 66(1) to refer to the High Court four questions of law. The Tribunal, however, rejected the application on March 5, 1956. The Commissioner thereupon preferred a petition before the High Court under section 66(2) for (1) A.I.R. 1955 Patna 225. L 9 Sup C T /66 13 (2) 186 directing the Tribunal to refer four question of law to it. At the hearing, however, only the following two questions were pressed on his behalf : "(1) Whether there is any material on the record to support the finding that Gosain Chander Bhan was the real partner of the assessee firm and was not a partner in the representative capacity representing all the partners of Gosain Chander Bhan and Company of Ferozepur ? (2) Whether the present is a case of sub partnership to which two cases A.I.R. 1935 Patna 225 and referred to in the order of the Tribunal apply?" The High Court, as already stated, dismissed the application and now the matter is before us by special leave. Before us the learned Additional Solicitor General, appearing for the department, has raised the following two points : (1) that there was a question of law which it was incumbent on the Tribunal to refer to the High Court; (2) that both the Tribunal and the High Court proceeded to decide the question of law on erroneous premises. The question of law, according to learned Additional Solicitor General, is : "whether on the facts and circumstances of the case the firm Chander Bhan Harbhajan Lal was registrable under section 26A". It must be borne in mind that the question is not whether there was material on record on the basis of which the Tribunal could come to the conclusion that the firm was registrable but whether, upon the facts found it was registrable. In other words, the question is as to what is the cumulative effect of all the facts and not what is the effect of only some of the facts found. The contention of learned Additional Solicitor General is that when a question of law is said to arise the High Court is bound to call for a reference and it is immaterial that the question is settled already. If in the facts and circumstances of the case a question of Law arises, there is little doubt that under section 66(1) the Tribunal is bound to draw up a statement of the case and refer the question to the High Court. The Tribunal has no discretion in the matter. Where, however, the Tribunal refuses to do so and the High Court is moved under section 66(2) of the Act, the position 187 becomes different. Section 66(2) confers a discretion on the High Court and if the High Court is of the opinion that though a question of law arises it is not substantial or that it is well settled it can reject the petition. What we have, therefore, to ascertain is whether a question of law at all arises in this case and if so whether it is a substantial question of law. In order to ascertain whether a question of law arises it is necessary to ascertain the facts which have been found established by the Income tax authorities. I will recapitulate the facts found by the Income tax Officer. (1) The original firm Gosain Chander Bhan & Co., was formed at Ferozepore on December 29, 1948. (2) Gosain Chander Bhan had a major share therein. (3) This firm was dissolved and re constituted on June 14, 1952. (4) In the original firm there were only 5 partners including Gosain Chander Bhan while in the reconstituted firm there were 8 partners including Gosain Chander Bhan. (5) The largest share in the reconstituted partnership was that of Gosain Chander Bhan. (6) The partnership deed of December 5 1952 specified the names of 14 persons including Gosain Chander Bhan as partners but did not specify the names of all the partners of Gosain Chander Bhan & Co. of Ferozepore. (7) The funds invested by Gosain Chander Bhan in the Rupar firm came out of the funds belonging to the Ferozepore firm. (8) Harbhajan Lal and other partners of Rupar firm admitted that Gosain Chander Bhan was not a partner in the Rupar Firm in his individual capacity but had joined it on behalf of the Ferozepore firm. (9) The business carried on by the Ruper firm is similar to that carried on by the Ferozepore firm. None of these findings on questions of fact has, been negatived or upset by the Appellate Assistant Commissioner or by the Tribunal. These findings must, therefore, be taken as the basis for ascertaining whether a question of law arises, and if it does they have to be home in mind for deciding the question. At this stage 188 I would like to mention that the High Court committed an ob vious error in stating in its judgment that the re constituted Ferozepore partnership was formed on June 14, 1954, that is, after the Rupar partnership was formed. This error has obviously led it into a further error, that is, of coming to the conclusion that the Ferozepore partnership was a sub partnership in relation to the Rupar partnership. Now, ordinarily there can be a sub partnership only when there is already in existence another partnership. 'Since in point of fact the Rupar partnership came into existence after the formation of the Ferozepore partnership the latter cannot stand in relation to the former as a sub partnership. The law as stated in Lindley on Partnership at p. 99 is : "A sub partnership is as it were, a partnership within a partnership : it presupposes the existence of a partnership to which it is itself subordinate." The correctness of this statement of law is not assailed before us by either side. It is no doubt settled law that where an application for registration of a firm complies with the requirements of section 26 A and of the rules and it is found that the partnership is not genuine the Income tax Officer is not bound to admit the firm to registration. But it does not follow from this that for ascertaining whether the requirements of law have been satisfied and for ascertaining whether a firm is genuine or is bogus or that it has no legal existence the Income tax Officer must confine himself to the deed of partnership. He has power to examine the partners and to require them to adduce evidence for satisfying himself about the genuineness or otherwise of the firm and also for satisfying himself about compliance with the requirements of law. Paragraphs 2 and 3 of the order of the Appellate Assistant Commissioner, however, show that he has treated the recitals in the partnership deed of December 5, 1952 as conclusive of the question as to who were the real partners in the Rupar firm. I can find no discussion or even reference to the findings of the Income tax Officer which I have earlier summarised. No doubt in paragraph 4 he has referred to some of the facts found by the Income tax Officer and the inference drawn by him and rejected them. Leaving these facts out of account there are other facts which are relevant for consideration but they appear to have been ignored by the Appellate Assistant Commissioner. 'Ascertainment of the legal effect of those facts would in my judgment be a question of law. It is not disputed before us that the application for registra 189 tion should set out the names of all the persons who are real partners of the firm and, therefore it is incumbent on the Income tax authorities to ascertain whether any of the partners had joined the partnership in his individual capacity Dr as representing a group of persons. If, to the knowledge of the other partners he represents a group of persons, be they members of another partnership or a joint Hindu family, it would be a question for decision as to whether all those persons have thereby become partners and that would be a question of law. In paragraph 6 of his order the Appellate Assistant Commissioner seems to have had this in mind and it will be useful to quote the relevant portion of the paragraph : "There are two essential conditions before it can be stated that contractual relationship has been brought about between the partners which is the relationship of a partnership and the two conditions are that the partners must agree to share the profits of the business and the business must be carried on by all or any of them for all of them. There can in law be a partnership between the partner in a Head Firm and another individual in respect of the partner 's share in the Head Firm so as to entitle the partners in the sub firm to apply for registration thereof under section 26 A of the Indian Income tax Act. If several persons are partners and one of them agrees to share the profits derived by him with a stranger, this agreement does not make the stranger a partner in the original firm. The result of such an agreement is to constitute a sub part nership. It makes the parties to it partners inter se; it does not affect the other members of the principal firm. " The sole ground given by the Appellate Assistant Commis sioner for holding that Gosain Chander Bhan was a partner in the Rupar firm in his individual capacity is that the preamble to the partnership deed 'clearly sets out that the contracting parties were 14 and that Gosain Chander Bhan was a partner in his individual capacity. ' It is true that he has repelled some of the grounds given by the Income tax Officer in support of his conclusion but, as already stated, he has entirely omitted to consider other facts found by the Income tax Officer which bear directly on the point. It may be that the finding cannot be said to be based on no evidence but even so, as it has been arrived at by ignoring relevant facts, it is vitiated by an error of law. 190 The first sentence of Para 6 of the order, of the Appellate Assistant Commissioner quoted above paraphrases the provisions of section 4 of the Partnership Act and is unexceptionable. The rest of the quotation appears to have been lifted from the head note of the decision in Commissioner of Income tax, Punjab vs Laxmi Trading Co(1). The question which fell for decision in that case was "Whether there could in law be a partnership between a partner in a head firm and another individual in respect of the partner 's share in the head firm so as to entitle the partners in the sub firm to apply for registration thereof under section 26 A, Income tax Act, 1922?" and it was answered in the affirmative. A sub partnership can also, as stated by the learned Appellate Assistant Commissioner, apply for registration under section 26 A. But where does it all lead to ? Here the question which arises is whether the head firm as such has entered into partnership with another or whether only one of the partners of the head firm has entered into partnership with another. For, that is what the question really is. According to the appellant, the Ferozepore firm as a firm has become partner in the Rupar firm and not merely Gosain Chander Bhan. The learned Appellate Assistant Commissioner has not addressed himself to this aspect of the case. At the end of the paragraph the learned Appellate Assistant Commissioner has observed : "there is no data on the record to substantiate the finding of the Income tax Officer that the firm was not genuine in view of the local enquiries by him." That, however, is not the whole question. The whole question which arises in this case is whether in the facts and circumstances of this case the firm Chander Bhan Harbhajan Lal was registrable under section 26 A, the circumstances being that a partner of another and pre existing firm became a partner in Chander Bhan Harbhajan Lal on behalf of the partners of that other firm, that he had brought in funds belonging to that firm and that the new firm was to carry on business of the same kind as the old firm was carrying on. Further, the reasoning of the Appellate Assistant Commissioner would be pertinent only to a case of sub partnership. To put it somewhat differently the question is whether the application for registration reflects the true position as regards the real partners in the Rupar Firm. This has not been considered either by the Appellate Assistant Commissioner or by the Tribunal. (1) A.I.R. 1955 Pat. 191 The Tribunal merely referred to the decisions in Laxmi Trading Co. 's case (1) and in Agardih Colliery Co. 's case(2) and dismissed the department 's appeal. The latter is also a case of sub partnership and does not assist us in deciding the matter arising here. It is contended on behalf of the respondents that the question arising here has already been settled by three decisions of this Court. The first of these is Commissioner of Income tax, Madras vs Sivakasi Match Exporting Co., Sivakasi(3). In that case this Court held that the mere fact that one of the, partners of the firm seeking registration brought his capital from another firm of which he was one of the partners and the further circumstance that he shared the profits received by him from the former firm with his partners in the latter firm did not make the former partnership bogus. In the first place the circumstance that upon a certain set of facts this Court arrived at a particular decision would not necessarily make that a binding precedent even though the inference drawn by the Court upon which its judgment rests is one of law. In the second place we have here the fact that one of the partners of the firm seeking registration was a partner in his representative capacity and not merely a partner in his individual capacity. The next case relied on is Commissioner of Income tax, Ahmedabad vs Abdul Rahim & Co.(4) In that case this Court held that the circumstance that one of the partners was a benamidar for another does not justify a refusal to register the firm under section 26 A and reiterated the essential conditions which must be satisfied by the firm seeking registration which have been stated in Commissioner of Income tax, Bombay vs Dwarkadas Khetan & Co.(5) It does not advance the respondent 's case any further. The third decision is that in Commissioner of Income tax vs Bagyalakshmi & Co.(6). There Subba Rao J., speaking for the Court has observed : "A partner may be the karta of a joint Hindu family; he may be a trustee; he may enter into a sub partnership with others; he may, under an agreement, express or implied, be the representative of a group of persons; he may be a benamidar for another. In all such cases he occupies a dual position. Qua the partnership he functions in his personal capacity; qua the third parties, in his representative capacity. The third parties, whom (1) A.I.R. 1955 Pat. (3) ; (5) ; (2) (4) ; (6) ; 192 one of the partners represents, cannot enforce their rights against the other partners nor the other partners can do so against the said third parties. Their right is only to a share in the profits of their partner representative in accordance with law or in accordance with the terms of the agreement, as the case may be. " It is upon these observations that learned counsel for the respondents has placed strong reliance. These observations are based on the fact that the person admitted as a partner in the firm seeking registration was so admitted as an individual. They cannot apply and were apparently not intended to apply to a kind of case as the one we have here, that is, where the partner to the knowledge of other partners was joining on behalf of and representing several persons. What has to be determined is the cumulative effect of this circumstance taken along with the other cir cumstances established in the case. That is a question of law and I am clear that question is far from being settled and also that it is a substantial question of law. A further question which arises on the particular facts of this case is whether the Rupar firm can be said to have legal existence because its real partners are not merely 14 persons but there are 7 persons in addition to that number. Under the provisions of section 11 of the (section 4 of the 1913 Act) where the number of partners exceeds 20 the firm has to be incorporated and that is admittedly not what has been done here. If, therefore, the number is in excess of 20 the firm being unincorporated, it cannot be said to have a legal existence. Unfortunately the Income tax Appellate Tribunal has not discussed the facts and circumstances of this case but dismissed the second appeal preferred by the appellant on the short ground that there was no merit in it in view of the decisions cited by it. It was necessary for the Tribunal to ascertain whether on the facts of this case those decisions concluded the matter. The questions which arise are, in My Opinion, substantial between the parties and are not settled. For these reasons I allow the appeal, set aside the judgment of the High Court and direct the Tribunal to refer the question earlier set out to the High Court. Costs so far incurred will abide the result. ORDER In accordance with the opinion of the majority, Civil Appeal No. 605 of 1963 is dismissed with costs. Civil Appeals Nos. 810 and 811 are dismissed, but there will be no order as to costs.

The assessee firm, consisting of 14 partners, applied for registration under section 26A of the Income tax Act, 1922. One G, who was a partner of the assessee firm, was also partner of another firm, the Ferozepore firm. The Ferozepore firm consisted of 8 partners who had agreed that if any work was carried on by any one of them with others the profits and losses arising out of that work would be divided amongst all the partners in proportion to their shares in that firm. In the course of the proceedings for the registration of the assessee firm all its partners had stated before the Income tax Officer that G was a partner in the as firm, not in his individual capacity but on behalf of the Ferozepore firm. It was found by the Income tax Officer that the capital of the assesseefirm was supplied by G who had taken the amount from the Ferozepore firm, and, that the assessee firm was to carry on the same kind of business as the Ferozepore firm. The Incom tax Officer rejected the application for the reason that 'in reality it was not G but the Ferozepore firm that was the partner of the assessee firm and consequently, the assessee firm was illegally constituted because : (i) Ferozepore firm could not legally be a partner in the assessee firm; (ii) the total number of partners of the assessee firm would then be 21; and (iii) the individual shares of the partners of the Ferozepore firm were not specified in the partnership deed of the assessee firm. The Appellate Assistant Commissioner, on appeal, reversed that order, holding that G was a partner of the assaw firm in his individual capacity and not as a representative of the Ferozepom Am and that the effect of his agreement to share his profits and losses in the assessee firm with the other partners of the Ferozepore firm was only to constitute a sub partnership between G and the other partners in the Ferozepore firm, in respect of the share of G in the assessee firm. The Appellate Tribunal upheld the order of the Appellate Assistant Commissioner on the short ground that there was no merit in the appeal in view of certain decisions cited by it, and also dismissed the application under section 66(1) to refer to the High Court four questions of law. The Commissioner preferred a petition before the High Court under section 66(2) for directing the Tribunal to refer the questions; (1) whether G was a partner of the assessee firm in his individual capacity or representing the partners of the Ferozepore, firm, and (ii) whether the Ferozepore firm was a sub partnership; but the High Court dismissed the application holding that the questions of law were well settled. In appeal to this Court, it was contended that : (i) under the circumstances, G was a partner of the assessee firm not in his individual capacity but on behalf of the Ferozepore firm; (ii) the High Court held that there was a sub partnership on the erroneous assumption that the: Ferozepore firm came into existence after the assessee firm was constituted; and since a sub partnership can be entered into only after a partnership was constituted, there could be no sub partnership between the members of the 177 Ferozepore, firm; and (iii) as a question of law arose out of the order of Tribunal, the High Court was bound to call for a statement of case. HELD : (per Sarkar and Bachawat, JJ.) on the materials on record, the Appellate Tribunal was entitled to come to the conclusion that G and not the Ferozepore firm was the partner in this assessee firm [181 D E] Commissioner of Income tax vs Sivakasi Match Exporting. Co. ; , followed. (ii) The question whether there was a sub partnership between the members of the Ferozepore firm in respect of the share of G is not materail, because, assuming that there was no sub partnership, the members of the Ferozepore firm did not become partners in the assessee firm by virtue of the clause which only regulated the relationship of the partners of the Ferozepore firm inter se and created a partnership between them in respect of the share of G in the assessee firm. [183 B D] Commissioner of Income tax vs Bagyalakshmi & Co. ; , followed. (iii) Though a question of law arose out of the order of the Appellate Tribunal, since it was not a substantial question of law and the answer to the question was self evident, the High Court was not bound to require the Tribunal to refer the question. [184 D] Per Mudholkar, J. (dissenting) : The main question which arose in the present cast was whether in the circumstances of the case, the assesseefirm was registrable under section 26A. Ascertainment of the legal effect of &we circumstances would be a question of law. The Appellate Assistant Commissioner and the Tribunal had not considered the question whether the application for registration reflected the true position as regards the real partners in the assessee firm. The reasoning of the Appellate Assistant Commissioner was pertinent only to a case of sub partnership, and the Tribunal merely referred to certain decisions and dismissed the Department 's appeal. Since the finding of the Appellate Assistant Commissioner and also of the Tribunal was arrived at by ignoring the relevant facts found by the Income tax Officer, the finding was vitiated by an error of law. The High Court has also committed an obvious error as to when the Ferozepore firm was constituted and that error has led to the further error that the Ferozepore firm was sub partnership in relation to the assessee firm. Moreover the decisions in Commissioner of Income tax vs Sivakasi Match Exporting Co. and Commissioner of Income tax vs Bagyalakshmi & Co. ; do not apply to the facts of this case, because, the observations in those cases are based on the fact that the person admitted as a partner in the firm seeking registration was admitted as an individual, whereas in the present case one of the partners of the firm seeking registration was a partner in his re presentative capacity. Thus the question in the instant case was a substantial question of law which has not been settled. Therefore, the High Court should have directed the Tribunal to refer the question. [188 H; 190 H. 189 H; 188 A B; 192 B D]

ivil Appeal No. 232 of 1955. Appeal under Article 132 (1) of the Constitution of India from the Judgment and Order dated November 24, 1954, of the former Travancore Cochin High Court in Original Petition No. 53 of 1954. T.N. Subramania Iyer and R. Ganapathy Iyer, for the appellant. K.S. Krishnaswamy Iyengar and Sardar Bahadur, for the respondent. April 2. The Judgment of the Court was delivered by BHAGWATI J. This appeal with a certificate of fitness under article 132 (1) of the Constitution is directed against the order of the High Court of Travancore Cochin dismissing the Original Petition No. 53 of 1954 filed by the appellant under article 226 for quashing the order of the Sales Tax Officer, 2nd Circle, Quilon, assessing him to sales tax on a net assessable turnover of Rs. 7,54,144 8 4 for the year 1951 52 (1st April, 1951 to 31st March, 1952) and for issuing proper directions to the Sales Tax Authorities to assess the same according to law. The appellant is a registered manufacturer of cocoanut oil and cake who has obtained a certificate of registration in Form VI as per sub r. (i) of r. 20 of the Travancore Cochin General Sales Tax Rules, 1950. The business of the appellant for the purposes of this appeal consisted in the ' purchase of copra, manufacture of cocoanut oil and cake and sale of the same to parties inside the State of Travancore Cochin and sale of the oil to parties outside the State. In the year 1951 52, the appellant purchased copra of the value of Rs. 7,16,048 1 4 and after manufacturing oil therefrom in his oil mills he sold the oil partly in the State and partly outside the State and the cake 839 entirely within the State. , The total value of the oil sold was Rs. 6,76,719 0 11 out of which the sales outside the State were of the value of Rs. 3,67,816 10 1 and the value of the cake sold in the State was Rs. 67,155 155. The total gross turnover of the appellant was thus Rs. 14,59,923 1 8 and he claimed to deduct therefrom the whole of the purchase price of the copra under r. 7 (1) (k) read with r. 20. The net turnover according to him was therefore only Rs. 7,43,875 0 4 and he claimed to deduct out of this a further sum of Rs. 3,67,816 10 1 being the sale price of oil in inter State transactions which could not be taxed under article 286 of the Constitution, thus showing a net assessable turnover of only Rs. 3,76 058 6 3. The Sales Tax Officer, 2nd Circle, Quilon, however fixed the net assessable turnover of the appellant at Rs. 7,54,144 8 4. He took the purchase value of the copra at Rs. 7,16,048 1 4 but added thereto Rs. 3,08,902 6 10 and Rs. 67,155 15 5 being the respective values of the oil and the cake sold inside the State, excluding the sale price of inter State sales of oil, namely, Rs. 3,67,816 10 1, from such computation. Having thus excluded the sale price of inter State sales of oil, he deducted only the value of the copra corresponding to the oil sold inside the State namely, Rs. 3,35,216 0 0, as against the sum of Rs.7,16,048 1 4 deducted by the appellant. He added a sum of Rs. 3,385 0 3 being the price of gum sold by the appellant and deducted a further sum of Rs. 6,130 15 6 being the sales tax collected by him. He thus arrived at the net assessable turnover of Rs. 7,54,144 8 4 and assessed the appellant for sales tax on the same. The appellant preferred an appeal to the Assistant Sales Tax Commissioner (S.T.A. No. 1480 of 1953 54) who dismissed the same by his order dated May 10, 1954. A further petition to the Government for redress met with the same fate and the appellant thereupon filed the petition in the High Court of Travancore. Cochin being O.P. No. 53 of 1954 with the result indicated above. The decision of this appeal turns on the construction of the relevant provisions of the Travancore Cochin 340 General Sales Tax Act, 1125 (Act XI of 1125 M.E.) and the Travancore Cochin General Sales Tax Rules, 1950, made thereunder which may be conveniently set out here. The preamble to the Act stated that it was enacted to provide for the levy of a general tax on the sale of goods in the United State of Travancore and Cochin. Section 2 (j) defined a " sale " as under: " Sale " with all its grammatical variations and cognate expressions means every transfer of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration. . . . Explanation (2) Notwithstanding anything to the contrary in the Sale of Goods Act for the time being in force, the sale or purchase of any goods shall be deemed for the purpose of the Act, to have taken place in the United State wherever the contract of sale or purchase might have been made. " Section 2 (k) defined " turnover " as " the aggregate amount for which goods are either bought by or sold by a dealer, whether for cash or for deferred payment or other valuable consideration, provided that the proceeds of the sale by a person of agricultural or horticultural produce grown by himself or grown on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise, shall be excluded from his turnover. " An explanation was added to this definition ' which is, however, not material for our purpose. Section 3 was the charging section and it provided for levy of taxes on sales of goods in the terms following: " (1) Subject to the provisions of this Act;(a) every dealer shall pay for each year a tax on his total turnover for such year; and (b) the tax shall be calculated at the rate of three pies for every Indian rupee in such turnover. . . (3) A dealer whose total turnover in any year is less than ten thousand Indian rupees shall not be liable to pay any tax for that year under sub section_ (1) or sub section (2). 841 (4) For the purposes of this section and the other provisions of this Act turnover shall be determined in accordance with such rules as may be prescribed. (5) The taxes under sub sections (1) and (2) shall be assessed, levied, and collected in such manner and in such instalments, if any, as may be prescribed. Provided that: (i) in respect of the same transaction of sale, the buyer or the seller but not both, as determined by such rules as may be prescribed, shall be taxed; (ii) where a dealer has been taxed in respect of the purchase of any goods in accordance with the rules referred to in clause (i) of this proviso, he shall not be taxed again in respect of any sale of such goods effected by him." Section 4 enacted that the provisions of the charging section shall not apply to the sale of electrical energy and any goods other than arrack and foreign liquor on which duty is or may be levied under the Travancore or Cochin Abkari Act, or the Travancore or Cochin Opium Act. Section 24 conferred upon the Government power to make rules to carry out the purposes of the Act. The Act as originally enacted received the assent of the Rajpramukh on January 5, 1950. After the advent of the Constitution, however, the Act was amended by the Travancore Cochin General Sales Tax (Amendment) Act, 1951, and section 26 was added thereto which ran as under: ' " Notwithstanding anything contained in this Act : (a) a tax on the sale or purchase of goods shall not be imposed under this Act (i) where such sale or purchase takes place outside the State of Travancore Cochin; or (ii) where such sale or purchase takes place in the course of import of the goods into, or export of the goods out of, the territory of India ; (b) a tax on the sale or purchase of any goods shall not, after the 31st day of March, 1951, be imposed where such sale or purchase takes place in the course of inter State trade or commerce except in so far as Parliament may by law otherwise provide. (2) The explanation to 842 clause (1) of article 286 of the Constitution of India shall apply for the interpretation of sub clause (i) of clause(a) of sub section (1). " The Travancore Cochin General Sales Tax Rules, 1950, which were made by_the Government under the rule making power conferred upon it by sub sections 4 & 5 of section 3 read with section 24 of the Act laid down inter alia the provisions in regard to the determination of the total turnover of a dealer which was liable to be taxed. Rule 4 provided for the determination of the gross turnover: " (1) Save as provided in sub rule (2) the gross turnover of a dealer for the purposes of these rules ,shall be the amount for which goods are sold by him. (2) In the case of the undermentioned goods the gross turnover of a dealer for the purposes of these rules shall be the amount for which the goods are. bought by him. (a) Cocoanut, copra, ground nut and its kernel. (b) Cashew, and its kernel. Rule 7 provided that the tax or taxes under section 3 or 5 or the notification,or notifications under section 6 shall be levied on the net turnover of a dealer. It further provided that in determining the net turnover, the amounts specified in cls. (a) to (k) were, subject to the conditions specified therein, to be deducted from the gross turnover. Clause (k) is relevant for our purpose. It specified " all amounts which a registered manufacturer of cocoanut and/or groundnut oil and cake may be entitled to deduct from his gross turnover under Rule 20 subject to the conditions specified in the rule. " Rule 20 so far as it is material for our purpose provided: " 1. Any dealer who manufactures cocoanut/ groundnut oil and cake from cocoanut and/or copra or groundnut and/or/kernel purchased by him may on application to the assessing authority having jurisdiction over the area in which he carries on his business, 843 be registered as a manufacturer of cocoanut/groundnut oil and cake and a certificate issued in Form VI. 2. Every such manufacturer shall be entitled to a deduction under clause (k) of sub rule (i) of rule 7 equal to the value of the cocoanut and/or copra or groundnut and/or kernel purchased and converted by him into oil and cake provided that the amount for which the oil is sold is included in his turnover. " It is not necessary to refer to any other rule for the purposes of this appeal. The main controversy between the parties centres on the method of calculation of the net turnover. The appellant contends that in the calculation of such net turnover he is entitled to include the total value of the oil sold by him, viz., Rs. 6,76,719 0 11, irrespective of the fact whether these sales were effected inside the State or outside the State and deduct therefrom the total value of copra purchased by him from which the whole quantity of oil sold by him was manufactured, viz., Rs. 7,16,048 1 4. The resultant figure, according to him, represents the net assessable turnover on which the Sales Tax Authorities would be entitled to assess him to sales tax if the position in law was as is stood before the amendment of the Act by the Travancore Cochin General Sales Tax (Amendment) Act, 1951. He next contends that section 26 which was added to the Act by the Travancore Cochin General Sales Tax (Amendment) Act 1951, prohibits the levy amongst others of a tax on the sale or purchase of goods where such sale or purchase takes place in the course of inter State trade or commerce. This is an overriding provision which, it is contended, entitled him to deduct the value of the oil sold outside the State, viz., Rs. 3,67,816 10 1, from the assessable turnover arrived at as above. The result of this mode of calculation is that he claims to deduct from the gross turnover the whole of the purchase price of copra, viz., Rs. 7,16,048 1 4 and not the purchase price of copra which can be allocated to his sales of oil inside the State. The Sales Tax Authorities on the other hand, contend that the appellant is not entitled to take into 844 computation at all his 'sales of oil outside the State and is also not entitled to deduct from his gross turnover the purchase price of copra allocated to the oil sold to persons outside the State. They claim to lift the whole of these sales of oil outside the State inclusive of the purchase price of the copra which can be allocated to them out of the calculations of the net turnover because of the provisions of section 26 set out above, relying upon the non obstante provision contained therein, viz., "Notwithstanding anything contained in this Act, a tax on the sale or purchase of goods shall not be imposed under this Act where such sale or purchase takes place in the course of inter State trade or commerce. " We have to decide which of these calculations of the net turnover is correct having regard to the relevant provisions of the Act and the rules made there under. The definition of 'sale" contained in section 2 (j) is wide enough to include, the sales of oil manufactured by the appellant whether these sales are effected inside the State or outside the State. The definition of " turnover " contained in section 2 (k) of the Act also makes no distinction between the sales inside the State and out,side the State. The " turnover " is there defined as the aggregate amount for which goods are either bought or 3old by a dealer and, that definition comprises within its scope both these types of sales whether inside the State or outside the State. This turnover of a dealer is under section 3, sub section (4) to be determined in accordance with such rules as may be prescribed. Rule 4 made by the Government under the rule making power prescribes that the gross turnover of a dealer for the purposes of the rules shall be the amount for which the goods are sold by him. This rule also does not make any distinction between sales inside the State or outside the State. After having thus provided for the inclusion of all sales within the gross turnover, r. 7 provides that the tax or taxes under section 3 (which is the charging section) shall be levied on the net turnover of a dealer. Such net turnover is to be arrived at after deducting from the gross turnover various 845 amounts specified in cls. (a) to (k) thereof and cl. (k) provides that a registered manufacturer of cocoanut and/or groundnut oil and cake will be entitled to deduct from his gross turnover such amounts as are mentioned in r. 20 subject to the conditions specified therein. The deduction under r. 20 is available to a dealer who manufactures cocoanut/groundnut oil and cake from cocoanut and " /or copra or groundnut and/or kernel purchased by him and he is entitled to deduct the value of the cocoanut and/or copra or groundnut and/or kernel purchased and converted by him into oil and cake provided that the amount for which the oil is sold is included in his turnover. Here also we find no distinction made between sales inside the State or outside the State. On a prima facie reading of these provisions contained in the Act and the rules made thereunder it would appear that a manufacturer of cocoanut or groundnut oil and cake would be entitled to include in his gross turnover the total value of the oil sold by him Whether inside the State or outside the State and to deduct from such gross turnover the whole of the value of the copra purchased by him and converted into oil and cake irrespective of the fact whether such oil or cake was sold by him inside the State or outside the State. The only thing which he had to do under r. 20, sub r.(2) was to include the amount for which the oil is sold in his turnover and he would then under r. 7(1)(k) be entitled to deduct from his gross turnover the whole of the price of the copra purchased and converted by him into oil and cake, again irrespective of the fact whether the same had been sold by him inside the State or outside the State. This was certainly the position as it obtained prior to the addition of the section 26 to the Act by the Travancore Cochin General Sales Tax (Amendment) Act, 1951. We have, therefore., to consider what is the impact of section 26 on the other provisions of the Act and the rules made thereunder. The High Court decided against the appellant observing that the definitions given in section (2)(j) and (k) of the Act applied only in the absence of "anything 109 846 repugnant in the subject or context", and on a perusal of the relevant provisions of the Act and the rules made thereunder, it was of opinion that these definitions were clearly inapplicable for the following reasons: "There can be no doubt that what has been intended is a taxation of copra at the purchase point and the avoidance of sales tax in respect of the oil extracted by a registered manufacturer from such copra to the extent of the value of the copra used for the said manufacture in all those cases where but for the concession he would have been liable to pay both the purchase tax on copra and the sales tax on oil under the Travancore Cochin General Sales Tax Act, 1125. In other words, the object is the avoidance of a double taxation by the State, one at the purchase point of copra and the other at the sale point of oil, and it is impossible to invoke the definition and say that the concession will be available to a registered manufacturer even in those cases where only one and not both the taxes can be realized from him under the provisions of the Act. " The answer given by the learned counsel for the appellant to the above reasoning was that in fiscal statutes what you have got to look to is not the spirit of the statute but the letter of the law; and if you could not bring a particular tax within the letter of the law, the subject could not be made liable for the same. Our attention was drawn in this connection to the observations of Lord Russell of Killowen in Inland Revenue Commissioners vs Duke of Westminster(1) : "I confess that I view with disfavour the doctrine that in taxation cases the subject is to be taxed if in accordance with a Court 's view of what it considers the substance of the transaction, the Court thinks that the case falls within the contemplation or spirit of the statute. The subject is not taxable by inference or by analogy, but only by the plain words of a statute applicable to the facts and circumstances of his case." As Lord Cairns said many years ago in Partington vs The Attorney General (1): "As I understand the (1) , 24. (2)(1869) , 122. 847 principle of all fiscal legislation it is this: if the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be. " The passage was quoted with approval by the Privy Council in the Bank of Chettinad vs Income Tax Commissioner (1) and the Privy Council registered its protest against the suggestion that in revenue cases "the substance of the matter" may be regarded as distinguished from the strict legal position. (See also F. L. Smidth & Co. vs F. Greenwood (2)). It is no doubt true that in construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law and not merely to the spirit of the statute or the substance of the law. If the Revenue satisfies the Court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter. We must of necessity, therefore, have regard to the actual provisions of the Act and the rules made thereunder before we can come to the conclusion that the appellant was liable to assessment as contended by the Sales Tax Authorities. It may be noted at the outset that the main bulk of the Sales Tax Acts enacted by the various Provincial Legislatures was enacted before the Constitution. There were on the Statute Book various Sales Tax Acts enacted by the Provincial Legislatures, viz., Bihar Sales Tax Act, 1947, Bengal Finance (Sales Tax) Act, 1941, Madhya Pradesh Sales Tax Act, 1947, Madras Sales Tax Act, 1939, Mysore Sales Tax Act, 1948, Orissa Sales Tax Act, 1947, East Punjab General Sales Tax Act, 1948, and the Uttar Pradesh Sales Tax Act, (1) A.I.R. (1940) P.C. 183. (2) VIII T.C. 193, 206, 348 1948, all of which levied sales tax on a more or less uniform basis bringing within their ken not only the sales which were actually effected within the territory but also sales where adopting the nexus theory eve1 one of the ingredients of sale was found to have taken place within the territory. The Assam Sales Tax Act, 1947, and the Hyderabad General Sales Tax Act, 1950, also followed the same pattern. When the Constitution came to be inaugurated on January 26, 1950, article 286(2) laid down restrictions on the State Legislatures to enact laws imposing or authorising the imposition of tax on the sale or purchase of goods in certain cases therein specified, so that after January 26, 1950, no State could impose a tax on the sale or purchase of goods falling within these categories. The Sales Tax Acts enacted by the various Provincial Legislatures had, therefore, to be brought in line with this provision of the Constitution and various expedients were devised by the State Legislatures in order to effectuate this object. This object was sought to be achieved in the main bulk of the Sales Tax Acts by adding towards the end of the Acts sections like section 26 of the Travancore Cochin General Sales Tax Act, 1125, incorporating therein the terms of article 286 of the Constitution. The non obstante provision was thus enacted in the main bulk of the Sales Tax Acts which laid down: "Notwithstanding anything contained in this Act the tax on the sales or purchase of goods shall not be imposed under this Act where. . . (and the provisions of article 286 were in terms incorporated therein). " A different expedient was adopted in the Assam Sales Tax Act, 1947 and the Hyderabad General Sales Tax Act, 1950. The Assam Sales Tax Act, 1947, had incorporated therein an addition to the charging section (section 3 of the Act) and section 3 (1 A) which was inserted by section 3 of the Assam Sales Tax (Amendment) Act, 1947 (Assam Act IV of 1951) was to the following effect: "Nothing in sub section (1) shall,except in cases covered by the first proviso to sub section (12) of section 2 of this Act be deemed to render any dealer 849 liable to tax on the sale of goods where such sale takes place: (1) outside the State of Assam; (2) in the course of the import of the goods into, or export of the goods out of, the territory of India; or (3) in the course of inter State trade or commerce except in so far as Parliament may by law otherwise provide. The Hyderabad General Sales Tax Act, 1950 had a similar provision incorporated in its definition of sale given in section 2 (k) of the Act. The Explanation (2) which was substituted for the original Explanation (2) by section 2 of the Hyderabad General Sales Tax (Amendment) Act, 1950 (Hyderabad Act XXXII of 1950) read as under: Explanation (2) " Notwithstanding anything to the contrary in any other law for the time being in force, a transfer of goods in respect of which no tax can be imposed by reason of the provision contained in Article 286 of the Constitution, shall not be deemed to be "sale" within the meaning of this clause. " A further expedient which was adopted in this connection may be noted in r. 5 of the Bombay Sales Tax Rules, 1952, enacted under the Bombay Sales Tax Act, 1952 (Bombay Act XXIV of 1952), which authorised the deduction of certain sales coming within article 286 of the Constitution while calculating the taxable turnover of a dealer. We are not called upon to express any opinion as to whether the incorporation of the provisions of article 286 of the Constitution in the charging section as it was done in the Assam Sales Tax Act, 1947, or in the definition of "sale" as it was done in the Hyderabad General Sales Tax Act, 1950, or even in the rules in regard to the calculation of taxable turnover as it was done in the Bombay Sales Tax Rules, 1952, had the effect of taking the sales falling within the categories specified in article 286 out of the purview of the respective Sales Tax Acts, so that they would not be included at all within the calculation of the net turnover on which only the sales tax could be levied. What was done in the instant case before us as in the bulk of the Sales 850 Tax Acts above noted was the incorporation of those provisions of article 286 of the Constitution therein by adding a non obstante provision at the end of the respective Sales Tax Acts in the manner above indicated. The definition of "sale" was not amended nor was the charging section. The rules as to the calculation of the net turnover also remained the same, without any deduction in regard to sales coming within article 286 of the Constitution being incorporated therein, with the result that the Sales Tax Authorities founded themselves upon the non obstante provision incorporated in the Act by the addition of section 26 therein by the Travancore Cochin General Sales Tax (Amendment) Act, 1951. What, then, is the effect of this non obstante provision ? This Court in Aswani Kumar Ghosh vs Arabinda Bose (1) made the following observations in connection with the non obstante clause: "It should first be ascertained what the enacting part of the section provides on a fair construction of the words used according to their natural and ordinary meaning, and the non obstante clause is to be understood as operating to set aside as no longer valid anything contained in relevant existing laws which is inconsistent with the new enactment. " The same ratio applies to the construction of the non obstante provision contained in section 26 of the Act with reference to all the other provisions of the Act that preceded the same. In our opinion, section 26 of the Act, in cases falling within the categories specified under article 286 of the Constitution has the effect of setting at nought and of obliterating in regard thereto the provisions contained in the Act relating to the imposition of tax on the sale or purchase of such goods and in particular the provisions contained in the charging section and the provisions contained in r. 20 (2) and other provisions which are incidental to the process of levying such tax. So far as sales falling within the categories specified in article 286 of the Constitution and the corresponding section 26 of the Act are concerned, they are, as it were, (1) ; , 21, 22. 851 taken out of the purview of the Act and no effect is to be given to those provisions which would otherwise have been applicable if section 26 had not been added to the Act. If these provisions of the Act and the rules made thereunder do not apply to. the sales falling within those categories, the value thereof cannot be included in the turnover of the dealer and no question would &rise of the applicability of r. 7 (1) (k) and r. 20 (2) at all to these cases. The amount for which the oil is sold in inter State trade or commerce would not be lawfully included in the turnover of the dealer and if the amount for which such oil is sold cannot thus be included in his turnover no occasion would arise for the deduction under r. 7 (1) (k) of the value of the cocoanut and/or copra or groundnut and/or kernel purchased and converted by the dealer into such oil and cake. A distinction was sought to be made between the inclusion of the value of such oil in the turnover of the dealer for the purpose of assessment and the levy of tax thereupon. It was urged that the inclusion of such oil in the turnover for the purpose of assessment was quite distinct from the liability for tax which was the only thing prohibited by section 26 of the Act and therefore the value of such oil could be lawfully included in the turnover involving as a necessary consequence the deduction of the value of the copra purchased by the dealer and converted by him into such oil from such turnover, the resultant turnover being the net turnover for the purposes of assessment, the value of the oil sold in the course of inter State trade or commerce being further deducted therefrom by reason of the operation of section 26 of the Act, thus making in effect a distinction between assessable turnover and the taxable turnover. Reliance was placed in support of this position on the observations of this Court in Messrs. Chatturam Horilram Ltd. vs Commissioner of Income Tax, Bihar and Orissa(1): " As has been pointed out by the Federal Court in Chatturam vs C.I.T., Bihar(,) (quoting from the (1) ; , 297. (2) , 126. 852 judgment of Lord Dunedin in Whitney vs Commissioners of Inland Revenue (1) 'there are three stages in the imposition of a tax. There is the declaration of liability, that is the part of the statute which determines what person in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment. That, ex hypothesi, has already been fixed. But assessment particularises the exact sum which a person liable has to pay. Lastly, come the methods of recovery if the person taxed does not voluntarily pay" The appellant, however, forgets that the three stages in the imposition of a tax which are laid down here predicate, in the first instance, a declaration of liability as the starting point. If there is a liability to tax, imposed under the terms of the taxing statute, then follow the provisions in regard to the assessment of such liability. If there is no liability to tax there cannot be any assessment either. Sales or purchases in respect of which there is no liability to tax imposed by the statute cannot at all be included in the calculation of turnover for the purpose of assessment and the exact sum which the dealer is liable to pay must be ascertained without any reference whatever to the same '. There is a broad distinction between the provisions contained in the statute in regard to the exemptions of tax or refund or rebate of tax on the one hand and in regard to the non liability to tax or non imposition of tax on the other. In the former case, but for the provisions as regards the exemptions or refund or rebate of tax, the sales or purchases would have to be included in the gross turnover of the dealer because they are prima facie liable to tax and the only thing which the dealer is entitled to in respect thereof is the deduction from the gross turnover in order to arrive at the net turnover on which the tax can be imposed. In the latter case, the sales or purchases are exempted from taxation altogether. The Legislature cannot enact a law imposing or authorising the imposition of a tax thereupon and they are not liable to any such imposition (1) 853 of tax. If they are thus not liable to tax, no tax can be levied or imposed on them and they do not come within the purview of the Act at all. The very fact of their non liability to tax is sufficient to exclude them from the calculation of the gross turnover as well as the net turnover on which sales tax can be levied or imposed. If this distinction is borne in mind, it is clear that section 26 of the Act enacts a provision with regard to nonliability of these transactions to tax and these transactions were therefore taken out of the purview of the Act. We are therefore of opinion that the non obstante provision contained in section 26 of the Act has the effect of taking these transactions out of the purview of the Act with the result that the dealer is not required nor is he entitled to include them in the calculations of his turnover liable to tax thereunder. This position is not at all affected by the provision with regard to registration and submissions of returns of the sales tax by the dealers under the Act. The legislature, in spite of its disability in the matter of the imposition of sales tax by virtue of the provisions of article 286 of the Constitution, may for the purposes of the registration of a dealer and submission of the returns of sales tax include these transactions in the dealer 's turnover. Such inclusion, however, for the purposes aforesaid would not affect the non liability of these transactions to levy or imposition of sales tax by virtue of the provisions of article 286 of the Constitution and the corresponding provision enacted in the Act, as above. We are, therefore, of opinion that the conclusion reached by We are therefore therefore, of opinion that the conclusion reached by the High Court was correct; the calculations of the net turnover made by the Sales Tax Authorities were also correct; and this appeal must stand dismissed with costs. Appeal dismissed.

The business of the appellant consisted in the purchase of copra, manufacture of cocoanut oil and cake therefrom and sale of oil and cake to parties inside the State of Travancore Cochin and sale of oil to parties outside the State. Before the coming into force of the Constitution of India, under the provisions of the Travancore Cochin General Sales Tax Act, 1125, and the rules made thereunder, for the purposes of assessment to sales tax, the appellant wag entitled to include in his gross turnover the total value of the oil sold by him whether inside the State or outside the State and to deduct therefrom the whole of the value of the copra purchased by him. Subsequently, in 1951, the Act was amended by the addition of section 26 which, inter alia, provided: "Notwithstanding anything contained in this Act. a tax on the sale or purchase of any goods shall not, after the 31st day of March, 1951, be imposed where such sale or purchase takes place in the course of inter ,State trade. . For the year 1951 1952, the Sales Tax Officer assessed the appellant to sales tax on a net assessable turnover by taking the value of the whole of the copra purchased by him, adding thereto the respective values of the oil and the cake sold inside the State and deducting only the value of the copra corresponding to the oil sold inside the State. It was contended for the appellant that in the calculation of the net turnover he was entitled to include the total value of the oil sold by him, both inside and outside the State, and deduct therefrom the total value of the copra purchased by him, and further that, under the overriding provision of the Act under section 26, he was entitled to have the value of the oil sold outside the State deducted. Held, that the calculation made by the Sales Tax Officer of the net turnover was correct. The non obstante provision contained in section 26 of the Act has the effect of taking transactions relating to inter State trade out of the purview of the Act and they are excluded in the calculation 108 838 of the gross turnover as well as the net turnover on which sales tax can be assessed. Aswani Kumar Ghosh vs Arabinda Bose, ; , relied on.

Civil Appeal No. 936 of 1977. From the Judgement and Order dated 16.9.1976 of the Bombay High Court in S.C.A. No. 2741 of 1971. Shishir Sharma and P.H. Parekh for the Appellant. Dr. N.M. Ghatate, S.V. Deshpande for the Respondent. 83 The Judgement of the Court was delivered by K.N. SAIKIA, J. This appeal by Special Leave is from the Judgement of the High Court of Bombay, dated 16th September, 1976, in Special Civil Application N. 2741 of 1971 upholding the Judgement of the Maharashtra Revenue Tribunal. The suit land bearing Survey No. 182, owned by Shankarlal Kunjilal, was taken under Government management as per order of the Assistant Collector, Jalgaon bearing No. TEN. WS 946 dated 14.12.1950 as the land was lying fallow for two consecutive years. The Mallatdar, Raver was appointed as a Manager thereof under Section 45 of the Bombay Tenancy and Agricultural Lands Act, 1948, hereinafter referred to as "the Act. ' After assuming the management the land was leased out to the appellant Dhondu Choudhary by the Mamlatdar for a period of 10 years by an agreement of lease dated 7.12.1951. The period of lease accordingly expired on 6.12.1951. The period of lease accordingly expired on 6.12.1961. However, the management of the land was terminated by the Government by the Assistant Collector 's order dated 27.7.1963, and the possession thereof was ordered to be restored to the respondent landlord. There was nothing on the record to show that the lease which expired on 6.12.1961 was extended by the Manager thereafter till the termination of management by order dated 27.7.1963. The appellant claimed that he was paying rent to the Mamlatdar during the period of 7.12.1961 to 27.7.1963 and thus continued to a be tenant in respect of the land. He filed a Civil Suit against the respondent in the Court of Civil Judge, Raver, who made a reference to the Mamlatdar, Raver who held that the appellant continued to be tenant. The respondent 's appeal to the Assistant Collector having failed, he moved a revision application before the Maharashtra Revenue Tribunal, hereinafter referred to as `the Tribunal ' wherein the question arose whether the appellant 's tenancy was subsisting on 27.7.1963, and whether he had become the tenant in respect of the land since that date under the Act. Relying on a bench decision of the Bombay High Court in Special Civil Application No. 1077 of 1961 Ghambhir Lal Laxman Das vs Collector of Jalgaon, (decided on 20.12.1962) wherein it was held that the person to whom lease was granted by the Manager of the land which was taken under Government management, could not continue to be the tenant after the expiry of the period of 10 years without a fresh lease, and that after the management was terminated by the 84 Government on expiration of the lease, the tenancy under the lease could not be said to be subsisting on the date on which the management was terminated. The Tribunal held that the appellant could not continue as tenant since termination of the lease on 27.7.1963. The Tribunal further held that since the land was taken under the Government management by the order of the Assistant Collector under Section 88(1) of the Act the provision s of Sections 1 to 87 were not applicable and the appellant, therefore, could not continue to be tenant after expiration of the period of lease on 6.12.1961. The High Court in the Special Application under Article 227 of the Constitution of India having upheld the above finding of the Tribunal, the appellant obtained Special Leave. The only submission of the learned counsel for the appellant Mr. Shishir Sharma is that the appellant having continued payment of rent to Mamlatdar even after expiry of lease till the termination of management, he continued to be a tenant which the landlord could not avoid on resumption of the land. Dr. N.M. Ghatate, the learned counsel for the respondent, submits that the appellant could by no means continue to be a tenant after his lease expired and no fresh lease was granted to him and more so after the management was terminated on 27.7.1963. We find force in Dr. Ghatate 's submission. Admittedly the management of the land was assumed by the State Government under Section 65 of the Act. Section 65 deals with assumption of management of lands which remained unclutivated, and says: "65. (1) If it appears to the State Government that for any two consecutive years, any land has remained uncultivated or the full and efficient use of the land has not been made for the purpose of agriculture, through the default of the holder or any other cause whatsoever not beyond his control the State Government may, after making such inquiry as it thinks fit, declare that the management of such land shall be assumed. The declaration so made shall be conclusive. (2) On the assumption of the management, such land shall vest in the State Government during the continuance of the management and the provision of Chapter IV shall mutatis mutandis apply to the said land: 85 Provided that the manager may in suitable cases give such land on lease at rent even equal to the amount of its assessment: Provided further that, if the management of the land has been assumed under sub section (1) on account of the default of the tenant, such tenant shall cease to have any right or privilege under Chapter II or III, as the case may be, in respect of such land, with effect from the date on and from which such management has been assumed. " Admittedly, the Manager was appointed under Section 45 of the Act, Section 45 deals with vesting of estate in management, and says: "45. (1) On the publication of the notification under section 44, estate the in respect of which the notification has been published shall, so long as the management continues, vest in the State Government. Such management shall be deemed to commence from the date on which the notification is published and the State Government shall appoint a Manager to be in charge of such estate. (2) Notwithstanding the vesting of the estate in the State Government under sub section (1), the tenant holding the lands on lease comprised in the estate shall, save as otherwise provided in this Chapter, continue to have the same right and shall be subject to the same obligations, as they have or are subject under the proceeding Chapters in respect of the lands held by them on lease. " Section 61 deals with termination of management, and says: "61. The State Government, when it is of opinion that it is not necessary to continue the management of the estate, by order published in the Official Gazette, direct that the said management shall be terminated. On the termination of the said management, the estate shall be delivered into the possession of the holder, or, if he is dead, of any person entitled to the said estate together with any balances which may be due to the credit of the said holder. All acts done or purporting to be done by the Manager during the continuance of the management of the estate shall be binding on the holder or to any person to whom the possession of the estate has been delivered. " 86 Thus on termination of the management the suit land in the instant case was to be delivered into the possession of the respondent holder and all acts done or purporting to be done by the Manager during the continuance of the management of the estate should be binding on the holder or on any person to whom the possession of the estate had been delivered. In the instant case the finding of the Courts below is that after expiry of the lease no fresh lease was granted by the Manager. In view of this finding, the appellant 's claim to have continued as the tenant even after expiry of the lease on 6.12.1961 and till 27.7.1963, the date of termination, by paying rent for the period to the Mamlatdar would be of no avail, in the absence of fresh lease after expiry of the 10 years lease on 6.12.1961. The Tribunal followed the binding decision of the Bombay High Court holding that there was no lease in favour of the appellant and that by mere holding over he could not have continued the status of a tenant. This would be so because the Act does not envisage the Government as a landholder but only as Manager. While delivering back the land into the possession of the landholder, it could not be burdened with any tenancy created or resulting while under management. Besides, there could be no privacy between the landlord and the erstwhile tenant under Government in the matter of tenancy. Between the appellant and the respondent landlord, therefore, no question of the former continuing as tenant of the latter could arise after the land was reverted to the landholder. Mr. Sharma 's submission that the appellant was a deemed tenant is also not tenable. The appellant could not have been a deemed tenant under Section 4 or 4B of the Act inasmuch as Section 88 of the Act grants exemption inter alia to lands held on lease from the Government. It says: "88. (1) Save as otherwise provided in sub section(2), nothing in the forging provisions of this Act shall apply (a) to lands belonging to, or held on lease from, the Government; xxx xxx xxx xxx xxx xxx xxx xxx (d) to an estate or land taken under management by the State Government under Chapter IV or section 65 except as provided in the said Chapter IV or section 65, as the case may be, and in sections 66, 80A, 82, 83, 84, 85, 86 and 87: 87 Provided that from the date on which the land is released from management, all the foregoing provisions of this Act shall apply thereto; but subject to the modification that in the case of a tenancy, not being a permanent tenancy, which on that date subsists in the land. xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx" In Keshav Vithal Mahatre vs Arbid Ranchhod Parekh, [1973] Bom. L.R. LXXXV 694, a learned Single Judge has held that a lease of land granted by a Manager under section 47 of the Bombay Tenancy and Agricultural Lands Act, 1948, comes to an end with the termination of the management of the land by virtue of section 61 of the Act. If the tenant continues to remain on the land thereafter, he would be cultivating it unlawfully as a trespasser and he cannot, therefore, claim to be a deemed tenant under section 4 of the Act. This is consistent with the decision in Ghambhir Lal 's case(supra) relied on by the Tribunal. Thus, Sections 4 and 4B were not applicable during the period from expiry of the lease to the termination of management. In the result, we find no merit in this appeal and it is dismissed, but without any order as to costs. V.P.R Appeal dismissed.

The suit land was taken under Government management as it was lying fallow for two consecutive years. The Mamlatdar, appointed as a Manager thereof under Section 45, of the Bombay Tenancy and Agricultural Lands Act, 1948, after assuming management, leased out the said land to the appellant for a period of 10 years by an agreement of lease dated 7.12.1951. The period of lease expired on 6.12.1961. However, the management of the land was terminated by Government by the Assistant Collector 's order dated 27.7.63 and possession thereof was ordered to be restored to the respondent landlord. The appellant filed a Civil Suit against the respondent contending that he was paying rent to the Mamlatdar during the period 7.12.1961 to 27.7.1963 and thus continued to be a tenant in respect of the land. The Civil Judge made a reference to the Mamlatdar, who held that the appellant continued to be tenant. The respondent 's appeal to the Assistant Collector having failed, a revision application was moved before the Revenue Tribunal wherein the question arose whether the appellant 's tenancy was subsisting on 27.7.1963, the date of termination of the management. The Tribunal held that the appellant could not continue as tenant on the termination of the management, since the land was taken under the Government management under Section 88(1) of the Act. 82 The High Court in the Application under Article 227 of the Constitution of India having upheld this finding of the Tribunal, the appellant filed Special Leave petition to this Court. The appellant contended that having continued payment of rent to the Mamlatdar even after expiry of the lease till the termination of management, he continued to be a tenant which the landlord could not avoid on resumption of the land, while the respondent submitted that the appellant could by no means continue to be a tenant after the expiry of lease, and that no fresh lease was granted to him after the management was terminated. Dismissing the appeal, this Court, HELD: 1. On the finding of the courts below that after the expiry of the lease, no fresh lease was granted by the Manager, the appellant 's claim to have continued as the tenant even after expiry of the lease on 6.12.1961 and till 27.7.1963, the date of termination, by paying rent for the period to the Mamlatdar would be of no avail, in the absence of fresh lease after expiry of the 10 years lease on 6.12.1961. This would be so because the Act does not envisage the Government as a landholder but only as Manager. While delivering back the land into the possession of the landholder, it could not be burdened with any tenancy created or resulting while under management. Besides, there could be no privacy between the landlord and the erstwhile tenant under Government in the matter of tenancy. Between the appellant and the respondent landlord, therefore, no question of the former continuing as tenant of the latter could arise after the land was reverted to the landholder. [86B D] 2. The appellant could not have been a deemed tenant either under Section 4 or 4B of the Act inasmuch as Section 88 of the Act grants exemption inter alia to lands held on lease from the Government.[86E]

Appeal No. 429 of 1959. Appeal by special leave from the judgment and order dated December 6, 1957 of the former Bombay Sales Tax Tribunal in Appeal No.6 of 1956. C. K. Daphtary, Solicitor General of India, H. R. Khanna and R. H. Dhebar, for the appellant. N. A. Palkhivala, section P. Mehta, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the respondents. November 15. The Judgment of the Court was delivered by HIDAYATULLAH, J. The State of Bombay has appealed to this Court with special leave, against an order of the Sales Tax Tribunal, Bombay, dated December 6, 1957, by which the Tribunal allowing the appeal before it, set aside an order of the Collector of Sales Tax passed under section 27 of the Bombay Sales Tax Act, 1953. The respondents, Ratilal Vadilal & Bros., are commission agents doing business as clearing and transport contractors. On June 25, 1954, they applied to the Collector of Sales Tax, Bombay, under sections 27(a), (b) and (c) of the Act describing the nature of their business, citing one instance thereof, for determination of the question whether they could be called "dealers " within the Act. The Collector by his order held that they were dealers, and were required to register themselves under the Act. On appeal, the Tribunal held otherwise, and hence this appeal by the State of Bombay. 369 It appears that no action was taken to ask for 'a reference to the High Court of Bombay under section 34(1) read with sections 30(1) and (2) of the Act. We have frequently noticed that all the remedies which are open to an appellant are not first exhausted before moving this Court. Ordinarily, this Court will not allow the High Court to be bypassed in this manner, and the proper course for an appellant is to exhaust all his remedies before invoking the jurisdiction of this Court under article 136. In the present case, however, the matter is simple, and the learned counsel for the respondent requested us to determine the question, stating that his client who was a small trader and who made the application for the clarification of the law, would be dragged through Courts once again, if we were to decide this appeal on this short point. In view of this, though we decide this appeal, we must not be held to lay down a cursus curiae for this Court. The matter relates to a time after the Colliery Control Order, 1945, came into force. Under that Order, no person could acquire or purchase coal from a colliery except under authority of the Central Government for which purpose he had to obtain a priority certificate from the State Coal Controller. Under the scheme of the Order, del credere agents were allowed to act and to charge a commission of one rupee per ton of coal. One Nanalal Karsandas, a brick manufacturer, was allotted a priority certificate in respect of 22 tons of coal on June 17, 1954. He dealt with M/s. S.C. Rungta Colliery, Burhar, through the respondents. The consignment was in the name of Karsandas, but the bill was sent by the Colliery to the respondents, and the respondents, in their turn, made out a bill in which they charged, in addition to the amount of the bill of the Colliery, a sum of Rs. 22 as their commission. The liability to pay the Colliery rested upon the respondents, but they claimed to be acting as mere "middlemen " between the Colliery and Karsandas. The respondents stated that their business was along these lines with other constituents also, and asked the Collector to determine whether they could be described as "dealers" within the Act, and required registration. 370 "Dealer " in the Bombay Sales Tax Act, 1953, is defined as follows: "dealer " means any person who carries on the business of selling goods in the State of Bombay, whether for commission, remuneration or otherwise. " (Explanation omitted). It would appear that to be a dealer, the person must carry on the business of selling goods in the State of Bombay. The short question in this case, therefore, was whether the respondents were carrying on such a business in respect of coal. The scheme of the Control Order shows that no sale of coal could take place except to a person holding a certificate. A sale otherwise was in contravention of the Control Order. The certificate which has been produced in the case, though made out in the name of the respondents, shows the consumer as the consignee. It is thus plain that there was no sale by the Colliery to the respondents, but directly to Karsan das, though through the agency of the respondents. The respondents also, when they made out the bill to Karsandas, mentioned that he was the consignee, and that they were only charging their " middlemen " commission. In these circumstances, it is difficult to hold that the Colliery sold coal to the respondents, and that they, in turn, sold it to Karsandas. There were no two sales involved; there was only one sale, and that was by the Colliery to the consumer. The respondents never became owners by purchase from the Colliery, because the Colliery would not have sold coal to them, nor could they have bought it unless they had obtained a certificate. The position of the respondents was merely that of agents, arranging the sale to a disclosed purchaser, though guaranteeing payment to the Colliery on behalf of their principal. In view of what we have said, no business of selling coal was disclosed in the instance cited before the Collector, and the order of the Tribunal was correct on the facts placed before it. In the result, the appeal fails and will be dismissed with costs. Appeal dismissed.

One Nanalal Karsandas, who was a brick manufacturer, held a priority certificate for purchasing coal under the Colliery Control Order and purchased a certain quantity of coal from M/s. section G. Rungta Colliery through the respondents who were commission agents. The respondents applied to the Collector for determining whether they could be described as "dealers" under the Bombay Sales Tax Act, 1953. The Collector held that they were dealers but the Sales Tax Tribunal held otherwise. No step was taken thereafter for a reference to the High 368 Court under sections 34(1) and 30(1) of the Act. On appeal by the State of Bombay by special leave, Held, that the respondents could not be described as "dealers" under the Act as the nature of their business as disclosed by them did not show that they were carrying on the business of selling goods in the State of Bombay but were only commission agents arranging sales to other persons. The proper course for the appellant was to move the High Court and exhaust all his remedies before invoking the jurisdiction of this court under article 136 of the Constitution.

Civil Appeal No. 3951 (NCE) of:1987. From the Judgment and Order dated 19.11.1987 of the Kerala High Court in E.P. No. 3 of 1987. K.K. Venugopal, E.M.S. Anam, E. Ahmad and V.K. Beeram for the Appellant. Dr. Y.S. Chitale, M.K. Damodaran, V.J. Mathew, Aseem Mehrotra and K.M.K. Nair for the Respondents. The Judgment of the Court was delivered by SAWANT, J. This is an appeal under Section 116A of the Representation of the People Act, 1951 (hereinafter referred to as the 'Act ') against the judgment of the High COurt of Kerala in Election Petition No. 3 of 1987, by which the election of the appellant to the Kerala Legislative Assembly from Mattancherry Constituency No. 73 was declared void on the ground that the appellant had committed two corrupt practices within the meaning of Section 123(4) of the Act. The admitted facts are that election to the Kerala Legislative Assembly from all the constituencies was held on March 23, 1987. The main contest in almost all the constitu encies was between the United Democratic Front (UDF) con sisting of Congress I, Kerala Congress, Indian Union Muslim League (IUML) and others on the one hand, and the Left Democratic Front (LDF) consisting of the Communist Party of India Marxist (CPI M), Revolutionary Socialist Party and others on the other. The appellant was the candidate of the LDF and the first respondent was the candidate of the UDF. In the said election, the appellant was declared elected by a margin of 1873 votes over his nearest rival, the first respondent. On May 8, 1987, the first respondent filed an elec tion petition claiming a declaration that the appellant 's election was void and that he was entitled to be declared duly elected from the said constituency. In support of the petition, the first respondent alleged various corrupt practices on the part of the appellant. However, the High Court negatived all the said corrupt practices except two, viz., (i) printing and publication on March 22, 1987, a day prior to the election, pamphlets containing a news item in daily "Malayala Manorama" dated May 22, 1983, and (ii) publication of a wall poster, both maligning the personal character and conduct of the first respondent. The High Court held that both these acts amounted to corrupt prac tices within the meaning of Section 123(4) of the Act and were sufficient to 726 void the election. The pamphlet containing the reprint of the daily "Malayala Manorama" was marked as exhibit P 1 and two photographs of the wall poster were marked as Exs. P 14 and P 15 before the High Court and would be referred to herein after as such. exhibit P 14 is the close up and exhibit P 15 is the distant photograph of the same wall poster. 4. Before we refer to the rival contentions and the material on record, it would be convenient if we reproduce here the contents of exhibit P 1 and Exs. P 14 and P 15 to understand the allegations made in the said documents. exhibit P 1 is a reprint of a page of the issue of 22nd May, 1983 of a daily newspaper "Malayala Manorama". It contains the names and the photographs of four men, who were admit tedly murdered in May 1983. It also carries two other photo graphs, one showing two killed bodies lying and the other showing the front part of the court building where allegedly all the four were killed. It also carries a photograph of the appellant with his election symbol which was 'ladder ' and a photograph of the then Prime Minister, Rajiv Gandhi. Apart from the contents of the said newspaper as they ap peared in the said old issue, it carries additions on the left hand, the English translation of which is as follows: "ELECT ZAKHARIA THE UNITED FRONT CANDIDATE MATTANCHERRY. On March 23rd a decisive election is taking place in our State. We wish to have a Government who will protect life and property of the people. In the light of past expe rience the only front acquired legitimate claim to give protection is the United Democratic Front under the leader ship of Congress (I). Marxist Party has only created insecu rity in the country. X X X X X The Marxist Comrades who create lawlessness and commit murders while in power and out of power, is a chal lenge to peace loving inhabitants of Mattancherry. Mattan cherry is a constituency which has witnessed terrible cruel ties of the Marxists. The Mattancherry Town, once the centre of commerce, today became equal to a grave 727 yard only due to violent activities of the Marxist people. The wounds created by their cruelties are always unhealed. They need not be detailed by one. X X X X X You may remember only the cruel murder that shocked Mattancherry in 1983. Four youngsters were cut to death in the road in broad day light. The relevant portion of the Malayala Manorama which published that news is given herewith as, such; everybody knows the hands behind that murder. The Marxist leader arrested is also known. X X X X X Dear sisters, brothers, you may think a while. Should we have the rule of the Marxist terrorists. We believe that the people of Mattancherry who wish peaceful life in the country will defeat Marxists. X X X X X Believers in democracy should be specially careful not to split their votes. It is possible to defeat Marxists only through unity of the believers in democracy. That is why the Indian National Congress lead by Shri Rajiv Gandhi ' the stalvert of democratic Bharath is giving leadership to the democratic front. It is the necessity of peace lovers that United Democratic Front should win for law and order and stable administration. Therefore, it is humbly requested that M.J. Zakharia may be elected with big majority casting votes to his Ladder Symbol. Photo of Vote Democratic Front Photo of candidate to avoid Marxist Rule Rajiv Gandhi M.J. Zakharia of Terror Constituency Election Committee Give Strength United Democratic Front, to Rajiv Gandhi 's Mattancherry hands 728 VOTE FOR UNITED DEMOCRATIC FRONT CANDIDATE M.J. ZAKHARIA IN LADDER SYMBOL Printed at Veekshanam. " The High Court has found that the following statement in paragraph 3 above, viz., "everybody knows the hands behind that murder. The Marxist leader arrested is also known" was in relation to the personal character/conduct of the first respondent. P 14 and P 15 are the photographs, as stated earlier, of the poster pasted on a wall, with the pamphlet (exhibit P 1) pasted on its left side. The contents of the wall poster are as follows: "Defeat murderer T.M. Mohammed who murdered four Christian brothers at Fort Cochin. Our Symbol. " The symbol is the ladder. This poster directly accused the first respondent as being murderer of the said four killed persons and requested the voters to vote for the appellant. As regards exhibit P 1, there is no mention of the first respondent directly by his name anywhere in the poster. However, the first respondent has alleged that there is an innuendo by which he is projected there as the murderer of the four victims. The High Court has accepted that the first respondent is referred to in the said pamphlet by innuendo. The High Court has also found that the pamphlets were got printed by one Latif who was appellant 's agent, on behalf of his Election Committee and at the instance of and with the consent and connivance of the appellant and his election agent and was distributed by them among the electors knowing the imputation to be false and calculated to affect the prospectus of his election. As regards Exs. P 14 and P 15, the High Court has recorded a finding that the said wall poster was pasted on a wall at the instance and with the consent of the appellant 's election agent. Thus, the High Court has recorded a finding that the first respondent had proved that the appellant was guilty of the corrupt prac tices within the meaning of Section 123(4) of the Act. Before we proceed to discuss the relevant evidence on record, it is necessary to understand the correct posi tion of law on the subject. The corrupt practices and elec toral offences are mentioned in Part 7 of the Act. Chapter I of the said Part deals with corrupt practices and contains Section 123 whereas Chapter III thereof enumerates electoral offences. and penalties therefore, and contains Sections 125 to 136. 729 Section 123(4) with which alone we are concerned in the present appeal reads as follows: "123(4) The publication by a candidate or his agent or by any other person with the consent of a candidate or his election agent, of any statement of fact which is false, and which he either believes to be false or does not believe to be true, in relation to the personal character or conduct of any candidate, or in relation to the candidature, or with drawal, of any candidate, being a statement reasonably calculated to prejudice the prospectus of that candidate 's election. " It is obvious from the aforesaid provisions of Section 123(4) that for a publication to constitute the corrupt practice (a) it must be a statement of fact: by (i) a candi date; or (ii) his agent; or (iii) any other person with the consent of the candidate or his election agent; (b) the statement must be false or the candidate must believe it to be false or should not believe it to be true; (c) the state ment should refer to the personal character and conduct of another candidate and (d) that it must be reasonably calcu lated to prejudice the prospects of that other candidate 's election. Explanation 1 to Section 123 states that in that Section the expression "agent" includes election agent, a polling agent and any person who is held to have acted as an agent in connection with the election with the consent of the candidate. The expression "election agent" is defined in Section 40 and is accorded a special status of almost an alter ego of the candidate so much so that whatever is done by the election agent or with his consent is deemed to have been done by the candidate himself whether it is with the candidate 's consent or not. It is further sufficient to note that the election agent is empowered to discharge almost all the functions that a candidate can himself perform. The further provisions of the Act which are necessary to be noted are those of sub sections (1)(b), (1)(d) and (2) of Section 100. They read as under: "100. Grounds for declaring election to be void (1) Subject to the provisions of sub section (2) if the High Court is of opinion (a). . . 730 (b) that any corrupt practice has been committed by a re turned candidate or his election agent or by any other person with the consent of a returned candidate or his election agent; or (c). . . (d) that the result of the election, in so far as it con cerns a returned candidate, has been materially affected (i). . . (ii) by any corrupt practice committed in the interests of the returned candidate by an agent other than his election agent, or (iii) . . . . . . . . the High Court shall declare the election of the returned candidate to be void. (2) If in the opinion of the High Court, a returned candi date has been guilty by an agent, other than his election agent of any corrupt practice but the High Court is satis fied (a) . . . . . . . . (c). . . . . . . . . (d). . . . . . . . . then the High Court may decide that the election of the returned candidate is not void". The aforesaid provisions of Section 100 show that where the corrupt practice is committed not by the candidate or his election agent or any other person with the consent of the candidate or his election agent but by an agent other than the election agent and in his interest, and the corrupt practice by such agent has materially affected the result of his election, the High Court is enjoined to declare the election of the candidate to be void. Sub section (2) of Section 100 enacts a rider to sub section (1) thereof, and states that even if the 731 agent has committed the corrupt practice in the interest of the returned candidate, if the High Court is satisfied that the said corrupt practice was not committed by the candidate or his election agent and every such corrupt practice was committed contrary to the orders and without the consent of the candidate or his election agent and that the candidate and his election agent took all reasonable means for pre venting the commission of the corrupt practice at the elec tion, and that in all other respects the election was free from any corrupt practice the part of the candidate or any of his agents, the High Court may decide that the election of the returned candidate is not void. With this statement of law in mind, we may now refer to the two corrupt practices alleged to have been committed by the appellant. We will first deal with exhibit P 1 the print ing, publication and distribution of which is held to have been one of the two corrupt practices committed by the appellant 's agent at his instance and with his consent and connivance as well as of his election agent. As far as the petition is concerned, the relevant averments with regard to exhibit P 1 are as follows: "13. Another important aspect which will amount to corrupt practice is the publication of pamphlets by the candidate, his agents and his workers with his consent and knowledge. Malayala Manorama dated 23.5.1983 was reported by the candidate at the expenses of the first respondent. This re printing is intended to propagate false statements which the candidate, his agents and as workers . . X X X X X 19. It is clear from these that the reprinting of Malayala Manorama by the candidate was with a view to create a false impression among the electorate that the petitioner is a murderer and hence the electorate shall not vote in favour of him. This was done with a mala fide intention to propa gate false news among the electorate. X X X X X 46. Malayala Manorama daily dated 22nd May, 1983 was re printed with certain additions and also with photographs 732 of Prime Minister and the candidate with the candidate 's symbol. This was reprinted from the Veekshanam Press at Ernakulam and got printed by the Election Committee of the first respondent . 47. Annexure I reprinted Malayala Manorama was widely dis tributed in the constituency. It was distributed on 22nd March, 1987. March 22, 1987 was a Sunday and May 1983 was also a Sunday. The petitioner is reliably informed that about 25,000 copies of Annexure I were printed and those copies of reprinted Malayala Manorama were distributed throughout the constituency. " In paragraphs 48 to 53 of the petition, the first re spondent has proceeded to give the names of the persons who distributed the said pamphlet in different divisions of the constituency and of the persons whom he was going to examine as witnesses to prove the same. In paragraph 54, he has made further averments in connection with the said pamphlet as follows: "Annexure was really the reproduction of Malayala Manorama daily dated 22.5.1983. Since a news item regarding the murder of 4 persons was reported in the daily mentioned above, to mislead the electorate, the Malayala Manorama printed and published on 22.5.1983 was reprinted . " 9. It will be apparent from these averments in the petition that although the first respondent has stated in his petition that the pamphlet was printed and distributed with a view to create a false impression among the elector ate that he was a murderer, he has not stated as to why it will create such an impression among the electorate. It was necessary for him to state so in the petition because admit tedly the pamphlet nowhere names him as a murderer of the said four victims. What was, however, argued by Dr. Chitale on behalf of the first respondent was that the statements in the pamphlet, viz., "everybody knows the hands behind that murder. The Marxist leader arrested also is known" were a clear and a direct reference to the first respondent, be cause it was an admitted fact that the first respondent was arrested for an offence of harbouring the accused in that murder case. There was also a protest meeting held in that connection, and the appellant who was his agent at that time had also addressed the said meeting condemning his arrest. According to Dr. Chitale, therefore, 733 the arrest of the first respondent though for the offence of harbouring the murderers, was in connection with the murder and the statement in the pamphlet that "The Marxist leader arrested is also known" read with the earlier statement that "Everybody knows the hands behind that murder" was clearly calculated to create an impression in the mind of the elec torate that it was the first respondent who was the murder er. Admittedly, therefore, even according to Dr. Chitale, these were the only two statements which could be said to have had a reference to the first respondent as the murderer and there was no direct reference to or implication of the first respondent as the murderer of the said four victims. In other words, the first respondent even in his petition had relied upon an innuendo, and the innuendo was based upon the fact that, firstly, the first respondent was a Marxist leader and, secondly, he was arrested for harbouring the murderers. However, in the petition, no averment is made anywhere that it was because he was a Marxist leader and was also arrested for harbouring the murderers that the elector ate was likely to construe the said two statements as accus ing him as the murderer. The facts and/or particulars which spell out the innuendo where one is alleged or relied upon to constitute a corrupt practice are themselves material facts and it is necessary to state them in the petition in view of the mandatory provisions of Section 83(1) of the Act. The provi sions of Section 83(1) are as follows: "83. Contents of petition (1) An election petition (a) shall contain a concise statement of the material facts on which the petitioner relies; (b) shall set forth full particulars of any corrupt practice that the petitioner alleges, including as full a statement as possible of the names of the parties alleged to have committed such corrupt practice and the date and place of the commission of each such practice; and (c) shall be signed by the petitioner and verified in the manner laid down in the Code of Civil Procedure, 1908 (5 of 1908) for the verification of pleadings: Provided that where the petitioner alleges any corrupt practice, the petitioner shall also be accompanied by an affidavit in the prescribed form in support of the allega 734 tion of such corrupt practice and the particulars thereof. " It is clear from the provisions of both clauses (a) and (b) of the Section that election petition has to contain (i) a concise statement of the material facts on which the petitioner relies and also (ii) give full particulars of any corrupt practice that the petitioner alleges. In a case therefore, where what constitutes a corrupt practice is not a bare statement/statements published but those which are not published, and yet are implied, a statement of material facts will not be complete without the statement of such implicit facts. In other words, without the statement of the said facts, the statement will not be a statement of materi al facts within the meaning of the said Section. This provi sion of law is indisputable. Much of the debate that took place before us cen tered round this aspect which has assumed all importance in the context of the first charge of the corrupt practice. Various authorities were cited on both sides in support of the respective contentions on the subject. We may briefly refer to them to the extent they are relevant for our pur pose. In Hough vs London Express Newspaper Ltd., it was a case of an action for an alleged libel pub lished in the newspaper. The plaintiff, Florence Sarah Hough, married Frank Hough in 1933 and lived with him in Battersea as his wife and had one child from him. In Febru ary, 1936, he deserted her, and in June 1936 he was ordered to pay maintenance for the child. He was known at Battersea, where he lived at the time of the order, and after the desertion also he continued to live there. He acquired some notoriety as a boxer, and the plaintiff became known in the district as his wife. On December 22, 1937, an article appeared in Daily Express, a newspaper owned by the defend ants, containing the words: "Frank Hough 's curly headed wife sees every fight. "I should be in more suspense at home. " she says, "I always get nervous when he gets in the ring although I know he won 't get hurt. Nothing puts him off his food. He always eats a cooked meal last thing at night, however late it is when he gets in". " From the description given of the wife, it was obvious to those who knew the wife that another person was referred to. Hence, the plaintiff brought an action for libel alleging that the words by innuendo meant that she was falsely repre senting herself to be the wife and that she was 735 an unmarried woman who had cohabited with and had children by the boxer. On these facts, the Court of Appeal held: (i) the words were defamatory as reasonable persons knowing the circumstances would understand the words in defamatory sense (ii) it was not necessary for the plaintiff to prove that one or more persons understood the words in a defamatory sense. 1t is sufficient that reasonable persons might so understand them. The decision, therefore, shows that it is not necessary that a person publishing a defamatory state ment should intend that the statement should refer to the defamed person. It is sufficient that reasonable persons should understand it to refer to him or her. The words need not be defamatory in the primary sense. They are actionable if the existence of certain circumstances makes it reasona ble that persons to whom those circumstances are known, might understand them in a defamatory sense. It is not necessary to prove that in fact persons with such knowledge did so understand them. What is necessary, however, is that the special circumstances which are known to others and by which they are likely to understand the reference as being one to that defamed persons must be pleaded and proved. In Fullam vs Newscastle Chronicle and Journal Ltd. & Anr. , the facts were that prior to 1962, the plaintiff was a Roman Catholic priest and a curate in the dioceses of Salford near Manchester. In 1962, he gave up the priesthood and became a schoolteacher. In 1964, he married and in 1965 he and his wife had their first child. The plaintiff took a teaching post at Wakefield. South Yorkshire, where he lived. In July 1973, he applied for the deputy headmastership at a school in Redcar on Teesside, which was about 80 miles north of Wakefield, and he was appointed to that post. There had been a controversy about the previous deputy headmaster. On 21st July, a local news paper which circulated in the districts of Teesside and Newscastle Upon Tyne but not in the Wakefield area, pub lished an article about the plaintiff 's appointment which stated inter alia that he was a former Catholic priest, that he had left his parish in the Salford diocese and later had married and that it was claimed by the general secretary of the National Association of School masters that he "went off very suddenly from the parish where he was curate 'about seven years ago '. " The plaintiff pleaded in his statement of claim that the words in the article meant and would be understood to mean that he (a) had lathered a child whilst still a priest serving in a parish, (b) had lathered an,,illegitimate child, (c) had wrongly continued to serve as a priest after his marriage, (d) had wrongly withheld the fact of his marriage from his eclesiastical 736 superiors and parishioners and accordingly was unfit to be deputy headmaster of the school at Redcar. Pursuant to RSC Order 82, rule 3(1), the plaintiff gave as the particulars of the facts on which he relied in support of innuendoes (i) that he had married on 15th February, 1964 and (ii) that his eldest child had been born in May 1965. He did not give particulars of the persons who knew one or the other of those extrinsic facts and who, therefore, having regard to the statement in the article that he had left the parish suddenly "seven years ago", might have derived from the article the imputations alleged in (a) to (d) of para 5 of the statement of claim. The defendants applied to strike out para 5 of the claim on the ground that it disclosed no reasonable cause of action. The Court of Appeal held as follows: "(i) Although it was not the usual practice in libel actions to plead particular acts of publication if the words com plained of had been published in a newspaper, in cases where the action was based on a legal, or 'true ', innuendo and the ordinary readers of the paper would not have derived from the words complained of the innuendo alleged, the plaintiff was required, under RSC Order 18, rule 7(I) and Order 82, rule 3(I) to particularise not only the special circum stances which were alleged to give rise to the innuendo but also the identity of the readers of the paper who were alleged to know of those special circumstances, since the identity of those readers was a material fact on which the plaintiff relied in support of his cause of action. (ii) Since the only readers of the article who could have concluded that the plaintiff had lathered a child or married while he was still a priest were readers who new either the date of birth of his 'eldest child or the date of his mar riage but did not know both those facts and such readers would be rare and exceptional, having regard in particular to the area where the paper circulated, the plaintiff should be ordered to give particulars identifying those readers. Accordingly, unless such particulars were given, para 5 of the statement of claim should be struck out. " While discussing the law on the subject, Lord Denning MR observed as follows: "The essence of libel is the publication of written words to 737 a person or persons by whom they would be reasonably under stood to be defamatory of the plaintiff. But those words may give rise to two separate and distinct causes of action . . First, the cause of action based on a popular innuendo. If the plaintiff relies on the natural and ordi nary meaning of the words, he must in his statement of claim satisfy the person or persons to whom they were published, save in the case of newspaper or periodical which is pub lished to the world at large, when the persons are so numer ous as to go without saying. Secondly, the cause of action based on a legal innuendo. If the plaintiff relies on some special circumstances which convey some particular person or persons knowing the circum stances, a special defamatory meaning other than the natural and ordinary meaning of the words when he must in his state ment of claim specify the particular person or persons to whom they were published and the special circumstances known to that person or persons for the simple reason that these are the material facts on which he relies and must rely for this cause of action. It comes straight within the general rule of pleading contained in RSC Order 82, rule 3. In the second cause of action, there is no exception in the case of a newspaper because the words would not be so understood by the world at large but only by the particular person or persons who know the special circumstances." (emphasis supplied) Lord Denning further observed that this rule of pleading was not observed in Cassidy vs Daily Mirror Newspapers, or in Hough vs London Express Newspaper Ltd., (supra) because the defendant did not ask for particu lars. After referring to paragraph 5 of the plaint, he then observed that paragraph 5 was utterly inadequate as it stood and that no ordinary reader could ever derive those imputa tions about "fathering a child" etc. from the article. It would have to be some particular person with knowledge of some special circumstances. He further observed that the pleading in that case told the circumstances, viz., the marriage in 1964 and the birth of a son in 1965 but it did not tell as to who were the persons who knew of the circum stances and derived the imputations from the article. In the same case, Scarman LJ stated that it was obvious that a 738 material fact in such a cause of action was that the persons to whom the words were published knew the extrinsic facts. In principle, therefore, their knowledge being a material fact should be pleaded. He further observed that there may be a case where the facts may be very well ' known in the area of the newspaper distribution in which even it would suffice to plead merely that the plaintiff would rely on inference that some of the newspaper readers must have been aware of the facts which are said to give rise to the innu endo. But that was not the case in that action and, there fore, justice required that the plaintiff should fully particularise the publication relied on so that the defend ants may understand the nature of the case they have to make. These two decisions, however, are in libel action and not in election matters. In Sheopat Singh vs Ram Pratap, ; , one of the questions that directly arose for consideration was of the burden of proving the ingredients of the corrupt practice under Section 123(4). The facts were that an alle gation was made against the personal character and conduct of one of the candidates in the election, viz., that a cinema theatre of Rs.7 lakhs in Ganganagar was the barkat of the cement of the Rajasthan Canal. The candidate concerned was at the crucial time the Minister in charge of the Rajas than Canal Project. During the election, a cinema theatre known as Adarsh Theatre was being put up at Ganganagar. There was no dispute that the theatre referred to in the poster was the said Adarsh Theatre and it belonged to the concerned candidate and his sons. In that context, there fore, it was manifest that the poster meant to convey the idea that the candidate had misappropriated the cement of the Rajasthan Canal of which he was in charge and built a big theatre in the name of his sons. Hence, it was a clear reflection on the candidate 's personal character and con duct. The argument advanced on behalf of the returned candi date was that there was no evidence in the case that the said statement was one reasonably calculated to prejudice the prospects of the election of the candidate against whom the said statement was meant, viz., Ramchander Chowdhary. In that connection, it was argued that if the voters did not know that the cinema theatre which was being built in Ganga nagar belonged to Ramchander Chowdhary or his sons, the statement concerned would not deflect the voters from voting in favour of Chowdhary. It was also argued that there was no evidence in the case that all or any of the voters knew the fact that the cinema theatre belonged to Chowdhary or his sons. This Court stated in that case that they were not dealing with a libel action and, therefore, the 739 cases cited at the Bar on libel action such as Nevill vs Fine Art and General Insurance Co. Ltd., and the Capital and Counties Bank Ltd. vs George Henty & Sons, had no relevance for determining the ques tion under Section 123(4) of the Act. The only question is whether the statement in question was reasonably calculated to prejudice the prospects of Chowdhary 's election. The Court then pointed out that on behalf of the returned candi date it was not contended either before the Election Tribu nal or before the High Court that the voters had no knowl edge of the fact that the cinema theatre at Ganganagar belonged to Chowdhary or his sons. The Court further ob served that apart from that the object with which the state ment was made was the crucial test. Since it was proved that Ganganagar cinema theatre belonged to Chowdhary 's sons and that Chowdhary was the Minister in charge of the Rajasthan Canal and he was also the only effective candidate against the returned candidate who was the appellant in that case, the appellant 's intention in making that statement was obvious and that was to attack the personal character of Chowdhary in order to prejudice his prospects in election. The appellant must have reasonably calculated that the voters, or at any rate the voters in and about the locality where the cinema theatre was being put up, had knowledge or the tact that It was being constructed by the Minister of his sons. It cannot also be said that when a big cinema theatre at a cost of Rs.7 lakhs was being put up in Gangana gar the voters in and about that place would not have known about the ownership of that building. Hence, the fact that the building was brought in for attacking the personal character of Chowdhary merely indicated that the appellant knew that the voters had knowledge of its ownership and expected that it would create the impression which it mani festly indicated to convey. Hence, this Court held that the High Court 's finding that the statement was reasonably calculated to prejudice Chowdhary 's prospects in election could not be said to be unsupported by evidence or by the. admitted facts placed before the High Court. It was a rea sonable inference from the facts found by the High ' Court. It must be said that in this case the question whether it was necessary for the election petitioner to state in the petition the extrinsic facts which would connect the person concerned with the libelous statement was not raised and, therefore, was not answered. The only question which was agitated was whether the voters without knowing that the theatre belonged to the defamed candidate would be deflected from voting and this Court upholding the finding of the High Court, observed that it was not contended either before the Election 740 Tribunal or before the High Court that the voters had no knowledge of the fact that the cinema theatre belonged to Chowdhary or his sons. Secondly, it was held that whether the voters had such knowledge was immaterial since what was crucial for the corrupt practice under Section 123(4) of the Act is the object with which it was made. Since the election petitioner had proved that the theatre belonged to Chowd hary 's sons and that Chowdhary was the Minister in charge of the Rajasthan Canal, it must be held that the returned candidate had reasonably calculated that the voters or at any rate the voters in and about the locality where the theatre was being put up, had knowledge of the fact that it was being constructed by the Minister or his sons, and that such extrinsic facts could not have been unknown to the voters. This decision may be construed as laying down that even if the petition does not state the extrinsic facts but the electorate is well aware of them, the petitioner can lead evidence and prove them. Whether the petition in that case did or did not state the extrinsic facts is not clear from the decision. It is also not clear from the judgment whether any evidence was led that in fact the voters had understood the said statement to refer to Chowdhary. On the other hand, one of the observations made in the judgment shows that the proof of such an impression of the voters is dispensable for the purpose of establishing a corrupt prac tice under Section 123(4) of the Act. That observation is as follows: "To be within the mischief of sub section (4) of Section 123 of the Act such a statement shall satisfy another test, namely, it shall be a statement reasonably calculated to prejudice the prospects of the election of the candidate against whom it is made. The word "calculated" means de signed: it denotes more than mere likelihood and imports a design to affect voters. It connotes a subjective element, though the actual effect of. the statement on the electoral mind reflected in the result may afford a basis to ascertain whether the said statement was reasonably calculated to achieve that effect. The emphasis is on the calculated effect, not on the actual result, though the latter proves the former. But what is important to notice is that it is not necessary to establish by positive evidence that the voters, with the knowledge of the contents of the statement were deflected from voting for the candidate against whom the statement was made. " In Kumara Nand vs Brijmohan Lal Sharma. ; the 741 facts were that the complaining candidate was called "the greatest of the thieves" in a poem recited at a public meeting in the presence of the returned candidate. It was held that it was not a mere expression of opinion but was a statement of fact. It was further held that in such circum stances, particulars are not necessary before a bald state ment with respect to personal character or conduct of the candidate can be said to be a statement of fact. It was also observed that whether particulars are necessary will depend on the facts and circumstances of each case. We may state here that the discussion in that case mainly centered around the question whether the particular statement was a state ment of fact or an expression of opinion. In Habib Bhai vs Pyarelal & Ors. , AIR 1964 MP 62 dealing with the question of innuendo the High Court referred to certain English cases on the point and held that "in view of these decisions, it is obvious that an innuendo is simply an averment that such a one, means such a particular person; or that such a thing, means such a particular thing: and, when coupled with the introductory matter, it is an averment of the whole connected proposition by which the charge may be brought home to the person concerned. The whole attempt of the learned counsel for the appellant before us was to suggest that the words, though not per se defamatory of the third respondent, were definitely so in their secondary meaning read in the context of circumstances. But, as no attempt was made in the pleadings to plead the extrinsic facts to show by those facts as to how the allegations contained in annexure I were related to the third respond ents, we are of opinion that it must he held that by refer ring to any possible meaning of the words used, no imputa tion could be read in the words as against him. " It can, therefore, be said that in this case the Court had insisted that it was necessary to plead the extrinsic facts to show all those facts as to how allegations were related to the defamed or complaining candidate. In Manmohan Kalia vs Yash & Ors., ; which is more or less on par with the present case, it was alleged by the election petitioner that the returned candidate through speeches either made by him or his friends had carried on a vilifying campaign to show that the complaining candidate was directly connected with the murder of one Asa Ram, a Harijan and one of the supporters of Congress (I) Party so as to wean away the votes of the harijans of the locality and members of the Congress (I) Party. The High Court had disbelieved oral evidence and found no nexus with the news items etc. and had 742 dismissed the petition. This Court held that where the doctrine of innuendo is applied, it must be clearly proved that the defamatory allegation was made in respect of a person though not named, yet so fully described that the allegation would refer to that person and that person alone. Innuendo cannot be proved merely by inferential evidence which may be capable of two possibilities. On the facts, the Court held that after having gone through the evidence, statement of witnesses and the documents placed before the Court, it was difficult to find any close connection or direct link between the imputations made against the appel lant in 1978 and those made in 1980. In none of the docu ments produced by the complaining candidate which referred to the activities of the returned candidate, there was the slightest possibility that the appellant had anything to do with the murder of Asa Ram. The Court further observed as follows: "It is now well settled by several authorities of the Su preme Court that an allegation of corrupt practice must be proved as strictly as a criminal charge and the principle of preponderance of probabilities would not apply to corrupt practices envisaged by the Act because if this test is not applied a very serious prejudice would be caused to the elected candidate who may be disqualified for a period of six years from fighting any election, which will adversely affect the electoral process". In W. Hay & Ors. vs Aswini Kumar Samanta, AIR 1958 Cal. 269 a Division Bench of the Calcutta High Court held that it is well settled that in a "libel action" the ordinary defam atory words must be set out in the plaint. Where the words are per se or prima facie defamatory only the words need be set out. Wherever the defamatory sense is not apparent on the face of the words, the defamatory meaning or as it is technically known in law, the innuendo must also be set out and stated in clear and specific terms. Where again the offending words would be defamatory only in the particular context in which they were used, uttered or published, it is necessary also to set out except where as in England, the law is or has been made expressly otherwise, the offending context (colloquium) in the plaint, and to state or ever further that this context or the circumstances constituting the same, were known to the persons to whom the words were published, or, at least, that they understood the words in the defamatory sense. In the absence of these necessary averments, the plaint would be liable to be rejected on the ground that it does not disclose any cause of action. 743 13. What exactly should be pleaded in an action for defamation has been stated also in Halsbury 's Laws of Eng land Vol. 28 4th ed. In paragraphs 174, 175, 176, 177 and 178 of the said Volume, we have discussion with regard to natural and ordinary meaning of the words complained of, and about the innuendo and the facts and matters supporting innuendo which should be pleaded and proved. It is stated there that in drafting a statement of claim in libel or slander, it is necessary to distinguish between cases in which the words complained of are alleged to be defamatory in their natural and ordinary meaning, whether the literal or the inferential meaning, and those in which the defamato ry meaning is a secondary meaning derived from extrinsic or special facts or matters, so that a legal or true innuendo must be pleaded. If it is claimed that the words are defama tory in their natural and ordinary meaning and the words bear only one literal meaning, which is clear and explicit, it is not necessary to plead the meaning in the statement of claim. However, if the words are reasonably capable of bearing more than one literal meaning or if the defamatory meaning relied on is inferential (a "false or popular" innuendo), it is desirable and may even be necessary to plead the defamatory meaning or meanings. Where the plain tiff wishes to claim that the words complained of were understood to be defamatory in a secondary or extended meaning by those persons having knowledge of some special facts or matters, such a meaning constitutes a separate cause of action and the same should be pleaded expressly in a separate paragraph in the statement of claim (emphasis supplied). Particulars must be given of the facts and mat ters on which the plaintiff relies in support of any second ary or extended defamatory meaning which it is decided to plead. These special facts or matters may be extrinsic to the words used or there may be some special meaning of the words themselves. The plaintiff should plead that particular words bore the innuendo meaning. In Gatley on Libel and Slander (8th ed.) in para graph 95, while dealing with "True and False Innuendoes", it is observed that in distinguishing between the ordinary and natural meaning and the innuendo meaning or words, the substantive law cannot be separated from the requirements of pleadings and the rules of evidence. When the plaintiff wishes to rely on any special facts as giving the words a defamatory or any particular defamatory meaning, he must plead and prove such facts including, where necessary, any special knowledge possessed by those to whom the words are published which gives the words that meaning, and must set out the meaning in his pleading. Where words are not defama tory in their natural and ordinary mean 744 ing but are so only by reason of extrinsic circumstances, the plaintiff must plead also those circumstances and the precise defamatory meaning conveyed by them to those persons to whom the words were published. Otherwise, the statement of claim will disclose no cause of action. Such an innuendo is required to be pleaded whenever the plaintiff relies on any extrinsic facts as giving to the words the meaning he alleges. The plaintiff must plead the words, the extrinsic facts and knowledge of those facts on the part of one or more of those persons to whom the words were published. He can also give evidence of any facts and circumstances which he has pleaded and which would lead reasonable persons to infer that the words were understood in that meaning provid ed such facts or circumstances were known to those persons to whom the words were published. The evidence required is the evidence of special facts causing the words to have a meaning revealed to those who knew the special facts. Street in his treatise on Torts (6th ed.) at page 294, has stated that where nothing is alleged to give an extended meaning, words must be construed by the judge in their ordinary and natural meaning. The whole of the statement must be looked at, not merely that part on which the plain tiff relies as being defamatory, although, of course, it may be relevant to take account of the greater importance of some part of a statement, e.g., the headlines of an article in a newspaper. There may be circumstances where the plain tiff alleges that the statement is defamatory because spe cific facts known to the reader give to the statement a meaning other than or additional to its ordinary meaning; this is known as a true or legal innuendo. In that case, the plaintiff must plead and prove such facts, for the defendant is entitled to know that meaning of the statement on which the plaintiff relies so that he is able to argue either that the statement in that meaning is not defamatory or that it is then true of the plaintiff. There is a third possibility. The words may have a meaning beyond their literal meaning which is inherent in them and arises by inference or impli cation: this is sometimes known as the "false" innuendo. The plaintiff has to plead separately any such "false" innuendo. A "false" innuendo differs from a "true" innuendo in that the pleader of a "false" innuendo does not set out any extrinsic facts in support of his plea. Duncan & Neil in their book on defamation (1978 ed.) while referring to "innuendo" on page 17 onwards have stated that the law of defamation recognises that (a) some words have technical or slang meaning or meanings which depend on some special knowledge possessed not by the general public but by a limited number of persons 745 and (b) that ordinary words may on occasions bear some special meaning other than their natural and ordinary mean ing because of certain extrinsic facts and circumstances. The plaintiff who seeks to refer to an innuendo meaning has to plead and prove the facts and circumstances which give words a special meaning '. He has also to prove that the words were published to one or more persons who knew these facts or circumstances or where appropriate, the meaning of the technical terms etc. While referring to the test where identification depends on extrinsic facts, the learned authors have stated that where identification is in issue, the matter can sometimes be decided by construing the words themselves in their context. More often, however, the plaintiff will be seeking to show that the words would be understood to refer to him because of some facts or circumstances which are extrinsic to the words themselves. In these cases the plaintiff is required to plead and prove the extrinsic facts on which he relies to establish identification and, if these facts are proved, the question becomes: would reasonable persons knowing these facts or some of them, reasonably believe that the words referred to the plaintiff. Where identification depends on extrinsic facts these extrinsic facts must be pleaded because they form part of the cause of action. The conspectus of the authorities thus shows that where the defamatory words complained of are not defamatory in the natural or ordinary meaning, or in other words, they are not defamatory per se but are defamatory because of certain special of extrinsic facts which are in the knowl edge of particular persons to whom they are addressed, such innuendo meaning has to be pleaded and proved specifically by giving the particulars of the said extrinsic facts. It is immaterial in such cases as to whether the action is for defamation or for corrupt practice in an election matter, for in both cases it is the words complained of together with the extrinsic facts which constitute the cause of action. It is true that Section 123(4) of the Act states that the statement of fact in question must be "reasonably calculated to prejudice the prospects" of the complaining candidate 's election. However, unless it is established that the words complained of were capable of being construed as referring to the personal character or conduct of the candi date because of some specific extrinsic facts or circum stances which are pleaded and proved, it is not possible to hold that they were reasonably calculated to prejudice his prospects in the elections. For, in the absence of the knowledge of the special facts on the part of the 746 electorate, the words complained of cannot be held to be reasonably calculated to prejudice such prospects. Once, however, it is proved by laying the foundation of facts that the words in question were, by virtue of the knowledge of the special facts, likely to be construed by the electorate as referring to the personal character or conduct of the complaining candidate, it may not further be necessary to prove that in fact the electorate had understood them to be so. That is because all that Section 123(4) requires is that the person publishing the complaining words must have in tended and reasonably calculated to affect the prospects of the complaining candidate in the election. It is in the light of this position in law that we have to examine as to whether the first respondent (elec tion petitioner) had discharged this primary burden cast on him. We have already shown above by referring to the por tions of the petition relating to exhibit P 1, that beyond alleging that the pamphlet in question and particularly the two statements therein, viz., "everybody knows the hands behind that murder. The Marxist leader arrested also is known", the first respondent has not shown as to how the said two statements or the rest of the contents of exhibit P 1 had projected him as the murderer in the eyes of the elec torate. Dr. Chitale, learned counsel appearing for the first respondent relied upon the contents of paragraphs 14 and 19 of the petition to contend that the extrinsic facts to spell out the innuendo were sufficiently set out there and those facts being known to the electorate the said two offending statements were enough to point to the first respondent as the murderer in the eyes of the electorate. We have already referred to the relevant portions from the said paragraphs. We do not find any facts pleaded there whereby the elector ate would gather an impression that the first respondent was the murderer of the Said four victims. Barring his own testimony, all other evidence led by the first respondent is also totally silent on this aspect of the matter. None of his witnesses has stated anywhere that the contents of exhibit P 1 had made out the first re spondent as the murderer of the four victims or even that they were capable of doing so. On the other hand, all his witnesses without exception are unanimous that after reading exhibit P 1 the impression it created on them was that it referred to an incident which had taken place on the previ ous day or to an earlier incident and nothing more. None of the witnesses has stated that exhibit P 1 even remotely connect ed the first respondent with the murders. This is what the witnesses have stated: 747 V.H. Ashraft, PW 2 states in his examination in chief as follows: "I read exhibit P 1. The impression that it created in me was that it referred to an incident that took place on the previous day. " In cross examination, the witness states: "On seeing a copy of exhibit P 1 my first impression was that it is an issue of the daily paper for that day . . I did not go through exhibit P 1 in full. Immediately I have gone through the daily issue also. At that time I realised that Ex P 1 did not relate to an incident that took place on the previous day. After that when I read exhibit P 1 I further realised that it relates to some incident on an earlier occasion". VSA Muthaliff, PW 3 in his examination in chief states as follows: "On reading exhibit P 1 I thought that it is a supplement pub lished in connection with the election. I thought that it is a supplement of Malayala Manorama Daily for that day. I thought that it was the report regarding murders in connec tion with the election". M.K. Saidalavi, PW 4 in his examination in chief states as follows: "On reading exhibit P 11 thought that it was the news about a murder that took place the previous day. The impression that 1 gathered was that murder was committed by the Communists . I thought that exhibit P 1 is likely to affect Left United Front adversely. " In cross examination, the witness says as follows: "I had occasion to talk to my friends about exhibit P 1. After reading exhibit P 11 understood that it was not the news of a recent incident. I had occasioned to read about that inci dent earlier in 1983. On going through exhibit P 1 I understood that it related to an incident that took place in 1983. " C.J. Dominic, PW 5 in his examination in chief states as follows: 748 "On reading the headlines I went to the market. When I returned home the talk there was as if murder took place the previous day. Then in order to clear doubt I went to the reading room. On going through the daily issue of the Ma layala Manorama I was not able to find the news in exhibit P 11 felt sorry that such a murder took place on the eve of the election." K.D. Abdu, PW 6 states in his examination in chief as fol lows: "I read the copy of exhibit P 1 I realised that it was a con scious attempt on the part of the United Democratic Front to defeat the petitioner in the election. Copies of exhibit P 1 were supplied by them in almost all the houses in the local ity. Majority of the voters in that locality was ladies and they were illiterate also. " In cross examination, the witness states as follows: "Regarding exhibit P 1 my enquiry revealed that almost all the persons of the locality had complained. I went through the entire copy of exhibit P 1. " Then it appears that there is a note by the court that the witness says that exhibit P 1 was purposely intended to defame the petitioner. The witness further stated in cross examina tion as follows: "When I talked to the petitioner (i.e., the first respond ent) about the speeches I made mention of the copy of exhibit P 1 also. He did not ask for a copy. ' ' K. Prakash, PW 7 in his examination in chief states as follows: "On reading such posters exhibit P 1 the news appeared to me to be true. It was only after the election that I came to know that the impression was not correct." Though T.M. Darar, PW 8 states in his examination in chief that he had seen copies of exhibit P 1 being distributed in 7th Division and he also alleges that he had seen the copy of the said pamphlet and the wall posters containing the photographs of the appellant seen pasted there, he does not give the impression about the same. However, in crossex amination he states as follows: 749 "I went through the copy of exhibit P 1. On reading I understood that it is an old story. " Thanhapen, PW 9 in examination in chief has nothing to state. However, in cross examination he states as follows: "1 did not read the copy of exhibit P 1 in full when it was given to me. Even before reading I was pained to see it. Pain was because I saw that four persons were murdered. After going over to my daughter 's residence on the same day I read another copy of exhibit P 1 in full. On reading I under stood that it is an old story. Then the pain that I felt at first was slightly relieved. But the pain continued because after all murder is murder. " C.S Devadas, PW 10 in his cross examination states as fol lows: "The impression that I gathered was that the Marxists are murderers and therefore instead of giving votes to them it must be given to the 1st respondent (i.e., the appellant). " Sathyan, PW 13 in his examination in chief states as fol lows: "In exhibit P 1 there was also a statement of the 1st respond ent. The reading of the news regarding 4 murders appears at first sight to be an item of news going adverse to the petitioner. This news item was a general discussion in the locality. " In cross examination he states as follows: "When I got exhibit P 1 I read through the same. Even after reading exhibit P 1 in full I was not able to realise that it was the news of murders committed much earlier. Even after discussions with others I did not realise that it was an earlier incident. It had news importance. It was only after the election that I came to understand that the news item in exhibit P 1 related to an earlier incident. Discussion was with my colleagues. They said that they also got the copies of exhibit P 1. They are persons without politics. I did not bring this news item to the notice of the petitioner (i.e., the first respondent). 750 5. The workers of the petitioner (i.e., the first respond ent) also used to come to me for canvassing. I asked them about the news in exhibit P 1. They said they knew about it. This was after lunch on the date previous to election. When Rajappan and Vasukutty gave a copy of exhibit P 1 to me others were waiting outside. On seeing and reading a copy of exhibit P 1 it appeared to me to be a supplement of Malayala Manora ma daily for that day. Even after reading. the news item in exhibit P I, on account of the importance of the news, I had no occasion to think about it further to ascertain whether it is a recent news or an old news. " P.M. Kaviraj, PW 14 in his examination in chief has only this to say: "I heard ladies saying that the news contained in exhibit P 1 is a cruel act. " In cross examination he says as follows: "On getting PW 1, I read through it in entirety. Even then 1 understand (sic) that it is the news of an old incident. My impression was that it was the news relating to an inci dent which took place on that date. I did not inform the petitioner that I read EX. I wanted to tell him but I did not do so. Till now I did not inform him. That is be cause I am not interested. I told my friends. It was then that I knew that it was an old news. " T.A. Guide, PW 15 in his examination in chief states as follows: "The persons mentioned in exhibit P 1 who have been murdered are my neighbours. " In cross examination he states as follows: "On reading of exhibit P 11 understood that it related to an earlier incident. We discussed the matter at home. I also discussed the matter with some friends. Thus, it is clear from the testimony of the first respondent 's witnesses that the contents of exhibit P 1 gave them an impression variously as either the incident had occurred the previous day or that it was 751 an old story or that the Communists or Marxits were murder ers or that it was a cruel act or that it was unfavourable to the first respondent. The impression conveyed by the document that the Marxists or Communists were murderers and therefore the electorate should not ' vote for them and hence it was unfavourable to the first respondent, was not an impression about his personal character/conduct. It was an impression at best about his political character/conduct. In particular there was no impression that he was the murderer or one of the murderers. As far as the petitioner himself is concerned, in paragraph 2 of his deposition in examination in chief he makes a general statement as follows: "Personally against me the propaganda on behalf of the first respondent (i.e., the appellant) was that I am a murderer, a non religious man and one who is unfit to be elected as a member of the legislative assembly. " Thereafter in paragraph 19 of his deposition he says with reference to exhibit P 1 as follows: "The original of exhibit P 1 was printed and published on a Sunday which was 22.5.83, distribution was on a Sunday which was 22.3.1987. Four murders were described as incidents which took place on the previous day. Out of the 4 murdered, the photos of two dead bodies lying in the hospital were also published therein. exhibit P 1 mainly contained the news about murders alone. The intention behind the publication was to make the electors understand 4 murders that took place in 1983 as murders that took place on the previous day. That paper also contains a request by the committee with the photos of 1st respondent (i.e., the appellant) and Rajiv Gandhi. In the request it is specifically stated 'that it is only common knowledge as to who is behind the murder. So also it is written that the Marxist leader who is arrest ed is also known to all. That was the result of a conspiracy consciously entered into for the purpose of maligning and exposing me as a murderer and an undesirable person. I was never an accused of any murder case. In connection with the 4 murders described in exhibit P 1 a 752 case was registered against me for having given shelter to the accused in that case. There were several meetings in protest against my rest in connection with that case stating that it is a false case. 1 had absolutely no involvement in giving protection or shelter to those persons. Subsequently that case ended in acquittal. In the main protest meeting held at Thoppumpadi one of the speakers was the 1st respond ent himself. (i.e., the appellant). At the time of those murders in 1983 Mr. Vayalar Ravi was the Home Minister. He was also the leader of the Union in the Cochin Port Trust. I was also a worker of a rival union there. There were differ ences of opinion between myself and Mr. Vayalar Ravi. There fore it was at his instigation that I was implicated in a false case." (emphasis supplied) Then there is a Court question: Whether the murders of those persons were political murders? The answer is: Those four murdered persons were anti social elements. There was no politics involved in it. Then he continues to state: "The publication of exhibit PW 1 on the date previous to the election had the effect of creating an impression among the impartial electors that I am a person involved in murders . . If such a propaganda is made as was done in this case the opposite candidate will not be getting an opportunity to rectify the result. 1st respondent and his workers were fully aware of the fact that I am completely innocent in connection with the murders of the said four persons. Since they were fully aware of the fact that I am sure to succeed in the election, this story was purposely manipulated as a result of conspiracy." "22. exhibit PW 1 when it was published had the appearance of a real issue of Manorama. Daily People on reading the report went under the impression that what was contained therein was the news of an incident which took place the previous day. On seeing copies of exhibit PW 1, many of my workers and electors also telephoned and told me that a supplement of Malayala Manorama was seen. They also inquired about the murders mentioned therein. Since I was not able to get an opportunity of bringing the real facts 753 before the electors, myself and my workers were in a help less condition." (emphasis supplied) In his cross examination he states in paragraph 32 of his deposition as follows: "The fight hand side of exhibit P 1 contains a true copy of the Malayala Manorama. In that portion there is no difference. On the left hand side and the lower portion of the right side there are certain additions. The news item in exhibit P 1 regarding murders are correct in all details. What is wrong is only that it was published as if to appear that it was an incident that took place on the previous day. My complaint is that an impression was created among the people that it was an incident that took place on 21.3.1987. Even after reading the whole of exhibit P I people go only under the im pression that the incident happened on the previous day. My memory is that I have specifically alleged in the petition that such an impression was created. It was unfavourable to my interest only on account of the creation of such an impression that it was an incident that happened on the previous day. My complaint is that I did not get an opportu nity to correct the impression before the polling. I have alleged in the petition that such an impression was created among the voters and I did not get time to correct the impression before the polling. In the true copy of Malayala Manorama contained in exhibit P 1 there is nothing against me. On the left hand side of exhibit P 1 is the request to vote for the 1st respondent even though my name was not mentioned it was intended against me. Even without mentioning my name it is possible to know that it was intended against me. The writings in that request capable of identifying me as the culprit are the statements that the persons responsible are known to all and the Marxist leader who was arrested was also known to all." (emphasis supplied). He was then asked the question: "Have you so stated in the petition?" The answer was "My memory is that it is so stat ed". He then proceeds to state as follows: "If I remember correct I have stated in the petition that the person intended by the arrested Marxist leader is my self. 754 Many persons who gathered such an impression contacted me over phone. I did not examine anybody among them. I have examined several persons for proving the distribution of exhibit P 1. None of those witnesses were asked by my counsel wheth er any of them understood the reference in the request contained in exhibit P 1 as concerning me. I was present in court when those witnesses were examined. I did not ask any of them whether they continued to hold the impression that the murder took place on the previous day . . My impres sion is only from what my workers told me." (emphasis supplied) 20. We have supplied the emphasis at the proper places in the first respondent 's testimony reproduced above. He has himself admitted that all those who read exhibit P 1 gathered an impression that the incident had occurred on the day previous to its publication. If that is so, then even the statements in exhibit P 1 that "Every body knows the hands behind that murder. The Marxist leader arrested is also known" were not connected by the people with his arrest for harbouring the accused in the old murder case and vice versa. The first respondent has repeated his allegation that the people had thought that the incident had taken place on the day previous to the publication of exhibit P 1 at places more than one in his testimony. He has also placed his own interpretation on the said publication which is incompatible with the extrinsic facts stated by him in support of the innuendo meaning of the publication. According to him (i) the four murders were described as incident which had taken place on the previous day; (ii) the intention behind its publication was to make the electorate believe that the murders which had taken place in 1983 were murders that had taken place on the previous day; (iii) it is in the context of this intention that it was specifically stated that it was only common knowledge as to who was behind the murders. So also in the context of this intention that it was written that the Marxist leader who was arrested was also known to all; (iv) again it is to explain this intention that he has given the extrinsic facts, viz., that in connection with the four murders described in the publication a case was registered against him for having given shelter to the accused in that case. He has also stated that there were several meetings in protest against his arrest and that in the main protest meeting the appellant was one of the speakers on his behalf; (v) according to him further the people on reading the report gathered the impression that what was stated in the publication was the news of an incident which had taken place the previous day; (vi) further what 755 was wrong with the publication, according to him, was only that it was published as if to appear that it was an inci dent that had taken place on the previous day. He has reit erated this by specifically stating that his complaint was that an impression was created among the people that it was an incident that had taken place on March 21, 1987. Accord ing to him, further even after reading the whole of exhibit P 1 people went only under the impression that the incident had occurred on the previous day. It is his case further that he has specifically alleged in the petition that such an im pression was created and that it was unfavourable to his interest only on account of the creation of such an impres sion, viz., that it was an incident that had happened on the previous day. He has then stated that even though his name was not mentioned, it was intended against him, and that even without mentioning his name it was possible to know that it was intended against him and that the publication was capable of identifying him as the culprit because of the statements that "the persons responsible were known to all" and "the Marxist leader arrested was also known to all. Although he has also added at the end that many persons who gathered such an impression, viz., that he was meant by the publication, had contacted him over phone, he admitted that he did not examine anyone from among the said persons. This is a telling circumstance against him because he had followed as a witness after all his witnesses were examined, and he knew that none of his witnesses had stated that they had connected the imputations in the publication with him. On the other hand, as stated earlier, not only all his witnesses had stated that they had gathered the impression that the incident had taken place the previous day but he himself was of the view that the publication was meant to create such impression and that it did so. Hence, there was no reason for the electorate to connect him with the said incident even remotely. On his own testimony as well as on the testimony of his witnesses, therefore, it is clear that the publication was intended to create an impression and did create an impression that the incident of murders had taken place a day previous to the election. If that is so, then the publi cation and the two allegedly offending statements in the same did not connect him with the murders much less had they called him a murderer. Even his arrest for harbouring the accused in the old incident of murders was not capable of identifying him as the murderer in the eyes of the people. None knew who were the accused and who were arrested in connection with the murders which were committed the previ ous day. The people, however, certainly knew that the first 756 respondent was not arrested in connection with the said murders. Hence the extrinsic facts which the first respond ent stated in his testimony for the first time even if they were given in the pleadings would not have spelt out the corrupt practice. For those facts in the face of the asser tion of the first respondent himself were incapable of identifying him as the murderer in the eyes of the elector ate. For these reasons, we are of the view that the extrin sic facts given for the first time by the first respondent in his testimony were incapable of identifying him as the hand behind the murders or as the murderer in the eyes of the people. We are also of the view that in the absence of the extrinsic facts supporting the innuendo meaning of the publication, the petition lacked the statement of material facts for spelling out the corrupt practice complained of. Either, therefore, the allegation of the corrupt practice should have been struck off or the petitioner ought not to have been allowed to lead evidence in support of it. For, as stated earlier, whenever an innuendo is alleged, a statement of material facts as required by Section 83(i)(a) of the Act is not complete without stating the extrinsic facts spelling out the innuendo meaning. It is the publication together with the extrinsic facts which in such circumstances consti tute the corrupt practice. The absence of the statement of such facts is not an absence of the particulars of corrupt practice but an absence of the averment of material facts themselves. Hence, it is not necessary for us to deal with the controversy raised before us with regard to the respon sibility of furnishing of or asking for particulars. It is necessary, in this connection, to make a distinction between a purely libel action and an allegation of corrupt practice in an election petition. Both, for libel action as well as for an allegation of corrupt practice in an election petition, it is necessary to plead as well as to prove the extrinsic facts to spell out the innuendo meaning of the words complained of. However, whereas in a libel action it may further be necessary to prove that those with special knowledge of the extrinsic facts were likely to interpret or understand the words complained of in a defama tory sense, in an election action, it may not be necessary to do so and all that is necessary is to prove that the words complained of were reasonably calculated to prejudice the prospectus of the defamed candidate 's election. However, this latter distinction does not obliterate the similarity between the two actions, viz., that in each case in the first instance the defamation is to be spelt out by pleading the necessary extrinsic facts. In a libel action, the ex trinsic facts constitute a cause of action whereas in the election action they 757 constitute the corrupt practice. In other words, without them, there is no cause of action in the libel suit and no allegation of corrupt practice in an election petition. Dr. Chitale, however, contended that the appellant had nowhere stated that the first respondent was not intend ed to be referred to by the said publication. In this con nection, he invited our attention to the appellant 's deposi tion. In his cross examination on the subject. In paragraph 25 the appellant has stated as follows: "The statement contained in exhibit P 1 may give an impression that it was in the name of the Election Committee. On a reading of that statement, it would appear that it was on behalf of the Election Committee. " There were then the following questions and answers: Question: Do you agree to the contents of the statement included in exhibit P 17 Answer: I do not have any disagreement. Question: In the statement contained in exhibit P 1 it is stated that everyone knows persons behind the murder and also the Marxist leader who was arrested in that connection. What is your opinion regarding those statements? Answer: That is only a repetition of an incident that took place in 1983. I cannot say what was the intention behind that statement and who was intended thereby. Question: No Marxist leader was arrested in connection with that case. Further on a reading of that statement the impression that could be gathered is that the Marxist leader in the election was responsible for the murder and he was arrested. Is it so? Answer: I have nothing to do with that statement. And I was not able to gather such an impression on reading it. I do not think that anybody else also will go under that impression. Question: When any such statement is reprinted and published, it must be intended for upsetting the candidate. Answer: That de pends upon the intention entertained by the person. I cannot give an opinion. Question: When the petitioner (the first respondent) was the Deputy Mayor of the Cochin Corporation, was he not arrested in connection with that case under the false accusation that he gave shelter to the accused? An swer: I remember that the petitioner (the first respondent) was arrested in connection with such a case. He then pro ceeds as follows: "I was a speaker in a meeting in protest against his arrest. I spoke in that meeting because I felt that it is a politi cally motivated false case. In 1983, I have gone to the hospital 758 where the dead bodies were taken for post mortem." In the first instance, in the absence of the statement of the material facts in the petition as stated above, the appellant was not called upon to join issue with them in his written statement. Secondly, there is nothing in his testi mony referred to above, which helps the first respondent in his case that the publication had referred to him as the murderer. This is more so, because, as stated above, the first respondent himself has interpreted the publication as creating an impression of a different murder. The next corrupt practice of which the High Court has found the appellant guilty is the wall poster affixed on the Palace Road on the northern side of the City Rationing Office, within 25 yards from the polling station. Near this wall poster was also affixed exhibit P 1. The contents of the wall poster are as follows: "Defeat murderer T.M. Mohammed who murdered four Christian brothers at Fort Cochin. Our symbol. " exhibit P 14 is the close up photograph of the said poster whereas exhibit P 15 is a photograph from a distance as stated earlier. There is no doubt that the contents of this wall poster directly named the first respondent as the murderer of the four victims, and if it is proved that the said poster was affixed prior to the election by the workers of the appellant with his knowledge and consent as alleged in the petition, nothing more has to be established to hold the appellant guilty of the corrupt practice within the meaning of Section 123(4) of the Act. The finding of the High Court on this corrupt practice is recorded in paragraph 50 of its judgment. The High Court has stated there that the writings were at the instance of the appellant and with the consent of his election agent and that it was published in the presence of and under the supervision of the appellant 's election agent and hence it attracts all the requirements of Section 123(4) of the Act. This finding is attacked on behalf of the appellant before us. It is necessary, there fore, first to find out the allegations made by the first respondent in his election petition in that behalf. The first respondent has alleged in paragraphs 17, 34, 84 and 120 of his petition as follows: "17. The wall posters and writings on the walls arc done by the first respondent, his agents and his workers with a view to propagate false aspects against the petitioner and to mis 759 lead the electorate that the petitioner is a murderer and if anyone votes in favour of him the law and order of the society will be adversely affected. This has misled the whole electorate which has caused serious prejudice in the election of the petitioner. X X X X X 34. On the Palace Road, on the northern side of the City Rationing Office the workers of the first respondent with the knowledge and consent of the first respondent affixed wall poster that the petitioner had murdered 4 Christian brothers at Fort Cochin and hence the electorate shall vote against the petitioner and they have to vote in favour of the first respondent. It is also relevant to note that this is within 25 yards from the polling station and near this writing they have affixed the reprinted Malayala Manorama daily on 22nd March, 1987 morning. This is to mislead the public that the petitioner is a murderer and he had murdered four Christian brothers . . X X X X X 84. To prove Annexures 20 and 21 the wall posters pasted on the walls near the City Rationing Office, Palace Road, COchin, the petitioner is examining two witnesses namely, (1) K. Prakash, House No. 8/796, T.D. East Raod, Cherali, Cochin 2 and (2) J. Sundaram, Kocherry Junction, Pandikuddy, Cochin 2. X X X X X 120. Even before the distribution of reprinted Malayala Manorama the first respondent has specifically instructed his workers to write on the walls and also paste handwritten wall posters throughout the constituency publishing that the petitioner is a murderer. The hand written wall poster was pasted near the City Rationing Office on the Palace Road, a photostat copy of which is produced and marked as Annexure 20. This was pasted by Anil Raj section Thamaraparambu, Amarava thy, Cochin 1. This wall poster was written at the specific instruction of the Chief Agent and convener of the election committee and in their 760 presence Anil Raj pasted this wail poster on the wails. This fact was witnessed by K. Prakash and J. Sundaram. Really these writings misled the whole electorate and give a bad impression about the petitioner that he is a murderer, and he is responsible for the murder of 4 Christian brothers. This is absolutely falsehood. This publication was done by the candidate, his agents and by his workers with the con sent and knowledge of the candidate and they knew that this statement is false in relation to the petitioner. The allegations in the petition were denied by the appellant in his written statement as follows: "12. Averments in paragraphs 30 to 35 are also false and are hereby denied. Neither the first respondent nor his agents or workers have any knowledge of the wail writings filed by the petitioner as Annexures 15 to 22. Nor were any such writings made by any person with the consent or knowledge of this respondent. Nor do the writings show anything beyond a criticism of the Marxist party on grounds of law and order. However, the wall writings shown as Annexure 20 were not seen anywhere in the constituency nor made by the respondent or his workers. It is deliberately concocted by the peti tioner. In these paragraphs also no material facts required to impute a corrupt practice against the first respondent have been stated. The entire allegations in the aforesaid paragraphs have been falsely made. X X X X X 18 . The annexure 20 appears to have been deliberate ly concocted by the petitioner with an ulterior motive and the rest of the aforesaid annexures are also similarly concocted nor do they show any corrupt practice. The further contention in para 98 that these writing and wall posters appeared in the constituency between 10th and 14th March 1987 is absolutely false. Nor were they done by this re spondent or by his agents or workers of the UDF. Neither, with the consent of the knowledge of the respondent. The witness mentioned in paragraph 98 also appears to be parti sans of the petitioner. X X X X X 761 25. The averments in paragraph 120 that the reprinted Ma layala Manorama was pasted and hand written wallposter was published stating that the petitioner is a murderer is entirely false and the averment that the first respondent instructed his workers to do so is false. The averment that annexure 20 is a photo copy of a handwritten wall poster near the City Rationing Office on the Palace Road and this was pasted by Anil Raj and they are written on the specific instruction of the Chief Agent and convener of the election committee is wholly untrue and is denied . . . X X X X X 26. The averments in paragraph 121 that this respondent has spent more than two lakhs for the election purpose is wholly untrue. The expense incurred by this respondent for the election has been strictly within the limits prescribed by law, and the ejection accounts of this respondent have been duly submitted as required by law. The petitioner is fur nishing a wholly fanciful idea of Auto rikshaws and cars etc. out of his imagination in paragraph 121. It will thus be seen that in paragraph 17 of the petition, the first respondent has averred generally that it was the appellant, his agents and his workers who had pasted the wall posters. Secondly, in this paragraph he has not specified any wail or walls on which the poster was pasted. Thirdly, he has attributed the pasting only to the appel lant, his agents and his workers. There is no mention of the election agent. What is further in this paragraph he has not said whether the workers had done it with the Appellant 's consent or knowledge. As regards the averments in paragraph 34 of the peti tion, the first respondent does state that the workers of the appellant had pasted the wall poser with the knowledge and consent of the appellant. But it is necessary to remem ber here that he does not mention in this paragraph either the agent or the election agent nor does he state here that the pasting was ,done with the knowledge and consent of the election agent. What is further important to note is that in this paragraph he mentions the pasting of the poster only on one wall and that is the Palace Road wall near the City Rationing Office. 762 In paragrah 84 again, he specifies that he is going to examine witnesses in connection with the pasting only on one wall, viz., the same wall on the Palace Road near the City Rationing Office, and he gives the names of two witnesses and one of them, viz., K. Prakash (PW 7) has been examined in that connection. In the last paragraph where there is a reference to the said posters. P 14/P 15, viz., paragraph 120, al though there is a vague mention of the "walls", the only wall specified is the same wall on the Palace Road. In this paragraph, again the averment is that the said pasting was done by the workers and agents with the knowledge and con sent of the appellant. In this paragraph, for the first time he has introduced the "Chief Agent" and the convenor of the Election Committee, and the allegation is that the wall poster was written at the specific instructions of the said Chief Agent and the Convenor. He has not specified who the Chief Agent and the Convenor of the Election Committee were. Although Dr. Chitale submitted that the expression "Chief Agent" should be construed to mean election agent, it is not possible for us to accept the submission for reasons more than one. In the first instance, the pleadings with regard to corrupt practice have to be specific since everyone who is guilty of the corrupt practice is liable to be prosecuted for the offence. Secondly, except in this paragraph, we don 't find there is a reference to any such person as Chief Agent. Wherever the first respondent wanted to refer to the election agent, he has done so. It cannot, therefore, be argued that he does not know the difference between the election agent and the Chief Agent. The averments in the petition, therefore, bring out two facts in particular prominently. One is that, though the first respondent has alleged vaguely in paragraphs 17 and 120 of the petition, that the wall posters were on more walls than one he has specified no wall in paragraph 17 and he has referred to only one wall, i.e., the Palace Road wall in all the other relevant paragraphs, viz. ,, 34, 84 and 120. What is more, in paragraph 84, he had made it clear that he was going to examine witnesses only in connection with the pasting of the poster on the said one wall and no more. Secondly, even with regard to the pasting of the wall poster on the said wall, he is not sure as to who had done it and with whose knowledge and consent. As pointed out above, in paragraph 17 he has stated that only the appel lant 's agents and workers had pasted it. He has not stated that his workers had done it with the appellant 's consent or with the consent of the election agent. In paragraph 34 no doubt he states that the appellant 's workers had done it with the knowledge of the appellant, but in paragraph 120, he 763 states that it was done at the specific instructions of the Chief Agent of the appellant and in the presence of the Chief Agent and the convenor of the Election Committee. Nowhere in the petition it is stated that it was done with the knowledge and consent and at the instance of or in the presence of the appellant 's election agent. This assumes importance because his witness, K. Prakash (PW 7) as will be pointed out hereafter, has come out with a version which is inconsistent with the averments in the petition and has stated that the pasting of the poster on the Palace Road wail was being done under the supervision among others of Joseph Katithara, who was the appellant 's election agent. As regards the evidence which the petitioner has led to prove Exs. P 14 and P 15. we find that although he had cited two witnesses, viz., K. Prakash and J. Sundaram, to prove the lone wallposter on the Palace Road only one wit ness, viz. K. Prakash is examined. Though K. Prakash (PW 7) was cited to prove the lone wail poster on the Palace Road, he has from the witness box deposed to the fact that he had seen "wall posters" being pasted on the Saturday, a week prior to the election. Since he is the only witness who has been examined to prove the actual pasting of the wall poster and the appearance of the wail poster prior to the election, his deposition has to be scanned carefully. He has stated that he resided in the 8th Division of the Mattancherry Assembly Constituency. In examination inchief, he stated that he was a medical wholesale distributor. He had also an occasion to see a copy of exhibit P 1. It was given to him at his residence on the date previous to the election. He has also named the appellant and M/s. M.K. Latif, Naveen Kumar, Radhakrishnan and others as being the persons who had brought the copy of exhibit P 1 to his residence. Indeed he seems to be a very important man, since not only the workers of the appellant but the appellant himself had, according to him, gone to his residence specially to deliver a copy of exhibit P 1 to him. Then he has deposed to the fact that he had seen copies of Exs. P 14 and P 15 being pasted on the "wails" and not only one wail near the City Rationing Office on the Palace Road. He admits that exhibit P 14 is the close up photo and exhibit P 15 is the distant photo of the same poster. It is, therefore, difficult to understand how he could have seen both being pasted. May that be as it is. It has further to be remembered that both Exs. P 14 and P 15 are the photographs of not only the wail poster but also of exhibit P 1 which was pasted by its side. Because, he has gone on to say that he had seen "wall posters" being pasted on Saturday, one week prior to the election. Since it is the case of the first respondent himself that exhibit P 1 was printed and pub lished only a day prior to the election, it is difficult to understand as to how this witness 764 could have seen the wall poster together with exhibit P 1 being pasted one week prior to the election. He has then named Anil Raj, Joseph Katithara who is the election agent of the appellant, K.M. Mohammed, Radhakrishnan and other unnamed workers of the UDF being persons present to supervise the pasting of the wail posters. ' Thereafter, he has corrected himself by saying that at that time the "photo" of exhibit P 1 was not there, a statement difficult to follow. According to him at the time he saw the pasting being done, his co worker was also there. He has not named him nor is he examined. It is then his case that on the day previous to the election, he also saw a copy of exhibit P 1 being pasted near the wall poster. Of course, this witness has also deposed to the writings on walls which are Exs. P 16, P 17 and P 18 with which we are not concerned in this appeal but about which the first respondent had made serious complaint in the petition before the High Court which has been rejected by the High Court. He is thus a witness not only for the past ing of Exs. P 14/P 15 on all the walls in the City but for a similar pasting of all other exhibits complained of. An omnipresent witness indeed. In cross examination he was asked whether he was not the Secretary of the Election Committee of the first respondent in Division No. 8 and also the branch Secretary of the Marxist Communist Party. He denied the said suggestion and stated that he did not work in the election for the first respondent and that he had no politics and he was not a member or sympathizer of any political party. He has also gone on to maintain that he had seen wail posters similar to exhibit P 14 in other places and has named some of the places as Anavadil, UCO Bank, Cherlai, Pandikuddy Junction. He has then stated contrary to what he had stated in his examina tion in chief, that he had not seen the act of pasting of exhibit P 1 and he did not know who pasted exhibit P 1 near exhibit P 14 although in examination in chief he has categorically stated as follows: "On the day previous to the election I saw copy of exhibit P 1 being pasted near the wall poster. Time and again, the courts have uttered a warning against the acceptance of a non corroborated oral testimony in an election matter because it is not only difficult to get a non partisan witness but is also easy to procure partisan witnesses in such disputes. The courts have, there fore, insisted upon some contemporaneous documentary evi dence to corroborate the oral testimony when in particular such evidence could have been maintained. The dangers of accepting only 765 the oral testimony are illustrated by this witness. In the first instance, this witness was cited by the first respond ent himself to prove only Exs. P 14/P 15 pasted on one wail, viz., the City Rationing Office wall on the Palace Road as has been stated clearly in paragraph 84 of the petition. Even if we construe the said paragraph in the petition liberally, it can only mean that this witness was cited to prove the "wallposters" being pasted on the "walls" near the City Rationing Office on the Palace Road. He was not cited to depose to posters on walls in any other part of the City. Secondly, the petitioner has not produced any documentary evidence such as the photographs of the posters on the other walls even near the City Rationing Office not to speak of the walls in other parts of the City. exhibit P 15 shows the long length of the wall. But except for this poster there is no poster on any other part of that wall seen in the photograph. Assuming that there were posters on the other walls, even near the City Rationing Office, we have no evidence in that behalf much less of the posters on the walls in the other parts of the City. The witness has, however, chosen to depose to his having seen posters on walls in other pans of the City to which again there is no specific reference in the petition. It was the duty of the petitioner to give the particulars of the posters on the other wails or in other parts of the City. His testimony is also suspect for other reasons as well. Firstly, this wit ness has also deposed to the fact that he had received a copy of exhibit P 1 on the day prior to the election and what is ' further, he has gone to the extent of saying that it was the appellant himself who along with his election agent and other workers had gone to his residence to deliver the said copy. It is difficult to believe that on the day prior to the election the appellant and his election agent in partic ular, will have no other work but to go from house to house distributing exhibit P 1. Secondly, the witness has also deposed to the fact that he had not only seen the wall poster, Exs. P 14/P 15 but he had also seen other wall posters which were the subject matter of the petition. What is further, according to him, he had also seen Exs. P 14/P 15 being pasted in his presence by one, Anil Raj under the supervi sion of the appellant 's election agent Joseph Katithara and the workers of the UDF one week prior to the election. We have pointed out above that in the petition there is no reference to the election agent in this connection anywhere and the reference to the Chief Agent cannot be construed as a reference to him. What is further, he has also in his examinatiOn in chief gone to the extent of saying that even when exhibit P 1 was pasted near exhibit P 14, a day prior to the election, he had seen the actual pasting. This, of course, he retracted in his cross examination when he stated that he had not seen the said act of pasting. We have, therefore, a witness here who is 766 omnipresent at all crucial times and places and has no compunction in contradicting himself on vital matters. It is this witness that we are asked to believe in support of the first respondent 's case that the wail poster Exs. P 14/P 15 was pasted by the appellant 's agents and workers under the supervision of the appellant 's election agent. Needless to say that his testimony has to be discarded being of a very doubtful nature. The only other witness who is examined in connection with Exs. P 14/P 15 is the photographer, K.J. Simon (PW 25). Even according to this witness, he had taken the photo graphs, Exs. P 14/ P 15 on March 25 and 26, 1987, i.e., two days after the election. Therefore, even if we accept his evidence that he had taken the photographs in question on the said days, that will not support the first respondent 's case that the said posters were there prior to the election day. The appellant 's cross examination of this witness was directed to prove that he had not taken the photographs even on 25th and 26th March, 1987 but at a much later date and just prior to the filing of the present election petition. The appellant 's case both in his written statement as well as in the Court is that the wall poster of which Exs. P 14 and P 15 are the photographs was concocted much after the election and only for the purpose of the election petition. It is in the light of this case of the appellant that we have to scrutinise the testimony of this witness. The wit ness says that exhibit P 14 is the chose up photograph of the wail writing near the City Rationing Office and exhibit P 15 is its long distance view and that he had taken the photographs in question on March 25 and 26, 1987. In cross examination, he was asked whether since he was a professional photogra pher and had his studio, he kept accounts. His answer was that he kept accounts only for the indoorwork and not for the out door work an answer which is very difficult to appreciate. The answer was given obviously to forestall the further investigation in the matter by compelling him to produce his accountbooks which would have shown the date on which he had actually taken the photographs. He was then asked as to how he had remembered the dates on which he had taken the photographs of various other posters including Exs. P 14/P 15. To that he replied that he had given the dates of the photographs from his memory. To test his memo ry, he was asked that since he was also taking photographs of marriage ceremonies which were on an average three or four times in a month, he could give the dates on which he had taken photographs in connection with some of the mar riages. To that question, of course, he answered in the negative. This witness, further, who was called only to depose to the fact that he had taken the photographs in question, has 767 gone further and stated that all the wall writings and wall posters appeared to him to be old and he had "seen them earlier". According to him, further, they were written even two days prior to the date of election. He also goes on to say that exhibit P 1 was seen by him on the day prior to the election. Although he stated that he was paid Rs.800 for the photographs and Rs.1,000 for copies thereof, he did not enter the amounts in his accounts. He stated that he had a Bank account but he did not remit the amount to the Bank. He then stated that in his studio there would be no record to show that the photographs were taken. He also stated that he had not given any receipt for receiving the payment. It was then suggested to him that he was a sympathizer of the Marxist Party which suggestion, of course, he denied. His testimony not only fails to impress us, but leads us to believe that there is much force in the contention of the appellant that the poster in question was concocted at a later day. For otherwise it is difficult to explain as to why the witness who in the ordinary course should maintain his accounts and other documents should keep them from the court on pretexts which are not only far from convincing but positively doubtful. There is yet another and a very important reason as to why the entire version with regard to Exs. P 14/P 15 has to be rejected. The first respondent has come to the court with a version that the wall poster and such other posters were pasted on walls in the different parts of the constitu ency at least a week prior to the election. Admittedly, such false propaganda is an electoral offence punishable both under Section 127A of the Act and Section 17 I C of the Indian Penal Code. The first respondent or his agents and workers could have made complaints both to the Election Officer as well as to the police in that connection immedi ately, and a regular panchnama of the same could also have been made at the time. That would have been the best evi dence of the said allegation. We have no doubt that the first respondent and his workers would not have failed to do so had the posters been pasted at the time alleged by them. We are, therefore, impelled to reject the evidence produced by the first respondent in connection with the publication of the wallposter represented by Exs. P 14/P 15. In the circumstances, the finding of the High Court in respect of both the alleged corrupt practices will have to be set aside and 768 is hereby set aside. Hence, we allow the appeal, set aside the order of the High Court and dismiss the election peti tion. Interim order passed by this Court also stands vacat ed. In the circumstances of the case, the parties will bear their own costs. The Registry will take immediate action under Section 116C (2) of the Act. G N. Appeal al lowed.

In the 1987 election to Kerala Legislative Assembly the appellant contested against the first respondent. The appellant and respondents belonged to two different fronts, each consisting of several political parties. The appellant was declared elected, by a margin of 1873 votes over his nearest rival, the first respondent. The first respondent filed an election petition in the High Court claiming that the appellant 's election was void and that he should be declared elected in place of the appellant. In support of his contention, he alleged various corrupt practices on the part of the appellant. The High Court negatived all except two of the allegations, viz., (i) printing and publication on March 22, 1987, a day prior to the election, pamphlets containing a news item in daily "Malayala Manorama" dated May 22, 1983, and (ii) publication of a wail poster, maligning the 720 personal character and conduct of the first respondent. The High Court held that both the said acts amounted to corrupt practices within the meaning of Section 123(4) of the Representation of People Act, 1951 and were sufficient to void the election. This appeal under section 116A of the Representation of People Act, is against the High Court 's judgment. Allowing the appeal, this court, HELD: 1.1. As regards the pamphlets, the first respond ent in his election petition had relied upon an innuendo, and the innuendo was based upon the fact that, firstly, he was a Marxist leader and, secondly, he was arrested for harbouring the murderers. However, in the election petition, no averment was made that it was because he was a Marxist leader and was also arrested for harbouring the murderers that the electorate was likely to construe the said two statements as accusing him as the murderer. No facts were pleaded in the Election Petition whereby the electorate would gather an impression that the first respondent was the murderer of the said four victims. [733B C; 746 E F] 1.2. Barring his own testimony, all other evidence led by the first respondent is also totally silent on this aspect of the matter. None of his witnesses has stated anywhere that the contents of the pamphlet had made out the first respondent as the murderer of the four victims or even that they were capable of doing so. On the other hand, all his witnesses without exception are unanimous that after reading the pamphlet the impression it created on them was that it referred to an incident which had taken place on the previous day or to an earlier incident and nothing more. None of the witnesses has stated that the said pamphlet even remotely connected the first respondent with the murders. The impression conveyed by the document that the Marxists or Communists were murderers and therefore the electorate should not vote for them and hence it was unfavourable to the first respondent, was not an impression about his per sonal character/ conduct. It was an impression at best about his political character/ conduct. In particular there was no impression that he was the murderer or one of the murderers. Although the first respondent has also added at the end that many persons who gathered such an impression, viz., that he was meant by the publication, had contacted him over phone, he admitted that he did not examine anyone from among the said persons. This is a telling circumstance against him because he had 721 followed as a witness after all his witnesses were examined, and he knew that none of his witnesses had stated that they had connected the imputations in the publication with him. On the other hand, as stated earlier, not only all his witnesses had stated that they had gathered the impression that the incident had taken place the previous day but he himself was of the view that the publication was meant to create such impression and that it did so. Hence, there was no reason for the electorate to connect him with the said incident even remotely. On his own testimony as well as on the testimony of his witnesses, therefore, it is clear that the publication was intended to create an impression and did create an impression that the incident of murders had taken place a day previous to the election. If that is so, then the publication and the two allegedly offending statements in the same did not connect him with the murders much less had they called him a murderer. Even his arrest for harbour ing the accused in the old incident of murders was not capable of identifying him as the murderer in the eyes of the people. None knew who were the accused and who were arrested in connection with the murders which were committed the previous day. The people, however, certainly knew that the first respondent was not arrested in connection with the said murders. Hence the extrinsic facts which the first respondent stated in his testimony for the first time even if they were given in the pleadings would not have spelt out the corrupt practice. For those facts in the face of the assertion of the first respondent himself were incapable of identifying him as the murderer in the eyes of the elector ate. For these reasons, the extrinsic facts given for the first time by the first respondent in his testimony were incapable of identifying him as the hand behind the murders or as the murderer in the eyes of the people. [746F H; 751A B; 755D H; 756A B] 1.3. In the absence of the extrinsic facts supporting the innuendo meaning of the publication, the petition lacked the statement of material facts for spelling out the corrupt practice complained of. Either, therefore, the allegation of the corrupt practice should have been struck off or the petitioner ought not to have been allowed to lead evidence in support of it. [756C] 2.1. Where the defamatory words complained of are not defamatory in the natural or ordinary meaning, or in other words, they are not defamatory per se but are defamatory because of certain special or extrinsic facts which are in the knowledge of particular persons to whom they are ad dressed, such innuendo meaning has to be pleaded and proved specifically by giving the particulars of the said extrinsic facts. It is immaterial in such cases as to whether the action is for 722 defamation or for corrupt practice in an election matter, for in both cases it is the words complained of together with the extrinsic facts which constitute the cause of action. It is true that Section 123(4) of the Act states that the statement of fact in question must be "reasonably calculated to prejudice the prospects" of the complaining candidate 's election. However, unless it is established that the words complained of were capable of being construed as referring to the personal character or conduct of the candi date because of some specific extrinsic facts or circum stances which are pleaded and proved, it is not possible to hold that they were reasonably calculated to prejudice his prospects in the elections. For, in the absence of the knowledge of the special facts on the part of the elector ate, the words complained of cannot be held to be reasonably calculated to prejudice such prospects. Once, however, it is proved by laying the foundation of facts that the words in question were, by virtue of the knowledge of the special facts, likely to be construed by the electorate as referring to the personal character or conduct of the complaining candidate, it may not further be necessary to prove that in fact the electorate had understood them to be so. That is because all that Section 123(4) requires is that the person publishing the complaining words must have intended and reasonably calculated to affect the prospects of the com plaining candidate in the election. [745E H; 746A B] 2.2. Whenever an innuendo is alleged, a statement of material facts as required by Section 83(i)(a) of the Act is not complete without stating the extrinsic facts spelling out the innuendo meaning. It is the publication together with the extrinsic facts which in such circumstances consti tute the corrupt practice. The absence of the statement of such facts is not an absence of the particulars of corrupt practice but an absence of the averment of material facts themselves. Sheopat Singh vs Ram Pratap, ; ; Kumara Nand vs Brijmohan Lal Sharma, ; ; Habib Bhai vs Pyarelal & Ors., AIR 1964 MP 62; Manmohan Kalia vs Yash & Ors. , ; ; W. Hay & Ors. vs Aswini Kumar Saman ta, AIR 1958 Cal. 269; Hough vs London Express Newspaper Ltd., ; Fullam vs Newscastle Chronicle and Journal Ltd. & Anr., ; Cassidy vs Daily Mirror Newspapers, ; Nevill vs Fine Art and General Insurance Co. Ltd., and Capital and Counties Bank Ltd. vs George Henty & Sons, , referred to. Halsbury 's Laws of England, Vol. 28, 4th Edn. paras 174 178; Gatley on Libel and Slander, 8th Edn. paragraph 95; Street on Torts, 723 6th Edn., p. 294 and Duncan & Neil on Defamation, [1978] Edn., p. 17, referred to. Both, for libel action as well as for an allegation of corrupt practice in an election petition, it is necessary to plead as well as to prove the extrinsic facts to spell out the innuendo meaning of the words complained of. Howev er, whereas in a libel action it may further be necessary to prove that those with special knowledge of the extrinsic facts were likely to interpret or understand the words complained of in a defamatory sense, in an election action, it may not be necessary to do so and all that is necessary is to prove that the words complained of were reasonably calculated to prejudice the prospects of the defamed candi date 's election. However, this latter distinction does not obliterate the similarity between the two actions viz., that in each case in the first instance the defamation is to be spelt out by pleading the necessary extrinsic facts. In a libel action, the extrinsic facts constitute a cause of action whereas in the election action they constitute the corrupt practice. In other words, without them, there is no cause of action in the libel suit and no allegation of corrupt practice in an election petition. [756F H; 757A] 4.1. As regards the wail posters in which the first respondent was described as a murderer and it is stated that hence he should be defeated, the first respondent in his petition has stated generally that it was the appellant, his agents and his workers who had pasted the wallposters. He has not specified any wail or wails on which the poster was pasted. He has not mentioned either the agent or the elec tion agent nor did he state that the pasting was done with the knowledge and consent of the election agent. It is important to note that he mentioned the pasting of the poster only on one wail, though there was a vague reference to "walls". [761F H; 765B] 4.2. Time and again, the courts have uttered a warning against the acceptance of a non corroborted oral testimony in an election matter because it is not only difficult to get a non partisan witness but is also easy to procure partisan witnesses in such disputes. The courts have, there fore, insisted upon some contemporaneous documentary evi dence to corroborate the oral testimony when in particular such evidence could have been maintained. Such a danger is illustrated by the testimony of PW. 25 in the instant case. It is not only contradictory, and fails to impress this court but also leads to the belief that there is much force in the contention of the appellant that the poster in ques tion was concocted at a later day. It is difficult to ex plain as to why the witness a 724 professional photographer who in the ordinary course should maintain his accounts and other documents should keep them off from the court on pretexts which are not only far from convincing but positively doubtful. Although he stated that he was paid Rs.8,00 for the photographs and Rs.1,000 for copies thereof, he did not enter the amounts in his ac counts. He stated that he had a Bank account but he did not remit the amount to the Bank. He then stated that in his studio there would be no record to show that the photographs were taken. He also stated that he had not given any receipt for receiving the payment. [764G H; 767A D] 4.3. "Election agent" as defined in Section 40 of the Act is accorded a special status of almost an alter ego of the candidate so much so that whatever is done by the elec tion agent or with his consent is deemed to have been done by the candidate himself whether it is with the candidate 's consent or not. He is empowered to discharge almost all the functions that a Candidate can himself perform. 1729E FI 4.4. It was alleged that the wall poster was written at the specific instructions of the Chief Agent and the Conven or. It was not specified who the Chief Agent and the Conven or of the Election Committee were. The argument that the expression "Chief Agent" should be construed to mean elec tion agent, cannot be accepted since the pleadings with regard to corrupt practice have to be specific since every one who is guilty of the corrupt practice is liable to be prosecuted for the offence. And except in one place, there is no reference to any such person as Chief Agent. Wherever the first respondent wanted to refer to the election agent, he has done so. It cannot, therefore, be said that he did not know the difference between the election agent and the Chief Agent. [762B E] 4.5. The first respondent has come to the court with a version that the wail poster and such other posters were pasted on wails in the different parts of the constituency at least a week prior to the election. Admittedly, such false propaganda is an electoral offence punishable both under Section 127A of the Act and Section 171 C of the Indian Penal Code. The first respondent or his agents and workers could have made complaints both to the Election Officer as well as to the police in that connection immedi ately, and a regular panchnama of the same could ,also have been made at the time. That would have been the best evi dence of the said allegation. The first respondent and his workers would not have failed to do so had the posters been pasted at the time alleged by them. [767E F] 725

Appeal No. 604 of 1966. Appeal by special leave from the judgment and order dated August 5, 1964 of the Madras High Court in Tax Case No. 131 of 1963 (Revision No. 87). G. Ramanujam and A. V. Rangam, for the appellant. K. Srinivasan and R. Gopalakrishnan, for the respondent. The Judgment of the Court was delivered by Shah, J. M/s. R. Nand Lal & Company hereinafter called 'the assessee are dealers in wool at Vaniyambadi in North Arcot District in ' the State of Madras. In proceedings for assessment of sales tax for the year 1959 60 the assessees were assessed to pay tax at the rate, of seven per cent. on a turnover of Rs. 2,08,343 05 from sales effected by them to certain registered dealers in the State of Punjab. The assessing authority declined to assess the turnover at one per cent. as prescribed by section 8(1) of the , because in his view the assessees had submitted declarations in Form 'C ' covering two or more transactions contrary to the first proviso to r. 10(1) of the Central Sales Tax (Madras) Rules, 1957. The Appellate Assistant Commissioner and the Sales Tax Appellate Tribunal, Madras confirmed the order of the assessing authority. The High Court of Madras, in exercise of its revisional jurisdiction, set aside the order of the Sales Tax Appellate Tribunal, and declared that the ass s were liable to pay tax on the turnover in dispute at the lower rate. The State of Madras has appealed to this Court with special leave. Section 8 of the (as amended by Act '31 of 1958) insofar as it is material provided "(1) Every dealer, who in the course of inter State trade or commerce (a) (b) sells to a registered dealer other than the Government goods of the description referred to in sub section (3); shall be liable to pay tax under this Act, which shall be one per cent. of his turnover. (2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods 647 in the course of inter State trade or commerce not falling within sub section (1) (a). . . (b) in the case of goods other than declared goods, shall be calculated at the rate of seven per cent. or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher; (2A) (3) (4) The povisions of sub section 1) shall not apply to any sale in the course of inter State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner (a) a declaration duly filed and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority; or (b). . . (5) It is common ground that the turnover was in respect of goods of the class specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or for use by him in the process of manufacture of goods for sale. A registered dealer selling goods in the course of inter State trade or commerce of the description referred to in sub section (3) is viable under section 8 ( 1 ) of the , to pay tax only if the rate of one per cent. on his turnover. But to qualify himself for that rate of tax he has to furnish to the prescribed authority a declaration duly filled and signed by the registered dealer to whom the goods are sold. Such a declaration must contain the Prescribed particulars in the prescribed form obtained from the Prescribed authority. If the selling dealer fails to furnish the declaration in the prescribed form, he is liable to pay tax at the higher rate mentioned in sub section (2) (b) of section 8. The respondents did furnish declarations in Form 'C ' pres cribed under the Rules framed ' by the Central Government in exercise of the, powers vested by section 1 3 (1) (d) of the . But each such declaration covered more transactions of sale than one and the aggregate value of the transactions recorded in each declaration exceeded Rs. 5,0001 The sales tax authorities and the Tribunal were of the view that these declarations contravened the express direction of the rule made by 648 the Madras State in exercise of the powers under section 13 (4) (e) of the . The High Court held that r. 10(1) of the Central Sales Tax (Madras) Rules, 1957, applied only to a transaction of purchase by a dealer in the State of Madras, and not to the purchasing dealer in the State of Punjab; that the Madras State was incompetent to frame rules governing the conduct of the purchasing dealers in the Punjab that since the corresponding rules framed by the State of Punjab under section 13 (4) (e) of the did not include a provision requiring separate form to be used for each sale transaction, the purchasing dealers were not obliged to comply with r. 10(1) of the Madras Rules, and that since the Madras selling dealers could not compel the purchasing dealers to comply with the rules relating to furnishing of separate declaration forms ordained by the Madras Rules, the declarations were not defective. In any event, the High Court held, r. 10(1) of the Madras Rules was directory and not mandatory. The assumption made by the High Court that no rule was framed by the State of Punjab under section 13 (4) (e) of the requiring the purchasing dealers in the State of Punjab to issue a separate declaration form in respect of each individual transaction is erroneous. It is conceded before us that the Punjab Government had in purported, exercise of the powers under sub sections (3) & (4) of section 13 of the Central Sales Tax, 1956, made r. 7(2 A) with effect from February 17, 1958 that: "No single declaration in Form 'C ' prescribed under the Central. Sales Tax (Registration and Turnover) Rules ' 1957, shall cover more than one transaction of sale except when the total amount of sales does not exceed five thousand rupees." But, for reasons which we will presently set out, the judgment of the High Court must still be, affirmed. Sub section (4) of section 8 of the provides that in order to, qualify himself for the lower rate of tax it, respect of sales in the course of inter State trade or commerce, the dealer selling goods has to furnish to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer to whom the goods are sold. The expressions "prescribed authority" and "prescribed manner" mean the authority and manner prescribed by rules under the Act. Section 13(1) of the , authorises the Central Government to make rules, providing, inter alia, the form in which and the particulars to be contained in any declaration of certificate to be given under the Act. By sub section (3) of section 13 the State Government is authorised to make rules not inconsistent with the provisions of the Act and the rules made under sub section (1) to 64 9 carry out the purposes of the Act, and by sub s (4) of section 13 the State Government is, in particular and without prejudice to the powers conferred by sub section (3), authorised to make rules for all or any of the purposes set out therein including "the authority from whom, the Conditions subject to which and the fees subject to payment of which any form of declaration prescribed under sub section (4) of section 8 may be obtained, the manner in which the form shall be kept in custody and records relating thereto maintained, the manner in which any such form may be used and any such declaration may be furnished." In exercise of the power conferred by section 131 (d) the Central Government has prescribed the form of declaration to be furnished by the purchasing dealer under section 8 (4). That is Form 'C '. The form is in three sections the "counterfoil", the "duplicate" and the "original". The "original" contains at the foot of the Form the following Note: "(To be furnished to the prescribed authority in accordance with the rules framed under section 13(4) (e) by the appropriate State Government.)" The Madras State Government presuming to act in exercise of authority under section 13(3) and section 13(4)(e) framed the Central Sales Tax (Madras) Rules, 1957, r. 10(1) of which reads as follows ': "A registered dealer, who wishes to purchase goods from another such dealer on payment of tax at the rate applicable under the Act to sales of goods by one registered dealer to another, for the purpose specified in the purchasing dealer 's certificate of registration, shall obtain from the assessing authority in the City of Madras and the registering authority at other places a blank declaration form prescribed under rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957 for furnishing it to the selling dealer. Before furnishing the declaration to the selling dealer, the purchasing dealer,or any responsible person authorized by him in this behalf shall fill in all the required particulars in the form and shall also affix his usual signature in the space provided in the form for this purpose. Thereafter the counterfoil of the form shall be retained by the purchasing dealer and the other two portions marked "original" and "duplicate" shall be made over by him to the selling dealer Provided that no single declaration shall cover more than one transaction of sales except 650 (a) in cases where the total amount covered by one declaration is equal to or less than Rs. 5,000 or such other amount as the State Government may, by a general order, notify in the Fort. St. George Gazette, and (b) Ex facie, this rule imposes no obligation upon a dealer in the State of Madras wishing to sell goods : it applies to a dealer wishing to purchase goods from another dealer. The argument that cl. (1) of r. 10 is intended to apply to a registered dealer in the State of Punjab is negatived by the scheme of the and the Rules framed thereunder. By section 7 of the , every dealer liable to pay tax under the Act has to make an application for registration under the Act to such authority in the appropriate State as the Central Government may by general order specify. The authority to be specified is designated in the Central Sales Tax (Registration and Turn over) Rules, 1957, framed by the Central Government under section 13(1), the "notified authority" : vide r. 2(c). Rule 3 provides that an application for registration under section 7 shall be made by a dealer to the notified authority in Form 'A '. In exercise of the powers conferred by sub section (1) of section 7 of the , the Central Government issued a notification No. S.R.O. 643 dated February 22, 1957, specifying the persons mentioned in Col. (3) of the Schedule thereto as the authorities to whom the dealers of the description in Col. (2) shall make the application for registration. Item 1 of the Schedule requires a dealer having a single place of business in a State to make an application to the authority competent to register him under the general sales tax law of the State if he were liable to, be so registered : and item 2 provides that the dealer having more than one place of business in a State shall make an application to the authority competent to register him in respect of the principal place of business under the general sales tax law of the State if he were liable to be so registered. A registered dealer contemplated by r. 10 is therefore registered in the State where he has his place of business. The expression "assessing authority" is defined in the Central Sales Tax (Madras) Rules, 1957, as meaning any person authorized by the State Government to make any assessment under the Madras General Sales Tax Act, 1959 (Madras Act 1 of 1959). The dealer has again to obtain the form of declaration from the assessing.authority in the State of Madras. These are clear indications that the rules framed by the Madras Government were intended to apply to dealers within the State of Madras. The High Court was, in our judgment, right in holding that under the scheme of the and the Rules framed under that Act by the State of Madras, the injunc 651 tion against the purchasing dealers in r. 10(1) did not apply to, dealers in the State of Punjab. It is unnecessary on that view to, express any opinion on the question whether the State Government could, in exercise of the powers under section 13 (4), impose upon dealers not within the State, obligations to comply with conditions relating to the contents of the 'C ' Form declarations. Since, r. 10 ( 1 ) requiring that a separate declaration form in respect of each individual transaction shall be furnished was intended only to apply to dealers in the State of Madras, and not to dealers outside the State, proviso to r. 10(1) which directs that no single declaration shall cover more than one transaction of sale except in certain cases has no application to a purchasing dealer outside the State of Madras. Rule 10(2), provides : "A registered dealer who claims to have made a sale to another registered dealer shall, in respect of such claim attach to his return in Form the portion marked "original" of the declaration received by him from the purchasing dealer. The assessing authority may, in its discretion, also direct the selling dealer to produce for inspection the portion of the declaration marked "duplicate". " But this rule does not direct that a declaration covering more than one transaction of sale shall not be given. The rules framed by the Madras Government do not otherwise impose any binding obligation upon the selling dealer in the State of Madras to obtain a separate declaration form in respect of each sale transaction, nor do the rules visit him with a penalty on failure to comply with the requirement. We are constrained to observe that the rule making authori ties have failed to appreciate the scheme of section 13 of the . We are of the opinion that it was not within the competence of the State authorities under section 13(3) & (4) of the to provide that a single declaration covering more than one transaction shall not be made. Authority to prescribe such an injunction cannot have its source in section 13(3) or section 13 (4) (e) : it can only be in the authority conferred by cl. (d) of section 13(1) by the Central Government. The Central Government has, in exercise of the power under section 1 3 (1) (d), prescribed the form of declaration and the particulars to be contained in them declaration. A direction that there shall be a separate declaration in respect of each individual transaction may appropriately be made in exercise of the power conferred under section 13 (1) (d). The State Government is undoubtedly empowered to make rules under sub sections (3) and (4) of section 13 but the rules made by them 652 State Government must not be inconsistent with the provisions of ,the Act and the rules made under sub section (1) of section 13 to carry out the purposes of the Act. If the authority to make a rule prescribing that the declaration shall not contain more than one transaction can be made only under section 13 (1) (d), the State Government cannot exercise that authority. The situation which has arisen in this case could have been avoided, if instead of each State making its rules requiring that no single declaration shall ,cover more than one transaction, the Central Government in exercise of the power under section 13 (1) (d) of the Act had made the rules. The appeal fails and is dismissed with costs. G.C. Appeal dismissed.

The assessee firm was a 'dealer ' in Madras State. For the year 1959 60 the firm was taxed at 7% on certain sales effected to registered dealers in the Punjab on the ground that the declarations taken from dealers in Punjab in Form 'C ' were not in accordance with r. 10(1) of the Central Sales Tax (Madras) Rules, 1957. The latter rule required ,that there must be a separate declaration in respect of each transaction whereas the declarations in the present case were in respect of several transactions each. The appellant firm claimed that on the turnover in question it should have been assessed at one Per cent only, as laid down in section 8(1) of the Central Sales Tax Act, 1056. The claim was turned down by the Sales tax Authorities and the Tribunal, but the High Court held that r. 10(1) of the Central Sales Tax (Madras) Rules, 1957 applied only to transactions of purchase by a dealer in the State of Madras and not to the purchasing dealer in the State of Punjab, that the Madras State was incompetent to frame rules governing the conduct of the chasing dealers in the Punjab, and that in any event r. 10(1) was tory and not mandatory. The State appealed. HELD: (i) Ex facie r. 10(1) imposes no obligation upon a dealer in the State of Madras wishing to sell goods : It applies to a clear wishing to purchase goods from another dealer. The High Court was further right in holding that under the scheme of the Central Sales Tax Act and the Rules framed under that Act by the State of Madras the injunction against the purchasing dealers in r. 10(1) did not apply to dealers in the State of Punjab. [650B 651A] Accordingly the proviso to r. 10(1) which,directs that no single declaration shall cover more than one transaction of sale except in certain cases has no application to a. purchasing dealer outside the State of Madras. Nor does r. 10(2). impose any binding obligation upon the selling dealer in Madras to obtain a separate declaration form in respect of each sale transaction. [651C F] The appellants were therefore to be taxed at the rate of one per cent and not seven per cent on the turnover in question. (ii) A rule prescribing that a declaration by a purchasing dealer shall not contain more than one transaction can only be made by the Central Government under section 13(1)(d) and the State Governments do not have 646 power under section 13(3) and section 13(4)(e) to make any such rule. The situation which had arisen in this case could have been avoided if instead of each State making its rules requiring that no single declaration shall cover more than one transaction, the Central Government in exercise of the power under section 13(1)(d) of the Act had made the rule. [651G H; 652A B]

Appeal No. 122 of 1954. Appeal under section 109(b) read with section 110, C.P.C. from the judgment and order dated the 28th September 1953 of the Orissa High Court in O.S. No. I of 1953. P. R. Das and Bakshi Tek Chand, with M. Mohantiand section P. Varma, for the appellant. M. C. Setalvad, Attorney General of India. B. Mohapatra, Advocate General of Orissa with section Mohanti and P. G. Gokhale, for the respondent. February 3. The Judgment of the Court was delivered by DAS C.J. This is an appeal from the judgment and decree passed on the 28th September, 1953, by a Bench of the Orissa High Court in an Original Suit which was filed on the 24th November, 1952, in the Court of the Subordinate Judge of Cuttack and was on the 17th January, 1953, transferred to the High Court and marked as Original Suit No. 1 of 1953. The suit was filed by the plaintiff appellant claiming as the Raja and owner of the Rajgee, known as the Kanika Raj, against the State of Orissa, praying for a declaration that the Orissa Estates Abolition Act, 1951 (hereinafter referred to as "the Abolition Act") was, in its application to the Rajgee of Kanika, invalid, unconstitutional and ultra vires the State Legislature and for an injunction restraining the State of Orissa from taking any action under the said Act. The suit was instituted evidently under an apprehension that the State of Orissa might issue a notification under section 3(1) of the Abolition Act declaring that the Rajgee of Kanika had passed to and become vested in the State free from all encumbrances. The High Court dismissed the suit but gave a certificate of fitness for appeal to this court. Hence the present appeal by the plaintiff. The plaintiff 's contention before us is that no notification under section 3(1) of the Abolition Act 10 74 can issue because (1) his land is not an "estate" as defined in section 2(g) of the Act, and (2) the plaintiff is not an "intermediary ' within the meaning of section 2(h) thereof. In answer to this, the AttorneyGeneral, appearing on behalf of the State, makes five Submissions, viz., (a) that on the admitted facts the plaintiff 's land is an "estate" within the meaning of the Abolition Act; (b) that the plaintiff is estopped by the compromise decree passed by the Patna High Court on 2nd May 1945 in F.A. No. 15 of 1941 from contending that his land is not an "estate" within the meaning of the Abolition Act; (c) that the plaintiff 's land has been held as an "estate" ever since 1803; (d) that whatever may have been the position before 1805, the plaintiff 's land became an "estate" by Regulation XII of 1805; and (e) that in any event, the plaintiff 's 'land became an "estate" after 1805 by subsequent acts and conduct of the plaintiff and his predecessors in title. (a): Under section 3(1) of the Abolition Act, the State Government can declare that a specified "estate" has passed to and has become vested in the State. It is, therefore, clear that the State Government cannot make any notification with respect to land which is not an "estate". "Estate" is defined in section 2(g) of the Abolition Act. The material portion of that definition, as it stood at the date of the institution of the suit, was as follows: `` `estate ' means any land held by an intermediary and included under one entry in any of the general registers of revenue paying lands and revenue, free lands, prepared and maintained under the law for the time being in force by the Collector of a district,. . . . . ' ' In order to be an "estate", the land must be held by an "intermediary" and must be included under one entry in any of the general registers of revenue paying lands and revenue free lands and such general registers must be prepared and maintained under the 75 law for the time being in force. Section 2(h), as it stood then, by its earlier part, defined an "intermediary", with reference to any "estate", to mean, amongst other things, a proprietor. The plaintiff certainly claims to be the proprietor of his land. Therefore, if his land is an "estate", he is clearly an "intermediary". The case of Biswambhar Singh vs The State of Orissa and Others"), which has been relied on by learned counsel for the plaintiff has no application to the present case, for that case was concerned not with the earlier but with the latter part of the definition of "intermediary". That the plaintiff 's land is included under one entry in the general register of revenue paying lands is not disputed. What is contended for is that in order to make such land an "estate" the register must be prepared and maintained under the law for the time being in force. There is no dispute that "the law for the time being ,in force" means the Bengal Land Registration Act (Bengal Act VII of 1876). The plaintiff contends that the register in which his land is included under one entry was not prepared or maintained under the Bengal Land Registration Act. The argument is that it is not only necessary to show that the land is included under one entry in a register but that it is also necessary to show that the register where the entry appears was prepared and maintained under the law. Under the Bengal Land Registration Act, 1876, land can be included in the register prepared and maintained under that Act only if such land is an "estate" as defined in that Act. The relevant part of that definition is: "3(2) 'estate ' includes: (a)any land subject to the payment of landrevenue, either immediately or prospectively, for the dis charge of which a separate engagement has been entered into with Government; (b). . . . . . . . . . (c). . . . . . . . . . It is urged, therefore, that the preparation of a register under that Act means the making of entries in that (1) [1954] S.C.R.842 76 register of lands which are subject to the payment of land revenue for the discharge of which a separate engagement has been entered into. Land which is not subject to payment of land revenue and for the discharge of which a separate engagement has not been entered into is not an "estate" and cannot be entered in the register prepared and maintained under the Bengal Land Registration Act. That Act confers powers on the Collector to prepare the register in the manner specified therein and such statutory power, in order to have effect, must be exercised in strict compliance with the provisions of that Act. The plaintiff maintains that the Rajgee of Kanika was never subject to payment of land revenue for the discharge of which a separate engagement had been entered into by him or his predecessors in title. That the ancestors of the plaintiff were at one time independent chiefs and that the Rajgee or Killa of, Kanika was in ancient time an independent State are conceded. Later on, the Rajas of Kanika owed nominal allegiance to the Mahrattas. Then came the last Mahratta War and the plains of Orissa were conquered by the East India Company. On 22nd November, 1803, there was an "Engagement" between the East India Company and Raja Balabhadra Bhanja Deo, the then Raja of Killa Kanika. The East India Company on the same day granted a Kaool Namah to the Raja. Under the Engagement the Raja agreed, amongst 'Other things, to pay, as annual Peshkush or tribute, 84,840 Kahuns of Cowrees, amounting to Rs. 20,407 12 1 1. This Engagement was confirmed by clause 10 of the Treaty of Peace concluded on the 17th December, 1803, at Deogan between the East India Company and the Mahrattas which treaty was later on ratified by the GovernorGeneral in 1804. On the 5th September, 1805, was passed the Bengal Regulation XII of 1805. Sections 33 to 37 which are material for our present purpose were as follows: "XXXIII. The Commissioners having granted sanads to certain zamindars, entitling them to hold, 77 their estates at a fixed jama in perpetuity, those sanads are hereby confirmed '. The following is the list of the names of the zamindars to whom this provision is to be considered applicable: Zamindar of Killah Darpan, Zamindar of Killah Sookindah, Zamindar of Killah Muddoopore. XXXIV. The Commissioners having likewise granted a sanad to Futtah Mohmed, jaghirdar of Malood, entitling him and his heirs for ever, in consideration of certain services performed towards the British Government, to hold his lands exempt from assessment, such sanad is hereby confirmed. First. The late Board of Commissioners having concluded a settlement of the land revenue with certain zamindars, whose estates are situated chiefly in the hills and jungles, for the payment of a fixed annual quit rent in perpetuity, those engagements are hereby confirmed; and no alteration shall, at any time, be made in the amount of the revenue payable under the engagements in question to Government. Second. The following is a list of the mehals to which the provision in the preceding Clause is applicable: Killah Aull, : Killah Humishpore, Killah Cojang, : Killah Miritchpore, Killah Puttra, : Killah Bishenpore. Third. The zamindaries of Cordah and Cunka being mehals of the description of those specified in the preceding Clause, a settlement shall be concluded, as soon as circumstances may admit, for the revenue of those mehals on the principle on which a settlement has been concluded with the zamindars of the mehals specified in the preceding Clause. XXXVI. All Regulations relating directly or indirectly to the settlement and collection of the public revenue, or to the conduct of the officers employed in the performance of that duty, whether European or native, in the province of Bengal, which are not superseded by the foregoing rules, are hereby extended to, and declared to be in force in the zillah 78 of Cuttack. Provided, however, that nothing herein contained shall be construed to authorize the division of the lands comprised in any estates in the zillah of Cuttack, in which the succession to the entire estate devolves according to established usage to a single heir: in cases of this nature, the Courts of Justice are to be guided by the provisions contained in Regulation X, 1800. Provided, also, that nothing herein contained shall be construed to imply, that any part of the said Regulations are for the present to be considered to be in force in certain jungle or hill zamindarries occupied by a rude and uncivilized race of people with the proprietors of which estates engagements were formed by the late Board of Commissioners for the payment of a certain fixed quit rent or tribute to Government. The following is the list of the names of the mehals to which this exemption from the operation of the general Regulations is to be considered applicable. Killah Neelgerry, : Killah Toalcherry,Killah Rampore, Killah Bankey, : Killah Attgurh, Killah Hindole, Killah Joormoo, : Killah Kunjur,Killah Teegereah, Killah Nirsing : Killah Kindeapara,:Killah pore, Burrumboh, Killah Augole, : Killah Neahgurh,: Killah Deckenaul. XXXVII. The foregoing exemption from the operation of the general Regulations shall likewise, for the present, be considered to be applicable to the lands known by the appellation of the territory of Mohurbunge; but it shall be the duty of the Collector of the zillah to conclude a settlement with the proprietor of the estate for the payment of a fixed annual quit rent, on the principles on which a settlement has been concluded with the other bill or jungle zamindars specified in the preceding section". It is claimed that there was at no subsequent time any such revenue settlement as was contemplated by 79 section XXXV(3) and that there was no separate engagement for payment of any land revenue at any time thereafter. The conclusion sought to be drawn in the circumstances is that as Killa Kanika was not subject to payment of land revenue. , for the discharge of which a separate engagement had been entered into, it was not an "estate" as defined in Bengal Land Registration Act, 1876, and that that being the posi tion, it could not have been validly entered in the register prepared and maintained under the Bengal Land Registration Act. The action of the Collector in entering Killa Kanika as a revenue paying estate was wholly ultra vires and in the eye of the law such an entry is a nullity and does not exist. It follows, therefore, that Killa Kanika cannot be regarded as an "estate" within the meaning of the Abolition Act because the general register in which it is included cannot be said to have been validly prepared and maintained under the law for the time being in force. Section 4 of the Bengal Land Registration Act, 1876, directs the Collector of every district to prepare and keep up the four kinds of registers therein mentioned. Section 7 lays down that in Part I of the general register of revenue paying lands should be entered the name of every estate which is borne on the revenue roll of the district and certain other particulars relating to every such estate as therein specified. Therefore, if the name of Killa Kanika was borne on the revenue roll of the district, the Collector would be bound to enter the same in Part I of the general register prepared and kept up by him under section 4. Section 20 of the Act provides that until the registers by that Act directed to be prepared were so prepared the existing registers then kept up in the office of every Collector should be deemed to be the registers kept up under the Bengal Land Registration Act, 1876. Prior to 1876, land registers used to be maintained under the Bengal Regulation XLVIII of 1793 as amended by Bengal Regulation VII of 1800. Existing registers mentioned in section 20 of the Bengal Land Registration Act, 1876, clearly refer to registers kept under those Regulations and the learned 80 Attorney General contends that section 20 gives a statutory validity to the registers kept under those Regulations. Mr. P. R. Das appearing for the appellant submits that his arguments apply with equal force to the registers kept under the old Regulations referred to above. According to him, if the Collector entered lands which were not "estate" as defined in the old Regulations, he did not exercise his statutory powers and the entry made by him was a nullity and if any of the existing registers was void as regards a particular entry, then that entry did not exist and could not be transferred to the new register and if it was transferred, such transfer was a nullity and the new register, qua that entry, was void and could not be said to have been prepared and maintained under law. We are unable to accept the line of reasoning developed by Mr. P. R. Das. To accede to his contention would be to add words to section 2(g) of the Abolition Act so as to make it applicable to lands which were "validly" included under one entry in any of the general registers "properly" prepared and maintained under the law for the time being in force, that is to say, the Bengal Land Registration Act 1876. This the court has no power to do. If section 2(g) defined "estate" as including lands mentioned in the schedule to the Act, then whatever was included in the schedule would be an "estate" within the meaning of the Abolition Act, irrespective of whether such land was or was not an "estate" within the meaning of any other Act. The same reasoning applies when the definition includes lands entered in the general registers prepared and maintained under the Bengal Land Registration Act, 1876. Here the reference to the register prepared or kept under the law for the time being in force was meant only to identify the particular register in which the particular land was included under one entry. Suppose that a )register prepared and maintained under the Bengal Land Registration Act, 1876, included lands which were "estates" within the meaning of the Land Registration Act and also lands which were not 81 "estates" within the meaning of that Act. 'Suppose further that the Orissa Legislature by the Abolition Act intended to include all these lands, properly or improperly included in the register, what language would they then have used? Precisely the language they have used in section 2(g) of the Abolition Act, namely, that an "estate" means any land included in the general registers prepared and maintained under the law for the time being in force. In other words, the definition covers lands which are factually included in the particular register referred to. Whether they are "estates" within the meaning of the Bengal Land Registration Act, 1876, and whether they were validly or properly entered according to the provisions of that Act., appears to us to be wholly irrelevant for the purpose of construing section 3 (g) of the Abolition Act. In our opinion, the contention of the State of Orissa on this point must be accepted. P. R. Das appearing for the appellant objects to the plea of estoppel being raised, because it has not been included in the Statement of Case filed in the present appeal by the respondent. Order XVIII of the Rules of this Court deals with the lodging of cases. Under Rule I no party to an appeal is entitled to be heard by the court unless he has previously lodged his case in the appeal. Rule 3 lays down how the case is to be prepared and what its contents should be. Order XIX, Rule 4 provides that the appellant shall not, without the leave of the Court, rely at the hearing on any grounds not specified in the Statement of Case filed by him. The Privy Council Practice founded on Sheo Singh Rai vs Mussumut Dakho and Moorari Lall(1) and set forth in Bentwich 3rd edition Ruling 63 at page 181 is to the same effect. There is no rule imposing corresponding disability on the respondent. Further even with regard to the appellant the Court may, in appropriate cases, give him leave to raise a ground not specified in the Statement of Case. In the present case there is no question of surprise, for the plea of estoppel was pointedly raised and made the subject matter of an (1) [1878] L.R. 5 I.A. 87. 11 82 issue before the High Court and was elaborately dealt with by the High Court in its Judgment under appeal. In the circumstances we do not consider it proper to shut out this plea of estoppel. The plea of estoppel is sought to be founded on the compromise decree, exhibit 'O ' passed by the Patna High Court on 2nd May, 1945, in F. A. No. 15 of 1941. The compromise decree is utilised in the first place as creating an estoppel by judgment. In In re. South American and Mexican Company, Ex parte Bank of England(1), it has been held that a judgment by consent or default is as effective an estoppel between the parties as a judgment whereby the court exercises its mind oil a contested case. Upholding the judgment of Vaughan Williams, J., Lord Herschell said at page 50: "The truth is, a judgment by consent is intended to put a stop to litigation between the parties just as much as is a judgment which results from the decision of the Court after the matter has been fought out to the end. And I think it would be very mischievous if one were not to give a fair and reasonable interpretation to such judgments, and were to allow questions that were really involved in the action to be fought over again in a subsequent action". To the like effect are the following observations of the Judicial Committee in Kinch vs Walcott and others(2): "First of all their Lordships are clear that in relation to this plea of estoppel it is of no advantage to the appellant that the order in the libel action which is said to raise it was a consent order. For such a purpose an order by consent, not discharged by mutual agreement, and remaining unreduced, is as effective as an order of the Court made otherwise than by consent and not discharged on appeal". The same principle has been followed by the High Courts in India in a number of reported decisions. Reference need only be made to the case of Secretary of State, for India in Council vs Ateendranath Das(3), (1) (2) , 493. (3) Cal. 550, 558. 83 Bhaishanker Nanabhai and others vs Morarji Keshavji and Co.(1) and Raja Kumara Venkata Perumal Raja Bahadur, Minor by guardian Mr. W. A. Varadachariar vs Thatha Ramasamy Chetty and others (2). In the Calcutta case after referring to the English decisions the High Court observed as follows: "On this authority it becomes absolutely clear that the consent order is as effective as an order passed on contest, not only with reference to the conclusions arrived at in the previous suit but also with regard to every step in the process of reasoning on which the said conclusion is founded. When we say "every step in the reasoning" we mean the findings on the essential facts on which the judgment or the ultimate conclusion was founded. In other words the finding which it was necessary to arrive at for the purpose of sustaining the judgment in the particular case will operate as estoppel by judgment". The correctness of these principles laid down in these decisions is not disputed by Mr. P.R. Das. Proceeding on the basis that there is such a principle of estoppel by judgment, he contends that the test laid down in the decisions referred to above is whether the judgment in the previous case could have been passed without the determination of the question which was put in issue in the subsequent case, where the plea of estoppel by the previous judgment is raised. This leads us to a consideration of the facts, which are material to this question. On the 4th February, 1936, the predecessor in title of the plaintiff brought a suit (O.S. No. 7 of 1936) in the Court of the Subordinate Judge of Cuttack against the Secretary of State for India in Council, praying for a declaration that the plaintiff bad a good and indefeasible title to the beds of certain rivers, by expressed or implied grant from the East India Company, alternatively for a declaration that the plaintiff had acquired an indefeasible right and title to the beds of the said rivers by prescription or adverse possession and for permanent injunction against the defendant restraining him from interfering with the (1) Bom. 283, (2) Mad. 84 rights of the plaintiff in the beds of the said rivers and the churs formed on them. The suit was founded on, amongst others, the following allegations. In paragraphs 3 to 6 of the plaint were pleaded that the plaintiff 's ancestors were the rulers of Killa Kanika owing allegiance to the Hindu Gajapati Kings of Orissa and were absolute owners of all lands and waters within the ambit of their territories including the two rivers therein mentioned and that after the fall of the Hindu kingdom in Orissa, and during the Afghan, Moghal and Mahratha occupation of Orissa, the Rulers of Killa Kanika, the ancestors of the plaintiff continued to be the absolute owners of the Killa including the said rivers. In paragraph 7 of the plaint reference was made to the Engagement and Kaoolnama of 1803, whereby the Raja was said to have been confirmed in his Rajgee or proprietorship of the entire Killa and it was submitted that the said grant was intended to and did, in fact, confirm his title, to the said rivers. In paragraph 9 of the plaint, it was acknowledged that subsequently the status of the rulers of Killa Kanika was gradually reduced to that of a Zamindar and that. they were divested of all administrative powers, but it was claimed that nevertheless, their proprietary rights in the Killa consisting of land and water including the disputed rivers remained intact and that the tribute which had been fixed by the engagement of 1803 remained so in perpetuity as Peshkush payable by the proprietors. In paragraph 33 it was stated that having regard to the fact that prior to the British conquest of Orissa, the plaintiffs predecessors in title had been independent rulers of Killa Kanika and as such had valid title to the said rivers within their territory and that after the British conquest the East India Company confirmed the title of the then Raja of Kanika to whatever had been in the possession of the said Raja prior to the said conquest and maintained him in possession thereof, the plaintiff claimed good and valid title to the beds of the said rivers by an express or implied grant by the said East India Company. A claim of title to the beds of the said 85 rivers by prescription and adverse possession was also pleaded by way of alternative plea. The written statement of the Secretary of State was filed on the 29th May, 1936, traversing the allegations in the plaint. In paragraph 7 it was definitely pleaded that the Raja, with whom engagement had been entered into in 1803, was deposed for miisrule and his status was reduced to that of a Zamindar as a punishment and that it was as an act of mercy that he was allowed to retain the estate without an enhancement of his Peshkush. It was submitted that in view of the treatment of the estate during the past 100 years, it was idle for the plaintiff to suggest that he retained the rights comparable to those of a Ruling Chief. Reading the pleadings and the issues raised in the case fairly and as a whole,it appears quite clear that although the Engagement and Kaoolnama of 1803 was referred to as a grant, express or implied, from the East India Company, the plaintiff was, in substance, founding his claim on his antecedent title as the Ruling Chief of Killa Kanika which, according to him, bad been confirmed by the Engagement and Kaoolnama of 1803, which were, therefore, construed as a grant, express or implied, from the East India Company. That the real issue on which the suit was fought out in the trial court was whether the plaintiff was an independent Ruling Chief and as such entitled to the beds of the rivers passing through his territory or was a mere Zemindar and as such having no such right is apparent from the following passage in the judgment of the Subordinate Judge "It is, therefore, too late now to suggest that the status of the plaintiff in relation to his Killa is something higher than or superior to that of a holder of an estate. In my view, it is of no consequence, as respects the point now under consideration whether the estate is a permanently settled estate or it is a temporarily settled estate. The question is whether the plaintiff is the holder of an estate or it is that he owns a State. But as I have just pointed out, a private individual cannot own a State in the sense a sovereign authority owns the same". 86 After referring to the Regulations of 1805 and 1806, the learned Subordinate Judge proceeded to say: "Thus it is apparent that with the advent of the British the question of status of the plaintiff was never left in any degree of uncertainty. All these various Regulations taken together will go to establish in an unmistakable term, that the plaintiff 's status in his relation to his Killa, was recognised from the time of the advent of the British in Orissa as that of a Zamindar, i.e., a bolder of an estate. That being so, in relation to these rivers, or to their beds, the plaintiff 's position shall be nothing more than or superior to that of a riparian owner". Again referring to the Engagement and Kaoolnama of 1803 the learned Subordinate Judge stated as follows: "Now taking these two documents together, it is difficult to read in them that any grant was made either expressly or impliedly by the sovereign authority in favour of the holder of the Killa. The main provisions are that the revenue was fixed for ever, and that the holder was asked to be loyal to the Company 's Government. Thus initially, I have been unable to associate any idea of grant as to be flowing from these engagements. All that can be said, and perhaps the earned counsel for the plaintiff maintains to that effect, is that what rights the holder of the Killa had, in reference to the Killa, were fully and without any limitation or restriction, recognised. It is, therefore, that the question will now be set at large for a discussion as to what rights the proprietor of the Killa had at the time when these engagements were made". It is needless to extract further passages from the judgment. In the result the learned Subordinate Judge answered the issues against the plaintiff and dismissed the suit. The plaintiff appealed to the Patna High Court. A compromise was arrived at between the parties, which was filed in court and the appeal was disposed of in accordance with the terms of the compromise petition. The principal terms of the compromise petition were as follows: 87 "1. That it shall be declared that the Crown and for the matter of that, the Province of Orissa, the defendant has the title to the disputed river beds, as described in the schedule of the plaint, and the plaintiff appellant acknowledges the same. 2.That the plaintiff appellant, that is the Proprietor of the Kanika Estate is the rightful owner of the fisheries of the said rivers and the defendant has not nor will have any objection to his unobstructed exclusive permanent enjoyment of the fishery rights in the said rivers at any time whatsoever. The respondents shall not claim nor the appellant shall be liable to any assessment on that ground, other than what is payable in respect of the permanently settled estate of Killa. 3.That subject to such rights as the Crown or in other words, the Province of Orissa has in the beds of the rivers aforesaid and in the channel of waters flowing thereon, the Proprietor of Kanika Estate that is the plaintiff appellant will have his rights to the ferries over the said rivers which he has been so far enjoying and except when such ferry rights interfere with the Crown 's right in the bed of the rivers and similar rights in the waters on the channel of the rivers for the purpose of navigation and things of the kind, the Province of Orissa will not interfere with nor raise any objection to the plaintiff 's enjoyment of such rights or ferry through the length and breadth of the aforesaid rivers. 4.That such Chars, islands or other accretions formed in the said rivers as have been shown in the Civil Court Commissioner 's map prepared in this suit and now forming a part of the court 's record shall be deemed as part and parcel of the permanently settled estate of Kanika and the defendant will not be entitled to any further assessment in respect thereof. 5.That all future riparian accretions or Chars formed adjoining the banks of the rivers in dispute shall also be always deemed to be part and parcel of the said permanently settled Zamindary of Kanika and shall be so possessed by him without any further payment on assessment of land revenue over and 88 above the land revenue that has been permanently fixed. 6.That all other islands or Chars that may be formed subsequent hereto in the midst of the river being cut off from the banks thereof by waters that are tidal, unfordable and navigable in all seasons of the year shall belong to the defendant and the plaintiff or his successor in interest will have a right to possess and take settlement of the same from the defendant and the latter will have the right to levy assessment of land revenue thereon according to the principles and provisions of law as laid down in Regulation II of 1819 and this assessment will be of force from the time when the islands or Chars will appear and be capable of enjoyment irrespective of the fact whether estate holder does really enjoy it or not ' . The declaration of the title of the State to the disputed river beds was a clear acknowledgment by the plaintiff of the State 's sovereign rights, which necessarily negatived the sovereign rights which he asserted and claimed for himself. The declaration that the plaintiff, as the proprietor of the Kanika estate, was the ' rightful owner of fisheries in the said rivers and that the defendant would not claim any assessment on that ground was nothing but a recognition of the plaintiff 's title as the holder of a permanently settled estate. The same observations apply to clause (3) whereby the plaintiff was declared to have the ferry rights over the said rivers, which were expressly made subject to the rights of the State in the beds of the rivers. The provision that all future riparian accretions or Chars formed adjoining the banks of the rivers would always be deemed part of the permanently settled Zemindari of Kanika and should be possessed by him without further payment of assessment of land revenue over and above the land revenue that had been permanently fixed clearly acknowledges that the plaintiff accepted the position that he had no rights other than what he had as the holder of a permanently settled estate liable to the payment of land revenue, in contradistinction to 89 tribute fixed in perpetuity. The provisions of clause (6) of the terms of settlement also point to the same conclusion. Mr. P. R. Das contends that the issue in the present case is whether the land held by the plaintiff is an "estate" within the meaning of the Bengal Land Registration Act, 1876, whereas the issue in the earlier case was whether the plaintiff 's predecessors had title to the river beds by express or implied grant from the Crown. This does not appear to us to be a fair reading of the pleadings as a whole. The plaint in the earlier suit summarised above and the passages culled from the judgment of the trial court clearly indicate that the parties went to trial on the definite and well understood issue that the plaintiff 's claim to the river beds was founded on his anterior title as an independent Ruling Chief of Killa Kanika and that that title had been confirmed by the Engagement and Kaoolnama of 1803, which were, in a loose way, construed as a grant of the river beds, express or implied, by the East India Company. What the parties understood by the issues on which they went to trial is clearly illustrated by the passages quoted from the judgment. The fact that the claim in the earlier suit related only to a part of the land, namely the river beds, whereas the present case is that the entire land held by the plaintiff is not an "estate" makes no difference, for the real issue between the parties in the earlier suit was, as it is in the present suit, only concerning his status and the rights flowing therefrom. To hold in this suit that the plaintiff is not the holder of an estate subject to payment of land revenue for the discharge of which a separate engagement has been entered into, will be to permit the plaintiff to set up a sovereign status for himself, which he actually did in the earlier case but failed to establish in the trial court and which he, by the compromise, expressly abandoned in the appeal court. In our judgment the compromise decree precludes the plaintiff from re asserting the title, which had been negatived by the compromise decree although it related only to his claim to a part of the lands, namely 12 90 the beds of the rivers therein mentioned. The compromise decree is also sought to be pleaded by the State against the plaintiff as estoppel by representation. It is said, that even if the compromise had not the imprimatur of the court, it would, nevertheless, be representation that the plaintiff 's predecessor was the Zemindar of a permanently settled estate. The compromise consisted of reciprocal concessions, those made by one party being the consideration for those made by the other. It was on the basis of the concession made by the plaintiff 's predecessor, namely, that he was a Zemindar of a permanently settled estate, that the State gave up the benefit of the decree which had been passed in its favour by the trial court and also the right to levy assessment on the accretions of future Chars. One of the main considerations for the compromise ,was the clear admission on the part of the plaintiff in that case that his status in respect of Killa Kanika was nothing more than that of a proprietor of a permanently settled estate liable to pay land revenue. The High Court decided the issue of estoppel against the State on two considerations, namely, (1) that the status of the owner of Killa Kanika was not directly and substantially in issue in the earlier litigation and (2) that there was no clear evidence led on the side of the State to establish that the admission by the plaintiff in that case of his status was the main consideration for the compromise. We are satisfied that the High Court was in error on both these points. As already pointed out, the pleadings summarised above and the passages in the judgments quoted above clearly indicate that the status of the plaintiff was the foundation of his claim to the river beds and was consequently directly and substantially in issue in that litigation and was understood to be so by the parties themselves. On the second ground the terms of the compromise speak for themselves. It is quite clear that the concessions made by one party were the consideration for those made by the other party and, therefore, it was not necessary to adduce any further evidence, assuming that any evidence was 91 admissible for the purpose. In our judgment, the finding of the High Court on this issue was clearly erroneous. Each of the conclusions we have arrived at on the first two points is quite sufficient, by itself, to enable us to dispose of this appeal and it is not necessary for us to deal with or express any opinion on the other three points canvassed before us. The result, therefore, is that this appeal should be dismissed with costs and we order accordingly.

The appellant sued the State of Orissa for a declaration that the Orissa Estates Abolition Act of 1951 was in its application to the Kanika Raj, of which he was the Raja and owner, invalid, unconstitutional and ultra vires the State Legislature and for an injunction restraining the State of Orissa from taking any action under the Act. It was contended, inter alia, that no notification under section 3(1) of the Act vesting the Kanika Raj in the State of Orissa could issue as the Raj was not an estate as defined by section 2 (g) of the Act. The contrary was asserted by the State of Orissa and its further contention was that the appellant was estopped by a compromise decree between his predecessors in title on the one band and the Secretary of State on the other from denying that the Raj was an estate as defined by the Act. Held, that the Kanika Raj was an estate as defined by the Orissa Estates Abolition Act of 1951 and the appellant was estopped from denying it by the compromise decree. That the real intention of the Act in defining 'estate ' as it has done in section 2(g) of the Act, was to include all lands, such as the appellant 's, which were as a matter of fact included ill the register prepared under the Bengal Land Registration Act Of 1876, and in construing the definition it is wholly unnecessary to consider whether such inclusion was valid or proper or in conformity with the meaning of an estate under that Act. That a judgment by consent is as effective in creating an estoppel between the parties as a judgment on contest and the test is whether the judgment in the previous case could have been passed without the determination of the question which is put in issue in the subsequent case where the plea of estoppel is raised. Held further, that there is no rule corresponding to Rule 4 of Order XIX of the Supreme Court Rules imposing a similar disability on the respondent, and even with regard to the appellant the court may in appropriate cases, give him leave to raise a ground not specified in the Statement of the Case filed by him.